Decree No. 11/2012/ND-CP dated February 22, 2012 of the Government amending and supplementing a number of articles of the Government’s Decree No. 163/2006/ND-CP of December 29, 2006, on secured transactions

THE GOVERNMENT

Decree No. 11/2012/ND-CP of February 22, 2012, amending and supplementing a number of articles of the Government’s Decree No. 163/2006/ND-CP of December 29, 2006, on secured transactions

THE GOVERNMENT

Pursuant to the June 14, 2005 Civil Code;

Pursuant to the December 25, 2001 Law on Organization of the Government;

At the proposal of the Minister of Justice,

DECREES:

Article 1. To amend and supplement a number of articles of the Government’s Decree No. 163/2006/ND-CP of December 29, 2006, on secured transactions, as follows:

1. To amend and supplement Clauses 1 and 9, Article 3 as follows:

“1. Securing party means a party that uses its/his/her assets, land use rights or prestige or commits to performing a job for the secured party to secure the performance of its/his/her or others’ civil obligations. A securing party may be a pledgor, mortgagor, security deposit payer, collateral payer, escrow payer, guarantor or grassroots socio-political organization, for case of trust.”

“9. Valuable papers mean stocks, bonds, bills of exchange, promissory notes, bonds of credit, deposit certificates, checks, fund certificates and other law-prescribed valuable papers which, according to law, are monetizable and tradable.”

2. To amend Clauses 1 and 2, Article 4 as follows:

“1. Security assets are existing assets or future assets which are not banned from transaction by law.”

“2. Future assets include:

a/ Assets procured with loans;

b/ Assets which are in the making or lawfully created at the time of entering into the secured transaction;

c/ Assets which have been formed and are subject to ownership registration but are registered in accordance with law after the time of entering into the secured transaction.

Future assets do not include land use rights.”

3. To add the following Article 7a:

“Article 7a. Notification of the mortgage of motor road vehicles, inland waterway vessels and railway vehicles

1. After the mortgage of a motor road vehicle, inland waterway vessel or railway vehicle is registered and the registration requester pays the fee for the issuance of a duplicate of the secured transaction registration certificate, the secured transaction-registering agency shall send 1 duplicate of the registration certificate to the state agency competent to make vehicle/vessel circulation registration. This agency shall update information on the mortgage of the vehicle/vessel right on the date of receiving the duplicate of the secured transaction registration certificate.

2. After the mortgage of a vehicle/vessel is deregistered and the deregistration requester pays the fee for the issuance of a duplicate of the secured transaction deregistration certificate, the secured transaction-registering agency shall send 1 duplicate of the deregistration certificate to the state agency competent to register the vehicle/vessel for the latter to update information on the deregistration of the mortgage of such vehicle/vessel.

3. The owner of a vehicle/vessel currently recorded as a security asset that wishes to have the vehicle/vessel registration certificate re-granted or renewed or to transfer the ownership of such vehicle/vessel but has not yet obtained the secured transaction deregistration certificate shall produce a certified copy or a copy, enclosed with the original for comparison, of the release of mortgage or the mortgagee’s written consent.”

4. To amend Article 8 as follows:

“Article 8. Security for the performance of obligations with future assets

1. In case the securing party has the right to partially or wholly own a future asset, the secured party will have the rights to part or the whole of such asset. For an asset which is subject to ownership registration according to law but has not yet been registered by the securing party, the secured party may still handle such asset in due time.

2. In case a future asset is handled to secure the performance of a civil obligation, right after obtaining handling results, competent state agencies shall base on these results to carry out procedures to transfer the right to own or use such asset to the asset buyer or recipient.”

5. To add the following Article 8a:

“Article 8a. Security for the performance of future obligations

1. In the contract on security for the performance of a future obligation, parties are not required to reach specific agreements on the scope of the secured obligation and time limit for performance of such obligation, unless otherwise agreed upon or provided by law.

2. When an obligation arises, parties are not required to register changes to the contents of the secured transaction already registered.”

6. To add the following Clause 4 to Article 12:

“In case the securing party is a judgment debtor and the secured party is a judgment creditor and the fulfillment of the securing party’s obligations towards the secured party has been certified by a competent civil judgment execution agency through the issuance of a written certification of judgment execution results, when requesting secured transaction deregistration, the securing party may use such written certification in replacement of the secured party’s written consent of secured transaction deregistration.”

7. To amend Clause 3, Article 14 as follows:

“3. Parties to a valid secured transaction concluded prior to the split, separation, consolidation, merger or transformation of legal entities (referred to as reorganization of legal entities) are not required to re-conclude such transaction when reorganizing legal entities.

If the secured transaction has been registered, the new legal entity shall produce the document on the reorganization of legal entities issued by a competent agency to register changes according to law.”

8. To amend Clause 3, Article 19 as follows:

“3. In case of pledge of a valuable paper, the pledgee may request the issuer of that valuable paper or the Securities Depository Center to secure its/his/her right to monitor that valuable paper.

If breaching the commitment to securing the pledgee’s monitoring right and causing damage to the pledgee, the valuable paper issuer or the Securities Depository Center shall pay compensation to the pledgee, unless otherwise agreed upon.

For pledged assets being securities which must be registered or deposited, the pledge registration at secured transaction-registering agencies complies with the law on registration of secured transactions while the registration and depositing of securities at the Securities Depository Center complies with the law on securities.”

9. To add the following Article 20a:

“Article 20a. Keeping of papers on mortgaged assets

In case the mortgaged asset is an aircraft, a seagoing vessel or a vehicle specified in Article 7a of this Decree, the mortgagor shall keep the original aircraft title document, Vietnamese seagoing vessel registration certificate or vehicle registration certificate during the validity term of the mortgage contract.”

10. To amend Article 21 as follows:

“Article 21. Mortgaged assets under lien

In case a mortgaged asset is currently placed under a lien according to Article 416 of the Civil Code, the lienor shall hand over such asset to the mortgagee for handling according to law after the mortgagee or the obligor fulfills its/his/her obligations toward the lienor.”

11. To add the following Clause 5 to Article 22:

“In case the right to claim debts is transferred under Article 313 of the Civil Code, involved parties are not required to re-conclude the secured transaction. When carrying out procedures for registering change of the secured party according to law, the transferee of the right to claim debts shall produce the contract on the transfer of the right to claim debt to prove such change.”

12. To add the following Clause 3 to Article 27:

“3. Cases in which the mortgagor or a third party invests in the mortgaged asset (below referred to as mortgaged asset investor) but does not use the asset portion increased thanks to investment to secure the performance of civil obligations shall be settled as follows:

a/ If the asset portion increased thanks to investment can be detached from the mortgaged asset without causing loss to or reducing the value of the mortgaged asset, when handling the mortgaged asset, the mortgaged asset investor may detach such increased portion from the mortgaged asset, unless otherwise agreed upon.

b/ If the asset portion increased thanks to investment cannot be detached from the mortgaged asset or if such portion is detached from the security asset, the value of the mortgaged asset will be lost or reduced, when handling the mortgaged asset, the mortgaged asset investor may not detach such increased portion from the mortgaged asset but will be prioritized for receiving payment for the increased value, unless otherwise agreed upon.”

13. To amend Article 47 as follows:

“Article 47. Handling of the guarantor’s assets

The handling of the guarantor’s assets under Article 369 of the Civil Code is specified as follows:

1. In case involved parties have agreed on mortgage or pledge of assets to secure the performance of guaranteed obligations, the mortgaged or pledged assets shall be handled under Chapter IV of this Decree.

2. In case involved parties have not yet agreed on mortgage or pledge of assets to secure the performance of guaranteed obligations, the guarantor shall hand over its/his/her assets to the guarantee for handling at the latter’s request, unless otherwise agreed upon. If the guarantor refuses to hand over assets, the guarantee may file a lawsuit according to law.

3. At the time of handling the guarantor’s assets, if the guarantor has no asset or the proceeds from the handling of its/his/her assets is not enough to pay for guaranteed obligations, the guarantee may, within the scope of guaranteed obligations, request the guarantor to hand over assets acquired after the time of handling the guarantor’s assets for subsequent handling.”

14. To add the following Article 47a:

“Article 47a. Order of payment priority between co-guarantees and between the guarantee and the pledgee, mortgagee, security deposit recipient, collateral recipient or escrow recipient

1. Co-guarantees enjoy the same order of payment priority. The proceeds from the handling of the guarantor’s assets shall be divided to co-guarantees in proportion to guaranteed obligations.

2. If the pledge, mortgage, deposit, collateral or escrow contract has been registered according to law, the pledgee, mortgagee, security deposit recipient, collateral recipient or escrow recipient enjoys payment priority over the guarantee.

3. If the pledge, mortgage, deposit, collateral or escrow contract has not yet been registered according to law, the order of payment priority between the guarantee and the pledgee, mortgagee, security deposit recipient, collateral recipient or escrow recipient shall be determined based on the order of establishment of these secured transactions.”

15. To amend Clause 4 of and add the following Article 6 to Article 58:

“4. The handler of security assets (below referred to as asset handler) is the secured party or the person authorized by the secured party, unless otherwise agreed upon by the parties to the secured transaction.

The asset handler shall handle security assets based on agreements in the security contract without having to obtain written authorization to handle assets made by the securing party.”

“6. In case a security asset is the right to use land or houses, the organization or individual that buys or receives such security asset as replacement for the performance of the securing party’s obligations must be eligible for the grant of the certificate of the right to use land or own houses or assets attached to land. In case such organization or individual is ineligible for such certificate, it/he/she may only enjoy the land use right or house value.”

16. To amend Clause 1, Article 61 as follows:

“1. Before handling a security asset, the asset handler shall notify in writing the handling of the security asset to other secured parties according to their addresses provided by the securing party or register a written notice of the handling of the security asset according to the law on registration of secured transactions.”

17. To add the following Article 64a:

“Article 64a. Sale of security assets

1. In case involved parties have agreed to apply the method of auction to handle a security asset, the auction complies with the law on auction of assets.

2. In case involved parties have agreed to sell a security asset not through auction, the sale of such asset complies with the Civil Code’s provisions on sale of assets and the following provisions:

a/ Involved parties may reach agreement on or hire a price appraisal organization to determine the sale price of the security asset;

b/ The secured party shall pay the securing party the difference between the sale price of the security asset and the value of the secured obligation, unless otherwise agreed upon;

c/ After the security asset is sold, the asset owner and the party entitled to handle the security asset shall carry out law-prescribed procedures to transfer the ownership of such asset to the asset buyer.”

18. To add the following Article 64b:

“Article 64b. Receipt of security assets as replacement for the performance of the securing party’s obligations

In case involved parties have agreed on the receipt of a security asset as replacement for the performance of the securing party’s obligations, the receipt of the security asset is specified as follows:

1. Involved parties may reach agreement on or hire a price appraisal organization to determine the value of the security asset;

2. If the value of the security asset is higher than the value of the secured obligation, the secured party shall pay the difference to the securing party, unless otherwise agreed upon;

3. When transferring the right to own or use the security asset, the party receiving the security asset as replacement for the performance of obligations shall produce to competent state agencies documents proving its/his/her right to handle the security asset and the results of handling of the security assets.”

19. To add the following Clauses 3 and 4 to Article 68:

“3. In case only the land use right is mortgaged while the asset attached to land is not and the land user is concurrently the owner of the asset attached to land, the asset attached to land shall be handled together with the land use right, unless otherwise agreed upon.

Parties may reach agreement on or hire a price appraisal organization to determine the value of the land use right and asset attached to land. Proceeds from the handling of the security asset shall be firstly used to make payment to the owner of the asset attached to land, unless otherwise agreed upon.

4. In case only the land use right is mortgaged while the asset attached to land is not and the land user is not the owner of the asset attached to land, when the land use right is handled, the owner of the asset attached to land may further use land as agreed with the land user, unless otherwise agreed upon. Rights and obligations of the mortgagor and the owner of the asset attached to land shall be transferred to the buyer or the recipient of the land use right.”

20. To annul Clause 2, Article 10, and remove the phrase “and the engine number” from Point b, Clause 1, Article 20.

21. To replace the phrase “a motor vehicle” at Point b, Clause 1, Article 20 with the phrase “a motor road vehicle, inland waterway vessel or railway vehicle”.

22. To replace the phrase “mortgage of the right to use land, the right to use forests or the right to own planted production forests of a third party” in Clause 4, Article 72 with the phrase “mortgage of the right to use land, the right to use forest, the right to own planted production forests as security for the performance of obligations by another party.”

Article 2. Implementation provisions

1. This Decree takes effect on April 10, 2012.

2. The Ministry of Justice shall:

a/ Assume the prime responsibility for, and coordinate with the State Bank of Vietnam and the Ministry of Natural Resources and Environment in, guiding the provisions on handling of security assets;

b/ Elaborate and submit to the Prime Minister for promulgation a directive on enhancing the implementation effect of the law on secured transactions aiming to raising the legal safety for secured lending;

c/ Assume the prime responsibility for, and coordinate with the State Bank of Vietnam in, examining the observance of the law on establishment and effect of secured transactions; guide, direct and provide professional training in the law on secured transactions for related organizations and individuals;

e/ Perform other tasks to implement this Decree.

3. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and related organizations and individuals shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG