Circular 39/2016 - New Lending Regulations for Banks in Vietnam

The State Bank of Vietnam (SBV) issued Circular 39/2016 in late December 2016 replacing the famous Decision 1627/2001 on lending by banks and other credit institutions in Vietnam which has been in force for more than a decade. Circular 39/2016 contains the following developments, among other things:

To terminate a loan agreement and accelerate the loan, a bank must prove that the borrower has provided inaccurate information or breached the loan agreement or the security agreements. While further clarifications are still required, this limitation may reduce the ability of a bank to call an event of default under the existing loan agreement. For example, defaults caused by a third party (e.g. a guarantor) may not satisfy the new requirement under Circular 39/2016.

The Civil Code 2015 – Risks for the party who prepares the first draft of a contract in Vietnam

Article 404.6 of the Civil Code 2015 provides that where the drafting party in a contract inserts into the contract contents which are disadvantageous to the other party, the contract will be interpreted in a manner favouring the other party. This provision not only applies to consumer contracts but also to commercial contracts between two commercially-sophisticated parties. Accordingly, the party who prepares the first draft of a commercial agreement may be subject to the risk of adverse interpretation in future disputes. In addition, parties, when negotiating a contract, may now need to keep track of who drafting which provision in the contract.

New Publication “Principles of Vietnam’s Enterprise Law”

Volume 1 of my book "Principles of Vietnam's Enterprise Law" is now available in both e-book and paperback format on Amazon.com. The e-book is free for download in from 1 February 2017 to 4 February 2017. A pdf copy of the table of content can be downloaded from here.

Info

Comment

Stricter regulations on issuance of Vietnamese Government guarantees

Under Decree 4/2017, the Vietnamese Government imposes stricter regulations on issuance and management of Government guarantees. Government guarantees under Decree 4/2017 are guarantees issued on behalf of the Vietnamese Government (as the guarantor) in favour of foreign lenders to guarantee loans or bonds borrowed or issued by companies in Vietnam. Under Decree 4/2017:

Vietnam Business Law