CIRCULAR

GUIDING PAWNAGE SERVICE BUSINESS

In furtherance of the Government’s Decree No. 11/1999/ND-CP of March 3, 1999 "on goods banned from circulation, commercial services banned from provision, goods and commercial services subject to business restriction or conditional business", after consulting the State Bank of Vietnam, the Ministry of Trade hereby provides the following detailed guidance on pawnage service business:

I. SCOPE OF APPLICATION

1. Pawnage service business stipulated in this Circular means the merchants lend money to clients and keep the clients’ goods or property to secure the latter’s performance of their obligations defined in the pawn contracts.

Goods or property used to secure the performance of the obligations in the pawn contracts are called the pawned goods or property.

Clients in this service may be producers, businessmen or consumers.

2. Merchants engaged in pawn service business must meet all the prescribed conditions and strictly comply with the provisions of this Circular.

...

...

...

3.1. Goods and property that can be pawned:

- They must be movable property of trading or exchanging value, which are lawfully owned by the clients.

- If the goods or property are owned by a third person, such person’s valid letter of authorization for the client is required.

- If the goods or property are jointly owned by many persons, the co-owners’ letter of authorization for the client is required.

3.2. Goods and property that cannot pawned:

- Goods and property under the State�s ownership.

- Immovable property and papers related to such property.

- Goods banned from business, circulation or use by law.

- Goods and property over which the ownership is disputed.

...

...

...

- Goods and property being mortgaged, guaranteed or pledged at other places.

II. PAWNAGE SERVICE BUSINESS CONDITIONS AND REGULATIONS

1. To engage in pawnage service business, a person must meet the following conditions:

1.1. Being merchant with business registration certificate which stipulates pawnage service business as one of his/her business lines.

1.2. Having a fixed pawnshop with definite address; having warehouses for keeping and preserving the pawned goods and property safely against damage or loss thereof during the time of keeping.

2. Lending amounts: shall be agreed upon by the two parties, which must not exceed 80% of the pawned goods’ or property’s value, determined according to the market price at the time of signing the pawn contract.

3. Lending interest rate (including the costs of preservation and keeping of the pawned goods and/or property): shall be agreed upon by the two parties, but not exceed 3%/month. Where the lending term is under 10 days, the lending interest rate shall not exceed 0.3%/day.

4. All pawning transactions must be made in contract, which is called the pawn contract.

A pawn contract shall be made according to the law provisions on economic contracts or civil con-tracts, depending on whether the client is a producer, businessman or consumer. For pawn contracts with the pawned goods or property valued at more than 500,000 VN dong, apart from the general contents as prescribed, they must also contain the following:

...

...

...

- The goods’ or property’s names, categories, trade marks and labels, symbols and codes.

- The ownership right certificate or the circulation registration paper, if so prescribed by law for such goods or property.

- The goods’ or property’s quality, state and value at the time of signing the contracts.

4.2. The lending amount already agreed upon under the provisions of Clause 2 above.

4.3. The lending interest rate already agreed upon under the provisions of Clause 3 above.

4.4. The pawn duration and mode of payment.

4.5. The handling of the pawned goods or property upon the liquidation of the contract.

4.6. Other commitments made by the two parties.

5. A pawn contract shall terminate and be liquidated in the following cases:

...

...

...

5.2. The client requests the termination of the contract before time-limit stated therein and has fully repaid the lending amount as well as the amount of interest arising therefrom by the time he/she requests the termination of the contract.

5.3. The pawned goods or property has been dealt with according to the provisions of Clause 8, this Item.

6. Merchants engaged in pawnage service business shall have the rights and obligations stipulated by the legislation on economic contracts or civil contracts; for the pawn contracts, a number of specific points are stipulated as follows:

6.1. They shall have the right to request the termination of contracts and handle the pawned goods and property according to the provisions of Clause 8 below in the following cases: the client dies or is missing without a heir as prescribed by law or his/her heir refuses in writing to continue the performance of the contract.

6.2. They shall have to preserve and keep the pawned goods and property of the clients; refrain from selling, exchanging, hiring, lending, donating, mortgaging or using them, except otherwise agreed upon in the pawn contracts.

6.3. They shall have to pay compensation to the clients if causing losses or damages to the latter�s pawned goods and property as prescribed by law.

7. The clients shall have the rights and obligations under the law provisions on economic contracts or civil contracts; for the pawn contracts, a number of specific points are stipulated as follows:

7.1. They shall have the right to request the termination of pawn contracts ahead of time if their demands for loans no longer exist or if the pawn-brokers breach the contracts.

7.2. They shall have to fully repay the lending amounts and interests arising therefrom upon the termination of the contracts in any cases.

...

...

...

8.1. The contract has not expired but the client is incapable of repaying the debt and propose the sale of the pawned goods or property.

8.2. Five days after the expiry of the contract or the already extended contract, the client cannot repay the debt.

8.3. The client dies or is missing without a heir or a person authorized to continue performing the contract as prescribed by law.

9. The sale of the pawned goods or property valued at more than 500,000 VND must be conducted in form of public auction according to the provisions of law.

10. The proceeds from the sale of pawned goods or property shall be dealt with according to the following order of priority:

10.1. To cover the costs of organizing the sale of the pawned goods or property.

10.2. To repay the borrowed money (both principal and interest arising therefrom) to the merchant engaged in pawn service business.

10.3. The remaining amount shall be returned to the client. In cases where no one receives it, the money shall be dealt with in accordance with the provisions of law.

10.4. Where the proceeds are not enough for paying off the loan, the client shall still have to pay the outstanding amount or the pawn-broker shall be entitled to initiate a lawsuit according to the provisions of law.

...

...

...

11.1. Pawnshops must all have placard boards clearly stating the pawned goods and property, the lending levels and lending interest rates as stipulated in Clause 1- Section I, Clauses 2 and 3- Section II of this Circular.

11.2. They must refrain from pawning transactions with clients who do not have civil act capacity as prescribed by the Civil Code.

11.3. They must not receive the pawned goods or property with unidentified origin. When suspecting that the goods or property is acquired through criminal acts, they must promptly inform the competent agencies thereof for inspection and handling.

III. HANDLING OF VIOLATIONS AND IMPLEMENTATION PROVISIONS

1. Merchants engaged in pawn service business who violate the provisions of this Circular shall, depending on the seriousness of their violations, be subject to administrative sanctions or examination for penal liability as prescribed by law.

2. This Circular takes effect 15 days after its signing and replaces Joint Circular No. 02-TT/LB of October 2, 1995 of the State Bank of Vietnam and the Ministry of Trade guiding the pawnage service business.

3. The Trade Services of the provinces and centrally-run cities shall have to guide, supervise and inspect merchants engaged in pawnage service business in their respective localities and promptly handle violations of this Circular as prescribed by law.

...

...

...