New guidance on foreclosure of shares and other securities registered with the Vietnam Securities Depository

On 26 August 2020, the Vietnam Securities Depository (VSD) issued Decision 154/QD-VSD (Decision 154/2020) to allow a lender who has taken a mortgage over shares or other securities registered with the VSD (Public Securities) to request the VSD to transfer the mortgaged or pledged Public Securities to a third party designated by the lender, if the mortgage or pledge agreement allows the lender to do so.

Previously, the VSD only transfers the Public Securities to the lenders when the lenders take actions to enforce a mortgage or pledge over Public Securities. Accordingly, the old regulations could cause problems for lenders who are subject to restrictions in directly holding the relevant Public Securities (e.g., ownership limit or other investment conditions).

Read MoreInfo
Comment
Written by Nguyen Quang Vu On In ,

The Vietnam Supreme Court’s opinion on unauthorised corporate loans

In September 2019, the Supreme Court has given an important opinion to lower courts about how to deal with a loan agreement by a borrower who has failed to obtain appropriate corporate approval. The opinion relates to a borrower being a limited liability company which has failed to obtain Members Council’s approval for a bank loan. However, the opinion should generally be applicable for borrower being joint stock companies. The court’s opinion is not a law. But it could still help lenders in protecting their loans in case a corporate borrower wants to get out of the loans on the ground the loan does not have appropriate corporate approvals.

Read MoreInfo
Comment
Written by Nguyen Quang Vu On In ,

A Comparison between Vietnam's Commitments in Financial Services under WTO, CPTPP and EVFTA

The full text of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Agreement (CPTPP) and the Free Trade Agreement between Vietnam and European Union (EVFTA) have been made available for public information. The table below tries to compare the existing commitments of Vietnam under WTO Agreement, CPTPP and EVFTA Agreement in Financial Services. The comparison is done by Tran Thuy Tien, and Nguyen Bich Ngoc.

Notes:

Read MoreInfo
Comment
Written by Nguyen Quang Vu On In ,

Mortgage registration of public securities at Vietnam Securities Depository and Clearing Corporation

Under the new Securities Law 2019, the Vietnam Securities Depository and Clearing Corporation (VSDCC) will replace the current Vietnam Securities Depository and will have the authority to register the security interest (such as mortgage or pledge) over securities centrally registered at VSDCC (public securities). Currently, security interest over public securities is registered with the NRAST, an agency under the Ministry of Justice. Although it is not clear, it is likely that the registration of mortgage of public securities will be completed at VSDCC instead of registration with NRAST. The registration of security interests over public securities with VSDCC is still subject to guidance by the Government. However, there are several issues which may arise from the change contemplated by arising from this new authority of VSDCC:

  • In essence, registration of security interest is an administrative procedure which should be done by a Government authority. Accordingly, VSDCC is a company with profit making purpose may not suitable to exercise the rights of a Government registrar;

Read MoreInfo
Comment
Written by Nguyen Quang Vu On In