The Ministry of Construction (MoC) has just responded to the proposal of Thanh Hoa province voters regarding the criteria for appraising investors of social housing projects under special mechanisms.
Specifically, enterprises must meet financial safety requirements, including outstanding debt and equity ratios in accordance with current regulations. Competent authorities will evaluate submitted dossiers and financial statements to ensure compliance with laws governing credit and real estate business.
After thorough research, the MoC clarified that according to Point b, Clause 2, Article 9 of the 2023 Real Estate Business Law, enterprises engaged in real estate business must meet conditions ensuring the ratio of credit debt and corporate bond debt to equity.
Clause 1, Article 5 of Decree 96/2024/ND-CP states that real estate businesses, based on their equity and investment plans, decide on borrowing from credit institutions, issuing corporate bonds, and maintaining the debt-to-equity ratio to ensure financial safety, complying with credit and bond laws.
For real estate businesses borrowing from credit institutions or issuing corporate bonds to execute approved projects, the total outstanding loans, bond debt, and required equity must not exceed 100 per cent of the project's total investment. The total debt ratio for projects on land under 20 ha should not exceed four times the enterprise's equity, and for projects on land over 20 ha, it should not exceed 5.67 times.
The MoC emphasized that enterprises must demonstrate compliance with these conditions, while authorities will base their assessments on the documentation provided by the enterprises to ensure adherence to financial safety ratios and legal regulations.
Additionally, the ministry highlighted the responsibilities of provincial and city governments in managing real estate business activities within their jurisdictions, as stipulated in the 2023 Real Estate Business Law and Decree 96/2024/ND-CP.
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