From May 15, Decree 21/2021 / ND-CP officially took effect ensuring rights and obligations of credit institutions

From May 15, Decree 21/2021 / ND-CP officially took effect ensuring rights and obligations of credit institutionsMr. Nguyen Quoc Hung, Secretary General of the Banking Association, spoke at the Conference

Important documents for credit institutions

Speaking at the opening of the conference, Mr. Nguyen Quoc Hung, General Secretary of the Banking Association evaluated Decree 21 as a very important document, affecting the operation of credit institutions, related to the professional work of credit, security transactions, collateral handling.

Mr. Nguyen Quoc Hung said that in the past, credit institutions applied Decree 163/2006 / CP-ND on secured transactions and Decree 11/2012 / ND-CP supplementing and amending Decree 163. Year In 2015, the Civil Code was newly issued and secured transactions are still implemented in accordance with the old Decree. This leads to many shortcomings and problems in the operations of credit institutions. Therefore, the Ministry of Justice has studied and submitted to the Government a new document to replace Decree 163 to suit the practice.

During the process of developing Decree 21, the drafting agency listened to, reviewed and synthesized the opinions of credit institutions, basically the problems raised by banks have been resolved. The Decree includes 5 chapters, 62 articles, which are very close to the credit operations, collateral transactions, collateral handling… of banks.

Because Decree 21 has many new issues, there may be incomplete and clear understanding and awareness, the Banking Association finds that it is necessary to organize a conference to create conditions for credit institutions to grasp, thoroughly and deploy in a full and convenient way. According to Mr. Nguyen Quoc Hung, although there are still some contents that credit institutions have not been included in the Decree due to entanglements in the law, there have also been some adjustments to suit the Decree level.

Mr. Nguyen Van Manh, deputy director of the Legal Department of the Government Office, assessed that the development of Decree 21 is very complicated and after promulgation, the content of the Decree has not satisfied all the issues raised by the practice but has tried to absorb as much as it can to regulate the operation of security transactions. In the near future, we can take into account the development of a legal document with a higher legal value such as the Law on Secured Transactions, which will then solve more comprehensive problems.

At the conference, Mr. Nguyen Hong Hai, Deputy Director General of the National Register of Secured Transactions (Ministry of Justice), shared some basic contents to pay attention to in applying and enforcing Decree 21. Accordingly, Mr. Nguyen Hong Hai emphasized that the Decree guides a number of issues that have not yet been agreed in the implementation of the Civil Code 2015 and are under the authority of the Government including general issues, issues of collateral, on establishment and implementation of security measures, on the disposal of collateral and the terms of implementation.

The main content

Mr. Nguyen Hong Hai noted that credit institutions are important contents of Decree 21 which have institutionalized the approach of the rights of the Civil Code 2015 such as the right of recourse. Article 7 of Decree 21 provides that the transfer of security property, even if the legal effect has arisen with a third party, does not alter or terminate the collateral’s right to recourse to the property unless otherwise Other agreements or Civil Code 2015 or other relevant Law as provided.

From May 15, Decree 21/2021 / ND-CP officially took effect ensuring rights and obligations of credit institutionsOnline conference to 63 provinces in the country

Notably, the Civil Code 2015 has separated the effective date of the contract and the antagonistic effect with a third person to ensure the interests of the collateral recipient. Accordingly, the mortgage contract takes effect from the time it is entered into, unless otherwise agreed or otherwise provided by law. The mortgage of property takes effect against a third person from the time of registration. Accordingly, after entering into a mortgage contract, the mortgagee needs to register a security transaction to ensure its interests. Any other third party, before entering into a transaction for this asset, is required to know its legal status. If the third party accepts the transaction, when a dispute arises over the collateral, the mortgagor has the “priority” in the handling of the collateral.

Regarding collateral, Decree 21 provides for legal mechanisms for determining and describing collateral, legal mechanisms for ssolving investments in security assets, legal mechanisms for resolving fluctuations in security assets. In particular, the Decree stipulates that the principle of determining collateral as assets not banned from sale or purchase, not banned from other transfers of ownership rights can be put into collateral. Some types of assets that arise entanglements in practice have been included in the provisions of the Decree such as regulations on assets created from surface rights and enjoyable rights. Accordingly, assets owned by surface rights subjects are used as collaterals, income flowers, income or other assets from the exploitation and use of assets that are subject to the right to use used for security.

Previously, the Civil Code 2005 did not specify the effective date of a security contract. With the Civil Code 2015 and Decree 21 clearly stipulate the contract to ensure compulsory notarization on request taking effect from the time of notarization.

Regarding the handling of collateral, Decree 21 does not have a regulation on seizure of collateral due to the Decree level document restriction. However, in order to solve problems, the Decree stipulates that when dealing with collateral, it is only necessary to comply with the agreement in the contract without the written authorization or written consent of the securing party.

In case the securee or the asset retainer does not deliver, the securee may consider and physically inspect the security assets to prevent the dispersal of the security assets, for disposal or to request the court to settle them.

In addition, the Decree also provides for the protection of third parties. Accordingly, assets belonging to void civil transactions used for mortgages which have been transferred to the mortgagee immediately, the mortgage contract is not void. Transfer of mortgaged assets is determined as the transfer of certificates of collateral as agreed upon or other practical measures have been taken so that the mortgagee does not breach its obligations without the need for a transfer of assets.  It is known that Decree 21/CP will officially take effect from May 15, 2021.

Source: enternews.vn – Translated by fintel.vn

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