Decree No. 61/2017/ND-CP dated May 16, 2017 of the Government stipulating on appraisal of the reserve price of nonperforming loans, collateral of nonperforming loans and establishment of the Council for auction of nonperforming loans, collateral of nonperforming loans for high value nonperforming loans, collateral of nonperforming loans

THE GOVERNMENT

Decree No. 61/2017/ND-CP dated May 16, 2017 of the Government stipulating on appraisal of the reserve price of nonperforming loans, collateral of nonperforming loans and establishment of the Council for auction of nonperforming loans, collateral of nonperforming loans for high value nonperforming loans, collateral of nonperforming loans

Pursuant to the Law on the Government’s organization dated June 19, 2015;

Pursuant to the Law on property auction dated November 17, 2016;

At the proposal of the Vietnam State Bank Governor;

The Government promulgates the Decree stipulating on appraisal of the reserve price of nonperforming loans, collateral of nonperforming loans and establishment of the Council for auction of nonperforming loans, collateral of nonperforming loans for high value nonperforming loans, collateral of nonperforming loans;

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

This Decree stipulates in detail Clause 4 Article 65 of the Law on property auction including:

1. The assessment of reserve prices of non-performing loans and collateral of non-performing loans in the case if the State owns 100% working capital established by the Government to handle with bad debts of credit institutions self-auction and hiring auction organizations to organize the auction.

2.  The establishment of a council for auction of high-value nonperforming loans and collateral of non-performing loans in the case if the State owns 100% working capital established by the Government to handle with bad debts of credit institutions self-auction and hiring auction organizations to organize the auction.

Article 2. Subjects of application

This Decree applies for:

1. The State organizations own 100% working capital established by the Government to handle with bad debts of credit institutions.

2. Price appraising enterprises;

3. Council for auction of nonperforming loans and collateral of non-performing loans.

4. Credit institutions having nonperforming loans sold to the State organizations owning 100% working capital established by the Government to handle with bad debts of credit institutions.

5. Organizations, individuals relating to property auction being bad debts, collateral of bad debts;

Article 3. Interpretation of terms

Under this Decree, the following terms are construed as follows:

1. The State organizations owning 100% working capital established by the Government to handle with bad debts of credit institutions are the Asset Management Company of credit institutions as stipulated under the Decree No.  53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company and other amendment documents (hereinafter referred to as Asset Management Company).

2. Non-performing loans of Asset Management Company are the nonperforming loan purchased from credit institutions by Asset Management Company as stipulated under theDecree No.  53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company and other amendment documents.

Chapter II

APPRAISAL ON RESERVE PRICES OF NONPERFORMING LOANS, COLLATERAL OF NONPERFORMING LOANS

Article 4. Cases that reserve price, collateral of nonperforming loans must be appraised

1. Nonperforming loans that are purchased by Asset Management Company according to the book value by special bonds when determining reserve price for auction, Asset Management Company fails to reach an agreement with credit institutions on reserve price.

2. Nonperforming loans that are purchased by Asset Management Company at market price;

3. Collateral of nonperforming loans when determining reserve price for auction, Asset Management Company fails to reach an agreement with the Guarantor on reserve price.

Article 5.Selecting appraisal enterprises to appraise reserve price of nonperforming loans, collateral of nonperforming loans

1. Selecting appraisal enterprises in cases as stipulated under Clause 1 Article 4 of this Decree.

a) Within 7 working days, Asset Management Company shall agree with credit institutions selling loans on selecting appraisal enterprises;

b) In the case failing to reach an agreement with credit institutions selling loans on selecting appraisal enterprises, Asset Management Company shall notify on hiring Appraisal Company at least 7 working days on the Portal of the Vietnam State Bank, website of the Asset Management Company for appraisal enterprises to register. Asset Management Company shall select appraisal enterprises based on principles as stipulated under Clause 4 of this Article.

2. Selecting appraisal enterprises in cases as stipulated under Clause 2 Article 4 of this Decree;

Asset Management Company shall notify on hiring appraisal enterprises at least 7 working days on the Portal of the Portal of the Vietnam State Bank, website of the Asset Management Company for appraisal enterprises to register. Asset Management Company shall select appraisal enterprises based on principles as stipulated under Clause 4 of this Article.

3. Selecting appraisal enterprises in cases as stipulated under Clause 3 Article 4 of this Decree:

a) Within 7 working days, Asset Management Company shall reach an agreement with the guarantor on selecting appraisal enterprises;

b) If failing to reach an agreement with the guarantor on selecting appraisal enterprises, Asset Management Company shall notify on hiring appraisal enterprises at least 7 working dayson the Portal of the Portal of the Vietnam State Bank, website of the Asset Management Company for appraisal enterprises to register. Asset Management Company shall select appraisal enterprises based on principles as stipulated under Clause 4 of this Article.

4. Selecting appraisal enterprises shall be based on the following principles:

a) Appraisal enterprises that are selected must be in the list of appraisal enterprises that are qualified for appraisal promulgated by the Ministry of Finance;

b) Appraisal enterprises that are selected are not in the cases of not being appraised as stipulated by the law on the price and other guidelines;

5. Appraisal Enterprises shall appraise reserve price of nonperforming loans, collateral of nonperforming loans as stipulated by the law on the price and other guidelines.

Article 6. Rights and obligations of Asset Management Company in the cases of being appraised on reserve price of nonperforming loans, collateral of nonperforming loans

1. Selecting appraisal enterprises as stipulated under Article 5 of this Decree;

2. Signing appraisal contract with appraisal enterprises.

3. Providing documents, data relating to nonperforming loans, collateral of nonperforming loans that must be appraised;

4. Being entitled to authorize credit institutions selling loans to implement activities as stipulated under Clause 1, 2, 3 of this Article in the case that nonperforming loans, collateral of nonperforming loans purchased at the book value by special bonds.

5. Other rights and obligations as stipulated by the law.

Article 7.Using the appraisal result to determine reserve price of nonperforming loans, collateral of nonperforming loans

1. If reserve price of nonperforming loans, collateral of nonperforming loans are appraised as stipulated under Article 4 of this Decree, Asset Management Company shall determine reserve price of nonperforming loans, collateral of nonperforming loans when auctioning at the first time according to the principle that the reserve price is not lower than the price of nonperforming loans, collateral of nonperforming loans according to appraisal results;

2. If auction of nonperforming loans, collateral of nonperforming loans as stipulated under Clause 1 of this Article fails:

a) For auction nonperforming loans purchased by Asset Management Company at the market price, Asset Management Company shall decide reserve price of nonperforming loans. If Asset Management Company decides to reduce the reserve price, each time of reduction should not be over 10% of the reserve price of the previous auction;

b) For auctioning nonperforming loans purchased by Asset Management Company at the book value by special bonds, in the case of continuing to auction, Asset Management Company shall agree with credit institutions on the reserve price of nonperforming loans. Within 7 working days since the auction continues but it fails to reach an agreement with credit institutions selling loans, Asset Management Company shall decide on the reserve price of nonperforming loans. If Asset Management Company decides to reduce the reserve price of nonperforming loans, each time of reduction should not be over 10% of the reserve price of the previous auction.

c) For auctioning collateral of nonperforming loans, in the case of continuing to auction, Asset Management Company shall agree with the guarantor on the reserve price of collateral. Within 7 working days since the auction continues but it fails to reach an agreement with the guarantor, Asset Management Company shall decide on the reserve price of collateral. If Asset Management Company decides to reduce the reserve price of collateral, each time of reduction should not be over 10% of the reserve price of the previous auction.

Chapter III

COUNCIL FOR AUCTION OF HIGH-VALUE NONPERFORMING LOANS AND COLLATERAL OF NON-PERFORMING LOANS

Article 8.High value nonperforming loans, collateral of nonperforming loans

1. High value nonperforming loans or collateral of nonperforming is nonperforming loan or collateral of nonperforming loans of Asset Management Company that the reserve price is from 100 billion dong or more.

2. The reserve price as stipulated under Clause 1 of this Article:

a) For nonperforming loans, collateral of nonperforming loans as stipulated under Clause 1, 2, 3 Article 4 of this Decree, the reserve price shall be determined as stipulated under Clause 1 Article 7 of this Decree;

b) For nonperforming loans, collateral of nonperforming loans, in addition to cases as stipulated under Point a of this Clause, the reserve price shall be determined according to related regulations.

Article 9.Establishment of the Council for auction of nonperforming loans and collateral of nonperforming loans

1. Asset Management Company shall decide on establishment and promulgate Regulations on operation of the Council for auction of nonperforming loans and collateral of nonperforming loans for high value nonperforming loans and collateral of nonperforming loans as stipulated under Article 8 of this Decree.

2. Council for auction of nonperforming loans and collateral of nonperforming loans include: Chairmen of the Board of Members of the Asset Management Company or the person authorized by the Chairmen of the Board of Members being the Chairmen of the Board, 01 auctioneers, 01 representative of credit institutions (in case of auctioning nonperforming loans, collateral of nonperforming loans purchased at the book value by special bonds, representatives of related agencies under Asset Management Company and other members under the Decision of the Asset Management Company (if any).

3. Asset Management Company shall establish the Council for auction of nonperforming loans, collateral of nonperforming loans to auction for one item of nonperforming loan, collateral of nonperforming loans or many nonperforming loans, collateral of nonperforming loans.

Article 10. Operation principles of the Council for auction of nonperforming loans, collateral of nonperforming loans

1. The auction conducted by the Council for auction of nonperforming loans, collateral of nonperforming loans must be attended by two over three numbers of members, of which there must be auctioneers, representative of credit institutions selling loans (if auctioning nonperforming loans, collateral of nonperforming loans purchased at the book value by special bonds).

2. The Council for auction of nonperforming loans, collateral of nonperforming loans shall work based on discussion principle and decisions shall be made based on the approval of most members. If the result can’t be made by voting, the chairman shall make decision.

Article 11.Rights and obligations of the Council for auction of nonperforming loans, collateral of nonperforming loans

1. The Council for auction of nonperforming loans, collateral of nonperforming loans shall have the following rights:

a) To deprive of the right to participate in an auction of, and make a record for handling, a bidder who commits an act of causing disorder at the auction, colludes or is in cahoots with others for price suppression or commits other acts affecting the objectivity and truthfulness of the auction;

b) To stop the auction and report to the competent person who has decided to form the council for handling violations of the regulations on auction order and procedures or when detecting that the auctioneer colludes or is in cahoots with others for price suppression or commits other acts affecting the objectivity and truthfulness of the auction;

c) To select a form of auction specified in Clause 1, Article 40 of this Law for property auction;

d)Other rights as provided by law.

2. The Council for auction of nonperforming loans, collateral of nonperforming loans shall have the following obligations:

a)The obligations prescribed at Points b and d, Clause 2, Article 24 of this Law;

b)To organize and conduct an auction according to the operation regulation of the council, rules of the auction and relevant laws;

c) To take responsibility for the auction results before law and the competent person who has decided to form the council;

d) To settle complaints and denunciations during the auction; to receive and settle according to its competence or propose the competent person who has decided to form the council to settle complaints filed after the auction; to pay damages in accordance with law;

dd) Report the result of property auction and send auction documents to competent people to decide on establishment of the Council after the auction finishes.

e) Other obligations as stipulated by the law;

Article 12.Rights and obligations of Chairman, members of the Council for auction of nonperforming loans, collateral of nonperforming loans

1. The Chairman of the Council for auction of nonperforming loans, collateral of nonperforming loans shall have the following rights and obligations:

a) To organize the implementation of rights and obligations of the Council as stipulated under Article 11 of this Decree;

b) To assume the prime responsibility in meetings; assign tasks for each member;

c) To implement other tasks, rights according to Regulations on operation of the Council and other laws;

2. Members of the Council shall implement tasks under the management of the chairman and be responsible before the Chairman of the Council;

3. Members of the Council is the auctioneer that shall directly take responsibility for the auction;

Chapter IV

IMPLEMENTATION PRIVISIONS

Article 13. Effect

1. This Decree takes effect on July 01, 2017.

2. To annul Clause 1 Article 27 of the Decree No. 53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company.

Article 14. Implementation responsibility

1. The State Bank Governor shall guide the implementation of this Decree.

2. Ministers, Heads of ministerial agencies; Heads of Governmental agencies; the Presidents of People’s Committees of central-affiliated cities and provinces; the President of the Member assembly and General Director of Asset Management Company shall implement this Decree./.

For Government

Prime Minister

Nguyen Xuan Phuc