DECISION

PROMULGATING REGULATIONS ON THE PURCHASING AND SELLING OF DEBTS BY CREDIT ORGANISATIONS

STATE BANK GOVERNOR

Pursuant to the Law on the State Bank of Vietnam No.01/1997/QH10 dated December 12, 1997;
Pursuant to the Law on Credit Organisations No.02/1997/QH10 dated December 12, 1997;
Pursuant to Decree No.15/CP dated March 2, 1993 by the Government concerning the compulsories, powers and responsibilities for State management by ministries, and ministerial ranking bodies;
According to the proposal by the head of the Department of Credit,

DECIDES

Article 1: The Decision is issued in connection with the Regulation on the Purchasing and Selling of Debts by Credit Organisations.

Article 2: The Decision comes into force 15 days after the date of signing.

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P/P STATE BANK GOVERNOR
DEPUTY GOVERNOR




Nguyen Van Giau

REGULATION

ON THE PURCHASING AND SELLING OF DEBTS BY CREDIT ORGANISATIONS

(issued in connection with Decision No.140/1999/QD-NHNN14, dated April 19, 1999 by the State Bank Governor)

Chapter I

GENERAL PROVISIONS

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Article 2: The following are the definition of some terms:

1. The purchasing and selling of debts are deals following which the seller transfers the debts that the debtor is owing the seller (including principle debts, interests and fines) to the debt buyer and gets paid from the buyer. The debt buyer takes responsibility for paying and receiving all rights of the old debt owner for the bought debts in accordance with the agreement of both parties;

2. The debt selling parties are credit organisations owning the debts (lending parties);

3. The debt buying parties are those who purchase the debts and become the owners of the debts;

4. Intermediaries are economic organisations and COs who function as the middlemen between the debt selling and buying parties, provide services for the discussion preceding the signing of debt selling and buying contracts and receive commissions in accordance with the agreement;

5. Debtors are COs, economic and financial organisations, and individuals who are owing the debt selling parties;

6. The value of sold debts includes principal debts, interest, overdue interest and other related expenses.

Article 3. Objectives involved in the purchasing and selling of debts are COs, economic organisations and individuals, including:

1. Credit organisations:

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- Banks for investment;

- Banks for development;

- Joint-stock commercial banks;

- Joint-venture banks;

- Foreign bank’s branches;

- Banks serving some State policies;

- Financial companies;

- Financial leasing companies;

- Central People’s credit funds.

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Article 4: The scope of the deal:

1. Debts lent to economic and financial organisations and individuals by COs;

2. Debts lent to COs by COs.

The regulation is not applied to the purchasing and selling of debts such as promissory notes, State treasury bonds and other valuable papers; nor debts treated in accordance with the Prime Minister’s decision, such as frozen debts and debts treated in the total settled debt amount.

Article 5: Features of debts:

1.Outstanding debts: the debt selling party and the debtor are operating; the debts are still not due; the debt selling party needs to return its investment capital or is meeting temporary difficulties in terms of capital sources;

2. Over-due debts: the debtor is still operating and will be able to pay the debts, but is meeting temporary difficulties in terms of production and business activities and has yet to pay the principle debt or the interest; or both principal debts and interest, when the lending term ends.

Article 6: The purchasing and selling of debts must obey the following principles:

1. Ensuring the operation of COs is safe, and suited to regulations of Vietnam’s legal system. In cases when the international agreements and treaties signed by the Socialist Republic of Vietnam provide different regulations than the regulation, regulations of the international agreements and treaties will be applied;

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3. Debts are transferred in accordance with the credit or lending contracts.

Article 7: Methods to buy and sell debts:

1. Direct method: the debt selling and buying parties come to an agreement to sign direct contracts. The debt selling party can directly sign contracts with one or many debt buying parties;

2. Indirect method: the purchasing and selling of debts needs the assistance of the intermediary.

Chapter II

DETAILED PROVISIONS

Article 8: The following are steps to buy and sell debts:

1. The debt selling party must announce some summarised information on the debt and the deal, including the total outstanding debts expected to be sold, terms of the debt, interest of the debt, and the maximum price and allotted time to complete the deal;

2. The debt buying party (the intermediary if there is) takes responsibility for analysing the debt and the operational conditions of the debtor;

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4. The debt selling and buying parties must sign a debt selling and buying contract;

5. The debt seller sends a document in writing concerning the deal to related parties (debtor, guarantor, and re-guarantor), including the transfer of credit contracts and other related contracts with the following contents:

a. Listing related contracts to be transferred: credit, mortgage or pawn, and guarantee and re-guarantee contracts;

b. Principal debts and other sums (interests and expenses);

c. The debt seller commits to the payment of expenses and completion of debt selling and buying procedures agreed upon by parties;

d. The debt seller commits that the debtor won’t pay any expenses related to the deal;

e. Parties including debtor, guarantor and re-guarantor must sign to certify the announcement;

6. The debt buyer takes responsibility for transferring the money to the debt seller according to the price agreed by the two parties;

7. Rectifying other remaining problems (if there is any).

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1. In cases when the credit or lending contract includes the possibility of selling and buying debts, the deal must be carried out through debt selling and buying contracts. In the contract, the debt seller must make available the following information:

a. Legal status of debt seller and buyer and related parties;

b. Addressees of debt seller and buyer;

c. Defining the value of the sold debt;

d. The selling price and payment modes;

e. Fixing the deadline of the deal;

f. Debtor’s responsibilities before and after the debt selling and buying contract is signed (If no other legal agreements are made between related parties, there won’t be any changes over the debtor’s powers and compulsories previously regulated in the original credit contract);

g. Forms to transfer papers of bought debts;

h. Other commitments.

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- In cases where the credit or lending contract signed between the debt seller (lending parties) and the debtor provides regulations on the allowance of selling and purchasing debts, it is unnecessary to have approvals by the debtor and related parties to carry out the deal;

- In cases when the credit or lending contract signed between the debt seller and the debtor excludes the possibility of selling and buying debts, it is necessary to have the approval of the debtor and related parties in order to carry out the deal;

3. Debt selling and buying contract must be announced to the debtor;

4. From the date that the debt selling and buying contract is signed, all previous letters and discussions become invalid, excluding some cases when there have been other agreements reached by the concerned parties;

5. The notarisation of the debt selling and buying contract is decided upon by the debt buyer and seller;

6. Measures to assure that the debt selling and buying contract is implemented smoothly are applied in accordance with the general provision on ensuring the implementation of contracts by Vietnam’s legal system.

Article 10: The following are the rights applied to the assurance of sold, bought and transferred debts:

1. All rights and interests linked with the assurance of debts (mortgages, pawns, guarantee and re-guarantee) are kept unchanged and transferred to the debt buyer by the debt seller in accordance with the debt selling and buying contract;

2. In cases where the assurance of debts needs to be adjusted in accordance with the selling and buying parties’ agreement, it is necessary to have approval of the debtor, guarantor and re-guarantor;

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Article 11: The debt seller and buyer, or the debt buyer are allowed to resell the debt to the third party. In this case, another contract must be formed to carry out the deal.

Article 12: The debt selling price must be agreed upon by parties in accordance with the percentage or the absolute value over the value of the sold debt.

Article 13: The currency used to sell and buy the debt is the currency of the sold debt. If the payment is balanced in other currencies, there must be an agreement between the seller and the buyer and it must follow all regulations on the management of foreign currencies by the State of Vietnam.

Article 14: The debt buyer has the following rights and responsibilities:

1.The right to request the seller to transfer all papers related to the sold debt;

2.The right to claim debt in accordance with the value of the sold debt and enjoying other rights and interests related to the debt;

3. Taking responsibility for paying the debt seller according to the selling price agreed upon by both parties in the debt selling and buying contract.

Article 15: The intermediary functions as the arranger of the deal and has the following rights and responsibilities:

1. The arrangement by the intermediary must obey regulations of the contract signed between the intermediary and related parties, the contract includes some basic contents, such as names, addresses of parties, major content, expenses, and duration;

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3. The intermediary has the right to request the debt seller and buyer to pay wages and rational expenses related to the intermediate in accordance with the signed contract, including cases when the intermediate does not succeed.

Article 16: Debt seller’s powers and responsibilities

1. Powers: The debt seller has the right to be paid by the debt buyer in accordance with the price agreed upon in the debt selling and buying contract;

2. Responsibilities:

a. Transferring all papers and rights to the assurances related to the debt sold and bought in accordance with the agreement in the debt selling and buying contract to the debt buyer;

b. Announcing the deal in writing to related parties (debtor, guarantor, and re-guarantor).

Article 17: General directors or directors of COs are authorised to sign debt selling and buying contracts.

Article 18: Changes related to the portion ensuring the safety of capital of the debt buyer and seller due to the purchasing and selling of debts must obey regulations on limitations in order to ensure the safety of the operation of COs.

Article 19: The balance of expenses related to the purchasing and buying of debts is implemented in accordance with the concrete stipulations stated in the financial regulation applied to COs.

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Article 21: In cases of the purchasing and selling of foreign debts, and when the foreign party purchases debts from Vietnamese parties in foreign currencies, COs must obey Vietnam’s regulations on the management of foreign loans and debts, and get approval of the State Bank of Vietnam. When paying in foreign currencies, if there are any differential in the terms of the exchange rate, the debt seller must clearly define who will have to bear the differential.

Chapter III

IMPLEMENTATION

Article 22: Chairmen of the management boards, and general directors (directors) of COs take responsibility for providing guidance on the implementation of debt selling and buying professions suited to the content of this regulation.

Article 23: Any changes to the regulation must be made by the State Bank Governor.

P/P STATE BANK GOVERNOR
DEPUTY GOVERNOR




Nguyen Van Giau