A new resolution of the Supreme Court on borrowing interests in Vietnam

On 11 January 2019, the Supreme Court issued Resolution 1 guiding the application of several regulations on interest, interest rate and relevant penalty (Resolution 1/2019). Resolution 1/2019 will take effect from 15 March 2019. Below are some salient points of Resolution 1/2019

Resolution 1/2019 clearly states that the interest rate caps of the Civil Code 2005 and 2015 will not apply to credit contracts between banks and its customers. In the past, there has been long debate regarding whether the interest rate caps of the Civil Code 2005 and 2015 will apply to credit contracts.
If the interest rate, overdue interest on principal and overdue interest on interest are higher than the permitted cap, the exceeding interest which has been paid will be deducted from the principal of the loan.

Fintech products and anti-money laundering regulations in Vietnam

Under anti-money laundering regulations, a financial transaction using new technology is transactions which can be conducted by customers without meeting with staffs of a financial institution. If a financial service provider (which may include payment service providers such as e-wallet providers) provides financial services using new technology, the financial institution is still required to meet with its customers at the first time the customer using the services and collect KYC information.

The requirement for physical meeting for collecting KYC information document may make the rolling out a fintech product in Vietnam much slower in other countries.

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Collective actions by bondholders in Vietnam

Collective action mechanism among bondholders is one of the common features in terms and conditions of a corporate bond. Two important features of collective action mechanism are:

· the use of a bond trustee to act for the benefit of bondholders; and

· the use of bondholders’ meeting to allow a decision of a majority (or super-majority) of bondholder regarding the bond (e.g. changing the terms of the bond) to bind minority bondholders who disagree with such decision.

Arguably, if the provisions of bondholders’ meeting are included in the terms of the bond and a bondholder agrees to such term then the provisions on a civil transaction under Civil Code 2015 may allow the use of bondholders’ meeting in Vietnam. However, the validity of a decision of a bondholders’ meeting which is not approved by all bondholders is still questionable under Vietnamese law. This is because:

E-signatures v.s. digital signatures under Vietnamese law

Under the Law on E-Transactions, an e-signature (chữ ký điện tử) is defined as being created in the form of words, script, numerals, symbols, sounds or in other forms by electronic means, logically attached or associated with a data message, and being capable of identifying the person who has signed the data message, and being capable of identifying the consent of that signatory to the contents of the signed data message.

According to Article 24.1 of the Law on E-Transactions, an e-signature of an individual affixed to a data message will be legally equivalent to the signature of such individual affixed to a written document if:

· the method of creating the e-signature permits to identify the signatory and to indicate his/her approval of the contents of the data message; and

· such method is sufficiently reliable and appropriate to the purpose for which the data message was originated and sent.

Accordingly, if an user being an individual of an e-commerce website, who can be identified by his/her username, password, and other means of verification (e.g., OTP code), clicks on a confirmation button of an online order then such action can be regarded as creating and affixing an e-signature to the online order by the individual user. This is because:

Vietnam Business Law