Decree No. 104/2007/ND-CP dated June 14, 2007 of the Government on provision of debt collection services

DECREE

ON PROVISION OF DEBT COLLECTION SERVICES

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 November 29, 2005 Law on Enterprises;

Pursuant to the July 2, 2002 Ordinance on Handling of Administrative Violations;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Decree governs the provision of debt collection services in the territory of the Socialist Republic of Vietnam.

2. Debt collection services defined in this Decree may only be provided for debts that:

a/ Are proved lawful on sufficient grounds;

b/ Are overdue.

3. Not subject to this Decree are debts currently udder legally effective court judgments or rulings; debts owed to or payable by political organizations, socio-political organizations, state agencies or peoples armed forces units, or debts between Vietnam and international organizations or other countries.

Article 2. Subjects of application

This Decree applies to economic organizations and individuals involved in debt collection services in Vietnam, including:

1. Creditors;

2. Debtors;

3. Debt collection service enterprises;

4. Other related organizations and individuals.

Article 3. Interpretation of terms

In this Decree, some terms are construed as follows:

1. Debt means a liability that must be fulfilled by an economic organization or individual toward another;

2. Creditor means an economic organization or individual that has the right to claim a debt;

3. Debtor means an economic organization or individual that is obliged to pay a debt;

4. Overdue debt means a debt not yet paid by the debtor to the creditor upon the expiration of the time limit for debt payment as agreed upon by the creditor and the debtor or decided by a competent state agency.

Article 4. Principles for provision of debt collection services

1. Only enterprises possessing debt collection service registration certificates may provide debt collection services.

2. Debt collection service enterprises may not conduct other business lines and provide services other than debt collection services.

3. Debt collection service enterprises may only take debt settlement measures compliant with law.

4. Debt collection services are provided under mandate contracts between creditors or debtors and debt collection service enterprises within the scope of rights recognized by law.

Article 5. Fulfillment of tax obligation and observance of accounting, auditing and reporting regulations

1. Debt collection service enterprises shall fulfill tax obligations according to the tax law.

2. Debt collection service enterprises shall conduct accounting, statistical, auditing and reporting activities according to relevant provisions of law applicable to enterprises.

Chapter II

DEBT COLLECTION SERVICES

Article 6. Specific debt collection services

1. Representing creditors in identifying debts and contents related to the fulfillment of the debt payment obligation by debtors; urging debtors to pay debts; collecting debts.

2. Representing creditors in working with related organizations or individuals for the purpose of collecting debts.

3. Representing debtors in identifying debts and measures to settle debts with creditors.

4. Providing legal consultancy to creditors or debtors on identifying debts, or measures and procedures for settling debts.

Article 7. Measures to be taken in debt collection services

1. Debt collection service enterprises may represent creditors in:

a/ Taking appropriate measures to collect, analyze and compare relevant information for clearly identifying debts;

b/ Notifying debtors of the debt collection and requesting them to supply information, coordinating with, supporting, or applying appropriate and lawful measures against debtors to make them pay debts;

c/ Receiving under authorization by creditors assets handed over by debtors or other related organizations or individuals for performing debtors debt payment obligation.

2. Debt collection service enterprises that represent debtors may apply appropriate measures specified in Clause 1 of this Article to negotiate with creditors on matters as mandated by debtors.

Article 8. Responsibilities and powers of creditors and debtors

1. To cooperate with one another and with debt collection service enterprises in clearly identifying debts; debtors have the responsibility to pay debts to creditors.

2. To mandate debt collection service enterprises to handle matters or perform activities related to debt settlement in strict accordance with law.

3. To supply debt-related information, documents and necessary means to debt collection service enterprises.

4. To pay service charges and other reasonable expenses to debt collection service enterprises under signed contracts.

5. To refuse to work with representatives of debt collection service enterprises if these representatives fail to present lawful papers or commit prohibited acts defined in Clause 2, Article 11 of this Decree.

6. To request debt collection service enterprises to fully and regularly report on the performance of debt settlement activities under signed contracts.

7. To request the handover of assets obtained from debts or return of documents and assets already given to debt collection service enterprises under signed contracts.

8. To work directly or assign their authorized representatives to work with representatives of debt collection service enterprises.

9. To bear no joint responsibility for illegal acts committed by debt collection service enterprises.

Article 9. Responsibilities and powers of debt collection service enterprises

1. To perform professional operations as mandated by creditors or debtors within the scope permitted by law; not to assign or sub-mandate individuals outside their enterprises or other organizations to perform these operations, unless sub-mandated organizations are also debt collection service enterprises and the sub-mandate is agreed upon in writing by creditors or debtors (parties having signed mandate contracts with debt collection service enterprises).

2. To notify creditors or debtors and other related organizations and individuals of the fact that they are mandated by creditors or debtors to settle debts.

3. To preserve and return to creditors or debtors documents and assets which creditors or debtors have supplied to them for providing debt collection services under signed contracts.

4. To fully and regularly report to creditors or debtors on the performance of activities they are mandated to perform under contracts.

5. To pay compensations to creditors or debtors for damage caused by their breaches of contract, loss of or damage to documents or assets supplied to them and assets obtained from debts.

6. To collect debts and hand over assets obtained from debts to creditors under signed contracts.

7. To bear responsibility before law for commission of prohibited acts specified in Clause 2, Article 11 of this Decree and acts beyond the scope of their mandate.

8. To issue papers of introduction to their employees who are assigned to personally conduct debt collection service activities.

9. To grant staff cards to their employees fully qualified to conduct debt collection service activities under the provisions of Articles 14 and 15 of this Decree. Such card must display the photo, full name and position of the card wearer, and the enterprises seal.

10. To request creditors or debtors to supply necessary information, documents and assets related to debts.

11. To be paid service charges and other expenses by creditors or debtors as agreed in writing.

12. To take no responsibility before creditors or debtors for matters outside the scope of their mandate.

Article 10. Responsibilities of employees of debt collection service enterprises in conducting debt collection activities

1. To perform only tasks within the scope of lawful operation of their enterprises.

2. Not to commit prohibited acts defined in Clause 2, Article 11 of this Decree.

3. Persons who do not wear staff cards or have no papers of introduction of debt collection service enterprises may not work directly with creditors or debtors or related organizations and individuals.

Article 11. Prohibited acts in debt collection services

1. For creditors or debtors:

a/ Mandating debt collection service enterprises to conduct activities falling beyond their rights recognized by law;

b/ Committing directly or indirectly through other persons acts of defrauding, using force or threatening to use force against staff of debt collection service enterprises.

2. For debt collection service enterprises:

a/ Conducting directly or indirectly through other persons activities that infringe upon life, health, dignity, honor, personal freedom, property rights and other civil rights of creditors, debtors and other related organizations and individuals;

b/ Using information obtained through performing debt collection services for purposes other than those of activities they are mandated to conduct or disclose such information to other organizations and individuals to the disadvantage of creditors and debtors, unless otherwise provided for by law;

c/ Conducting activities or taking acts which are beyond their rights recognized by law or the scope of activities they are mandated by creditors or debtors to conduct;

d/ Representing both creditor and debtor in settling the same debt.

Article 12. Debt collection service charge

Creditors or debtors and debt collection service enterprises shall agree on debt collection service charges and state them in contracts signed between them.

Chapter III

CONDITIONS FOR PROVIDING DEBT COLLECTION SERVICES

Article 13. Condition on capital

Legal capital for the debt collection service business is VND 2,000,000,000 (two billion).

Throughout the course of operation, debt collection service enterprises shall maintain their charter capital at a level not lower than the legal capital.

Article 14. Condition on criteria of managers and directors of branches of debt collection service enterprises:

1. Having full civil act capacity.

2. Possessing a university or postgraduate diploma in economics, administration, law or public security.

3. Having no criminal records.

4. Persons who have worked for other debt collection service enterprises which had their debt collection service registration certificates revoked must also satisfy the condition that they have not acted as managers of these enterprises for the latest three years.

Article 15. Condition on criteria of employees involved in debt collection services

1. Being recruited under labor contracts of an unspecified term or of a term of six months or more.

2. Having full civil act capacity.

3. Possessing an intermediate or higher education diploma in economics, administration, law or public security.

4. Having no criminal records.

Article 16. Dossiers of registration of debt collection service provision

Apart from satisfying the legal provisions on business registration dossiers, an enterprise registering to provide debt collection services must also submit:

1. A dossier evidencing satisfaction of the condition on capital, comprising:

a/ A written record of capital contribution by founding shareholders, for joint-stock companies, or founding members, for limited liability companies with two or more members; the corporate owners decision of capital assignment, for one-member limited liability companies owned by organizations; the corporate owners registration of investment capital, for private enterprises and one-member limited liability companies owned by individuals;

b/ For capital amounts contributed in money, there must be certification by a commercial bank licensed to operate in Vietnam of deposited money amounts of founding members. Deposited money amounts must be equal to contributed capital amounts of founding members and may be released only after the enterprise is granted a debt collection service registration certificate.

c/ For capital amounts contributed in asset, there must be a deed issued by a valuation organization in Vietnam certifying the results of valuation of assets contributed to the enterprises capital. That deed must remain valid by the date of submission of the dossier to a competent business registry office.

2. A dossier evidencing satisfaction of the condition on criteria of managers and directors of branches of the enterprise, comprising:

a/ Valid copies of university diplomas in any of the disciplines specified in Clause 2, Article 14 of this Decree. For diplomas granted by foreign universities, their notarized Vietnamese translations are required.

b/ Judicial record cards.

For foreign individuals, written certifications made by administrations of their countries of origin that they have no criminal records in these countries are required together with their notarized Vietnamese translations.

Article 17. Change of managers, directors of branches of enterprises and their charter capital

When changing their managers, directors of their branches or their charter capital, debt collection service enterprises shall strictly comply with current provisions of law on business registration and satisfy all conditions on capital and criteria of managers and directors of branches of enterprises specified in Articles 13 and 14 of this Decree.

Chapter IV

STATE MANAGEMENT OF DEBT COLLECTION SERVICES

Article 18. Responsibilities of the Ministry of Finance

1. To elaborate and propose to competent authorities for promulgation or promulgate according to its competence legal documents on provision of debt collection services.

2. To guide, inspect and supervise activities of debt collection service enterprises.

Article 19. Responsibilities of provincial/ municipal Peoples Committees

1. To inspect and supervise the provision of debt collection services in their provinces or cities, and handle acts of violation in the provision of debt collection services according to their competence.

2. To send biannual, annual or extraordinary reports to the Ministry of Finance on the situation of debt collection services in their provinces or cities.

Article 20. Responsibilities of business registry offices

1. To receive and examine dossiers of registration of debt collection services and grant debt collection service registration certificates to enterprises if these dossiers satisfy all the conditions specified in Articles 13, 14 and 16 of this Decree.

2. To report to provincial/municipal Peoples Committees on the grant of debt collection service registration certificates to enterprises (or the grant of operation registration certificates to their branches).

Chapter V

SANCTIONING OF ADMINISTRATIVE VIOLATIONS IN DEBT COLLECTION SERVICE PROVISION

Article 21. General provisions on sanctioning of administrative violations in debt collection service provision

1. Particular acts of violation in debt collection service provision to be administratively sanctioned under this Decree include:

a/ Acts of violation of provisions on subjects permitted to provide debt collection services;

b/ Acts of violation of provisions on conditions for providing debt collection services;

c/ Acts of violation of provisions on professional requirements for debt collection service provision.

2. Acts of violation in debt collection service provision not specified in Clause 1 of this Article shall be handled according to other current provisions of law.

3. Sanctioning principles, statute of limitations for sanctioning, aggravating and extenuating circumstances, sanctioning procedures and enforcement of sanctioning decisions against acts of violation specified in this Decree comply with current provisions of law on handling of administrative violations.

Article 22. Forms of sanctioning administrative violations in debt collection service provision

Acts of violation in debt collection service provision specified in Clause 1, Article 21 of this Decree are subject to either of the following administrative sanctioning forms:

1. Caution;

2. Fine;

The maximum fine level is VND 70,000,000 (seventy million).

3. In addition to the sanctioning forms specified in Clauses 1 and 2 of this Articles, debt collection service enterprises that commit acts of violation are forced to comply with this Decrees provisions on debt collection services as a measure to remedy consequences.

4. In addition to the sanctioning forms specified in Clauses 1, 2 and 3 of this Article, debt collection service enterprises that commit acts of violation may also be subject to the additional sanctioning form of revocation of business registration certificates according to the provisions of law on handling of administrative violations in business registration.

Article 23. Administrative sanctions against acts of violation of provisions on subjects permitted to provide debt collection services

1. A fine of between VND 40,000,000 and 50,000,000 shall be imposed on organizations and individuals that are not debt collection service enterprises and commit for the first time acts of illegally providing debt collection services.

2. A fine of between VND 60,000,000 and 70,000,000 shall be imposed on organizations and individuals that are not debt collection service enterprises and relapse into committing acts of illegally providing debt collection services.

3. Consequence remedy: coerced immediate termination of activities of providing debt collection services.

Article 24. Administrative sanctions against acts of violation of provisions on conditions for debt collection service provision

1. A caution shall be imposed on debt collection service enterprises for any of the following first-time acts of violation:

a/ Conducting other business lines or providing services other than debt collection services defined in this Decree;

b/ Failing to maintain the legal capital level specified in this Decree;

c/ Electing or appointing persons unqualified according to the provisions of this Decree as enterprise managers or enterprise branch directors.

2. A fine of between VND 15,000,000 and 20,000,000 shall be imposed on debt collection service enterprises for each re-commission of any of the acts of violation specified in Clause 1 of this Article.

3. Consequence remedies:

a/ Coerced immediate termination of business activities other than debt collection services.

b/ Coerced satisfaction of the conditions on capital and criteria of managers or directors of branches of enterprises.

Article 25. Administrative sanctions against acts of violation of provisions on professional requirements for debt collection service provision

1. A caution shall be imposed on debt collection service enterprises for any of the following first-time acts of violation:

a/ Failing to grant staff cards to their employees assigned to personally conduct debt collection service activities;

b/ Granting staff cards which do not have all required details;

c/ Failing to issue papers of introduction to their employees assigned to personally conduct debt collection service activities;

d/ Their employees who are assigned to personally conduct debt collection service activities wear no staff cards or present no papers of introduction when working directly with debtors, creditors or other related organizations and individuals.

2. A fine of between VND 10,000,000 and 15,000,000 shall be imposed on debt collection service enterprises for any of the following acts of violation:

a/ Sub-mandating debt collection services to organizations and individuals not permitted to provide these services;

b/ Re-committing any of the acts of violation specified in Clause 1 of this Article.

3. A fine of between VND 20,000,000 and 25,000,000 shall be imposed for each re-commission of any of the acts specified at Point a, Clause 2 of this Article.

4. Consequence remedies:

a/ Coerced immediate termination of sub-mandate to organizations and individuals not permitted to provide debt collection services;

b/ Coerced restoration of the original state altered due to sub-mandate to organizations and individuals not permitted to provide debt collection services;

c/ Coerced strict compliance with this Decrees provisions on grant of staff cards and issuance of papers of introduction.

Article 26. Competence to impose administrative sanctions for acts of violation specified in Articles 23, 24 and 25 of this Decree

1. Presidents of Peoples Committees at all levels may impose administrative sanctions for acts of violation specified in this Decree within their sanctioning competence provided for in Articles 29 and 30 of the Ordinance on Handling of Administrative Violations.

2. When on duty, inspectors of the Ministry of Finance and provincial/municipal Finance Services may:

a/ Impose cautions;

b/ Apply the consequence remedies specified in this Decree.

3. Chief inspectors of provincial/municipal Finance Services may:

a/ Impose cautions;

b/ Impose fines of up to VND 20,000,000;

c/ Apply the consequence remedies specified in this Decree.

4. The Chief Inspector of the Ministry of Finance may:

a/ Impose cautions;

b/ Impose fines of the highest level specified in this Decree;

c/ Apply the consequence remedies specified in this Decree.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 27. Effect

This Decree takes effect 15 days after its publication in CONG BAO.

Article 28. Applicability to enterprises licensed to provide debt collection services before the effective date of this Decree.

1. For enterprises engaged only in debt collection service provision:

a/ Enterprises that fully satisfy the conditions specified in Articles 13, 14 and 15 of this Decree are not required to carry out business registration procedures anew but shall make and send, within 60 days from the effective date of this Decree, dossiers evidencing their satisfaction of these conditions to business registry offices. A dossier comprises:

A document evidencing satisfaction of the condition on capital: The accounting balance sheet of the enterprise at the end of the latest month;

Documents evidencing satisfaction of the condition on criteria of managers and branch directors of the enterprise as stipulated in Clause 2, Article 16 of this Decree.

b/ Enterprises that do not fully satisfy the new conditions for providing debt collection services shall strive, within 60 days from the effective date of this Decree, to fully satisfy these conditions and send their dossiers made under Item a, Clause 1 of this Article to business registry offices. Failing to do so, they will have their business registration certificates revoked.

2. Enterprises that have been granted registration certificates for various business lines, including debt collection service provision, shall strictly comply with the provisions of this Decree.

Article 29. Organization of implementation

1. The Minister of Finance shall guide the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies and presidents of provincial/municipal Peoples Committees shall implement this Decree