Vietnam updates Secured Transactions law
Decree No. 83/2010/ND-CP issued on 23 July 2010 ("Decree 83"), updates procedures for registering an asset used as security in a financial transaction, mainly land and attached assets, forestry
rights, aircrafts, vessels, and other assets provided by law.
Decree 83 is designed for the situation wherein a lender requests registration of an asset prior to disbursement. The lender will then lodge a request, or ask the borrower to make a similar request, with the relevant authority (determined by the type of asset and the location). The authority then requires proof of ownership from the borrower. If the borrower can provide such proof, and correctly fill out
the proper forms, the asset is registered for purposes of the transaction. Registration of assets for the purposes of securing a transaction involves a temporary holding of ownership documents by the registering authority. This is to prevent the borrower from absconding with the assets before completing
payment on the loan.
Decree 83 provides separate procedures, including registration dossiers, time limits, relevant authorities, and procedures to end the registration, for each type of asset. This even applies to land use rights, as the procedure calls for the submission of the relevant "book" of rights as part of the registration dossier.
This new Decree suggests that this central registration will be used to further research in creditworthiness and help banks make more informed lending decisions. Once a transaction is registered, or more appropriately, once an asset is secured, any authorized entity or individual (there are criteria for
authorization, and the registry may only give information to those authorized) may access limited information related to that secured asset and thus know whether it is already registered to secure some other, senior debt. This is particularly useful in avoiding situations where a bank might, unwittingly,
be granting a second or third mortgage on a house that is possibly not worth enough to cover the first.
Decree 83 replaces Decree No. 08/2000/ND-CP on Secured Transactions, and
repeals specific articles in Decrees No. 163/2006/ND-CP, No. 181/2004/
NDCP, No. 84/2007/ND-CP, No. 23/2006/ND-CP, No. 70/2007/ND-CP, and
No. 29/2009/ND-CP. Decree 83 enters effect on 09 September 2010.
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