Potential loss of priority upon re-registration of security interest over listed securities with Vietnam Securities Depository

From 1 January 2021, Decree 155/2020 requires securities interests (e.g., a mortgage) over listed securities to be registered with the Vietnam Securities Depository and Clearing Corporation (VSD). Since security interest over unlisted securities is registered with the National Register Agency of Secured Transactions (NRAST), a re-registration of the security interest with VSD is likely to be required when the unlisted securities become listed. However, such a re-registration may result in a loss of ranking of the relevant security interests.

Decree 155/2020 provides that security interests over listed securities, which have been registered at NRAST before 1 January 2021 are not required to be re-registered at VSD after 1 January 2021. This provision suggests that security interests over listed securities which have been registered at NRAST after 1 January 2021 are required to be registered at VSD. Accordingly, when an unlisted security becomes listed security, the security interest registered with NRAST over such unlisted security should be re-registered with VSD.

The re-registration of the security interest with VSD could cause the priority time generated by the existing NRAST registration to be lost. Under Decree 155/2020, the priority time of a security interest is when VSD records the registration content into its registry of information of security interest. Decree 155/2020 does not have any mechanism (i) which allows a security interest, when being registered at VSD, to keep their priority time generated by NRAST registration, or (ii) which allows a security interest registration at NRAST to be forwarded to VSD.

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