In this post, we continue to discuss the new Decree 99/2022 on security interest registration, which took take effect from 15 January 2023. Part 1 of our analysis can be found here.

· Expanded scope of registration: Decree 99/2022 also extends security interests, which can be registered at NRAST. Specifically, it allows pledge, deposit, security collateral (ký cược), and escrow deposit (ký quỹ) to be registered at NRAST. Decree 99/2022 also introduces that security interest over rights to use sea area and assets attached to sea area will be registered at a separate registrar under the law on exploitation and use of marine resources.

· Registration of security over listed securities: Although Decree 155/2020 still applies to registrations of security interests over listed securities, Decree 99/2022 will apply to these registrations on issues not contemplated by Decree 155/2020. It is not clear if this provision will allow a registration of securities over rights attached to listed securities (e.g., rights to receive dividend or interests).

· Registration of security over “evolving” assets - Decree 99/2022 also provides that the registration of a security over certain types of evolving assets will continue to be effective even if the secured assets have evolved in certain situations. These situations include (1) unlisted securities becoming listed securities and vice versa, (2) inventories or materials being incorporated into other assets, and (3) property rights under contracts to purchase future houses or construction works becoming actual houses and construction works.

· Registration of mortgage over investment projects – Decree 99/2022 clearly provides that mortgages over investment project using lands will be registered with the land registration department. The previous Decree 102/2017 only contemplates mortgage over residential projects only.

· Eligible applicants for registration - Decree 99/2022 provides more detailed provisions on who can register in different situations, e.g.: registration for the first time, registration of changes, or de-registration. In case of registration of pledge, deposit, security collateral, or escrow deposit, the default applicant is the secured party unless otherwise agreed by parties. It is not clear why Decree 99/2022 has such provision while there is no provision for the default applicant for the registration of other types of security interests.

While a branch is not a legal person and under the Civil Code 2015, Decree 99/2022 still recognizes the ability of a branch to register security interests. However, Decree 99/2022 also makes it difficult for bank branches to register security interests by requiring that the dossier must contain a document on the assignment of duty by the legal person to the branch to implement the function of the legal person in registering security interests.

Interestingly, Decree 99/2022 allows the owner of the sole proprietorship to stand as the securing party if the security assets are assets of the sole proprietorship. Such provision reflects that the sole proprietorship and its owner are not separate. However, it is not clear if the same will apply in case the sole proprietorship is the secured party.

· Cancellation of registration - Decree 99/2020 introduces for the first time the procedures for cancellation of registration of security interests, which will cancel the validity of the registration from first day. The authorities can decide to cancel a registration at its own discretion or at the request of the applicant. Grounds for cancellation includes (1) an effective court judgment/decision ruling that the registration of security interest must be cancelled, (2) the registration not under the authority of the registrar; (3) false document, signature or seals; or (4) duplicated registrations.

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

Vietnam Business Law