Tiếng Việt

Legal update relating to Finance and Credit (Monthly Legal Update – 08/2018)

by | Jun 1, 2018 | Banking, EN, Legal Update | 0 comments

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 07/2018 AND 08/2018

1.1. Circular No. 27/2017/TT-NHNN amending and supplementing certain articles of the Circular No. 03/2013/TT-NHNN providing on credit information activity of the State Bank of Vietnam

  • Name of legal document: Circular No. 27/2017/TT-NHNN issued on 31/12/2018 by the Governor of the State Bank of Vietnam amending and supplementing certain articles of the Circular No. 03/2013/TT-NHNN dated 28/01/2013 of the Governor of the State Bank of Vietnam on credit information activity of the State Bank of Vietnam.

  • Effective date: 01/07/2018.

Some contents should be noted:

  • Firstly, amending and supplementing of words that defined in Article 3 of Circular No. 03/2013/TT-NHNN.

Specifically, Clause 1, Article 1 of Circular No. 27/2017/TT-NHNN stipulates: “Article 3 (Circular No. 03/2013/TT-NHNN) is amended and supplemented as follows:

1. Clause 4, Article 3[1] is amended and supplemented as follows:

“4. Borrowers include legal entities or individuals that have credit relations with credit institutions or foreign bank branches.”

1. Point a, Clause 8, Article 3[2] is amended and supplemented as follows:

“a. The companies with function of debt trading, companies of debt management and asset exploitation, companies of credit information, enterprises providing insurance services, enterprises of securities.”

1. To add Clause 12 to Article 3 as follows:

“12. Foreign credit information organizations are organizations established and operating under foreign laws on credit information.””

  • Secondly, amending and supplementing the provisions on the operation of credit information stipulated in Article 5 of Circular No. 03/2013/TT-NHNN.

Specifically, Clause 2, Article 1 of Circular No. 27/2017/TT-NHNN stipulates: “Clause 1 Article 5[3] (Circular No. 03/2013/TT-NHNN) is amended and supplemented as follows:

“1. Abiding by provisions of Law on protection of State secrets, personal secrets and other relevant law provisions when providing and exploiting credit information.””

  • Thirdly, amending and supplementing the regulations on norm groups that credit institutions, foreign banks’ branches supply for the CIC[4].

Specifically, Clause 3, Article 1 of Circular No. 27/2017/TT-NHNN stipulates: “Clause 1, Article 7[5] (Circular No. 03/2013/TT-NHNN) is amended and supplemented as follows:

“1. Credit institutions, foreign banks’ branches supply for the CIC all the credit information norm system specified in Appendix enclosed with this Circular and classified into norm groups as follows:

a) Identification information;

b) Information of credit contracts;

c) Information of credit relationship;

d) Information of account status of credit cards;

e) Information of loan security;

g) Annual financial information of the borrower being an enterprise, including the balance sheet, the report on business results and the cash flow report as prescribed by the Finance Ministry;

h) Information of bond investment in borrowers being enterprises.””

  • Fourthly, supplementing the provisions on subjects of credit information use (Clause 4, Article 1 of Circular No. 27/2017/TT-NHNN); amending and supplementing provisions on rights and obligations of the Credit Information Center (Clause 5, Article 1 of Circular No. 27/2017/TT-NHNN); amending and supplementing the provisions on rights and obligations of Credit institutions, foreign banks’ branches (Clause 6, Article 1 of Circular No. 27/2017/TT-NHNN); amending and supplementing provisions on rights and obligations of voluntary organizations joining the credit information system (Clause 7, Article 1 of Circular No. 27/2017/TT-NHNN); amending and supplementing provisions on rights and obligations of borrowers (Clause 8, Article 1 of Circular No. 27/2017/TT-NHNN).

  • Fifthly, replacing the Credit Information System Appendix issued in conjunction with Circular No. 03/2013/TT-NHNN with Appendix 1 issued in conjunction with Circular No. 27/2017/TT-NHNN.

Specifically, Clause 1, Article 2 of Circular No. 27/2017/TT-NHNN stipulates: “Replacing the Credit Information System Appendix issued in conjunction with Circular No. 03/2013/TT-NHNN with Appendix 1 issued in conjunction with this Circular.”

  • Sixthly, changing the phrase “Credit Information Center”, “The director of Credit Information Center”, “Department of Monetary statistics and Forecast” and “Credit Department”.

Specifically, Clause 3, Clause 4, Article 2 of Circular No. 27/2017/TT-NHNN stipulate:

“2. Changing the phrase “Credit Information Center” into “National Credit Information Center of Viet Nam”; “The director of the Credit Information Center” to “The director of National Credit Information Center of Vietnam” in Article 1, Article 12, Clause 1, Article 21 of Circular No. 03/2013/TT-NHNN.”

3. Changing the phrase “Department of Monetary statistics and Forecast” into “Department for Forecast and Statistics”; “Credit Department” to “Credit Department of Economic Branches” at Point b, d, Clause 2, Article 13 of Circular No. 03/2013/TT-NHNN.”

1.2. Decree No. 42/2018/NĐ-CP abolishing a number of Government Decrees in the banking

  • Name of legal document: Decree No. 42/2018/NĐ-CP issued on 12/03/2018 by Government abolishing a number of Government Decrees in the banking.

  • Effective date: 01/07/2018.

Content should be noted: Decree No. 42/2018/NĐ-CP abolished a number of Government Decrees in the banking.

Specifically, Article 1 of Decree No. 42/2018/NĐ-CP stipulates: “Abolishing a number of Government Decrees in the banking, include:

  1. Decree No. 14/CP issued on 02/03/1993 by Government promulgating the provisions on policies for production households to borrow capital for development of agriculture, forestry, fishery and rural economy.

  2. Decree No. 48/2001/NĐ-CP issued on 13/8/2001 of Government on organization and operation of People’s Credit Funds.

  3. Decree No. 69/2005/NĐ-CP issued on 26/05/2005 by Government amending and supplementing a number of articles of the Decree No. 48/2001/NĐ-CP issued on 13/8/2001 by Government on organization and operation of People’s Credit Funds.

  4. Decree No. 22/2006/NĐ-CP issued on 28/02/2006 by Government on organization and operation of foreign bank branches, joint-venture banks, banks with 100% foreign capital, and representative offices of foreign credit institutions in Viet Nam.

  5. Decree No. 59/2009/NĐ-CP issued on 16/7/2009 by Government on organization and operation of commercial banks.

  6. Decree No. 05/2010/NĐ-CP issued on 18/01/2010 by Government stipulating the application of the Bankruptcy law to credit institutions.”

1.3. Decision No. 1417/QĐ-NHNN approving simplification of business conditions under the management function of the State Bank of Vietnam

  • Name of legal document: Decision No. 1417/QĐ-NHNN issued on 09/07/2018 by the Governor of the State Bank of Vietnam approving simplification of business conditions under the management function of the State Bank of Vietnam.

  • Effective date: 09/07/2018.

Some contents should be noted:

  • Firstly, 257 business conditions under the management function of the State Bank of Vietnam are reduced, simplified. In particular, Decision No. 1417/QĐ-NHNN reduces, simplifies 84 conditions for business activities of commercial banks; 52 conditions for business activities of non-bank credit institutions; 59 conditions for business activities of cooperative banks, people’s credit funds and microfinance institutions; 8 conditions for providing intermediary payment services; 13 conditions for providing credit information services; 19 conditions of foreign exchange activities of organizations other than credit institutions; 12 conditions for gold trading; 6 conditions for printing and minting; 4 conditions for debt trading business[6].

  • Secondly, stipulating conditions for founding members and owners of foreign credit institutions of joint venture banks and banks with 100% foreign capital issued establishment and operation Licenses in Viet Nam.

Specifically, Section I.3 of the Scheme on reduction and simplification of business conditions under the management function of the State Bank (Promulgated together with Decision No. 1417/QĐ-NHNN issued on 09/07/2018) stipulates: “Conditions applicable to a founding member, owner as a foreign credit institutions (35 – 41):

  1. Not to seriously violate provisions on banking activities and other provisions of applicable laws of its native country within 05 latest consecutive years prior to the year applying for the license till the issuance of the license;

  2. To have experience in international operation, is ranked from average and stable upwards by international credit rating organizations, can prove the ability to perform financial commitments and operate normally even when economic situation, condition faces adverse changes;

  3. To be profitable in the 05 consecutive years preceding the year of applying for the License and as of the time of obtaining the License;

  4. The total assets must be approximately USD 10 billion at the end of the year preceding the year of applying for the license;

  5. To be assessed by a competent agency of the native country in respect of the capital adequacy ratio, other prudential ratios, to fully comply with regulations on risk management and making provision as provide for by the native country in the year before the year of applying for the license till the issuance of license;

  6. Not to be the owner, founding member, strategic shareholder of another Vietnamese credit institution;

  7. Within a period of 05 years since the issuance of the License, founding members shall be required altogether to hold 100% of the charter capital of a joint-venture bank, 100% foreign owned bank.”

1.4. Circular No. 08/2018/TT-BTP guiding the registration, provision of information on security measures, contracts and exchange of information on registration of security measures at the Registration Center for transactions and assets of Ministry of Justice National Registration Agency for Secured Transactions

  • Name of legal document: Circular No. 08/2018/TT-BTP issued on 20/06/2018 by the Ministry of Justice guiding the registration, provision of information on security measures, contracts and exchange of information on registration of measures at the Registration Center for transactions and assets of Ministry of Justice National Registration Agency for Secured Transactions.

  • Effective date: 04/08/2018.

Some contents should be noted:

  • Firstly, providing for cases are registered the security measures upon request at the Registration Center for transactions and assets (hereinafter referred to as the Registration Center); contracts are registered upon request.

Specifically, Article 5 of Circular No. 08/2018/TT-BTP stipulates: “Cases of registration security measures, contracts:

1. Registration of security measures upon request at the Registration Center includes the following cases:

a) Mortgaging of movable property, except for aircraft or seagoing vessels, including future mortgage of movable property;

b) Reserving ownership in the case of sale and purchase of movable property, except for aircraft or vessels with reservation of ownership;

c) Modifying, correcting or deleting registration of registered security measures mentioned at Points a and b, Clause 1 of this Article;

d) Written notice of the disposal of the security property for the registered security measure.

2. Contracts (except for contracts for the purchase of civil aircraft in accordance with the law on aviation, financial leasing contracts for aircraft in accordance with the law on finance leasing, hire purchase contracts in accordance with the law on maritime shipping, finance leasing contracts with respect to seagoing vessels, which do not fall into the cases specified in Clause 3, Article 39 of the Circular No. 30/2015/TT-NHNN issued on 25/12/2015 by The State Bank of Vietnam providing regulations on licensing, organization and operation of non-bank credit institutions and contracts relating to land use rights and assets attached to land in accordance with the law on land, housing) registered upon request include:

a) Property lease contracts with the term of one year or more or contracts with the lease term of less than one year, but the parties agree on the extension and the total leasing term (including the term extended) for one year or more;

b) Financial leasing contracts in accordance with the law on financial leasing;

c) Contracts on the transfer of the right to reclaim debts, including the right to reclaim existing debts or the right to reclaim debts, to be formed in the future;

d) Modifying, correcting errors or deleting registration of registered contracts mentioned at Points a, b and c, Clause 2 of this Article.”

  • Secondly, stipulating security properties registered at the Registration Center upon request.

Specifically, Article 6 of Circular 08/2018/TT-BTP stipulates: “Assets subject to the registration of security measures, contracts

Security properties registered at the Registration Center upon request, including:

1. Automobiles, motorcycles and other motorized traffic means; railway transport means.

2. Fishing vessel; inland waterway transport means.

3. Machinery, equipment, production lines, raw materials, fuel, materials, consumer goods, other goods, precious metals, precious stones.

4. Vietnamese currency, foreign currency.

5. The capital contribution in the enterprise in accordance with the law of the enterprise.

6. Shares, bonds, promissory notes, certificates of deposits, fund certificates, checks and other valuable papers as prescribed by law, valued in money and allowed to be traded; the lawful receivables of individuals and legal persons.

7. Property rights according to the provisions of Article 115 of the Civil Code, except for land use rights, include:

a) Property rights arising from copyright, industrial property rights and plant variety rights; debt claims; rights to exploit natural resources; the right to compensation for damage arising from the contract;

b) Property rights arising from contracts of ship building; the right to compensation for damage arising from the contract for purchase and sale of aircraft or ships; the insurance beneficiary under insurance contracts for aircraft or seagoing ships;

c) Property rights include the right to claim debts, the right to demand payment, the right to compensation for damage, the right to enjoy insurance arising from dwelling house purchase/sale contracts, contracts on capital contribution to the construction of dwelling houses or contracts investment cooperation, housing business cooperation, lease contract, house purchase contract (including social housing) between organizations and individuals or between organizations, individuals and real estate business enterprises in housing construction projects in accordance with the law on housing; the property rights are the right to claim debts, the right to demand payment, the right to compensation for damages, the right to enjoy insurance arising from purchase/sale contracts, capital contribution contracts, investment cooperation contracts lease, contract for hire purchase of construction works between organizations and individuals or between organizations and individuals and real estate business enterprises in construction projects according to the provisions of law on real estate business;

d) Other property rights as prescribed by law.

8. Income, rights to receive insurance sums for security assets or other interests earned from security assets mentioned in this Article; the income earned from the operation of aircraft or ships; the income from the business, exploiting the value of land use rights or assets attached to land; accounts receivable and fees collected by the investor in the process of investment, business and development of projects on construction of dwelling houses or projects on construction of works.

9. Other movable property as provided for in Clause 2, Article 107[7] of the Civil Code.

10. Houses and other construction works which are temporarily constructed without being subject to ownership certification prescribed in Clause 2, Article 35[8] of Decree No. 43/2014/NĐ-CP issued on 15/5/2014 by Government detailing a number of articles of the Law on land, such as temporarily constructed properties during construction of construction works or construction of bamboo or foliage materials; the auxiliary works are outside the scope of the main works and serve for the management, use and operation of the main works; or other assets attached to land without provisions on ownership certification such as: pre-engineered steel buildings, workshop frames, net houses, membrane houses; wells; pool; the yard; fence; power poles; power station; pump station, transmission system, power transmission; drainage system or water supply system; internal roads and other auxiliary works.

Thirdly, other contents relating to registration, provision of information on security measures, contracts and exchange of information on registration of security measures at Registration Centers: database use codes on security measures, asset declaration, registration forms…

[1] “Article 3. Interpretation of terms

In this Circular, the following terms are construed as follows:

…4. Borrowers include organizations, individuals or other subject as prescribed by law, having credit relationship with credit institutions, foreign banks’ branches.”

[2] “Article 3. Interpretation of terms

In this Circular, the following terms are construed as follows:

…8. Organizations voluntarily joining the credit information system (hereinafter referred to as voluntary organizations) include:

a) The Vietnam Development Bank, companies with function of debt trading, companies of debt management and asset exploitation, companies of credit information, enterprises providing insurance services, enterprises of securities;”

[3] “Article 5. Principles of credit information activity

1. Strictly abide by provisions of law.”

[4] Credit Information Center (CIC)

[5] “Article 7. Supply of credit information

1. Credit institutions, foreign banks’ branches supply for the CIC all the credit information normsystem specified in Annex enclosed with this Circular and classified into normgroups as follows:

a) Information to identify the borrowers who are individuals, business households; information to identify the borrowers being enterprises, other organizations; information to identify the owners of credit card;

b) Information of credit contracts;

c) The borrowers’ information of credit relationship;

d) Information of account status of credit cards;

e) Information ofloan security;

g) Financial information of borrowers being enterprises;

h) Information of bond investment in borrowers being enterprises.”

[6] State Bank of Viet Nam, “The SBV has approved the simplification of 257 business conditions under SBV’s management function”, [https://www.sbv.gov.vn/webcenter/portal/vi/menu/trangchu/ttsk/ttsk_chitiet?centerWidth=80%25&dDocName=SBV344983&leftWidth=20%25&rightWidth=0%25&showFooter=false&showHeader=false&_adf.ctrl-state=14ojjbc42_4&_afrLoop=397120084870000#%40%3F_afrLoop%3D397120084870000%26centerWidth%3D80%2525%26dDocName%3DSBV344983%26leftWidth%3D20%2525%26rightWidth%3D0%2525%26showFooter%3Dfalse%26showHeader%3Dfalse%26_adf.ctrl-state%3Ddqomvf35t_4] (accessed on 23/7/2018)

[7] Clause 2 of Article 107 of the Civil Code stipulates: “2. Moveable property is property which is not immovable property.”

[8] Clause 2 of Article 35 of Decree No. 43/2014/NĐ-CP stipulates: “Land – attached assets ineligible for ownership certification upon grant of certificates of land use rights and ownership houses and other land – attached assets

Land – attached assets are ineligible for ownership certification in one of the following cases:

…2. Houses or other construction facilities which are temporarily built during the construction of main facilities or which are built with bamboo, leaf or earth; and auxiliary facilities which are outside the premises of main facilities and serve the management, use and operation of main facilities;”