Rights and obiligations of contractors in syndicated loan agreements

DUONG PHUONG THANH NĂM 2017 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** EXECUTIVE BOARD ADVANCED PROGRAMS DUONG PHUONG THANH BACHELOR OF LAW GRADUATION THESIS RIGHTS AND OBLIGATIONS OF CONTRACTORS IN SYNDICATED LOAN AGREEMENTS BACHELOR OF LAW GRADUATION THESIS Specialization: Commercial Law School year: 2013 - 2017 2017 HO CHI MINH CITY 2017 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** EXECUTIVE BOARD ADVANCED PROGRAMS DUONG PHUONG THANH RIGHTS AND OBLIGATIONS OF CONTRACTORS IN SYNDICATED LOAN AGREEMENTS BACHELOR OF LAW GRADUATION THESIS Specialization: Commercial Law School year: 2013 - 2017 Supervisor: Dr Phan Thi Thanh Duong Student: Duong Phuong Thanh Student ID: 1353801014182 Class: High Quality Class – CLC38B HO CHI MINH CITY 2017 DECLARATION I declare that this thesis is the result of my own research, which is performed under the instruction of Dr Phan Thi Thanh Duong, ensures the honesty and complies with the rules regarding to quotation, note of reference I hereby take full responsibility for this declaration Author Duong Phuong Thanh ACKNOWLEDGEMENT I would like to whole hearty thank and express my sincere gratitude to Dr Phan Thi Thanh Duong, Lecturer of Ho Chi Minh City University of Law, Faculty of Commercial Law, for providing me with knowledge and instructing me to complete this thesis I would also like to express my deepest thanks and appreciation to my family, my friends who encourage and motivate me throughout the process of doing the thesis and throughout four years studying in University of Law This accomplishment would have not possible without the constant support from them Author ABBREVIATION Abbreviation Civil Code 2005 Civil Code 2015 Law on Credit Institutions Law on Commercial Explanation Civil Code (No 33/2005/QH11) dated on June 14th, 2005 Civil Code (No 91/2015/QH13) dated on November 24th, 2015 Law on Credit Institutions (No.47/2010/QH12) dated on June 16, 2010 Law on Commercial No 36/2005/QH11 dated June 14, 2005 Circular No 24/2016/TT-NHNN dated June 30, 2016 amending, supplementing several articles of Circular No 24/2016/TTNHNN Circular No 39/2016/TTNHNN Circular No 09/2015/TTNHNN Circular No 42/2011/TTNHNN Circular No 42/2011/TT-NHNN dated December 15, 2011 by the Governor of the State Bank of Vietnam on co-financing for clients by credit institutions Circular No 39/2016/TT-NHNN dated December 30, 2016 regulating lending by credit institutions and foreign bank branches to customers Circular No 09/2015/TT-NHNN regulating debt purchase and sale by credit institutions and foreign bank branches Circular No 42/2011/TT-NHNN dated December 15, 2011 regulating provision of co-financing for clients by credit institutions TABLE OF CONTENT CHAPTER I CONCEPTS OF THE SYNDICATED LOANS AND SYNDICATED LOAN AGREEMENTS 1.1 1.2 Overview of the syndicated loans 1.1.1 Definition of syndicated loans 1.1.2 Types of syndication 1.1.3 Process of Syndicated loans 10 1.1.4 Roles of syndicated loans 13 Overview of syndicated loan agreements 17 1.2.1 Definitions of syndicated loan agreements 17 1.2.2 Types of facility 18 1.2.3 Subjects of syndicated loan agreements 21 1.2.4 Contents of syndicated loan agreements 25 CONCLUSION OF CHAPTER 30 CHAPTER PROVISIONS OF RIGHTS AND OBLIGATIONS OF CONTRACTORS IN SYDICATED LOAN AGREEMENTS 31 2.1 2.2 Rights and obligations of lenders 31 2.1.1 Rights and obligations of administrative lenders 31 2.1.2 Rights and obligations of co-lenders 41 2.1.3 Arising issues in the relationship among lenders 43 Rights and obligations of borrowers 51 2.2.1 Rights and obligations of borrowers 51 2.2.2 Arising issues in the relationship among lenders and borrowers 54 CONCLUSION OF CHAPTER 59 CONCLUSION 60 INTRODUCTION Rationale The economy of Vietnam is developing and extending due to the contribution of numerous investment projects, production and business carrying out by foreign and domestic investors in the great number of fields To execute economic projects effectively and stably, the role of credit institutions in providing capital through lending activity is considerably essential, so as to encourage investors to enhance the projects and impulse the progress of investment However, lending activity is very complicated, risky and competitive Therefore, this activity requires the close control of the State Bank and the limitation of credit extension in order to protect the banking activity in particular and the economy in general To tackle the high demand of capital of investors as well as to comply with the regulation on credit extension limits of credit institutions, syndicated loan is a useful solution With loan syndication, a large number of credit institutions and foreign bank branches could participate in loaning to one project of one client In most cases, when only one bank carries out the lending, it will be easier to suffer the risks if the borrower cannot repay the debt Syndicated loans would solve the demand of sharing risks among lenders in lending activity, improve their reputation and maintain the relationship with customers as well as extend the lending markets Furthermore, in the opening economy where encourages the integration with international organizations, loan syndication is an important tool to connect domestic credit institutions to foreign credit institutions and bank branches, create the corporation and together develop banking activity Hence, this action would bring not only the profits but also the experience to domestic investors Syndicated loan is not the new form in lending activity It is regulated the first time in Decision No 154/1998/QĐ-NHNN14 by the governor of State Bank promulgating the regulation on co-finance by credit institutions in 1998 and amended in several stages The last documents in effect are Circular No 42/2011/TT-NHNN dated December 15, 2011 regulating provision of co-financing for clients by credit institutions (“Circular No 42/2011/TT-NHNN”) and Circular No 24/2016/TT-NHNN dated June 30, 2016 amending, supplementing several articles of Circular No 42/2011/TT-NHNN dated December 15, 2011 by the Governor of the State Bank of Vietnam on co-financing for clients by credit institutions (“Circular No 24/2016/TT-NHNN”) However, there is no provision on rights and obligations of contractors in syndicated loan agreement which leads to the fact that several shortcomings and conflicts arising in the relationship among contractors in practice still cannot be solved Therefore, the author decided to choose the topic “Rights and obligations of contractors in syndicated loan agreement” in order to indicate the rights and obligations of lenders and borrower in syndicated loan agreement, analyze arising issues in the relationship of contractors, and provide improving solutions on the basis of reference to foreign law and practical syndicated loan agreements With this research, the author hopes that parties taking part in syndicated loan agreements will understand more about their rights and responsibilities in loan syndication, avoid conflicts, reduce risks and improve the efficiency of lending activity in Vietnam Background overview In the scope of Ho Chi Minh University of Law, there are several graduation theses mentioning legal issues with regard to syndicated loans, such as “Cho vay theo quy chế đồng tài trợ - Thực trạng pháp luật số giải pháp hoàn thiện” (Translated: Loans on co-financing – legal practical issues and several improving solutions) of Trinh Thu Nga in 2003 The scope of this thesis mentions the legal practical issues arising from co-financing activities of credit institutions and improving solutions relating to co-financing activities However, the legal basis applied in this graduation thesis which is Decision No 286/2002/QD-NHNN dated 03/04/2002 issuing the regulation on co-financing by credit institutions (“Decision No 286/2002/QD-NHNN”) was expired The most recent thesis is “Quy định pháp luật cho vay hợp vốn ngân hàng thương mại” (Translated: Regulation on syndicated loans by commercial banks) in 2014 of Dang Thi Luyen which concentrates on the research of legal issues regarding to syndicated loans by commercial banks, indicates arising issues in this activity and provides improving solutions However, this thesis is still in general Also, the legal bases applied in this master thesis including Circular No 42/2011/TT-NHNN was amended and supplemented by Circular No 24/2016/TTNHNN; Decision No 1627/2011/QĐ-NHNN on issuing regulation on lending by credit institutions to clients was expired on 15/03/2017 and replaced by Circular No 39/2016/TT-NHNN prescribing lending transactions of credit institutions and/or foreign bank branches with customers (“Circular No 39/2016/TT-NHNN”); and Civil Code No 33/2005/QH11 dated June 14, 2005 (“Civil Code 2005”) was expired and replaced by Civil Code No 91/2015/QH13 dated on November 24, 2015 (“Civil Code 2015”) which was valid from 01/01/2017 Hence, several improving solutions given by this thesis are not feasible to put in practice Moreover, the rights and obligations as well as the relationship of contractors in syndicated loan agreements are not in the scope of this thesis In Vietnam, there are several documents relating to syndicated loans, such as “Mở rộng hoạt động tín dụng đầu tư Ngân hàng phát triển Việt Nam thơng qua tín dụng hợp vốn ngân hàng thương mại” (Translated: Extending credit investment activity of The Vietnam Development Bank through syndicated loans of commercial banks), master thesis of Lam Anh Nguyet in 2012; or “Giải pháp mở rộng cho vay đồng tài trợ ngân hàng thương mại địa bàn Thành phố Hồ Chí Minh” (Translated: Extending solutions of co-financing of commercial banks in Ho Chi Minh City), master thesis of Tran Thi Thu in 2005 These two theses mainly focus on the analysis of syndicated loans in the aspect of economy and not have the profound insight into the legal aspect Also, there are many books and journals that can be taken into account, comprising:  Nguyen Thi Mui (2000), Quản lý rủi ro cho vay hợp vốn (Translated: Risk management in syndicated loans);  Hong Linh (2001), Giải pháp phát triển phương thức cho vay hợp vốn nước ta (Translated: Solutions to develop the procedure of syndicated loans in our country);  Truong Thi Hong (2012), Giải pháp để phát triển cho vay hợp vốn Việt Nam (Translated: Solutions to develop syndicated loans in Vietnam);  Nguyen Hong Nang (2016), Thị trường vốn nợ: Luật hợp đồng (Translated: Capital market – Law and contract) There are a great number of foreign research documents regarding to syndicated loans that can be referred, such as:  Benjamin C Esty and William L Megginson (2002), Creditor rights, enforcement, and debt ownership structure: Evidence from the global syndicated loan market;  Jim Armstrong (2003), The Syndicated Loan Market: Developments in the North American Context;  Andrew Fight (2004), Syndicated lending, Essential Capital Markets;  Agasha Mugasha (2007), The Law of Multi-bank Financing: Syndicated Loans and the Secondary Loan Market;  Frank J Fabozzi (2008), Handbook of Finance, Financial Markets and Instrument;  Gary A Goodman and Jonathan D Jacobs (2014), United States: Special Problems Of Syndicated Loans;  Loan Market Association (2013), Guide to Syndicated Loans & Leveraged Finance Transactions;  Phillips Lytle LLP (2014), The risks and rewards of multiple lender financings: loan participations and syndicated loans;  Sean Ross (2015), How risky is a syndicated loan for the lender? In conclusion, the above documents provide helpful information with regard to the overview of syndicated loans and the rights and obligations of contractors in syndicated loan agreement which supports the author in the process of doing the research Research objectives This thesis is performed in order to achieve following aims:  Analyzing and indicating the rights and obligations of contractors in syndicated loan agreements;  Analyzing arising issues in the relationship among lenders and borrower in practice on the basis of domestic and foreign documents;  Providing solutions to improve the law on loan syndication so as to impulse syndicated loan activity in Vietnam and protect the interests of contractors in syndicated loan agreements Subjects and scope of research The thesis “Rights and obligations of contractors in syndicated loan agreements” concentrates on the rights and obligations of contractors in syndicated loan agreements as well as arising issues in the relationship among lenders and 51 the author‟s perspective, such provision is sensible as long as the performance of debt seller and debt purchaser does not violate the regulation In case of changing lenders, the alteration of administrative lenders by purchasing and selling debt is more complicated as in loan syndication, the responsibilities of administrative lenders are extremely important Therefore, to be the new administrative lender, the investor needs not only to purchase the debt at a high proportion but also to satisfy the conditions to become an administrative lender prescribing in syndicated loan agreement Also, the contents regulated in debt purchase and sale agreement must not be opposed to the contents stipulated in syndicated loan agreement110 One more issue should be considered is that whether administrative lenders or co-lenders have the priority to purchase the debt sold by their member before it is offered in the secondary market or not The author supports this priority as purchasing and selling in the scope of contractors in syndicated loan agreement would facilitate members‟ capital increase, reduce the procedure for admitting new lenders and avoid arising conflicts between new lenders and existing lenders Therefore, the legislators should consider supplementing this priority of existing lenders in the provision on purchase and sale of the debt from syndicated loan of Circular No 09/2015/TT-NHNN 2.2 Rights and obligations of borrowers 2.2.1 Rights and obligations of borrowers To be granted a syndicated loan, the borrower has to satisfy all the conditions for borrowing111 below:  The client is a legal entity with civil legal capacity as prescribed by law Or the client is an individual aged 18 years or more with full capacity for civil acts as stipulated by law, or aged from 15 to below 18 years and his or her capacity for civil acts is not restricted or has not been lost pursuant to law;  There is a requirement for a loan to use for a lawful purpose;  There is a feasible capital utilization plan;  The client has the financial capacity to repay the loan 110 111 Article 15.1 Circular No 09/2015/TT-NHNN Article Circular No 39/2016/TT-NHNN 52 Also, the borrower‟s case must be one of cases applying co-financing under Vietnamese law112, including:  A request by a client for issuance of credit to implement a project exceeds the legal limits on extension of credit by a credit institution;  The financial capability and capital sources of any one credit institution are insufficient to satisfy the request for project financing  Any one credit institution needs to share the risks  A client wishes to raise capital from a number of different credit institutions in order to implement a project  Credit institutions provide co-financing for important projects pursuant to instructions from the Government Rights and obligations of the borrower in syndicated loan agreement are almost similar to normal loan agreement Requiring disbursements, receiving information relating to the syndicated loan and prepaying debt are three basic rights of the borrower When the borrower has a requirement to disburse the loan, he can inform to the administrative lenders in accordance with utilization schedule in advance and the notification should specify the sum of money required and the utilization date According to that, syndicate lenders have to disburse the proposed loan to the borrower in full and in time Receiving information regarding to the loan is one of the crucial rights that the borrower should consider and negotiate with lenders in syndicated loan agreement so as to ensure his benefits and following up the whole lending process For instance, the borrower should be informed about infringements of lenders, changing of lenders and/or any influence on the borrower immediately in order to have timely measures to avoid any damage or adverse effect relating to the loan Moreover, the borrower may prepay the loan at any time Based on the agreement among contractors, most lenders allow the borrower to prepay the outstanding balance of a loan at any time without a fee, but some lenders charge a prepayment penalty, often about 2% of the amount borrowed There are many reasons that borrower may prepay loan, such as the borrower might receive a bonus or other lump sum of money that can be used to pay the loan back, or the borrower 112 Article of Circular No 42/2011/TT-NHNN 53 might also decide to use savings to pay off debt rather than having interest accrue each month Another common reason for prepaying loan is the ability to refinance at lower rates However, before deciding to perform prepayment, the borrower should consider and calculate carefully the penalty cost in this circumstance Prepaying debt should also be taken into account as the borrower‟s responsibility if there is a breach or event of default leading to the prepayment that both lenders and borrower already stipulated in syndicated loan agreement For an instance, in the event that the borrower does not utilize the facility for the right purpose as stated in the loan agreement, the lenders have the right to recover the loan from the borrower before the maturity date Making on-time payments, registering security and informing events of default are primary responsibilities that the borrower needs to perform in syndicated loan agreement Payment method and term is agreed by contractors before signing the loan agreement The borrower has to repay not only the loan but also the interest and fees on the loan Due to the specific characteristics of loan syndication, the borrower must pay the mandate fee for administrative lenders who have performed additional work and/or taken on greater responsibility in the loan process Registering security is a beneficial step to protect syndicate lenders in the event that the borrower cannot repay the debt In most cases, secured loans are preferred if the borrower does not have a perfect credit rating; however, interest rate for secured loan can be relative low and the borrower may repay the loan in long time period Finally, the borrower is obliged to inform events of default to the lenders as an event of default is an action or circumstance that causes a lender to demand full repayment of an outstanding balance sooner than it was originally due Normally in many loan agreements, the lender will include a contract provision covering events of default to protect itself in case it appears that the borrower will not be able to or does not intend to continue repaying the loan in the future An event of default enables the lender to seize any collateral that has been pledged and sell it to recoup the loan Therefore, informing events of default to the lenders are necessary, especially in the case of syndicated loan where exists the number of lenders participating with the large amount of money The indication above is the fundamental rights and obligations of the borrower that should be highlighted in syndicated loan agreement Based on the 54 agreement among contractors, the borrower may perform additional responsibilities (such as buying insurance for security, committing confidentiality, or keeping in touch with administrative lenders) or receive further rights (such as restructuring repayment period, or receiving payment documentation) 2.2.2 Arising issues in the relationship among lenders and borrowers 2.2.2.1 Security Security for syndicated loan is performed in compliance with law on secured transaction113 Unlike normal transaction, loan syndication has a complex loan structure with the great number of lenders and the high value of loan, therefore the current legal basis regarding to security in syndicated loan cannot solve several arising issues and mostly, the issues will be tackled in accordance with the loan agreement of contractors As syndicated loan is formed on the basis of small proposed loan of each lender, thus it is suggested that collateral securities should be utilized to secure for the whole syndicated loan (general security) instead of each lender receives collateral separately for its proposed loan (particular security) The borrower only needs to work directly with the security agent, who is on behalf of all lenders to receive and manage the collateral securities, which leads to the fact that the borrower can save his time and cost on security procedure Moreover, by this way, syndicate lenders can consent on all aspects of security, such as collateral appraisal, collateral disposal On the other hand, securing for each proposed loan can waste time of the borrower as he has to negotiate with each lender until approaching all agreements and may increase the total of collaterals submitted Thus, the provision on security asset for co-financing114 allowing contractors to appoint a security agent for receipt of security assets and to be liable in managing, monitoring and disposing security assets on behalf of syndicate lenders is reasonable and progressive, in order to have the unanimity of all syndicate lenders, reduce conflicts of contractors and protect benefits of the borrower However, this provision is not binding contractors to mandate for only one representative to administer collateral securities Therefore, in some cases, contractors still have more than one representative which causes difficulties and inconvenience for the borrower in security procedure With regard to collateral disposal, if the whole 113 114 Decree No 163/2006/ND-CP dated December 29, 2006 on secured transaction Article 13.2 Circular No 42/2011/TT-NHNN 55 syndicated loan is secured generally, the security agent, on behalf of syndicated lenders, disposes collateral securities in accordance with the disposal method agreed by all lenders Subsequently, the security agent has the responsibility to assign the debt recovered to each lender By this way, the disposal process will be carried out promptly and effectively to ensure the interests of syndicate lenders Another issue relating to security is that whether foreign bank branches participating in loan syndication have the right to receive land use right as collateral security from the borrower or not Under Vietnamese law on land, foreign bank branches are not allowed to receive land use right via mortgage Therefore, foreign bank branches taking part in loan syndication cannot take land use rights as collaterals if they directly perform secured transaction with the borrower or be the security agent To solve this issue, normally in practice, foreign bank branch needs a local bank to act as a guarantee for the borrower if performing particular security in loan syndication By this way, the local bank will perform secured transaction directly with the borrower, receive land use right as collateral, as well as dispose the security The foreign bank branch only concerns about recovering debt from a local bank in case the borrower cannot repay the loan On the other hand, in the event that the whole syndicated loan is secured generally and the security is managed by the local security agent, land use rights become collateral securities when foreign bank branches are syndicated members As in this case, foreign bank branches will not receive land use right but select the local bank to act as the security agent and be responsible for collateral securities Thus, after the stage of disposal, what foreign bank branches receive will be the payment tantamount to their proposed loan The solutions provided above are just temporary because in the event that local banks hesitate to be the guarantee for such risky transaction as syndicated loan or the syndication has no local banks participating to be the security agent, land use rights will not be accepted as security collaterals of foreign bank branches Therefore, in the author‟s perspective, Vietnamese law should have the mechanism to directly alter this issue Referring to the definition of security trustee in English law, a security trustee is the entity holding the various security interests created on trust115 115 “A trust can be used as a means of holding security over assets of a debtor for a number of creditors, for example, in a syndicated loan or a secured transaction A security trustee is the entity holding the various security interests created on trust for the various creditors, such as banks or bondholders.” according to 56 for the various creditors, which means that in this circumstance, the local bank becomes the security trustee to hold the secured assets created on trust for foreign bank branches By this way, the loan syndication does not need a local bank to be its member and act as a security agent as foreign bank branches can select any local bank to be the security trustee to conduct the work regarding to the security and pay him trust fee Moreover, the risk of being the security trustee comparing to the risk of being the guarantee is significantly reduced because it is shared with foreign bank branches Hence, the author suggests that the law on co-financing should create the definition of security trustee in Vietnam so as for foreign bank branches to easily receive land use rights as collaterals from the borrower via the local bank (security trustee), for the local bank to gain more profit through entrustment This is also a way to encourage foreign bank branches to increase and develop their lending activity in the domestic capital market The security agent in Vietnamese law The security trustee in English law Duty Receiving and managing the security in syndicated loan Appointment The member [lender] in loan The member [lender] in syndication Relationship with Representative or Authority116 syndicate lenders loan syndication or not Trust 2.2.2.2 Interests and fees Contractors in syndicated loan agreement can agree to apply fixed interest rate or floating interest rate The items to be agreed on the interest rate provision for a loan comprise both such interest rate and the method of calculating interest on the loan This provision also stipulates the interest rate which is applicable to overdue principal debt and late payment of interest In accordance with Vietnamese law, if on maturity for payment the client has not repaid or repaid in full the principal Thomson Reutors Pratical law, https://uk.practicallaw.thomsonreuters.com/1-1077234?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1, access on July 03, 2017 116 Article 13.2 Circular No 42/2011/TT-NHNN 57 and/or loan interest as agreed, then the client must pay loan interest as follows117: (a) interest on the principal debt at the loan interest rate agreed, and corresponding to the period of the loan term for which the loan was not repaid when it fell due; (b) a client who fails to pay on time the interest prescribed in sub-clause (a) above must pay interest on late payment at the rate agreed by the CI and the client but not exceeding ten per cent (10%) per annum calculated on the amount of interest for late payment for the period of late payment; (c) if the debt is transferred to overdue debts, then the client must pay interest on the overdue debt for the period for which payment was late, and such interest rate shall not exceed one hundred and fifty per cent (150%) of the interest rate applicable as at the time of transferring the debt to overdue debts In loan syndication, all lenders can agree to apply the same interest rate on the loan which is calculated based on the average interest rate of all syndicate lenders or decided by administrative lenders However, in several cases, each lender decides to apply its own interest rate on its proposed loan which may cause the disorder in loan process and the difficulty in loan management, create unfair competitive practices among lenders, affect the benefits of the borrower and lose the essence of syndicated loan As in this circumstance, the payment agent, on behalf of lenders, receive the repayment including principal debt, interest and fees and it will be very difficult for him to avoid mistakes in calculating and recovering numerous payments with different amounts of each lender Also, the borrower may meet an obstacle in checking all figures if there are too many payments carried out at the same time Moreover, unfair competition may easily take place when the disparity of interest rates of lenders is considerable Therefore, applying the same interest rate among lenders in loan syndication is an effective way to solve the above shortcomings Under Vietnamese law on co-financing, any fee payments shall be agreed by the borrower and the lenders provided that such agreement must be consistent with Vietnamese law In 2017, the State Bank Vietnam issued Circular No 39/2016/TTNHNN including the provision on fees regarding to lending activities This new circular has solved the shortcoming in the former circular118 which only regulates 117 Article 13.4 Circular No 39/2016/TT-NHNN Circular No 05/2011/TT-NHNN dated March 10, 2011 regulating collection of loan fees by credit institutions from clients 118 58 fees collected by onshore credit institutions Thus it is more advantageous for foreign bank branches to participate in loan syndication and receive reasonable fees in Vietnam According to Article 14 of Circular No 39/2016/TT-NHNN, the credit institutions (consisting of onshore credit institutions and foreign bank branches) and the client shall reach agreement on collection of charges relevant to lending activities, comprising: (i) prepayment fee; (ii) fee for a standby credit line (facility); (iii) arrangement fee for a syndicated loan; (iv) drawdown commitment fee; and (v) other specific fees However, this provision is generally applied for a normal loan With regard to syndicated loan, arrangement fee is the only one charge prescribed in the regulation, on the other hand, in practice, the borrower has to pay other fees such as agent fee, management fee, extension fee, or fee for changing utilization schedule Although there are several specific fees in syndicated loan being reasonably received by the lenders, in some cases, the lenders may intentionally collect unnecessary fees to gain their profits and limits several rights of the borrower In conclusion, the law on co-financing should have a provision which prescribes the fees charged by the lenders in loan syndication in order to avoid unreasonable costly fees and protect the interests of the client 59 CONCLUSION OF CHAPTER Chapter 2, which is the main theme of the thesis, focuses on the analysis of rights and obligations of contractors in syndicated loan agreements as well as arising issues in the relationship among lenders and borrower In the first content, the author indicates the rights and obligations of lenders including administrative lenders and co-lenders prescribed in the law on co-financing and practical syndicated loan agreements In addition to the foreign cases, the author compares to Vietnamese law and provides several points that contractors should notice when participating in syndicated loan agreements, improving solutions for domestic law on the basis of referring to foreign regulations Furthermore, the author classifies administrative lenders into four main types: (i) arranger; (ii) facility agent; (iii) payment agent; and (iv) security agent and indicated the rights and duties of each agent Especially, arising issues in the relationship among lenders are considered and analyzed in this part, comprising sharing clause and pro rata, decision-making and changing lenders which have not been regulated in the law on co-financing In the second chapter, the rights and obligations of the borrower in syndicated loan agreements are represented Also, the author chooses two salient issues with regard to the relationship among lenders and borrower to indicate, comprising: security; interests and fees, thereby specifying shortcomings in current law and giving improving solutions 60 CONCLUSION In company with the development of the economy, especially in the field of investment, the high demand of capital for major projects is raising and loan syndication is formed as a necessary method for investors to be provided with large loan exceeding the limitation of credit extension of one lender and for lenders to share high risks As syndicated loan agreement normally has the number of parties involving, the rights and obligations of each contractor as well as the relationship among them should be specified However, the current law on co-financing has not been regulated these issues which leads to the fact that several shortcomings still cannot be tackled Therefore, in the thesis “Rights and obligations of contractors in syndicated loan agreements”, the author concentrates on the analysis of rights and obligations of parties participating in loan syndication, arising issues in the relationship among lenders and borrower and provides solutions to improve the current law This thesis consists of two chapters: (i) Concepts of syndicated loans and syndicated loan agreements; and (ii) Provisions of rights and obligations of contractors in syndicated loan agreements In Chapter 1, the author introduces the overview of syndicated loans for the purpose of providing the general sight of this form of lending, and showing the importance of loan syndication to the economic development The overview of syndicated loan agreements is also represented in this chapter in order to create the grounds for further research in Chapter with regard to the rights and obligations of contractors in syndicated loan agreements and their relationship In Chapter 2, the author analyzes the rights and obligations of parties taking part in syndicated loan agreements and arising issues in the relationship among lenders and borrower basing on the comparison of English law and Vietnamese law and the reference of practical syndicated loan agreements Unlike normal loan agreements, the lenders in loan syndication are classified into administrative lenders (comprising arranger, facility agent, payment agent and security agent) and colenders Therefore, the relationship among administrative lenders and co-lenders and the relationship among lenders and borrower are complicated To solve the arising issues in their relationships as well as the shortcomings in current law, improving solutions are provided in each section of Chapter 61 In conclusion, with this thesis, the author analyzes and clarifies the rights and obligations of contractors in syndicated loan agreements with the desire to reduce the conflicts arising in their complicated relationships, improve the regulation on loan syndication and develop this form of lending in practice BIBLIOGRAPHY ***** A Laws and Regulations Civil Code (No 91/2015/QH13) dated on November 24, 2015 Law on Credit Institutions (No.47/2010/QH12) dated on June 16, 2010 Law on Commercial No 36/2005/QH11 dated June 14, 2005 Decree No 163/2006/ND-CP dated December 29, 2006 on secured transaction Circular No 24/2016/TT-NHNN dated June 30, 2016 amending, supplementing several articles of Circular No 42/2011/TT-NHNN dated December 15, 2011 by the Governor of the State Bank of Vietnam on cofinancing for clients by credit institutions Circular No 39/2016/TT-NHNN dated December 30, 2016 regulating lending by credit institutions and foreign bank branches to customers Circular No 09/2015/TT-NHNN regulating debt purchase and sale by credit institutions and foreign bank branches Circular No 42/2011/TT-NHNN dated December 15, 2011 regulating provision of co-financing for clients by credit institutions Circular No 05/2011/TT-NHNN dated March 10, 2011 regulating collection of loan fees by credit institutions from clients 10 Decision No 286/2002/QĐ-NHNN dated April 03, 2002 on issuing the regulation on co-financing by credit institutions B  Reference Materials Vietnamese Materials Truong Thi Hong (2012), Giải pháp để phát triển cho vay hợp vốn Việt Nam (Translated: Solutions to develop syndicated loans in Vietnam), Monetary Finance Market Magazine 10(355), page 22-26 Ho Chi Minh University of Law (2011), Banking law Textbook, Ho Chi Minh National University Publisher Dang Thi Luyen (2014), Quy định pháp luật cho vay hợp vốn ngân hàng thương mại (Translated: Regulation on syndicated loans by commercial banks), Master thesis, Ho Chi Minh City University of Law Nguyen Hong Nang (2016), Thị trường vốn nợ: Luật hợp đồng (Translated: Capital market – Law and contract), Industry and Trade Publisher Trinh Thu Nga (2003), Cho vay theo quy chế đồng tài trợ - Thực trạng pháp luật số giải pháp hoàn thiện” (Translated: Loans on co-financing – legal practical issues and several improving solutions), Bachelor thesis, Ho Chi Minh City University of Law  Foreign materials Agasha Mugasha (2007), The Law of Multi-bank Financing: Syndicated Loans and the Secondary Loan Market, Oxford University Press Andrew Fight (2004), Syndicated lending, Essential Capital Market, Butterworth-Heinemann Denis Petkovic (2008), Arranger liability in the Euro markets, Banking Law Journal Frank J Fabozzi (2008), Handbook of Finance, Financial Markets and Instruments Group legal department royal bank of Canada, Illegality clauses under syndicated loan agreement, International Financial Law Review Jim Armstrong (2003), The Syndicated Loan Market: Developments in the 10 North American Context, Bank of Canada Lionel Melka, Amit Shabi (2012), Merger Arbitrage: A Fundamental Approach to Event-Driven Investing, Wiley Publisher Latham & Watkins LLP, The Book of Jargon - European Capital Markets and Bank Finance, Latham & Watkins LLP Latham & Watkins LLP (2014), The Book of Jargon: US Corporate & Bank Finance, Latham & Watkins LLP Toluwani Ajayi, Margaret Sosan, Solving issues of default under syndicated 11 12 loan, Transactions: A detailed legal analysis Bristol and West Building Society v Mothew [1996] Hedley Byrne & Co Limited v Heller & Partners Limited [1963]  Internet documents Benjamin C Esty and William L Megginson (2002), Creditor rights, enforcement, and debt ownership structure: Evidence from the global syndicated loan https://papers.ssrn.com/sol3/papers.cfm?abstract_id=320226 market, Charlotte Winter (2014), Australia: The role of the security trustee in a syndicated loan transaction, http://www.mondaq.com/australia/x/331544/Trusts/The+role+of+the+security +trustee+in+a+syndicated+loan+transaction Curtis, Mallet-Prevost, Colt & Mosle LLP (2011), Transfer by lenders under syndicated loan agreements, http://www.lexology.com/library/detail.aspx?g=b41fda6c-31be-4920-b0304d46f6cf2efd Dawn Tong, Sharing clauses in loan syndication documentation, http://www.lawgazette.com.sg/2002-2/Feb02-focus3.htm David J.Seipp (Boston University), Trust and fiduciary duty in early common law, www.bu.edu/law/journals-archive/bulr/documents/seipp.pdf Dentons (2014), Special problems of syndicated loans, https://www.dentons.com/en/insights/articles/2014/april/14/special-problemsof-syndicated-loans 10 11 Financial Web, The types of syndicated loans, http://www.finweb.com/loans/the-3-types-of-syndicatedloans.html#axzz4h6q9FKU1 Joe Stone, What Is a Promissory Note and Security Agreement?, http://smallbusiness.chron.com/promissory-security-agreement-70210.html Loan Market Association, A guide to syndicated loans & leveraged finance transactions, http://www.lma.eu.com/application/files/1614/7749/3386/LMA_Guide_to_Sy ndicated_Loans.pdf Magee, ECDI, Syndicated Loans Law and Legal Definition, https://definitions.uslegal.com/s/syndicated-loans/ Norges Bank Investment Management, Discussion note on syndicated loans, https://www.nbim.no/en/transparency/news-list/2014/discussion-note-onsyndicated-loans/ 12 13 Oman (2012), Types of loan agreements: revolving credit facilities, http://www.lexology.com/library/detail.aspx?g=9112c1eb-ad56-43ab-a3d69ce5ea3b51fa Phillips Lytle LLP (2014), The risks and rewards of multiple lender financings: loan participations and syndicated loans, http://www.lexology.com/library/detail.aspx?g=2f1b5567-fdf3-483f-982d1fb41a6d9810 14 15 Pro rata, http://www.investopedia.com/terms/p/pro-rata.asp#ixzz4k3xpW5FJ Sean Ross, How risky is a syndicated loan for the lender?, 16 http://www.investopedia.com/ask/answers/070815/how-risky-syndicated-loanlender.asp Thomson Reuters Practical law, Commitment fee, 17 https://uk.practicallaw.thomsonreuters.com/5-3824214?originationContext=document&transitionType=DocumentItem&context Data=(sc.Default)&firstPage=true&bhcp=1 Thomson Reutors Pratical law, Security trustee, https://uk.practicallaw.thomsonreuters.com/1-1077234?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhc p=1 18 Yueqin (Cathy) Wu, Overview of syndicated loans, http://www.lexology.com/library/detail.aspx?g=d3cfd2c1-7887-4184-9945b1e50966407d ... CONCEPTS OF THE SYNDICATED LOANS AND SYNDICATED LOAN AGREEMENTS 1.1 Overview of the syndicated loans 1.1.1 Definition of syndicated loans Syndicated loans have become an increasingly important part of. .. the interests of contractors in syndicated loan agreements Subjects and scope of research The thesis ? ?Rights and obligations of contractors in syndicated loan agreements? ?? concentrates on the rights. .. topic ? ?Rights and obligations of contractors in syndicated loan agreement” in order to indicate the rights and obligations of lenders and borrower in syndicated loan agreement, analyze arising issues