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;
It is not clear how existing registration of security interest over public securities with NRAST will be affected with the change of the registrar. In particular, if re-registration with VSDCC is required then whether the re-registration will keep their priority dates; and
It is not clear whether the VSDCC could develop a registration system which can perform as well as that of NRAST. Currently registration with NRAST is quite straightforward and takes only a few days. More importantly, searches at NRAST can be done online very quickly.

This post is written by Nguyen Quang Vu and Nguyen Hoang Duy.

Vietnam Business Law