Shortcomings and recommendations for regulations on syndicated loans by commercial banks

MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** MANAGEMENT COMMITTEE OF SPECIAL PROGRAMS NGUYEN THUY TRANG SHORTCOMINGS AND RECOMMENDATIONS FOR REGULATIONS ON SYNDICATED LOANS BY COMMERCIAL BANKS BACHELOR OF LAW – GRADUATION THESIS FALCUTY: COMMERCIAL LAW ACADEMIC YEAR: 2013 – 2017 HO CHI MINH CITY 2017 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** MANAGEMENT COMMITTEE OF SPECIAL PROGRAMS NGUYEN THUY TRANG SHORTCOMINGS AND RECOMMENDATIONS FOR REGULATIONS ON SYNDICATED LOANS BY COMMERCIAL BANKS BACHELOR OF LAW – GRADUATION THESIS FALCUTY: COMMERCIAL LAW ACADEMIC YEAR: 2013 – 2017 SUPERVISOR: LLM TRAN THANH BINH AUTHOR: NGUYEN THUY TRANG STUDENT ID NUMBER: 1353801011254 CLASS: CLC38B HO CHI MINH CITY 2017 STATEMENT OF GUARANTEE I hereinafter guarantee that this bachelor thesis is definitely attributed to my own research and are implemented under the supervisory guidance of LL.M Tran Thanh Binh All of information other than my opinions to be used or quoted has been acknowledged by means of complete references I am faithfully and completely responsible for this guarantee i Abbreviation LIST OF ABBREVIATIONS Full text SBV State Bank of Vietnam CMBs Commercial banks CIs Credit institutions NPLs Non-performing loans VND Vietnam Dong USD United State Dollars LMA Loan Market Association CC Civil Code (Law No.91/2015/QH13) issued by National Assembly dated 25 November 2015 LCI Law on Credit institutions (Law No.47/2010/QH12) issued by the National Assembly dated 16 June 2010 LOB Law on Bankruptcy (Law No.51/2014/QH13) issued by National Assembly dated 19 June 2014 LOL Law on Land (Law No 45/2013/QH13) issued by National Assembly dated 29 November 2013 Decree 163/2006/ND-CP Decree No 163/2006/ND-CP on security transactions issued by the Government dated 29 December 2006 amended by Decree 11/2012/ND-CP dated 22 February 2012 Circular 39/2016/TT-NHNN Circular No 39/2016/TT-NHNN prescribing lending transactions of credit institutions and/or foreign bank branches to clients issued by the State Bank of Vietnam dated 30 December 2016 Circular 24/2011/TT-NHNN Circular No 42/2011/TT-NHNN regulating the syndicated loan by credit institutions to customers issued by the State Bank of Vietnam on 15 December 2011 amended by Circular 24/2016/TTii NHNN dated 30 June 2016 Decision 1627/2001/QD-NHNN Decision No 1627/2001/QD-NHNN on issuing regulations on lending by credit institutions to clients issued by the State Bank of Vietnam dated 31 December 2001 Decision 1160/2004/QD-NHNN Decision No.1160/2004/QD-NHNN issued by the State Bank of Vietnam dated 13 September 2004 on the issuance of the regulation on savings deposits amended and supplemented by Decision 47/2006/QĐ-NHNN dated 25 September 2006 and Circular 04/2011/TT-NHNN dated on 10 March 2011 iii LIST OF TABLES AND FIGURES Table 1: List of projects financed by syndicated loans from 2008 to 2017 15 Table 2: Comparison table of types of syndicated loans 19 Figure 1: Syndicated loans since 1980s 11 Figure 2: Diagram on syndicated loan transactions 28 iv TABLE OF CONTENTS STATEMENT OF GUARANTEE i LIST OF ABBREVIATIONS ii LIST OF TABLES AND FIGURES .iv INTRODUCTION CHAPTER I THE CONCEPT OF SYNDICATED LOANS BY COMMERCIAL BANKS 1.1 Definition and Historical background of syndicated loans by commercial banks 1.1.1 Definition of syndicated loans 1.1.2 Historical background of syndicated loans 1.2 Types of syndicated loans by commercial banks 15 1.2.1 Underwritten deals 16 1.2.2 Arranged or best efforts deals 17 1.2.3 Club deals 18 1.3 The major principles of syndicated loans by commercial banks 19 1.3.1 Principle of Independent Obligation 19 1.3.2 Agent bank 19 1.3.3 Principle of Democratic Decision-Making 20 1.3.4 Pro rata sharing 21 1.4 The roles of syndicated loans 22 1.4.1 For the lenders 22 1.4.2 For the borrower(s) 24 SUB-CONCLUSION FOR CHAPTER I 27 CHAPTER II 28 REGULATIONS, PRACTICAL ISSUES AND PROPOSED RECOMMENDATIONS ON SYNDICATED LOANS IN VIETNAM 28 2.1 Parties to a syndicated loan 28 2.1.1 Regulations and practical application 28 2.1.2 Shortcomings of regulations and practical application on parties to a syndicated loan 33 2.2 Taking security for syndicated loans 38 2.2.1 Regulations and practical application 38 2.2.2 Shortcomings of regulations and practical application on taking security for syndicated loan 43 SUB-CONCLUSION FOR CHAPTER II 49 CONCLUSION 50 BIBLIOGRAPHY APPENDIX Table of ratings for debt securities APPENDIX Clause on Covenants APPENDIX Clause on Agent in syndicate APPENDIX INTRODUCTION Rationale for Research Since the implementation of Đổi (Renovation), which was initiated by the Vietnamese Communist Party in 1986, the Vietnamese legal system in general and its banking area in particular have been significantly reformed to accommodate the transition process In the period of this innovation, the commercial banks (“CMBs”) have been considered not merely as the storehouses of the country’s wealth but also the reservoirs of resources necessary for economic development, especially in case of developing country like Vietnam One of the fundamental functions of CMBs is the source of finance and credit for industry and trade However, nowadays, due to the rapid growth in volume, the escalating size and complexity of the loans, CMBs have been forced to further develop methods to adequately diversity their risk Indeed, when a borrower’s need for funds exceeds the amount which any single bank is able to lend or exceeds the limit on credit extension for each client set by the State Bank of Vietnam (“SBV”), it becomes necessary for banks to find the way to provide the required funds In order to handle these restrictions, besides unilateral credit extension, the CMBs nowadays may finance projects; production and business plans together with other credit institutions for the purpose of risk sharing and increase in the possibility of fund mobilization This type of credit extension is so-called syndicated lending In the recent time, the numbers of projects and economic organizations, which have been financed by syndicated loans, have gradually increased In 2016 and 2017, syndication agreements worth hundreds million United State dollars (“USD”) entered by large corporations as Vingroup1 and Novaland2 mark a milestone in the process of development of syndicated loans in Vietnamese financial market Be aware of the importance of the syndicated loans, SBV has enacted a new circular3 to amend and supplement Circular 42/2011/TT-NHNN Binh An, “Vingroup vay 300 triệu USD từ nước ngồi hình thức vay hợp vốn” [Vingroup borrowed 300 million USD from abroad by mean of syndicated loan], http://vietnamfinance.vn/tai-chinh/vingroup-vay1 300-trieu-usd-tu-nuoc-ngoai-bang-hinh-thuc-vay-hop-von-20160707093531209.htm, last visited on 14 May 2017 “Maybank Vietinbank Filiale Deutschland giải ngân 30 triệu đô la cho Novaland” [Maybank and Vietinbank Filiale Deutschland disbursed USD 30 million to Novaland], http://www.thesaigontimes.vn/160530/Maybank-va-VietinBank-Filiale-Deutschland-giai-ngan-30-trieu-dola-cho-Novaland.html, last visited on 14 May 2017 Circular No.24/2016/TT-NHNN issued by the State Bank of Vietnam dated 30 June 2016 on amendment and supplement to a number of articles of Circular No.42/2011/TT-NHNN regulating provisions of syndicated loans for clients by credit institutions issued by the State Bank of Vietnam dated 30 December 2016 regulating provision of syndicated loans for clients by credit institutions which revealed many shortcomings in the process of application Syndicated loan is not a new lending method in the world, but it has just been introduced to Vietnam since the emerging of investment capital’s needs for large-scale projects However, after looking at the Vietnamese laws relating to syndicated loans, the author still explores defects around this kind of transactions which may incur substantial risks, in the worst case where the CMBs’ risk management does not work effectively, can lead to systemic risk4-the collapse of an entire financial system, initially from the first weak bank in trouble Therefore, building a legal framework to ensure the safety of syndicated lending activity in particular and to create the stability for banking activities in general is very urgency Based on the fact that current laws not adequately protect the benefits of CMBs due to the shortage of effective legal mechanism, there are still rooms for improvement of regulations on syndicated loans For this reason, the author wishes to conduct the thesis with topic “Shortcomings and recommendations for regulations on syndicated loans by commercial banks” for the purpose of contributing to perfect the legal foundations for implementing “successful” syndicated loans in Vietnam Literature review As of this moment, the topic of syndicated loans has attracted the attention of many legal practitioners, policy-makers and, more recently, academic researchers in Vietnam in particular and in the world in general The scientific works on this topic which have been referred by the author will be divided into materials written in foreign language and in Vietnamese as bellows for convenience of the readers 2.1 Materials in foreign language In the developed countries where the international syndicated loan market has been evolving most such as America, Europe, Eastern Europe, a large number of research works on syndicated loans have been conducted by specialists as well as scholars in banking and finance field The author is pleased to summary some remarkable points relating to syndicated loans in these works as follows: The book The Law and Practice of International Finance of Phillip Wood in 2008 covers practical and doctrinal aspects, comment and analysis on this type of lending activity in typical legal instruments to both international and domestic Systemic risk, Investopedia, http://www.investopedia.com/terms/s/systemic-risk.asp, last visited on 14 May 2017 Agreement, which in each case has not ceased to be a Party in accordance with the terms of this Agreement “Finance Parties” means collectively (a) the Facility Agent, (b) the Security Agent and (b) the Lenders “Facility Agreement” has the meaning given to that term in the second recital “Facility Agent” has the meaning given to that term in Clause 2.1 “Loan” means a Revolving Facility Loan “Majority Lenders” means: (a) at any time, a Lender or Lenders whose Commitments aggregate more than fifty one percent (51%) of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 51% of the Total Commitments immediately prior to the reduction); or (b) if at such time there is no outstanding principal amount, any Lender or Lenders holding at least fifty one percent (51%) of the Total Commitments “Relevant Security Documents” has the meaning given to that term in Clause 8(a)(i) “Percentage” means, when applied to a Lender, (a) the ratio between the Loans made by such Lender and the Loans made by all the Lenders; or (b) if the outstanding principal amount of the Loans at the time the Percentage is determined is zero, the ratio between the Commitment Amount of such Lender and the Total Commitments “Security Agent” means the security agent as provided in Clause 2.1 “Total Commitments” has the meaning given to that term in Clause 3.1 1.2 Interpretation Clause 1.2 of the Facility Agreement shall, mutatis mutandis, be hereby incorporated into this Agreement by reference as if set out in full here ARTICLE THE FACILITY AGENT AND THE SECURITY AGENT The Lenders agree to appoint … Bank as Facility Agent (for and on behalf of the Lenders) to enter into Facility Agreement dated on the date hereof among the Lenders, the Facility Agent, the Security Agent and the Borrower pursuant to which the Lenders agree to make available to the Borrower loans in an aggregate principal amount of up to … million United States Dollars (USD …) (the “Facility Agreement”); and The Lenders agree to appoint … Bank as Security Agent (for and on behalf of the Finance Parties) to enter into the Security Documents, 2.1 Appointment of Facility Agent and Security Agent The Finance Parties hereby: 2.2 (i) designate and irrevocably authorize Bank as facility agent (the “Facility Agent”) and security agent (the “Security Agent”) for and on behalf of the Finance Parties to enter into the Facility Agreement, the Security Documents and the other Credit Documents in form and substance satisfactory to the Finance Parties; and (ii) irrevocably authorize the Facility Agent and the Security Agent on their behalf to perform the duties and to exercise the rights, powers and discretions that are specifically delegated to them under or in connection with the Facility Agreement, the Security Documents and the other Credit Documents, together with other incidental rights, powers and discretions Nature of Duties (a) Each of the Facility Agent and the Security Agent shall only have duties and responsibilities expressly set forth herein, in any other Credit Document and applicable Legal Documents (b) The Facility Agent, the Security Agent and any of their respective officers or employees shall only be liable for any action taken by it or by them hereunder or under any other Credit Document or in connection herewith or therewith due to the willful misconduct of the Facility Agent, the Security Agent or their respective officers or employees (c) The duties of each of the Facility Agent and the Security Agent shall be mechanical and administrative in nature The Facility Agent and the Security Agent shall only be responsible to protect the interest of any Person if there are clear instructions provided by the Majority Lenders or all the Lenders (as the case may be) as required by this Agreement or any other Credit Documents provided that in order to obtain such instructions, the Facility Agent and the Security Agent shall be required to advise all the Lenders of the issues involved (d) The Security Agent will hold the benefit of the undertakings and Security Arrangements made or given or to be made or given by the Borrower contained in each of the Security Documents in its favor and all realizations by the Security Agent under each of the Security Documents as security agent for and on behalf of the Finance Parties 2.3 Certain Rights of Facility Agent and Security Agent (a) If the Facility Agent or the Security Agent (as the case may be) requests instructions from the Majority Lenders or all the Lenders (as the case may be) with respect to the performance of any action (including acting or refraining from acting) in connection with this Agreement or any other Credit Document: (i) the Facility Agent or the Security Agent (as the case may be) shall be entitled to refrain from taking such action unless and until the Facility Agent or the Security Agent (as the case may be) shall have received such instructions from the Majority Lenders or all the Lenders (as the case may be); and (ii) the Facility Agent or the Security Agent (as the case may be) shall incur no liability to any Person by reason of so refraining (b) No Financing Party shall have any right to enforce a claim against the Facility Agent or the Security Agent (as the case may be) as a result of: (i) the performance by the Facility Agent or the Security Agent (as the case may be) of any action (including acting or refraining from acting) hereunder or under any other Credit Document in accordance with the instructions of the Majority Lenders or all the Lenders (as the case may be); or (ii) the non-performance by the Facility Agent or the Security Agent (as the case may be) of any action (including acting or refraining from acting) which might in the opinion of the Facility Agent or the Security Agent (as the case may be) constitute a breach of any applicable Legal Documents or be otherwise actionable at the suit of any Person Each of the Facility Agent and the Security Agent may anything which, in its opinion, is necessary or desirable to comply with any applicable Legal Documents provided that it shall promptly advise the Finance Parties of any action required to be taken to comply with such applicable Legal Documents 2.4 Reliance on Documents (a) Subject to Clause 2.3, each of the Facility Agent and the Security Agent shall be entitled to rely, and shall be fully protected in relying, upon: (i) any document, writing, resolution, notice, statement, telex, facsimile or other document made, signed, or sent by any Person that the Facility Agent or the Security Agent (as the case may be) believes to be proper for actions specified above; and (ii) advice of counsel selected by it with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder (b) Each of the Facility Agent and the Security Agent shall be responsible to verify the adequacy and validity of any documents signed by the Borrower pursuant to this Agreement or any other Credit Documents in accordance with applicable Legal Documents 2.5 Indemnification of Facility Agent and Security Agent (a) The Finance Parties agree that the Facility Agent and the Security Agent (as the case may be) shall request written instructions from all the Lenders in case: (i) the Facility Agent or the Security Agent (as the case may be) may incur any liabilities, obligations, losses, damages, penalties, claims, fees, or expenses in performing its duties hereunder or under any other Credit Document; and (ii) such liabilities, obligations, losses, damages, penalties, claims, fees, or expenses shall not be indemnified by the Borrower (b) To the extent all the Lenders agree to make an indemnification to the Facility Agent or the Security Agent (as the case may be), each Lender shall indemnify the Facility Agent or the Security Agent (as the case may be) in accordance with its Percentage or such other percentage as agreed by the Lenders for and against all liabilities, obligations, losses, damages, penalties, claims, fees, expenses or advance payments which the Facility Agent or the Security Agent (as the case may be) has incurred: 2.6 (i) in performing its duties hereunder or under any other Credit Document; or (ii) in any way relating to or arising out of this Agreement or any other Credit Document Resignation by Facility Agent and Security Agent (a) Subject to clause (b) below, each of the Facility Agent and the Security Agent may resign from and stop the performance of all its duties and obligations hereunder and/or under other Credit Documents upon giving fifteen (15) Business Days prior written notice to the Borrower and the other Finance Parties Such resignation shall take effect upon the appointment of a successor facility agent or security agent (as the case may be) pursuant to clauses (b) and (c) below (b) Upon any such notice of resignation, all the Lenders shall appoint a successor facility agent or security agent (as the case may be) under this Agreement and the other Credit Documents The resignation of the Facility Agent or the Security Agent (as the case may be) shall not become effective and shall be deemed invalid until such time as all the Lenders appoint a successor facility agent or security agent (as the case may be) (c) After consultation with the Borrower, all the Lenders may, by notice to the Facility Agent or the Security Agent (as the case may be) require it to resign and all the Lenders may appoint a successor facility agent or security agent (as the case may be) ARTICLE THE FACILITY 3.1 The Loans The Lenders shall prior to the expiry date of the Availability Period agree to make available to the Borrower loans in United States Dollars (each, a “Loan”) in the aggregate principal amount of up to million United States Dollars (USD …) (the “Total Commitments”) provided that: (i) subject to Clause 3.2(b), the aggregate principal amount of the Loans outstanding from any Lender shall not at any time exceed the Commitment Amount of such Lender at such time; and (ii) 3.2 all the terms and conditions set forth in the Credit Documents shall have been observed and satisfied Proportionate Borrowings (a) Each Lender shall agree to provide the Loans pro rata on the basis of its Commitment Amount as follows: Name of Banks Total Commitment Amount (USD) Commitment Percentage (%) 100 (b) Notwithstanding the provisions of Clause 3.2(a), if any Lender fails to provide its Loans (in whole or in part), the Facility Agent shall immediately advise the other Lenders of such failure, and any other Lender shall be entitled (but not obligated) to provide additional funds to cover the shortfall and its Commitment Amount and its Percentage shall change accordingly provided that: (i) if the additional funds proposed to be provided by the other Lenders are higher than the shortfall, such Lenders shall provide the additional funds pro rata on the basis of their Commitment Amounts or in such other manner as agreed among them; and (ii) if no other Lenders propose to provide the additional funds or the additional funds proposed to be provided by the other Lenders are lower than the shortfall, the Facility Agent shall use its best efforts (but shall be under no obligation) to invite credit institutions (other than the Lenders) to lend to the Borrower on the same terms and conditions contained herein and such credit institutions shall be treated as Lenders for all intents and purposes of this Agreement, provided further that in either case all authorizations necessary in respect of such provision of additional funds have been obtained 3.3 Disbursement of Funds (a) As soon as it receives a Notice of Borrowing from the Borrower, the Facility Agent shall promptly send a notice to each Lender, via fax or email, specifying the Requested Amount, such Lender’s share thereof in accordance with its Percentage, the Facility Agent’s account for purpose of disbursing the Loans, the Requested Disbursement Date and other matters as specified in the Notice of Borrowing and any Credit Documents (b) The Facility Agent shall promptly send to each Lender (i) one (1) original Note delivered by the Borrower pursuant to Clause 2.6 of the Facility Agreement and (ii) one (1) documentation set and the list of evidence and documents therein delivered by the Borrower pursuant to Clause 2.5(c) of the Facility Agreement (c) No later than 10:00 a.m (Hanoi time) on the relevant Requested Disbursement Date specified in the relevant Notice of Borrowing, each Lender shall (subject to this Agreement and the Facility Agreement) make available to the Facility Agent’s account (as notified by the Facility Agent to the Lenders pursuant to Clause 3.3(a)) and the Facility Agent shall receive the amount of the requested Loans to be provided by such Lender in United States Dollars and in immediately available funds (d) Without prejudice to the obligations of each Lender to make the Loans as provided in Clause 3.3(c), if prior to 10:00 a.m (Hanoi time) on the Requested Disbursement Date, a Lender has notified the Facility Agent that such Lender does not intend to make available to the Facility Agent the Loans to be provided by such Lender, or the Loans to be provided by such Lender is not in fact made available to and received by the Facility Agent, then the Facility Agent shall not make available to the Borrower such Lender's corresponding amount The parties agree that the failure of a Lender to make Loans without cause will be considered a serious breach of this Agreement 3.4 Loan Term The term of the Loans hereunder shall be … ( ) months from the Initial Disbursement Date (or ending on such earlier date as all Obligations shall have been paid in full by the Borrower), in which the grace period shall be … ( ) months after the Initial Disbursement Date pursuant to Clause 4.2(a) of the Facility Agreement 3.5 Interest Rate The interest rate applicable to the Loans in any Interest Period shall be the annual interest rate equal to the aggregate of 3-month SIBOR and … percent per annum ( % p.a.) 3.6 Security Arrangements (a) To secure the Obligations, the Borrower shall mortgage in favor of the Finance Parties all of the immovable assets of the Borrower in relation to the Project pursuant to the Security Agreement for Immovable Assets (b) To secure the Obligations, the Borrower shall mortgage in favor of the Finance Parties all machinery and equipment, vehicles, other movable assets, accounts, property rights and contractual rights of the Borrower in relation to the Project to the Security Agreement for Movable Assets and Property Rights ARTICLE WAIVERS AND CONSENT (a) Each Financing Party agrees with the other parties hereto that, unless otherwise expressly set forth in any Credit Document, all of the rights conferred upon the Finance Parties pursuant to the Credit Documents shall be exercised or not exercised (as the case may be) in accordance with the wishes of the Majority Lenders or all the Lenders (as the case may be) Accordingly, unless otherwise expressly stated, each Financing Party agrees to be bound by the decision(s) of the Majority Lenders or all the Lenders (as the case may be) with respect to such rights (b) Notwithstanding any other provision of the Credit Documents, each of the parties hereto agrees that: (i) no waiver, approval or modification affecting the rights or obligations of the Facility Agent or the Security Agent (in their respective capacities as such) shall be made without the written consent of both the Majority Lenders or all the Lenders (as the case may be) on the one part and the Facility Agent or the Security Agent (as the case may be) on the other part; and (ii) no provision of this Agreement may be amended otherwise than in accordance with Clause 10.4 ARTICLE PAYMENTS 5.1 Proportional Payments (a) Each of the Facility Agent and the Security Agent agrees that promptly after its receipt of payments with respect to the Obligations hereunder or under any other Credit Document, it shall distribute such payment to the account of each Lender (as notified by such Lender to the Facility Agent or the Security Agent from time to time) in accordance with their respective Percentages and to the other Finance Parties in accordance with the provisions of the Credit Documents on the same day (b) If the Facility Agent or the Security Agent fails to distribute such payment on the same day due to the willful misconduct of the Facility Agent or the Security Agent or its respective officers or employees, the Facility Agent or the Security Agent shall be subject to a penalty at a rate equal to the then applicable Interest Rate on such amount from the date such amount should be paid to the Lenders and other Finance Parties until the date of distribution to the Lenders and other Finance Parties If the Facility Agent or the Security Agent fails to distribute such payment on the same day due to any objective reason beyond the control of the Facility Agent or the Security Agent or its respective officers or employees, the Facility Agent or the Security Agent shall discuss with the Lenders and other Finance Parties to seek appropriate solution and shall not be required to pay the penalty provided in the preceding sentence provided that if such failure is attributable to technical difficulties within the banking system in relation to the transmission of funds, the Facility Agent or the Security Agent shall use its best efforts to distribute such payment on the next Business Day 5.2 Priority of Payment If the Facility Agent or the Security Agent (as the case may be) receives a payment insufficient to discharge all the Obligations due and payable, the Facility Agent or the Security Agent (as the case may be) must apply that payment towards the Obligations in accordance with Clause 4.6 of the Facility Agreement 5.3 Pro rata Sharing The Finance Parties agree that if a Financing Party receives or recovers any amount from the Borrower or any other Person (whether by voluntary payment, realization upon security, set off or otherwise) other than through the Facility Agent or the Security Agent under this Agreement or any other Credit Documents and applies that amount to a payment due under this Agreement or any other Credit Documents, then Clause 10.2 of the Facility Agreement shall apply 5.4 Notice No later than five (5) Business Days prior to the proposed payment date of the principal and interest under the Facility Agreement, the Facility Agent shall advise each Lender of the amount and due date of such payment ARTICLE INFORMATION PROVISION (a) The Facility Agent and the Security Agent (as the case may be) shall, within two (2) Business Days after receipt of any notices, documents, statements, communications and other information under each of the Credit Documents, transmit the same to each Lender Such any notices, documents, statements, communications and other information include without limitation the following: (i) any request for prepayment from the Borrower in accordance with Clause 4.04 of the Facility Agreement; (ii) all information concerning the business operations or financial conditions of the Borrower in accordance with Clause 8.1 of the Facility Agreement; (iii) all information concerning the secured assets that are the subject of the Security Documents; and (iv) any notice given by the Borrower on the occurrence of (A) any material adverse event or Material Adverse Change and (B) any Potential Event of Default or Event of Default, in accordance with Clause 8.05 of the Facility Agreement (b) The Facility Agent and the Security Agent (as the case may be) shall advise other Lenders within two (2) Business Days after receipt of any information from a Lender including without limitation the following: (i) any notices on the illegality of the making or maintaining of any Loan by such Lender in accordance with Clause 4.3 of the Facility Agreement; and (ii) any notice received by such Lender on the occurrence of (A) any material adverse event or Material Adverse Change and (B) any Potential Event of Default or Event of Default, in accordance with Clause 8.5 of the Facility Agreement (c) At the end of every six (6) month period of the Approved Drawdown Schedule, the Facility Agent shall advise each Lender of the amounts of the Loans and the Borrower’s Cash for the Project that have factually been made ARTICLE INDEPENDENT APPRAISAL (a) Each Lender shall conduct (i) its own investigation of the financial conditions and business operations of the Borrower in connection with the making and continuance of the Loans, and the taking or not taking of any action in connection with any Credit Document, and (ii) its own appraisal of the creditworthiness of the Borrower Neither the Facility Agent nor the Security Agent shall have any duty or responsibility to provide any Lender or any Person holding the Note with any credit information or other information with respect thereto, except as expressly set forth herein (b) Neither the Facility Agent nor the Security Agent shall be responsible to any Lender for (i) any statement, information, representation and warranty in any Credit Document or in any document, certificate or other writing delivered in connection therewith or (ii) the effectiveness, validity, enforceability, legality, completeness and sufficiency of this Agreement or any other Credit Document (c) Neither the Facility Agent nor the Security Agent shall have any obligation to any party to investigate the performance or observance of any term or condition of this Agreement or any other Credit Document, or the financial condition of the Borrower or the existence or possible existence of any Potential Event of Default or Event of Default, or the collectability of amounts payable under any Credit Document ARTICLE CERTAIN ACTIONS BY THE SECURITY AGENT (a) Subject to the terms and conditions of this Agreement, the Security Agent will be required to all such acts, matters and things as may be required under the Security Documents and applicable Legal Documents including, without limitation: (i) to take possession of the Secured Documents (as defined in each of the Security Agreement for Movable Assets and Property Rights and the Security Agreement for Immovable Assets (the "Relevant Security Documents")) in accordance with Clause 2.4 of each of the Relevant Security Documents; (ii) to hold and apply compensation (monetary or otherwise) upon cancellation of the Secured Documents (as defined in each of the Relevant Security Documents) in accordance with Clause 2.6 of each of the Relevant Security Documents; (iii) to give approval (upon instructions of the Majority Lenders) on surrender of the Secured Documents (as defined in each of the Relevant Security Documents) in accordance with Clause 2.13 of the Security Agreement for Movable Assets and Property Rights and Clause 2.9 of the Security Agreement for Immovable Assets, and deliver the same to the Borrower; (iv) to receive evidence that such registrations and all other acts and formalities in relation to registration of Security Arrangements as required by Clause 4.1 of each of the Relevant Security Documents have been made and performed; and (v) to enforce the Secured Assets (as defined in each of the Relevant Security Documents) in accordance with Article of the Security Agreement for Movable Assets and Property Rights and Article of the Security Agreement for Immovable Assets, including among others to issue a Foreclosure Notice (as defined in each of the Relevant Security Documents), valuate, sell, assign, lease or otherwise dispose of the Secured Assets (as defined in each of the Relevant Security Documents) in accordance with applicable Legal Documents, and to apply enforcement proceeds (b) The Security Agent will be required to any other such acts, matters and things as may be required under the Security Documents ARTICLE REPRESENTATIONS AND WARRANTIES Each Finance Party hereby represents and warrants that (i) it has full power and authority to execute, deliver and perform each Credit Document to which it is a party and (ii) each Credit Document to which it is a party is its valid and binding obligation enforceable against it in accordance with its terms ARTICLE 10 MISCELLANEOUS 10.1 Notices (a) Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing and sent by (i) post mail, (ii) hand-delivery or (iii) fax or email (with originals mailed within two (2) Business Days thereafter) at the address specified below: for the Facility Agent: for the Security Agent: for the Lenders: or at such other address as shall be designated by such party in a written notice to the other (b) All notices and communications shall be effective immediately upon receipt (i) from the post office, (ii) by hand-delivery or (iii) via fax or email, by the intended recipient at the address or at the fax number or via email address specified in paragraph (a) above (c) Each party shall from time to time notify the Facility Agent of any changes of its address, telephone number, fax number or email address and the Facility Agent shall within five (5) Business Days thereafter notify the other parties accordingly 10.2 Benefit of Agreement This Agreement shall be binding upon the respective successors and permitted assigns or permitted transferees of the parties hereto and such successors, permitted assigns or permitted transferees are entitled to the benefits hereof 10.3 Governing Law and Forum (a) This Agreement and the rights and obligations hereunder shall be construed in accordance with and be governed by the laws of Vietnam (b) Any dispute arising out of or relating to this Agreement shall be resolved at the competent courts of Vietnam Nothing contained in the preceding sentence, to the fullest extent permitted by applicable Legal Documents, limits the right of a Financing Party to initiate any other proceedings against other Finance Parties in any other dispute resolution forum in Vietnam 10.4 Amendments (a) This Agreement and any terms hereof may be changed, amended or terminated only if such change, amendment or termination is made in writing and signed by the Facility Agent, the Security Agent and all the Lenders (b) Notwithstanding the foregoing sentence, with respect to issues required for instructions of the Majority Lenders, an amendment to any term of this Agreement only as a result of such instructions by the Majority Lenders may be made in writing and signed by the Majority Lenders only and any such amendment will be binding on all parties to this Agreement The Facility Agent may effect, on behalf of any Financing Party, any amendment permitted by this Clause (c) An amendment which relates to the rights and obligations of the Facility Agent or the Security Agent (as the case may be) may not be effected without the consent of Facility Agent or the Security Agent (as the case may be) 10.5 Severability Every provision and each part thereof contained in this Agreement shall be severable and distinct from the other provisions If any provision is invalid, illegal or unenforceable under the laws of Vietnam, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected 10.6 Language; Originals (a) This Agreement shall be executed in ( ) originals in English which shall have the equal validity (b) Terms defined in Clause 1.1 are set forth in alphabetical order in English of this Agreement 1.7 Effective Date This Agreement shall come into effect from the date hereof ARTICLE 11 GOVERNING LAW The transactions contemplated in this Agreement and the other Credit Documents are governed and permitted by: (1) Civil Code issued by the National Assembly dated June 14, 2005; (2) Law No 47/2010/QH12 on Credit Institutions issued by the National Assembly date June 16, 2010; (3) Circular No 42/2011/TT-NHNN on Extension of Syndicated Credit by Credit Institutions to Customers issued by the SBV on December 15, 2011; (4) Decision No 1627/2001/QD-NHNN promulgating the Regulations on Lending by Credit Institutions to Customers issued by the Governor of the SBV dated December 31, 2001 (as amended by Decision No 28/2002/QD-NHNN issued by the Governor of the SBV on January 11, 2002, Decision No 127/2005/QD-NHNN issued by the Governor of the SBV on February 3, 2005, and Decision No 783/2005/QD-NHNN issued by the Governor of the SBV dated May 31, 2005); (5) Circular No 37/2012/TT-NHNN on Provision of Foreign Currency Loans by the Credit Institutions and Foreign Bank Branches to Customers Being Residents issued by the SBV dated December 28, 2012; (5) Decree No 163/2006/ND-CP on Secured Transactions issued by the Government on December 29, 2006 (as amended by Decree No 11/2012/ND-CP issued by the Government on February 22, 2012); and (6) other relevant Legal Documents; IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Agreement as of the date first above written as Facility Agent, Security Agent and Lender By: Name: Title as Lender By: Name: Title: ... rooms for improvement of regulations on syndicated loans For this reason, the author wishes to conduct the thesis with topic ? ?Shortcomings and recommendations for regulations on syndicated loans by. .. Vietnamese regulations on syndicated loans CHAPTER I THE CONCEPT OF SYNDICATED LOANS BY COMMERCIAL BANKS 1.1 Definition and Historical background of syndicated loans by commercial banks 1.1.1 Definition... 38 2.2.1 Regulations and practical application 38 2.2.2 Shortcomings of regulations and practical application on taking security for syndicated loan 43 SUB-CONCLUSION FOR CHAPTER