Decree No. 69/2016/ND-CP dated July 01, 2016 of the Government on requirements for running debt trading service

                                      DECREE   

On conditions for provision of debt purchase and
sale service[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the November 26, 2014 Law on Investment;

Pursuant to the June 14, 2005 Civil Code;

Pursuant to the November 26, 2014 Law on Enterprises;

Pursuant to the June 16, 2010 Law on Credit Institutions;

Pursuant to the December 13, 2005 Ordinance on Foreign Exchange, and the March 18, 2013 Ordinance Amending and Supplementing a Number of Articles of the Ordinance on Foreign Exchange;

At the proposal of the Governor of the State Bank of Vietnam;

The Government promulgates this Decree on conditions for provision of debt purchase and sale service.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Decree prescribes the conditions for provision of debt purchase and sale service in the territory of the Socialist Republic of Vietnam.

2. Credit institutions and foreign bank branches shall purchase and sell debts in accordance with the Law on Credit Institutions and relevant laws.

3. Organizations and individuals purchasing and selling bonds within the scope of regulation of the Law on Securities shall comply with the Law on Securities.

4. The Asset Management Company of Vietnamese credit institutions shall purchase and sell debts under the Government’s regulations on the establishment, organization and operation of the Asset Management Company of Vietnamese credit institutions.

5. The Vietnam Debt and Asset Trading Corporation shall purchase and sell debts under the Government’s and Prime Minister’s regulations on the establishment and operation of Vietnam Debt and Asset Trading Corporation.

6. The stock exchanges shall organize the securities trading market in accordance with the Law on Securities.

7. Organizations and individuals (except those defined in Clauses 2, 3, 4, 5 and 6 of this Article) purchasing and selling debts for non-commercial purposes shall comply with the Civil Code.

Article 2. Subjects of application

1. Enterprises providing purchase and sale debt service.

2. Organizations and individuals wishing to provide purchase and sale debt service.

Article 3. Interpretation of terms

In this Decree, the terms below shall be construed as follows:

1. Debt means an obligation whereby a debtor must transfer assets to a creditor as agreed upon in a contract, or rights and obligations arise in accordance with law.

2. Debt purchase and sale means transfer by a debt seller of part or the whole of the creditor’s right to claim debts and relevant rights to a debt purchaser and receives a payment from the debt purchaser.

3. Creditors include economic organizations, individuals and other subjects of civil transactions that have the right to claim debts.

4. Debtors include economic organizations, individuals, and other subjects of civil transactions that have the obligation to pay debts under contracts or obligation to pay a debt arising in accordance with the law.

5. Other subjects of civil transaction are subjects participating in other civil transactions, except the following:

a/ Economic organizations and individuals;

b/ Political organizations and socio-political organizations;

c/ State agencies and people’s armed forces units;

d/ International organizations or governments of other countries.

6. Provision of debt purchase and sale service means the continuous performance of one activity or several activities related to the debt purchase and sale for the profit-making purpose, including debt purchase, debt sale, debt purchase and sale brokerage, debt purchase and sale consultancy and debt trading floor services.

7. Non-business debt purchase and sale means debt purchase and sale activities which are conducted by an organization or individual in an interrupted manner not for the profit-making purpose, including:

a/ The sale of debts of a creditor, excluding debts purchased by such creditor from other creditors;

b/ The purchase of debts not for the purpose of resale to any organization or individual, including purchase of debts to be converted into capital contribution portions or shareholding, rescheduling of a debt repayment term; and realization of security assets;

c/ Other interrupted activities of purchase and sale of debts not for the profit-making purpose.

8. Debt purchase and sale brokerage means an intermediary service provided to the parties of a debt transaction whereby a debt broker arranges the debt purchase and sale and enjoys a service charge as agreed, excluding auction activities of professional auction organizations.

9. Debt purchase and sale consultancy means a service by which a consultant uses his/her professional knowledge to discover issues and propose solutions for debt purchase and sale. That service is provided in an independent and objective manner at the request of customers who must pay consulting charge as agreed.

10. Debt trading floor service means the provision of debt trading floor and organization of debt purchase and sale; introduction and provision of information about debts to parties that wish to enter into transactions; examination of debt-related dossiers and documents to ensure the eligibility to conduct debt transactions; and provision of intermediary service between the parties to communicate, negotiate and enter into a debt purchase and sale contract.

11. Debt trading floor means a place where transactions of debt purchase and sale, consultancy and brokerage are regularly conducted.

12. Debt purchaser means an organization or individual that purchases or is transferred a debt in order to become a new creditor.

13. Debt seller means an organization or individual that owes a debt to a creditor and sells or transfers such debt to a debt purchaser.

14. Broker means an enterprise that provides debt purchase and sale brokerage service.

15. Enterprise providing debt purchase and sale service means an enterprise that has registered the business line of provision of debt purchase and sale service (including debt management and asset operation company of a commercial bank).

16. Managers of an enterprise providing debt purchase and sale service means managers of a company and managers of a private enterprise, including owner of a private enterprise, general partner, chairperson of the Members’ Council, member of the Members’ Council, president of a company, chairperson of the Board of Directors, member of the Board of Directors, director or general director and persons holding other managerial positions who are competent to enter into the company’s transactions on its behalf in accordance with the company charter.

Article 4. Principles of provision of debt purchase and sale service

1. An organization (not an enterprise) or individual that wishes to provide debt purchase and sale service shall establish an enterprise.

2. Enterprises shall register the business line of provision of debt purchase and sale service in accordance with law.

3. Enterprises providing debt purchase and sale service must meet the corresponding condition prescribed in Article 5, 6, 7 or 8 of this Decree.

4. The debt purchase and sale service must be provided in a public, transparent and equal manner in accordance with law.

Chapter II

CONDITIONS FOR PROVISION OF DEBT PURCHASE AND SALE SERVICE

Article 5. General conditions for enterprises providing debt purchase and sale service

1. Enterprises shall issue internal regulations on organizational management and on the provision of debt purchase and sale service in accordance with this Decree.

2. Enterprises shall comply with the provisions on the minimum charter capital or investment capital in Clause 2, Article 6; Clause 2, Article 7, and Clause 2, Article 8 of this Decree. In case an enterprise conducts some, or all of, activities, its minimum charter capital or investment capital shall be the highest minimum level prescribed for any of the activities which it conducts.

3. A manager of an enterprise must meet the following conditions:

a/ Having full civil act capacity and being not banned by the Law on Enterprises from managing enterprises;

b/ Possessing a university or higher degree in economics, or business administration, law, or a field relevant to his/her charge;

c/ Having worked as a manager for at least 5 years or having at least 5 years’ working experience in finance, banking, accounting, auditing, law, asset valuation or debt trading;

d/ An individual who has worked in an enterprise providing debt purchase and sale service whose enterprise registration certificate has been revoked must meet the following additional condition: Having not worked as a manager of such enterprise for the last 3 years.

Article 6. Conditions on enterprises providing debt purchase and sale brokerage or consultancy services

1. Satisfying the conditions prescribed in Article 5 of this Decree.

2. Having a charter capital or an investment capital of at least VND 5 billion.

Article 7. Conditions on enterprises purchasing and selling debts

1. Satisfying the conditions prescribed in Article 5 of this Decree.

2. Having a charter capital or an investment capital of at least VND 100 billion.

3. To be purchased and sold, a debt must meet the following conditions:

a/ There is no written agreement on ban on debt purchase and sale;

b/ The debt is not used to secure the fulfillment of a civil obligation at the time of debt purchase and sale, except where the secured party accepts in writing the debt sale;

c/ The debt purchaser and the debt seller are not affiliated persons under the Law on Enterprises.

4. The debt purchase and sale must be under written contracts on the basis of the contractual parties’ agreement, which must specify the rights and obligations of the debt purchasers and sellers in order to ensure lawful rights and interests of the parties.

5. An enterprise providing debt purchase and sale service may neither get credit extension from a credit institution or foreign bank branch to purchase debts of borrowers of such credit institution or foreign bank branch, nor receive guarantee of a credit institution or foreign bank branch to get credit extension from another credit institution or foreign bank branch for purchasing debts from borrowers of the securing credit institution or foreign bank branch.

6. The debt purchaser, debt seller, debtor and other related parties shall comply with current regulations on foreign exchange management in case the debt purchase and sale give rise to a foreign lending/borrowing relation and requires foreign currencies in debt transactions.

Article 8. Conditions on enterprises providing debt trading floor service

1. Satisfying the conditions prescribed in Article 5 of this Decree.

2. Having a charter capital or an investment capital of at least VND 500 billion.

3. Having provided debt purchase and sale service for at least 1 year and earning a turnover of at least VND 500 billion from such service in the year preceding the year of providing trading floor service.

4. Having at least 2 staff members possessing certified accountant certificates or price appraiser cards in accordance with the law.

5. Having the operation regulation of the debt purchase and sale floor that must include the following contents:

a/ Order and procedures and responsibilities of participants in the debt trading floor, and rights and obligations of enterprises providing debt trading floor service;

b/ Conditions for debts planned to be listed on the debt trading floor;

c/ Management and supervision of transactions, with regulations on provisions and storage of information about the debts planned to be listed on the debt trading floor;

d/ Time and mode of establishment and cancellation of transactions;

dd/ Payment mode and payment guarantee for involved parties;

e/ Settlement of disputes.

6. Having appropriate physical and technical facilities and information technology systems for receiving, updating and providing information about debt purchase and sale for debt trading floor participants.

7. Performing annual independent audit in accordance with law.

Chapter III

STATE MANAGEMENT OF PROVISION OF DEBT PURCHASE AND SALE SERVICE

Article 9. Responsibilities of the Ministry of Finance

1. To take responsibility before the Government for the state management of enterprises providing debt purchase and sale service.

2. To manage, examine, inspect and supervise the provision of debt purchase and sale service according to its competence.

3. To guide the implementation of this Decree.

Article 10. Responsibilities of provincial-level People’s Committees

1. To examine and inspect the observance of the law on provision of debt purchase and sale service in their localities and handle violations of the regulations on provision of debt purchase and sale service according to their competence.

2. To send annual or extraordinary reports on provision of debt purchase and sale service in their localities to the Ministry of Finance.

Article 11. Responsibilities of business registration agencies

1. To receive and settle dossiers of request for enterprise registration or registration of change in contents of enterprise registration certificates for provision of debt purchase and sale service.

2. To send annual or extraordinary reports on the grant and supplementation of business registration certificates for provision of debt purchase and sale service to provincial-level People’s Committees.

Article 12. Responsibilities of the State Bank of Vietnam

The State Bank of Vietnam shall coordinate with the Ministry of Finance in examining, inspecting and supervising the provision of debt purchase and sale service by debt management and asset operation companies of commercial banks under this Decree.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 13. Effect

This Decree takes effect on July 1, 2016.

Article 14. Transitional provisions

Within one year from the effective date of this Decree, enterprises that have provided debt purchase and sale service before the effective date of this Decree shall comply with the following provisions:

1. Enterprises fully satisfying the conditions prescribed in this Decree shall send written reports to business registration agencies.

2. Enterprises failing to fully satisfy the conditions prescribed in this Decree shall send written reports to business registration agencies and take measures to ensure the compliance with this Decree, including termination of the provision of debt purchase and debt service.

Article 15. Implementation responsibility

Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of People’s Committees at all levels, and subjects of application of this Decree shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC