Proxy contest in Vietnam

Vietnam securities regulations do not have specific regulations governing a proxy contest where a shareholder or group of shareholder actively seeks to obtain proxies from other shareholders in order to influence the decision of the Shareholder Meeting (e.g. electing new Board directors or approving certain important corporate matters). In particular, a shareholder, who seeks to obtain proxies from other shareholders in a Public Joint Stock Company (Public JSC), is not required to make any public disclosure or filing about its intention for the proxies obtained.

New Bank Lending Regulations Circular 39/2016 (2)

On 14 March 2017, the State Bank of Vietnam (SBV) has issued an Official Letter No. 1576/NHNN-CSTT (OL 1576) explaining several points of its Circular 39/2016, including:

confirmation that applicable interest rate of a loan can be described in general in a frame loan agreement and specified (with conversion to per cent per annum) in a relevant debenture note;
confirmation that commitment fee can only be applied one time only; and
a further guidance that if the bank and its customer agree on an interest rate calculated on the basis of a year having 360 days, then the loan agreement also has to include an interest rate calculated on the basis of a year having 365 days;
if the repayment period is restructured, overdue interest can be applied to overdue interest amount but it cannot be accumulated over overdue principal amount during the extended period; and
regarding floating interest, if the formula or its calculating factor is not clear which resulted to different interest rates, the lowest one shall be applied by default.

One important change made by Circular 39/2016 is that the loan period will start on the day immediately after the disbursement date rather than the disbursement date itself as provided by previous legislation. Consequently, interest payable by the borrower will also have to be calculated on that day. This change may appear small in theory but could cause material change in practice. This is because most banks are using software to calculate interest. And it appears that many systems have been set up according to previous practice which cannot be easily changed to reflect the change introduced by Circular 39/2016. The SBV however has not offered any clarification on this point.

This post is contributed by Nguyen Hoang Duy, an associate at Venture North Law Limited.

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Comment

Mortgage or pledge of future assets in Vietnam

The Civil Code 2015 recognises that future assets can be used as security. Future assets are assets which do not exist at the time of creation of the relevant security or which exist at the time of creation of the relevant security but do not belong to the ownership of the relevant mortgagor or pledgor. However, it is not clear how a mortgage or pledge over a future asset which is not owned by the mortgagor at the time of creation of the mortgage or pledge could reconcile with the requirement that the mortgagor or pledgor must own the mortgaged assets under the Civil Code 2015.

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Confusion regarding time limitation under Vietnamese Civil Code 2015

Under the Civil Code 2015, the time limitation for making a claim is longer than that of the Civil Code 2005. For example,

Under the Civil Code 2015, a claim for breach of contract or for non-contractual damages now has a time limitation of three years commencing on the date on which the claimant knows or should have known that the claimant’s rights or interests have been violated. This is longer than two years under the Civil Code 2005. In addition, the two year time limitation period under the Civil Code 2005 may commence on a much earlier date (i.e. the date on which the claimant’s rights or interests have been violated).
Under the Civil Code 2015, a claim for an inheritance of an immovable property is 30 years instead of 20 years under the Civil Code 2005.

Vietnam Business Law