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THE GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No: 163/2006/ND-CP
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Hanoi,
December 29, 2006
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DECREE
ON SECURITY TRANSACTIONS
THE GOVERNMENT
Pursuant to the December
25, 2001 Law on Organization of the Government;
Pursuant to the June 14, 2005 Civil Code;
Pursuant to the National Assembly's Resolution No. 45/2005/QH11 of June 14,
2005, on the implementation of the Civil Code;
At the proposal of the Justice Minister,
DECREES:
Chapter
I
GENERAL
PROVISIONS
Article
1.- Governing scope
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Article
2.- Application of law
The establishment and
execution of security transactions and the disposal of security assets shall
comply with the provisions of the Civil Code, this Decree and relevant legal documents.
Article
3.- Interpretation of terms
In this Decree, the
terms below are construed as follows:
1. Securer means an
obligor or a third party that commits to secure the performance of civil
obligations, that may be a pledgor, mortgagor, depositor, escrow account
depositor, collateral payer, guarantor or a grassroots socio-political
organization in case of trust.
2. Securee means a
right holder (obligee) in a civil relation whereby the exercise of that right
is secured with one or more than one security transaction, that may be a
pledgee, mortgagee, deposit receiver, escrow account receiver, guarantee or a
credit institution in case of trust, or a party entitled to a payment by bank
or to a damages in case of collateral.
3. Bona fide securee
means a securee that is ignorant or unable to know that the securer is not
entitled to use an asset to secure the performance of civil obligations.
4. Obligor means a
party that is supposed to perform the secured obligation toward the obligee.
5. Secured obligation
means part or the whole of a civil obligation, which may be a present
obligation, a future obligation or a conditional obligation, of which the
performance is secured with one or more than one security transaction.
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7. Security asset
means an asset used by the securer to secure the performance of a civil
obligation toward the securee.
8. Goods circulated in
the production or business process means a movable asset used for exchange,
sale, purchase or lease within the scope of production or business activities
of the securer.
9. Valuable papers
means stocks, bonds, bills of exchange, promissory notes, deposit certificates,
checks and other valuable papers that are specified by law, can be monetized
and are allowed to be transacted.
10. Asset allowed to
be transacted means an asset not banned from transactions under law at the time
a security transaction is established.
Article
4.- Security assets
1. Security assets are
agreed upon by the involved parties and owned by the obligor or by a third
party that commits to use those assets to secure the performance of obligations
of the obligor toward the obligee. Security assets may be current assets or
future assets which are allowed to be transacted.
2. Future assets means
those owned by the securer after the time the obligation is established or the
security transaction is entered into. Future assets also include those formed
at the time the security transaction is entered into, which, however, shall
belong to the securer's ownership only after the security transaction is
entered into.
3. Unless otherwise
provided for by law, state enterprises are entitled to use assets under their
management to secure the performance of civil obligations.
4. If a security
transaction is lawfully entered into and binding on a third party, the court or
a competent state agency may not distrain security assets for the performance
of another obligation by the securer, unless otherwise provided for by law.
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In case the securer
uses an asset to secure the performance of many civil obligations according to
Clause 1, Article 324 of the Civil Code, the involved parties may agree to use
an asset of a value smaller than, equal to or larger than the total value of
the secured obligations, unless otherwise provided for by law.
Article
6.- Payment priority order
1. The payment
priority order upon the disposal of security assets is determined in accordance
with Article 325 of the Civil Code.
2. Parties secured
with the same asset may agree on the interchange of the payment priority order
between them. The party succeeding the top payment priority shall be given
priority to be paid within the scope of security of its predecessor.
3. If the proceeds
from the disposal of the security asset is not enough to pay the securees with
the same payment priority, that amount shall be paid to those parties in
proportion to the values of secured obligations.
Article
7.- Selection of security transactions to
secure the performance of civil obligations
When a civil
obligation is secured with many security transactions but the obligor fails to
perform or improperly performs that obligation when it comes due, the securee
may select a security transaction to dispose of or dispose of all security
transactions, unless otherwise agreed by involved parties.
Chapter
II
ENTRY INTO
SECURITY TRANSACTIONS
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In case the
performance of an obligation is secured with a future asset, when the securer
owns part or the whole of the security asset, the securee will have the right
to part or the whole of that asset. For assets that are, under law, subject to
the ownership registration but have not yet been registered by the securer, the
securee may still dispose thereof when the time for disposal comes due.
Article
9.- Notarization or certification of
security transactions
1. The notarization or
certification of security transactions shall be agreed upon by the involved
parties.
2. When it is so
provided for by law, security transactions must be notarized or certified.
Article
10.- Effect of security transactions
1. A security
transaction which is lawfully entered into takes effect as from the time it is
entered into, except for the following cases:
a/ The involved
parties otherwise agree;
b/ The asset pledge
takes effect as from the time the asset is transferred to the pledgee;
c/ The mortgage of
land use rights, forest use right, ownership over planted production forests,
aircraft or seagoing vessels becomes valid as from the time of mortgage
registration;
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2. The general
description of security assets does not affect the validity of security
transactions.
Article
11.- Time
when a security transaction is legally valid for a third party
1. A security
transaction shall be legally valid for a third party as from the time it is
registered. The time of registration is determined according to the provisions
of law on registration of security transactions.
2. The change of a
party or parties to a security transaction shall not change the time that
security transaction is legally valid for a third party.
Article
12.- Registration of security transactions
1. Cases where
registration is required include:
a/ The mortgage of
land use rights;
b/ The mortgage of
forest use rights, ownership right to planted production forests;
c/ The mortgage of
aircraft or seagoing vessels;
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e/ Other cases
specified by law.
2. Security transactions
not falling into the cases specified in Clause 1 of this Article shall be
registered upon requests of organizations or individuals.
3. The order,
procedures and competence for registering security transactions shall comply
with the provisions of law on registration of security transactions.
Article
13.- Cases where security assets are not
owned by securers
1. When a securer uses
an asset not under its ownership to secure the performance of civil
obligations, the owner may reclaim that asset according to Articles 256, 257
and 258 of the Civil Code and Clause 2 of this Article.
2. When a security
asset is purchased on a deferred payment, payment in installments or is rented
for a term of one year or more by an enterprise or an individual that has made
business registration, i.e., machinery, equipment or another movable not
subject to the ownership registration and the contract on purchase on deferred
payment, payment in installments or rent registered at a competent security
transaction registry within fifteen days after that contract is entered into,
the seller may retain the ownership and the renter is on the top payment
priority upon the disposal of security assets. If no registration is made or
the registration is made after the above time limit and after the security
transaction is registered, the securee is considered as a bona fide securee and
on the top payment priority upon the disposal of security assets.
3. Organizations or
individuals that are secured with assets purchased on a deferred payment,
payment in installments or rented shall not be considered bona fide securees
after the contracts on purchase on deferred payment, payment in installments or
rent are registered.
Article
14.- Cases where securers are reorganized
legal entities
1. A securer being a
reorganized legal entity shall notify the securee of its reorganization before
it is divided, separated, consolidated, merged or transformed.
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a/ In case of division
of the legal entity, new legal entities shall jointly execute the security
transaction;
b/ In case of
separation of the legal entity, the separated legal entity and separating legal
entities shall jointly execute the security transaction;
c/ In case of
consolidation or merger, the consolidating legal entity or the merging legal
entity shall execute the security transaction;
d/ In case of
transformation of an enterprise or state company, the transformed enterprise
shall execute the security transaction.
3. For security
transaction established before the reorganization of legal entities and still
within the execution time limit, the involved parties are not required to
re-enter into those transactions. They may record in writing the change of
securers.
For registered
security transactions, the registration of change of securers shall be made
within a time limit specified by law.
Article
15.- Relationship between security
transactions and contracts involving secured obligations
1. When a contract
involving secured obligations is invalidated but the contracting parties have
not yet performed it, the security transaction shall terminate. If the contract
involving secured obligations has been partially or wholly performed, the
security transaction shall not terminate, unless otherwise agreed upon.
2. Unless otherwise
agreed upon, invalid security transaction shall not terminate the contract
involving the secured obligations.
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4. Unless otherwise
agreed upon, cancelled or unilaterally terminated security transaction shall
not terminate the contract involving the secured obligations.
5. If a security
transaction does not terminate according to the provisions of Clauses 1 and 3
of this Article, the securee may dispose of the security assets for settling
the refunding obligation of the obligor toward the securee.
Chapter
III
EXECUTION OF
SECURITY TRANSACTIONS
Section
1. PLEDGE OF ASSETS
Article
16.- Holding of pledged assets
After taking the
transfer of the pledged asset, the pledgee shall directly hold that asset or
authorize a third party to hold it. In case of authorizing a third party to
hold the asset, the pledgee shall still be responsible before the pledgor for
the performance of obligations specified in Article 332 of the Civil Code and
other obligations as agreed with the pledgor.
Article
17.- Responsibilities of the pledgee in
case the pledged asset is lost, damaged, deteriorated or devalued
1. In case the pledged
asset is an object in danger of deterioration or devaluation, the pledgee
currently holding that asset shall notify the pledgor of the danger and request
the latter to give the handling methods within a given time limit. If past that
time limit the pledgor fails to reply, the pledgee shall take necessary
preventive measures. The pledgee may request the pledgor to pay reasonable
expenses if the former is not at fault for the danger.
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2. In case the pledged
asset is an object held by a third party and in danger of loss, damage,
deterioration or devaluation, the rights and obligations between the third
party and the pledgee shall comply with the asset custody contract.
3. The provisions of
Clauses 1 and 2 of this Article do not apply in case the pledged asset suffers
natural wear.
Article
18.- Responsibilities of the pledgee in
case of sale, exchange, donation, lease or lending of the pledged asset or use
of the pledged asset to secure the performance of other obligations
1. When the pledgee
sells, exchanges, donates, leases or lends the pledged asset or uses the
pledged asset to secure the performance of other obligations in contravention
of the provisions of Clause 2, Article 332 of the Civil Code, the pledgor may
claim back that asset and request the pledgee to pay damages. The pledgor does not
have the right to reclaim the asset in the following cases:
a/ The asset buyer,
exchangee and donee may establish the ownership within the statute of
limitations specified in Clause 1, Article 247 of the Civil Code;
b/ The buyer or
exchangee of assets being movables is not required to register the asset
ownership and considered a bona fide party according to the provisions of
Article 257 of the Civil Code.
2. If the pledgor does
not have the right to reclaim the asset from the asset buyer, exchangee or donee
according to the provisions of Clause 1, this Article, the pledgee shall pay
damages to the pledgor.
Article
19.- Rights of the pledgee in case of
pledge of bills of lading, savings cards or valuable papers
1. In case of pledge
of an ordered bill of lading or a bearer bill of lading (complete set of bills
of lading) according to the provisions of Article 89 of the Maritime Code of
Vietnam, the pledgee has the rights to the cargo stated in that bill of lading.
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3. In case of pledge
of a valuable paper, the pledgee may request the issuer of that valuable paper
or the Securities Depositary Center to guarantee the pledgee's right to
supervise the asset value stated in that paper.
If the valuable paper
issuer or the Securities Depositary Center breaches the commitment to guarantee
the pledgee's supervision right, it shall pay damages equivalent to the decreased
portion of the asset value stated in that paper, unless otherwise agreed upon
by the parties.
Section
2. MORTGAGE OF ASSETS
Article
20.- Rights of the mortgagee in case the
mortgagor sells, exchanges or donates the mortgaged asset
1. In case the mortgagor
sells, exchanges or donates the mortgaged asset that is not a goods circulated
in the production or business process without the consent of the mortgagee, the
mortgagee may recover the mortgaged asset, except for the following cases:
a/ The asset purchase
or exchange is conducted before the time of mortgage registration, and the
buyer or the exchangee of the mortgaged asset is a bona fide party;
b/ For the buyer or
the exchangee of a motorized vehicle which has been registered for mortgage,
the content of the mortgage registration does not accurately describe the frame
number and engine number of that motorized vehicle and the mortgaged asset
buyer or exchangee is a bona fide party.
2. If the mortgagee
does not exercise the right to recover the mortgaged asset, the proceeds, the
right to claim payment or other assets obtained from the sale, purchase or
exchange of the mortgaged asset will become the mortgaged asset in replacement
of the sold or exchanged asset.
For a registered
security transaction, the mortgagee may take initiative in requesting the
registration of change of the security asset. The registration of change of the
security asset in this case does not change the time of registration.
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Article
21.- Rights of the holding party in case
of holding of assets currently used for mortgage
When the obligee holds
the asset according to the provisions of Article 416 of the Civil Code and that
asset is currently used for mortgage, the rights of the holding party are
preferred over those of the mortgagee.
Article
22.- Mortgage of the right to claim debts
1. The debt claim
holder may mortgage part or the whole of that claim, including also the future
claim, without the consent of the debtor.
2. The debt claim
mortgagee has the following rights and obligations:
a/ To request the
debtor to pay the due debt, if the debtor fails to perform or improperly performs
the debt payment obligation;
b/ To supply
information on the mortgage of the debt claim, when so requested by the debtor.
3. The debtor has the
following rights and obligations:
a/ To pay the debt to the
mortgagee according to the provisions of Point a, Clause 2 of this Article;
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4. When the debt claim
is transferred according to the provisions of Article 309 of the Civil Code,
the order of priority between the debt claim transferee and mortgagee is
determined according to the time of registration of transfer and mortgage
transactions at the competent security transaction registry.
Article
23.- Lease or lending of mortgaged assets
1. When the mortgagor
leases or lends the mortgaged asset without notifying the lesser or the
borrower of the current mortgage of that asset according to the provisions of
Clause 5, Article 349 of the Civil Code, thus causing damage, it shall pay
damages to the lessee or the borrower.
2. The contract on
lease or lending of the mortgaged asset shall terminate when the mortgaged
asset is disposed of for the obligation performance. The lessee or the borrower
shall hand over the asset to the mortgagee for disposal, unless otherwise
agreed upon by the mortgagee and the lessee or the borrower.
Article
24.- Mortgage of currently leased assets
In case of mortgage of
currently leased assets, the mortgagor shall notify the mortgagee of the lease.
If that asset is disposed of for the obligation performance, the lessee may
continue leasing it until the expiration of the contracted lease term, unless
otherwise agreed upon by the parties.
Article
25.- Responsibilities of the mortgagor or
a third party holding the mortgaged asset
1. If the mortgaged
asset is lost, damaged, deteriorated or devalued, the mortgagor shall promptly
notify such to the mortgagee and repair, supplement or replace that asset with
another asset of equivalent value or add or replace the mortgage with another
security measure, unless otherwise agreed upon by the parties.
2. When the third
party holding the mortgaged asset pays damages for the loss, deterioration or
devaluation of the mortgaged asset according to the provisions of Clause 1,
Article 352 of the Civil Code, the paid damages shall become the security asset.
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Article
26.- Supervision and inspection of
mortgaged future assets
The mortgagor is
obliged to create conditions for the mortgagee to exercise the right to
supervise and inspect the process of asset formation. The supervision and
inspection by the mortgagee must neither obstruct nor cause troubles for the
formation of the asset.
Article
27.- Investment in mortgaged assets
1. The mortgagee must not
restrict the investment by the mortgagor or a third party in the mortgaged
asset to increase that asset's value.
2. When the mortgagor
invests in the mortgaged asset and uses the asset portion increased thanks to
investment to secure the performance of another obligation or when a third
party invests in the mortgaged asset and takes up the mortgage of the very
asset portion increased thanks to investment, the case shall be handled as
follows:
a/ If the increased
asset portion can be detached from the mortgaged asset without devaluing the
mortgaged asset compared with its value before investment, the securees may
detach asset portions they receive as security for disposal.
b/ If the asset
portion increased thanks to investment cannot be detached from the mortgaged
asset, that mortgaged asset shall be disposed of as a whole for the obligation
performance. The order of payment priority between the co-securees is
determined according to the time of registration.
Article
28.- Return of land use right certificates
or asset ownership certificates to mortgage registration applicants
1. When it is agreed
by the parties or permitted by law to use the land use rights or assets with
ownership registration to secure the performance of many civil obligations, the
mortgagee or a third party currently holding the land use right certificate or
the asset ownership certificate shall return such certificate to the
registration applicant for carrying out procedures for mortgage registration,
unless the registration of security transaction is otherwise agreed upon by the
co-securees.
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Section
3. DEPOSITS OR ESCROW ACCOUNTS
Article
29.- Cases where deposits or advances are
not clearly identified
When a contracting
party transfers to the other party a sum of money, which is not clearly
identified by the parties as a deposit or an advance, that sum of money shall
be considered an advance.
Article
30.- Obligations of the depositor or the
escrow account depositor
1. To pay to the
deposit receiver or escrow account receiver reasonable expenses for
preservation and maintenance of the deposited asset or the asset put in escrow
account, unless otherwise agreed upon.
2. To carry out the registration
of the ownership over the deposited asset or the asset put in escrow account
for the deposit receiver or escrow account receiver, for assets of which the
ownership must be registered as required by law, in case the ownership over
that asset is transferred to the deposit or escrow account receiver as provided
for by law or agreed upon.
Article
31.- Rights of the depositor or escrow
account depositor
The depositor or
escrow account depositor may request the deposit receiver or escrow account
receiver to stop using the deposited asset or the asset put in the escrow
account if the use of such asset may pose a danger of deterioration or
devaluation.
Article
32.- Obligations of the deposit receiver
or escrow account receiver
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2. Not to establish
any transaction on the deposited asset or the asset put in the escrow account,
unless it is so agreed by the depositor or the escrow account depositor.
Article
33.- Rights of the deposit receiver or
escrow account receiver
Unless otherwise
agreed upon, the deposit receiver may own the deposited asset if the depositor
refuses to enter into or perform the contract.
The escrow account
receiver may own the asset put in the escrow account if the rented asset no
longer exists for return to the escrow account receiver, unless otherwise
agreed upon.
Section
4. COLLATERALS
Article
34.- Collateral assets
1. Collateral assets
as specified in Clause 1, Article 360 of the Civil Code are put in frozen
accounts at commercial banks to secure the performance of civil obligations.
2. Collateral assets
and single or multiple collaterals at banks where collaterals are made shall be
agreed upon by the parties or provided for by law.
Article
35.- Obligations of the bank where
collateral is made
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2. To return the
remaining collateral asset to the depositor after subtracting bank service
charge and the sum of money it has paid at the request of the obligee upon the
termination of the collateral.
Article
36.- Rights of the bank where the
collateral is made
1. To request the
obligee entitled to bank payment and damages to strictly carry out procedures
for getting payment and damages.
2. To enjoy the bank
service charge.
Article
37.- Obligations of the collateral maker
1. To make the
collateral at the bank designated or accepted by the obligee entitled to bank
payment and damages.
2. To remit fully the
collateral asset in strict compliance with the agreement with the obligee
entitled to bank payment and damages.
3. To agree with the
bank where the collateral is made on payment terms in strict compliance with
the commitment with the obligee entitled to bank payment and damages.
Article
38.- Rights of the collateral maker
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Article
39.- Obligations of the obligee entitled
to bank payment and damages
The obligee entitled
to bank payment or damages is obliged to strictly comply with procedures for
requesting payment by the bank where the collateral is made.
Article
40.- Rights of the obligee entitled to bank
payment and damages
The obligee entitled
to bank payment and damages may request full and timely payment by the bank
where the collateral is made.
Section
5. GUARANTEES
Article
41.- Grounds for the performance of
guaranteed obligations
Grounds for the performance
of guaranteed obligations are agreed upon by the parties or provided for by
law, including the following cases:
1. When an obligation
comes due but the guaranteed fails to perform or improperly performs that
obligation toward the guarantee;
2. The guaranteed must
fulfill the obligation toward the guarantee ahead of time due to its obligation
breach but it fails to perform or improperly performs it;
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4. Other grounds
provided for by law.
Article
42.- Notice on the performance of
guaranteed obligations
The guarantee shall
notify the guarantor of the performance of guaranteed obligations when the
grounds for performance of the guaranteed obligations specified in Article 41
of this Decree arise. If the guaranteed must fulfill the obligation ahead of
time due to its obligation breach but fails to perform or improperly performs
that obligation, the guarantee shall clearly state the reasons in the notice on
premature performance of the obligation by the guaranteed.
Article
43.- Time limit for the performance of
guaranteed obligations
The guarantor shall
perform a guaranteed obligation within a time limit agreed upon by the parties.
If there is no agreement, the guarantor shall perform the guaranteed obligation
within a reasonable time limit after it is notified of the performance of the
guaranteed obligation.
Article
44.- Security for the performance of
guaranteed obligations and the guaranteed's obligation toward the guarantor
The parties may agree
on the establishment of a security transaction to secure the performance of the
guaranteed obligation and the guaranteed's obligation toward the guarantor
according to the provisions of the Civil Code, this Decree and relevant legal
documents.
Article
45.- The
guarantor's right to request the refund
The guarantor shall
notify the guaranteed of the completed performance of the guaranteed
obligation. If no notice is made and the guaranteed continues performing the
obligation toward the guarantee, the guarantor may not request the guaranteed
to perform the obligation toward it. The guarantor may request the guaranteed
to refund what the guaranteed has received from the guarantor.
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As soon as it notifies
the guarantor according to the provisions of Article 42 of this Decree, the
guaranteed has the following rights:
1. To request the
court to apply provisional urgent measures to the guarantor's assets according
to the provisions of the civil procedure law;
2. To request the
person committing act of illegally obstructing the exercise of the guarantee's
right to terminate that act.
Article
47.- Disposal of the guarantor's assets
In case of necessity
to dispose of the guarantor's assets according to the provisions of Article 369
of the Civil Code, the parties shall agree on the assets to be disposed of, the
disposal time, place and mode. If no agreement is reached, the guarantee may
initiate a lawsuit at court.
Article
48.- Performance of the guaranteed
obligation in case the guarantor is a bankrupt enterprise or an individual who
is dead or declared dead by the court
1. If the guarantor is
a bankrupt enterprise, the guarantee shall be settled as follows:
a/ When the guaranteed
obligation arises, the guarantor shall perform that obligation. If the
guarantor fails to fully pay within the guarantee scope, the guarantee may
request the guaranteed to pay the deficit;
b/ When the guaranteed
obligation has not yet arisen, the guaranteed must replace the guarantee with
another security measure, unless otherwise agreed upon.
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a/ If the guaranteed
obligation must be performed by the guarantor itself as agreed upon or provided
for by law, the guarantee terminates;
b/ If the guaranteed
obligation is not performed by the guarantor itself, the guarantee does not
terminate. The heir of the guarantor shall perform the guaranteed obligation
for the guarantor according to the provisions of Article 637 of the Civil Code,
except for case of disclaim of heritage according to the provisions of Article
642 of the Civil Code. The heir that has performed the obligation for the
guarantor shall enjoy the guarantor's rights to the guaranteed.
Section
6. TRUST
Article
49.- Trust
1. Trust means a security
provided by a grassroots socio-political organization with its prestige for a
poor individual or household to borrow a sum of money from a credit institution
for production, business or service activities.
2. Poor individuals or
households secured with trust must be members of one of the socio-political
organizations specified in Article 50 of this Decree.
3. The poverty line
applies in each period according to law.
Article
50.- Socio-political organizations
providing trust security
Grassroots units of
the following socio-political organizations are trust security providers:
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2. Vietnam Women's
Union;
3. Vietnam
Confederation of Labor;
4. Ho Chi Minh
Communist Youth Union;
5. Vietnam War
Veterans' Association;
6. Vietnam Fatherland
Front.
Article
51.- Obligations of socio-political
organizations
1. To certify at the
request of credit institutions the conditions and circumstances of poor
individuals or households borrowing capital from those credit institutions.
2. To take the
initiative or closely coordinate with credit institutions in assisting, guiding
and creating conditions for poor individuals or households to borrow capital;
to supervise the use of borrowed capital for proper purposes and with
efficiency; to urge the full and on-time repayment of loans to credit
institutions.
Article
52.- Rights of socio-political
organizations
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Article
53.- Obligations of credit institutions
Credit institutions
are obliged to coordinate with socio-political organizations providing trust
security in providing and recovering loans.
Article
54.- Rights of credit institutions
Credit institutions
may request socio-political organizations providing trust security to
coordinate with them in inspecting the use of borrowed capital and urging the
debt repayment.
Article
55.- Obligations of borrowers
1. To use borrowed
capital for the committed proper purposes.
2. To create favorable
conditions for credit institutions and socio-political organizations to inspect
the use of borrowed capital.
3. To repay fully and on
time loan principals and interests to credit institutions.
Chapter
IV
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Article
56.- Cases of disposal of security assets
1. The secured obligation
comes due but the obligor fails to perform or improperly performs that
obligation.
2. The obligor must
fulfill the secured obligation ahead of time as a result of its obligation
breach, as agreed upon or provided for by law.
3. It is provided for
by law that security assets must be disposed of for the performance of another
obligation by the securer.
4. Other cases agreed
upon by the parties or provided for by law.
Article
57.- Disposal of security assets when the
securer goes bankrupt
1. If the securer
being the obligor goes bankrupt, the security asset shall be disposed of
according to the provisions of law on bankruptcy and this Decree for the
obligation performance. If law on bankruptcy contains provisions on disposal of
security assets different from those of this Decree, the provisions of law on
bankruptcy prevail.
2. If the securer
being a third party that pledges or mortgages its asset goes bankrupt, the
security asset shall be disposed of as follows:
a/ If the secured
obligation comes due but the obligor fails to perform or improperly performs
the obligation, the security asset shall be disposed of according to the
provisions of Clause 1 of this Article for the obligation performance;
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Article
58.- Principles for disposal of security
assets
1. In case an asset is
used to secure the performance of an obligation, the disposal of that asset
shall be carried out as agreed upon by the parties. If there is no agreement,
that asset shall be put on auction according to the provisions of law.
2. In case an asset is
used to secure the performance of many obligations, the disposal of that asset
shall be carried out as agreed upon by the securer and the co-securees. If
there is no agreement or no agreement is reached, that asset shall be auctioned
according to the provisions of law.
3. The disposal of
security assets must be carried out in an objective, public and transparent
manner so as to ensure the legitimate rights and interests of the parties to
security transactions, the concerned organizations and individuals and in
compliance with the provisions of this Decree.
4. The disposer of
security assets (hereinafter referred to as the asset disposer) is the securee
or the person authorized by the securee, unless otherwise agreed upon by the
parties to the security transaction.
5. The disposal of
security assets for recovery of debts does not constitute asset trading
activities of the securee.
Article
59.- Agreed modes of disposal of security
assets
1. Sale of security
assets.
2. Receipt by the
securee of the very security assets as substitute for the obligation
performance by the securer.
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4. Other modes agreed
upon by the parties.
Article
60.- Obligations of the asset disposer in
case an asset is used to secure the performance of many obligations
1. To notify other
co-securees of the disposal of the asset according to the provisions of Article
61 of this Decree.
2. To dispose of the
security asset.
3. To pay proceeds
from disposal of the security asset according to the payment priority order.
Article
61.- Notification of disposal of the
security asset for performance of many obligations
1. Before disposing of
the security asset, the asset disposer shall notify in writing the security
asset disposal to other co-securees according to their addresses kept at the
security transaction registry, or register the written notice on security asset
disposal according to the provisions of law on registration of security
transactions.
2. For security assets
in danger of deterioration or devaluation, debt claims, valuable papers,
savings cards or bills of lading, the asset disposer may dispose of them
immediately and concurrently notify other securees of that asset disposal.
3. A written notice on
disposal of a security asset shall contain the following principal details:
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b/ Secured obligation;
c/ Description of the
asset;
d/ Mode, time and place
of disposal of the security asset.
4. If the asset
disposer fails to notify the security asset disposal according to the
provisions of Clause 1 of this Article, thus causing damage to other
co-securees in the registered security transaction, it shall pay damages.
Article
62.- Time limit for disposal of security
assets
The security asset
shall be disposed of within a time limit agreed upon by the parties. If there
is no agreement, the asset disposer may decide on the disposal time limit,
which must be at least seven days for movables or fifteen days for immovables
as from the date of notification of security asset disposal, except for the
cases specified in Clause 2, Article 61 of this Decree.
Article
63.- Custody of security assets for
disposal
1. The holder of the
security asset shall hand over that asset to the asset disposer according to
the latter's notice. Upon the expiration of the time limit stated in the
notice, if the asset holder fails to hand over the asset, the asset disposer
may take into custody the security asset according to the provisions of Clause
2 of this Article for disposal or request the court to handle.
2. When taking into
custody the security asset, the asset disposer has the following
responsibilities:
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b/ Not to apply
measures in violation of prohibitions prescribed by law and in contravention of
social ethics in the course of taking into custody of the security asset.
3. If the asset holder
is a third party, the securer shall coordinate with the asset disposer in
taking into custody the security asset.
4. The securer or the
third party holding the security asset shall bear reasonable and necessary
expenses for the taking into custody of the security asset. If it fails to hand
over the security asset for disposal or commits act of obstructing the lawful
custody of the security asset, thus causing damage to the securee, it shall pay
damages.
5. In the course of
taking into custody the security asset, if the asset holder shows signs of
resisting, obstructing, causing public insecurity or disorder or commits other
law-breaking acts, the security asset disposer may request the People's
Committee of the commune, ward or district township and the Police Office of
the locality where the security asset is taken into custody to apply, within
the ambit of their respective functions, tasks and powers, measures provided
for by law to maintain security and order, ensuring the exercise of the asset
disposer's right to take into custody the security asset.
Article
64.- Rights and obligations of the securee
pending the disposal of the security asset
1. Pending the
disposal of the security asset, the securee may exploit or use the security
asset or permit the securer or authorize a third party to exploit or use the
security asset according to its properties and utility. The permitted or
authorized exploitation, modes of exploitation and the use of yields and
profits obtained from exploitation must be recorded in writing.
2. Obtained yields and
profits must be separately accounted, unless otherwise agreed upon. After
subtracting expenses necessary for the exploitation or use of assets, the
remainder of yields and profits shall be used to pay to the securee.
Article
65.- Disposal of security assets being
movables in case of no agreement on disposal mode
If there is no
agreement on mode of security asset disposal, the security asset may be
auctioned according to the provisions of law. Particularly for a security asset
which can be specifically or clearly valued on the market, the asset disposer
may sell it at the market price without carrying out auctioning procedures and
shall concurrently notify such to the securer and other co-securees (if any).
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1. The securee may
request a third party being a debtor to transfer money amounts or other assets
to it or to its authorized person. The securee shall prove the debt claim when
so requested by the debtor.
2. If the securee is
concurrently the debtor, it may clear such debt.
Article
67.- Disposal of security assets being
valuable papers, bills of lading or savings cards
1. The disposal of
security assets being bonds, stocks, bills of exchange, other valuable papers
and savings cards shall comply with the provisions of law on bonds, stocks,
bills of exchange, other valuable papers and savings cards.
2. Pledgees of bills
of lading may produce those bills of lading according to the procedures
specified by law for exercising the right to possession of cargos stated in
those bills of lading. The disposal of cargoes stated in bills of lading shall
comply with the provisions of Article 65 of this Decree.
If the cargo holder
fails to transfer the cargo stated in the bill of lading to the securee, thus
causing damage to the latter, it shall pay damages.
3. If the securee is
concurrently obliged to pay, it may clear the payable amount.
Article
68.- Disposal of security assets being
land use rights or assets attached to land in case of no agreement on disposal
mode
1. In case of no
agreement on mode of disposal of security assets being land use rights or
assets attached to land, those assets shall be auctioned.
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Article
69.- Determination of payment priority
order in case of security for performance of future obligations
When a security
transaction is entered into to secure the performance of a future obligation,
that future obligation will be on the payment priority order according to the
registration order of that security transaction, regardless of the time of
establishment of the civil transaction that gives rise to that future
obligation.
Article
70.- Transfer of security asset ownership
and use rights
1. The buyer or
principal receiver of the security asset as substitute for the performance of
the obligation by the securer to it may own that asset. The time of transfer of
ownership is determined according to the provisions of Article 439 of the Civil
Code.
2. In case of the
security asset with the ownership or use right registration, the transferee of that
asset's ownership or use rights are granted an ownership or use right
certificate by a competent state agency.
Procedures for
transferring security asset ownership or use rights comply with the provisions
of law on registration of asset ownership and use rights. If it is provided for
by law that the transfer of asset ownership or use rights must be approved in
writing by the owner and on the basis of a contract on asset purchase and sale
between the asset owner or the judgment debtor and the asset buyer on disposal
of security asset, the asset pledge contract or the asset mortgage contract is
used as a substitute for those papers.
Article
71.- Rights
to receive back security assets
If the securer
fulfills its obligation toward the securee and pay all expenses arising due to
delayed obligation performance before the disposal of the security asset, it
may receive back that asset, unless otherwise provided for by law.
Chapter
V
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Article
72.- Effect
1. This Decree takes
effect 15 days after its publication in "CONG BAO."
2. This Decree
replaces the Government's Decree No. 165/1999/ND-CP of November 19, 1999, on
security transactions.
3. This Decree
supersedes:
a/ The Government's
Decree No. 178/1999/ND-CP of December 29, 1999, on security for loans of credit
institutions;
b/ The Government's
Decree No. 85/2002/ND-CP of October 25, 2002, amending and supplementing
Government Decree No. 178/1999/ND-CP of December 29, 1999, on security for
loans of credit institutions;
c/ Clause 2, Article 2
of the Government's Decree No. 08/2000/ND-CP of March 10, 2000, on registration
of security transactions.
4. The guarantee with
land use rights, right to use forests, ownership over planted production
forests according to the provisions of the Government's Decree No.
181/2004/ND-CP of October 29, 2004, on the implementation of the Land Law, the
provisions of Clause 5, Article 32; Clause 4, Article 33; Clause 4, Article 34;
Clause 4, Article 35; and Clause 1, Article 36 of the Government's Decree No. 23/2006/ND-CP
of March 3, 2006, on the implementation of the Law on Forest Protection and
Development and guiding documents, are now converted into mortgage of land use
rights, right to use forests and ownership over planted production forests by
the third party.
5. Other provisions
contrary to this Decree are hereby annulled.
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Security transactions
entered into under the provisions of the 1995 Civil Code; the Government's
Decree No. 165/1999/ND-CP of November 19, 1999, on security transactions; the
Government's Decree No. 178/1999/ND-CP of December 29, 1999, on security for
loans of credit institutions; the Government's Decree No. 85/2002/ND-CP of
October 25, 2002, amending and supplementing the Government's Decree No. 178/1999/ND-CP
of December 29, 1999, on security for loans of credit institutions; or other
legal documents that continue to be effective after the effective date of this
Decree, are still valid and not required to be modified or re-entered into.
Article
74.- Implementation responsibilities
Ministers,
heads of ministerial-level agencies, heads of government-attached agencies and
presidents of People's Committees of provinces or centrally run cities shall
implement this Decree.
ON
BEHALF OF THE GOVERNMENT
THE PRIME MINISTER
Nguyen Tan Dung