A new Circular on registration of mortgages and other secured transactions in Vietnam

On 20 June 2018, the Ministry of Justice issued Circular 8 on the registration and provision of information on security interest and contracts (Circular 8/2018). Circular 8/2018 will replace Circular 5/2011 on the same subject from 4 August 2018.

Name of the object of the registration

The object of registration under Circular 5/2011 is secured transactions (giao dịch bảo đảm), which is in line with the Civil Code 2005. However, the term “secured transaction” is almost removed from the Civil Code 2015 and the registration is now the registration of security interest (biện pháp bảo đảm). Circular 8/2018 adopts such approach and determined the object of registration is security interest to be consistent with the new Civil Code 2015.

Technology Transfer in Vietnam - Is “technology” a property?

The Law on Technology Transfer 2017 is drafted based on the assumption that a technology (công nghệ) can be transferred as a property (tài sản). But in light of the provisions of the Civil Code 2015, one may have to ask whether technology is a property?

Transferring technology means the transfer of the ownership or the use right of a technology from a transferor to a transferee. In addition, Article 7 of the Law on Technology Transfer 2017 says that the owner of a technology may assign its ownership or license its use right of the technology. Therefore, the Law on Technology Transfer 2017 implies that, to transfer a technology, the transferor must have the ownership of such technology. Under the Civil Code 2015, ownership can only be created upon a property. Thus, the technology under the Law on Technology Transfer 2017 should be a property.

However, technology as defined by the Law on Technology Transfer 2017 may not be a property. Article 2.2 of the Law on Technology Transfer 2017 defines technology as a solution (giải pháp), process (quy trình), and know-how (bí quyết) which can turn resources into products. Article 105 of the Civil Code 2015 says that property comprises objects (vật), money (tiền), valuable papers (giấy tờ có giá), and property rights (quyền tài sản).

The definition of technology suggests that technology is something intangible. Therefore, it is not an object. For the obvious reason, technology is not money, or a valuable paper.

Then can a technology may be property right? Solution, process, and know-how is arguably not a right. But a right to solution, process, and know-how can be property right. Article 115 of the Civil Code 2015 says that property rights are rights being able to be valued in terms of money, including property rights in respect of subjects of intellectual property rights, land use rights and other property rights. Accordingly, a transfer of technology should be considered as a transfer of rights to such technology.

Solution, process, and know-how can be the subjects of intellectual property rights. Therefore, a right to technology can be intellectual property right, thus, a property right. However, the law is not clear whether there is any money-worth right other than intellectual property right can be created upon technology?

This post is contributed by Ha Thanh Phuc, a trainee at Venture North Law.

Proposed amendments to the Vietnamese Securities Law 2006

The Ministry of Finance has released a latest draft amendment to the Securities Law 2006 (https://tinyurl.com/ydc44zyd), which is scheduled to be passed in the second half of 2019. It looks like that any major law in Vietnam will need to undergo major changes in every 10 years whether or not the changes are necessary. The draft amendments include the following major changes regarding capital raising process:

New Decree on private issuance of corporate bonds by Vietnamese companies

In December 2018, the Government issues Decree 163/2018 to replace Decree 90/2011 on private issuance of corporate by Vietnamese companies from February 2019. Decree 163/2018 introduces certain new important points as follows:

·        To be able issue bonds, a company is no longer required to be profitable in year before the proposed issuance. Instead, the company only needs to operate for at least one year and its financial statement is audited by a qualified auditor. Issuer who has undergone certain restructuring (e.g., merger, conversion or division) may rely on the historical operation of other related companies to meet the one year operating test;

·        Secondary trading of privately-issued bonds is limited within up to 100 investors excluding “professional investors” within one year from the issuance date. The new limitation seems to aim at the practice of issuing bonds privately at the first place and reselling the same to public investors in secondary market;