Joint Circular No. 03/2001/TTLT/NHNN-BTP-BCA-BTC-TCDC guiding the handling of collateral assets to recover debts for credit institutions

CIRCULAR

JOINT CIRCULAR OF THE STATE BANK OF VIETNAM - MINISTRY OF JUSTICE - MINISTRY OF PUBLIC SECURITY - MINISTRY OF FINANCE - NATIONAL LAND COMMISSION NO. 03/2001/TTLT/NHNN-BTP-BCA-BTC-TCĐC OF APRIL 23, 2001 GUIDING THE HANDLING OF COLLATERAL FOR LOANS TO RECOVER DEBTS FOR CREDIT ORGANIZATIONS
||| BASED ON Clause 2, Article 39 of Decree No. 178/1999/NĐ-CP dated December 29, 1999 of the Government on collateral for loans of credit organizations and other relevant laws;

||| To implement the handling of collateral to recover debts for credit organizations, the State Bank of Vietnam, Ministry of Justice, Ministry of Public Security, Ministry of Finance, and National Land Commission hereby jointly guide the handling of collateral for loans to recover debts for credit organizations as follows:

||| I. All borrowers from credit organizations have the obligation to repay their debts when due or before maturity as prescribed by law. The guarantor for a borrower's loan at a credit organization has the obligation to repay the debt on behalf of the borrower if the borrower does not fulfill or fulfills incorrectly the obligation to repay the debt.

A. GENERAL PROVISIONS

||| In case the borrower or the guarantor does not fulfill or fulfills incorrectly the obligation to repay the debt, the collateral used to secure the obligation to repay the debt at the credit organization (hereinafter referred to as the collateral) shall be handled to recover the debt.

||| II. The collateral shall be handled according to the method agreed upon in the credit contract or pledge contract, mortgage contract, guarantee contract (hereinafter collectively referred to as the guarantee contract) between the credit organization and the borrower, guarantor (hereinafter collectively referred to as the guarantor). In case the parties cannot handle the collateral according to the agreed method, the credit organization has the right to proactively apply methods to handle the collateral. The collateral shall be handled according to the following methods:

||| 1. Selling the collateral: Selling the collateral is the act of the credit organization or the guarantor or both parties cooperating to sell the asset directly to the buyer or authorizing a third party to sell the asset to the buyer.

||| The authorized third party to sell the asset may be the Asset Auction Center or an auction company or an organization with the function of purchasing assets for resale.

||| 2. Accepting the collateral itself to replace the fulfillment of the secured obligation: Accepting the collateral itself to replace the fulfillment of the secured obligation is the act of the credit organization directly accepting the collateral, using the valuation price of the collateral when handling it as the basis for repaying the principal, interest on the loan, and overdue interest of the guarantor after deducting other expenses (if any) and accepting the asset according to the provisions of this Circular and other relevant laws.

||| 3. Accepting money or property that a third party must pay or deliver to the guarantor: Accepting money or property that a third party must pay or deliver to the guarantor is the act of the credit organization directly accepting the amount of money or property that a third party must pay or deliver to the guarantor according to the procedures stipulated in this Circular and other relevant laws.

||| III. The credit organization has the right to transfer the right to recover debts or authorize a third party to handle the collateral. The third party must be an entity with legal personality and can exercise the right to recover debts or handle the collateral according to the law.

||| In case the third party is transferred the right to recover debts by the credit organization, the third party has the right to take measures to recover debts or handle the collateral as the credit organization would. In case the third party is authorized to handle the collateral by the credit organization, then the third party can handle the collateral within the scope of authorization.

||| IV. Handling the collateral must comply with the principles of transparency, simple procedures, convenience, speed, ensuring the rights and interests of all parties, and cost-saving.

||| V. In case the owner of the collateral is indicted for a criminal act unrelated to the loan from the credit organization or unrelated to the source of formation of the collateral, then the collateral of that person will not be seized and will be handled according to the provisions of this Circular, except where otherwise provided by law.

||| VI. Competent state agencies have the responsibility to create favorable conditions and implement necessary measures to support credit organizations in handling collateral according to the provisions of this Circular and other relevant laws.

||| B. SOME SPECIFIC PROVISIONS ON PROCEDURES

||| HANDLING OF COLLATERAL
||| I. HANDLING OF COLLATERAL ACCORDING TO AGREEMENT

||| 1. The collateral shall be handled according to the agreement between the credit organization and the guarantor in the credit contract or guarantee contract. The parties may agree to amend, supplement, or make a new agreement on the handling of the collateral. Such agreement must be documented in writing.

||| 2. Before handling the collateral, the credit organization shall perform the following procedures:

||| The credit organization must notify the guarantor in writing about the handling of the collateral and register the notification requesting the handling of the collateral according to the law on registration of security transactions (if such security transaction has been registered).

2.1. ||| a. The notice of handling the collateral shall include the following main contents:

||| - Reason for handling the collateral;

||| - Value of the secured obligation;

||| - Type of collateral being handled: characteristics, quality, quantity;

||| - Method of handling the collateral;

||| - Time of handling the collateral;

||| - Deadline and location for transferring the collateral (if applicable);

||| b. The credit organization sets the time for handling the collateral in the notice of handling the collateral, but it must not be earlier than 7 days for pledged assets, 15 days for mortgaged assets, counted from the date of registering the request to handle the collateral at the security transaction registration agency. For security transactions that do not need to be registered or have not yet been registered due to the national security transaction registration agency not yet operating, the 7-day and 15-day periods mentioned above are calculated from the date the credit organization sends the notice of handling the collateral to the guarantor. In case the collateral is at risk of damage, the credit organization can handle the collateral immediately after notifying the handling of the collateral.

b. A credit institution shall determine the time for disposing of collateral assets in the notice of disposal of collateral assets, but not earlier than seven days for pledged assets and fifteen days for mortgaged assets from the date of registering the notice requesting the disposal of collateral assets with the registration authority for secured transactions. For secured transactions that are not required to be registered or have not been registered due to the non-operation of the national registration authority for secured transactions, the seven-day and fifteen-day periods mentioned above shall be calculated from the date on which the credit institution sends the notice of disposal of collateral assets to the guarantor. In cases where the collateral asset is at risk of damage, the credit institution may dispose of the asset immediately after issuing the notice of disposal of collateral assets.

2.2. The guarantor shall cooperate with the credit institution to implement measures to prepare for the disposal of the collateral, such as transferring the collateral to the credit institution, delivering documents related to the collateral at the request of the credit institution (in cases where the guarantor or a third party holds the collateral documents or the collateral), facilitating potential buyers to view the collateral, and implementing other necessary measures to dispose of the collateral.

In cases where the guarantor or a third party holds the collateral documents or the collateral (hereinafter referred to as the holder of the collateral), the credit institution shall set a date for the transfer of the collateral documents or the collateral for disposal in the notice of collateral disposal; if the holder of the collateral fails to comply, the credit institution has the right to request competent authorities to apply measures to compel the holder of the collateral to transfer the collateral documents or the collateral according to the provisions of Section XI Part B.

3. The credit institution shall establish a record of collateral disposal. The record of collateral disposal must clearly state the transfer and receipt of the collateral, the method of disposing of the collateral, the rights and obligations of the parties, and any other agreements (if any).

In cases where the credit institution applies measures to compel the holder of the collateral to transfer the collateral to the credit institution for disposal, the credit institution shall establish a record of seizure of the collateral according to the provisions of Point 3.3 Clause 3 Section XI Part B.

4. After implementing the notice of collateral disposal, the rights of the credit institution, the obligations of the guarantor, and the third party holding the collateral are regulated as follows:

4.1. Rights of the credit institution

a. Requesting the guarantor to cooperate with the credit institution to implement necessary measures to prepare for the disposal of the collateral according to the provisions of Point 2.2 Clause 2 Section I Part B;

b. Exploiting and using the collateral or allowing the guarantor or authorizing a third party to exploit and use the collateral according to the provisions of Section VI Part B;

c. Requiring the guarantor or a third party not to exploit or use the collateral if such actions pose a risk of devaluing or reducing the value of the collateral;

For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;. Paying off debts from profits or income derived from exploiting or using the collateral after deducting necessary expenses for exploitation and use of the collateral;

d. Requiring the holder of the collateral to transfer the collateral if any of the following acts occur:

- Not transferring the collateral as requested by the credit institution;

- Not implementing or fully implementing measures to preserve the collateral;

- Unilaterally conducting acts of selling, exchanging, giving away, leasing, lending, joint venture capital contribution, dissipating, damaging, or losing the collateral;

- Engaging in other acts that pose a risk of damaging or losing the collateral.

In cases where the holder of the collateral does not transfer the collateral as requested by the credit institution, the credit institution has the right to request state authorities to compel the holder of the collateral to transfer the collateral according to the provisions of Section XI Part B.

e. Other rights as prescribed by law.

4.2. Obligations of the guarantor:

a. Cooperating with the credit institution to implement necessary measures to prepare for the disposal of the collateral when requested by the credit institution according to the provisions of Point 2.2 Clause 2 Section I Part B;

b. Not selling, exploiting, using, or leasing the collateral without the approval of the credit institution;

c. Not destroying, dissipating, exchanging, giving away, using the collateral for joint venture capital contribution, damaging, or losing the collateral or engaging in other acts causing damage to the collateral;

d. Preserving and maintaining the collateral, and transferring the collateral and related documents upon receiving a request from the credit institution;

e. Other obligations as prescribed by law.

4.3. Obligations of the third party holding the collateral:

The third party holding the collateral shall fulfill the obligation to preserve and transfer the collateral to the credit institution as prescribed for the guarantor under Subparagraphs b, c, d, and e of Point 4.2 Clause 4 Section I Part B.

5. Methods of disposing of the collateral according to agreement.

5.1. Selling the collateral.

a. The sale of the collateral shall be carried out according to the provisions of Clause 1 Article 34 Decree No. 178/1999/ND-CP dated December 29, 1999 of the Government on collateral for loans of credit institutions (hereinafter referred to as Decree No. 178). The parties agree on the valuation of the collateral for sale according to the provisions of Section VII Part B.

b. A purchase and sale contract for the collateral shall be established in writing between the seller of the collateral and the buyer of the collateral. In cases where the guarantor and the credit institution have no agreement or cannot reach an agreement on the seller of the collateral, the credit institution shall decide on the seller according to one of the cases provided for in Clause 1 Article 34 of Decree No. 178.

5.2. The credit institution accepts the collateral to substitute for the performance of the secured obligation.

a. The credit institution and the guarantor shall establish a record of acceptance of the collateral to substitute for the performance of the secured obligation. The record must clearly state the transfer and receipt, valuation, and disposal of the collateral, and payment of debt from the proceeds of the disposal of the collateral according to this Circular.

b. After accepting the collateral to substitute for the performance of the secured obligation, the credit institution may proceed with the procedures to accept the transfer of ownership or use rights of the collateral or sell or transfer the collateral to the buyer or transferee according to the provisions of the law.

5.3. The credit institution receives money or assets that a third party must pay or deliver to the guarantor.

a. The credit institution or the guarantor must notify the third party of the credit institution's right to receive the aforementioned money or assets, and simultaneously request the third party to deliver the money or assets to the credit institution. The delivery of the money or assets to the credit institution must be carried out strictly according to the deadline and location specified in the notice of collateral disposal, except in cases provided for in Article 320 of the Civil Code.

For collateral as stipulated in Points b, c, d, e, and f Clause 1.1 Section II Chapter II Circular 06/2000/TT-NHNN dated April 4, 2000, guiding the implementation of Decree No. 178, credit organizations may accept collateral assets and rights arising from such assets. The third party shall transfer funds, assets, and rights arising from the collateral assets to the credit organization.

b. Credit organizations shall prepare a record of receipt of funds and assets between the credit organization, the guarantor, and the third party. The record of receipt of funds and assets must clearly state the handover and acceptance of funds and assets, the valuation of the asset, and the settlement of debt from the disposal of the asset.

6. After the collateral asset has been disposed of to recover the debt, the credit organization or the guarantor shall proceed to cancel the registration of asset disposal and the collateral transaction registration in accordance with the provisions of the law on collateral transaction registration.

II. DISPOSAL OF COLLATERAL ASSETS IN ACCORDANCE WITH THE PROVISIONS OF
CLAUSE 2 ARTICLE 34 DECREE NO. 178

1. When disposing of collateral assets according to the cases stipulated in Clause 2 Article 34 of Decree No. 178, credit organizations and guarantors must comply with the procedures specified in Clause 2, Clause 3 Section I Part B; the rights and obligations of the parties shall be governed by the provisions of Clause 4 Section I Part B.

2. Credit organizations have the right to proactively implement one of the following methods for disposing of collateral assets:

2.1. Credit organizations directly sell the collateral assets (except for collateral assets being land use rights and other assets that must be sold at specialized auction organizations under the law).

a. Credit organizations must publicly announce the sale of collateral assets and can proceed to sell the collateral assets after the period specified in item b point 2.1 Clause 2 Section I Part B.

b. The purchase and sale contract of collateral assets between the credit organization and the buyer must be documented in writing. The credit organization determines the selling price of the collateral asset in accordance with the provisions of Section VII Part B.

2.2. Credit organizations authorize the sale of collateral assets to the Asset Auction Center or an enterprise specializing in asset auctions (hereinafter referred to collectively as the asset auction organization).

a. Cases of authorizing the sale through auction:

- Credit organizations choose to sell collateral assets through authorization to the asset auction organization;

- Collateral assets are land use rights as stipulated in Section III Part B and other assets that must be sold at specialized auction organizations under the law.

b. The authorization contract for the sale through auction between the credit organization and the asset auction organization shall be signed. The credit organization and the guarantor may agree for the guarantor to request the sale through auction of the collateral asset.

c. The procedure for selling through auction shall be carried out in accordance with the provisions of the law on selling through auction.

2.3. Credit organizations authorize or transfer the handling of collateral assets to an organization with the function of purchasing assets for resale.

a. An organization with the function of purchasing assets for resale includes:

- Companies managing non-performing loans and exploiting mortgaged assets of commercial banks established pursuant to Decision No. 305/2000/QĐ-NHNN dated September 15, 2000, of the Governor of the State Bank of Vietnam;

- Enterprises established to manage and resolve non-performing debts of credit organizations in accordance with the law.

b. The organization authorized or transferred the handling of collateral assets by the credit organization has the right to handle the collateral assets in accordance with the provisions of Section III Part A and other relevant laws.

For land use rights and assets attached to land, when the organization authorized or transferred the handling of collateral assets implements the method of selling collateral assets, it must put them up for auction. The procedures for selling through auction are implemented in accordance with the provisions of Section III Part B.

2.4. Credit organizations accept the collateral asset itself to substitute for the performance of the secured obligation (excluding collateral assets being land use rights and assets attached to land):

In this case, the credit organization does not need to renegotiate with the guarantor. The procedure for accepting the collateral asset itself to substitute for the performance of the secured obligation is governed by Point 5.2 Clause 5 Section I Part B.

2.5. Credit organizations accept funds and assets that a third party must pay or deliver to the guarantor.

a. The acceptance of funds and assets that a third party must pay or deliver to the guarantor is governed by the law or the agreement of the parties in the guarantee contract. The procedures for accepting funds and assets are carried out in accordance with the provisions of Point 5.3 Clause 5 Section I Part B.

b. If the third party does not deliver the aforementioned funds and assets as requested by the credit organization, the credit organization has the right to request the competent state agency to enforce the third party to deliver the asset in accordance with the provisions of Section XI Part B or initiate legal proceedings before the Court.

3. After disposing of the collateral asset, the credit organization or the guarantor shall carry out the cancellation of the registration of asset disposal and the collateral transaction registration in accordance with the provisions of the law on collateral transaction registration.

4. During the process of disposing of collateral assets in accordance with the methods stipulated in Clause 2 Article 34 of Decree No. 178, credit organizations and guarantors have the right to negotiate, renegotiate, or enter into new agreements regarding the method of disposing of the asset, the rights and obligations of the parties, and other agreements consistent with the provisions of this Circular and other relevant laws.

III. DISPOSAL OF COLLATERAL ASSETS BEING LAND USE RIGHTS AND ASSETS ATTACHED TO LAND
1. The disposal of collateral assets being land use rights and assets attached to land shall be carried out in accordance with the agreement of the parties in the credit contract and the guarantee contract and must comply with the relevant provisions in Section I Part B of this Circular and the provisions of the law on land.

2. In the case where the collateral asset being land use rights and assets attached to land cannot be disposed of according to the agreement of the parties in the contract, the credit organization shall put the asset up for auction to recover the debt or initiate legal proceedings before the Court.

3. The sale through auction of land use rights shall be carried out in the following sequence:

The credit organization shall submit the file to the competent state agency to obtain permission to sell land use rights through auction:

3.1. The credit institution shall submit the application file to the competent state agency for permission to auction the right to use land as follows:

a. The People's Committee at the district level permits the auction of land use rights that have been mortgaged by households and individuals;

b. The People's Committee at the provincial level permits the auction of land use rights that have been mortgaged by organizations.

3.2. The application for permission to auction land use rights includes:

a. A request for permission to auction land use rights;

b. A copy of the credit contract and guarantee contract (certified by the credit organization);

c. A copy of the certificate of land use rights or the certificate of ownership of a house and land use rights, or other documents as stipulated in Point 7.3 Clause 7 Section of this (certified by the credit organization).

3.3. Within fifteen days from the date of receipt of the above application, the competent People's Committee shall be responsible for:

a. Issuing a document permitting the auction of land use rights in cases where the transfer of land use rights is allowed;

b. Guiding the credit organization to complete necessary procedures in cases where the application is incomplete, then issuing a document permitting the auction of land use rights;

c. Responding in writing to the credit organization regarding the prohibition on auctioning land use rights for types of land that are not permitted to be transferred according to Article 30 of the Land Law.

3.4. Specifically, for annual crop agricultural land allocated by the State to households and individuals, participants in the auction of land use rights must meet the conditions stipulated in Article 9 of Decree No. 17/1999/ND-CP dated March 27, 1999 of the Government on procedures for conversion, transfer, lease, sublease, inheritance of land use rights, mortgage, and capital contribution with the value of land use rights (hereinafter referred to as Decree No. 17).

3.5. After being granted permission to auction land use rights by the competent People's Committee, the credit organization proceeds with the procedures specified in Clause 2, Clause 3 Section I Part B and authorizes the Asset Auction Center to conduct the auction of land use rights.

4. After completing the disposal of collateral assets, which are land use rights and attached assets, the credit organization is responsible for processing the cancellation of registration of the announcement of collateral asset disposal, cancellation of mortgage, and cancellation of mortgage registration. The credit organization will proceed with the transfer of land use rights and ownership of attached assets to the transferee or buyer, except when the Asset Auction Center implements it according to the law on asset auctions.

5. The issuance of certificates of land use rights and certificates of ownership of houses and land use rights is carried out as follows:

5.1. The party responsible for transferring land use rights and ownership of attached assets to the transferee or buyer, as stipulated in Clause 4 above, submits the application to the competent state agency to issue certificates of land use rights and certificates of ownership of houses and land use rights for the transferee or buyer.

The application for certificates of land use rights and certificates of ownership of houses and land use rights is in accordance with Clause 2 Section X Part B.

5.2. Within fifteen days (for certificates of land use rights) or sixty days (for certificates of ownership of houses and land use rights) from the date of receiving complete and valid applications, the competent state agency is responsible for issuing the aforementioned certificates for the transferee or buyer.

6. The obligation to pay taxes for the transfer of land use rights and attached assets is regulated in Section IX Part B.

7. The provisions of this circular apply to the disposal of collateral assets, which are land use rights and attached assets mortgaged before the effective date of Decree No. 178, in the following cases:

7.1. Land use rights and attached assets that have complete documents and files consistent with legal regulations at the time of mortgage or consistent with legal regulations at the time Decree No. 178 becomes effective;

7.2. Land use rights and attached assets that meet the conditions stipulated in Point 7.1 above but have not been processed due to the mortgage contract lacking certification from a Notary Public or lack of certification from the competent People's Committee;

7.3. Land use rights and attached assets where, at the time of mortgage, the mortgagor has a certificate of land use rights, or a certificate of ownership of a house and land use rights, or one of the documents stipulated in Clause 2 Article 3 of Decree No. 17 and has the right to mortgage land use rights;

7.4. Attached assets where, at the time of mortgage, the mortgagor has lawful ownership of the asset and has the documents on land use rights as stipulated in Point 7.3 above but does not have the right to mortgage land use rights according to the law on land.

In this case, the credit organization puts the attached assets up for auction at the Asset Auction Center. After completing the auction, the Asset Auction Center submits the application to the competent state agency to issue a certificate of land use rights for the successful bidder in accordance with the form of land allocation, leasing, or transfer of land use rights as prescribed by the law on land.

7.5. When disposing of collateral assets, which are land use rights and attached assets, according to the cases stipulated in Points 7.1, 7.2, and 7.3 above, the credit organization sends existing documents to the competent state agency as stipulated in Clause 3 Section III Part B to request permission to auction land use rights. After obtaining permission from the competent state agency, the credit organization proceeds with the disposal of collateral assets according to this Circular.

IV. DISPOSAL OF ASSETS FOR ENTERPRISES IN CASES OF DIVISION, SEPARATION, MERGER, CONSOLIDATION, TRANSFORMATION, AND PRIVATIZATION
1. Credit organizations have the right to dispose of assets to recover debts before enterprises undergo division, separation, merger, consolidation, transformation, and privatization as stipulated in Clause 3 Article 13 of Decree No. 178.

1. A credit institution has the right to dispose of assets to recover debts before a business undergoes division, separation, merger, acquisition, restructuring, or shareholding reform as provided for in Clause 3, Article 13 of Decree No. 178.

In the case where the collateral for the loan has not been processed to recover the debt, and the enterprise has divided, separated, merged, consolidated, converted, or privatized, the enterprises formed after such division, separation, merger, consolidation, conversion, or privatization must assume the debt and fulfill the obligation to repay the credit institution. If the enterprises formed after division, separation, merger, consolidation, conversion, or privatization fail to fulfill their repayment obligations, the credit institution has the right to process the collateral according to the provisions of Section II Part B.

2. In the case where the credit institution processes the collateral for the loan according to the provisions of Clause 4 Article 13 Decree No. 178, the processing of the asset and fulfillment of the repayment obligation shall be based on the guarantee contract that was re-signed after the enterprise's division, separation, merger, consolidation, conversion, or privatization. The credit institution shall implement the processing of assets according to the provisions of this Circular.

V. PROCESSING OF COLLATERAL IN THE CASE WHERE THE GUARANTOR DIES OR IS ABSENT FROM THE PLACE OF RESIDENCE AT THE TIME OF
||| I. HANDLING OF COLLATERAL ACCORDING TO AGREEMENT

The credit institution may proceed with the processing of collateral when the due date for repayment arrives or if early repayment is required, and the guarantor dies or intentionally absents themselves from their place of residence at the time of the collateral processing as notified by the credit institution. The person holding the collateral (if any) or the heir of the guarantor's property (in the case where the guarantor dies) has the obligation to hand over the collateral to the credit institution for processing according to the notification of the credit institution. If the person holding the collateral or the heir of the guarantor's property refuses to hand over the collateral to the credit institution for processing, the credit institution has the right to request the competent state authority to apply measures compelling the holder of the collateral to hand it over to the credit institution for processing according to the provisions of Section XI Part B.

VI. EXPLOITATION AND USE OF COLLATERAL DURING THE PERIOD BEFORE PROCESSING
DURING THE PERIOD BEFORE DISPOSAL

1. During the period before the collateral is processed to recover the debt, the credit institution has the right to exploit and use the collateral or permit the guarantor or authorize a third party to exploit and use the collateral in accordance with its intended function and utility. The permission or authorization to exploit, the method of exploitation, and the handling of profits and benefits derived from the exploitation and use of the collateral must be documented in writing.

2. Profits and benefits obtained must be accounted for separately (except in cases where the parties have agreed otherwise); after deducting necessary expenses for the exploitation and use of the collateral (including management costs, maintenance, repair costs of the collateral, taxes, fees for exploiting the collateral, and other necessary and reasonable expenses), the remaining amount shall be used to repay the debt to the credit institution according to the provisions of Section VIII Part B.

VII. VALUATION OF COLLATERAL WHEN PROCESSING

1. The credit institution and the guarantor agree on the valuation price of the collateral at the time of processing and record the agreement on the valuation of the collateral in a memorandum.

2. In the event that the parties cannot agree on the valuation price of the collateral, the valuation shall be conducted as follows:

2.1. Before the credit institution decides on the valuation price of the collateral, the credit institution hires a consulting organization or a specialized organization to determine the price or refers to the price determined by a consulting organization or a specialized organization, the actual price in the locality at the time of processing, the price prescribed by the state (if any), and other factors related to the price.

2.2. In the case where there is a significant difference in price between bidders when selling the collateral or when multiple bidders are present, the credit institution will decide on the valuation price of the collateral based on the highest bid or put it up for auction to recover the debt.

3. In the case where the credit institution authorizes an organization to sell the collateral through auction, the determination of the valuation price of the collateral shall be carried out in accordance with the laws on the sale of collateral through auction.

4. In the case where the credit institution authorizes or transfers the processing of the collateral to a third party, the credit institution may determine the valuation price of the collateral or agree with the third party to determine the valuation price of the collateral according to the principles stipulated in Point 2.1 Clause 2 above.

VIII. SETTLEMENT OF DEBT RECOVERY FROM THE PROCESSING OF COLLATERAL

1. The settlement of debt recovery shall be carried out in the following order:

1.1. Necessary expenses for processing the collateral: preservation costs, valuation costs, advertising costs for selling the collateral, selling costs, commission fees, auction fees, and other necessary and reasonable expenses related to the processing of the collateral.

1.2. Taxes and fees paid to the state budget (if any).

1.3. Principal, interest on the loan, and overdue interest calculated until the day the guarantor or the holder of the collateral hands over the collateral to the credit institution for processing.

2. In the case where the credit institution advances funds to cover the processing expenses of the collateral or taxes and fees paid to the state budget, the credit institution shall recover the advanced funds before settling the principal, interest on the loan, and overdue interest, except in cases where the guarantor has already repaid the advanced funds to the credit institution.

3. In the case where the proceeds from selling the collateral and profits from the exploitation and use of the collateral during the period before processing (after deducting necessary expenses for the exploitation and use of the collateral) exceed the amount of debt owed, the excess amount shall be refunded to the guarantor. The guarantor shall continue to pay the debt if the proceeds are insufficient to settle the debt owed and related processing expenses.

In the case where the credit institution receives the collateral directly to replace the performance of the obligation or receives payments and assets that a third party must transfer to the guarantor, the excess amount between the valuation price of the collateral and the profits from the exploitation and use of the collateral during the period before processing (after deducting necessary expenses for the exploitation and use of the collateral) compared to the amount of debt owed shall be refunded to the guarantor. The guarantor shall continue to pay the debt if the proceeds are less than the principal, interest, overdue interest, and related processing expenses.

4. In cases where the buyer cannot immediately pay off debts with collateral assets, the credit institution may apply a partial debt collection method based on the buyer's payment capacity. The credit institution shall determine the principal amount, interest, overdue interest, and other charges due up to the date when it receives the collateral asset.

5. If a single asset is used to secure multiple obligations at one credit institution, and if the asset must be processed to fulfill a due debt obligation, then all other debt obligations, even those not yet due, will be considered due, and the credit institution may process the collateral asset for debt collection. The order of repayment among debts secured by a specific asset shall follow the registration order at the collateral transaction registration authority.

6. For a collateral asset securing multiple obligations in a syndicated loan, if the asset must be processed to fulfill a due debt obligation, then the lending parties shall be repaid according to their respective capital contributions.

7. If the guarantor increases the value of the collateral asset (such as through repairs or upgrades) during direct management and use of the collateral asset, the additional value of the collateral asset shall be considered part of the collateral asset value to ensure the fulfillment of the initial obligation. When processing the collateral asset, the credit institution can recover debts from both the original and the increased value of the collateral asset.

8. If the collateral asset has been insured, the insurance money paid by the insurance agency shall be directly paid to the credit institution for debt recovery. This amount will be used to settle the guarantor's debt.

IX. TAXATION ON THE TRANSFER OF OWNERSHIP RIGHTS AND USE RIGHTS OF COLLATERAL ASSETS
RIGHT TO USE COLLATERAL ASSETS

1. Taxation on the transfer of ownership rights and use rights of collateral assets shall be carried out when procedures for transferring ownership rights and use rights are conducted, or when the credit institution receives the collateral asset itself to replace the debt obligation and transfers ownership and use rights to the credit institution.

2. For taxes on the transfer of land use rights, they shall be implemented in accordance with Decree No. 19/2000/NĐ-CP dated June 8, 2000, of the Government detailing the implementation of the Law on Land Transfer Tax and the Law Amending and Supplementing Certain Provisions of the Law on Land Transfer Tax.

3. In cases where the credit institution receives the collateral asset itself to replace the secured obligation but the asset has not yet completed the procedures for transferring ownership rights and use rights, no tax on the transfer of ownership rights and use rights shall be required.

X. COOPERATIVE RESPONSIBILITIES OF RELEVANT AUTHORITIES

1. When the credit institution proceeds to handle collateral assets according to the methods stipulated in this Circular, the state notary office, and the competent People's Committee within their respective duties and powers shall be responsible for certifying purchase and sale contracts, transfer contracts, asset receipt records, and other documents related to the transfer of ownership and use rights to the buyer or transferee.

2. Relevant state authorities (competent People's Committee, Department of Land Administration or Department of Land Administration - Real Estate, Provincial Public Security Traffic Police, Vessel Inspection Authority, Regional Ship Registration and Seafarer Authority, Civil Aviation Administration of Vietnam) shall be responsible for completing the procedures for transferring ownership and use rights of the asset to the buyer or transferee upon receiving requests from the credit institution (or auction organization) and relevant documents including:

2.1. A copy of the credit agreement; guarantee contract (signed by the credit institution);

2.2. Certificate of ownership of the asset, or certificate of use right of the asset, or asset registration document of the asset owner, or other documents as specified in Point 7.3 Clause 7 Section III Part B (depending on the specific case);

2.3. Record of asset handling or asset seizure record;

2.4. Purchase and sale contract, or transfer contract, or asset receipt record, or auction sale document (depending on the specific handling case);

2.5. Documents confirming the payment of asset transfer tax as prescribed by law.

3. Procedures for transferring ownership and use rights of collateral assets in the event of enforcement of collateral assets:

Relevant state authorities shall complete the procedures for transferring ownership and use rights of collateral assets to the buyer or transferee based on the following documents in the file:

3.1. Extract of judgment or copy of judgment or copy of court decision;

3.2. Enforcement decision of the enforcement agency;

3.3. Credit agreement, guarantee contract (signed by the credit institution);

3.4. Purchase and sale contract, or transfer contract, or receipt contract, or auction sale document (depending on the specific handling case).

4. In the file for transferring ownership and use rights of collateral assets, there is no requirement for a consent document from the collateral asset owner regarding the handling of the collateral asset (as such consent is already reflected in the credit agreement and guarantee contract); there is also no requirement for a purchase and sale contract between the asset owner or the person subject to enforcement and the buyer, except when the handler of the asset is the asset owner or the person subject to enforcement.

5. The deadline for completing the procedures for transferring ownership and use rights of the asset to the buyer or transferee is fifteen days (sixty days for the transfer of ownership of housing and land use rights), counted from the date of receipt of the request from the credit institution (or auction organization) and the above documents, unless otherwise provided by law.

XI. PROCEDURES FOR OBLIGING THE HOLDER OF THE COLLATERAL ASSET TO HAND OVER THE COLLATERAL ASSET TO THE CREDIT INSTITUTION
COLLATERAL FOR CREDIT INSTITUTIONS

According to Article 35 of Decree No. 178, the procedures for obliging the holder of the collateral asset to hand over the collateral asset to the credit institution are as follows:

1. The party holding the collateral asset shall deliver the collateral asset to the credit institution for disposal upon notification from the credit institution. If the party holding the collateral asset fails to deliver the collateral asset within the time limit specified in the notification, the credit institution shall issue a notice applying measures to compel the party holding the collateral asset to deliver the collateral asset to the credit institution.. The notice must clearly state the reasons for application, the deadline for delivering the collateral asset, the implementation measures, and the rights and obligations of the parties.

2. The credit institution may apply the following measures:

2.1. The credit institution requests the party holding the collateral asset to deliver the collateral asset under its management to the credit institution.

2.2. After applying the above measure, if the party holding the collateral asset still fails to deliver the collateral asset, the credit institution sends a notice to the People's Committee and the police authority where the guarantor resides or where the collateral asset is located, requesting cooperation and support in recovering the collateral asset.

In cases where a third party holds the collateral asset, the credit institution notifies the guarantor to cooperate with the credit institution to compel the party holding the collateral asset to deliver the collateral asset to the credit institution.

2.3. After the time limit specified in the notice applying the measure to compel delivery of the collateral asset has expired and the party holding the collateral asset still fails to deliver the collateral asset to the credit institution for disposal, the credit institution proceeds to seize the collateral asset with the support of the People's Committee and the police authority.

3. The responsibility for cooperation of the People's Committee and the police authority in supporting the credit institution in recovering the collateral asset is as follows:

3.1. Upon receiving the request of the credit institution as stipulated in point 2.2 clause 2 above, the People's Committee applies educational measures to persuade the party holding the collateral asset to deliver the collateral asset under its management to the credit institution. The People's Committee sets a deadline for the party holding the collateral asset to deliver the collateral asset to the credit institution for disposal, but not exceeding 10 days from the date the People's Committee applies the educational measures.

3.2. If the deadline expires and the party holding the collateral asset still fails to deliver the collateral asset according to the credit institution's request, the People's Committee directs relevant functional departments to participate in cooperation with the credit institution and proceed with necessary procedures to compel the party holding the collateral asset to deliver the collateral asset to the credit institution.

a. For collateral assets that are means of transportation, based on the notice of the credit institution (clearly stating the contact address, fax number, and telephone number):

- The traffic police department, through registration work, will not allow transfer of ownership or change of name if it discovers cases as requested by the credit institution, and will require the vehicle owner or the person authorized by the owner to seek consent from the credit institution before proceeding with such procedures.

- In cases discovered during patrol and inspection work, if the traffic police department finds the driver using a copy of the vehicle registration certificate that has exceeded its validity period as stipulated in Clause 2 Article 12 Decree No. 178, the traffic police department will issue a temporary detention notice and send a notice (directly, via fax, or other communication methods) to the credit institution to inform them about the temporary detention of the vehicle. Within 15 days from receipt of the notice, the credit institution must dispatch personnel to collect the vehicle. The handover between the traffic police department and the credit institution must be documented in a handover record. The credit institution must notify the vehicle owner and driver of this handover. If the credit institution fails to collect the vehicle within this period, the traffic police department will return the vehicle to the detained driver.

The credit institution must pay the costs of notification, temporary detention of the vehicle, and other reasonable expenses (if any) when collecting the detained vehicle. These costs are included in the asset disposal costs as stipulated in Section VIII Part B. If the credit institution does not collect the vehicle as notified by the traffic police department, the credit institution must bear the responsibility for paying these costs from its own funds.

b. For collateral assets that are warehouses, houses, and other construction works, the credit institution allows the transfer of non-collateral items to a storage agency and accepts the collateral asset for disposal. The cost of storing the collateral asset is paid by the party owning the collateral.

c. For collateral assets that are machinery, equipment, raw materials, fuel, consumer goods, precious metals, gems, and other collateral assets, the credit institution proceeds to seize them.

3.3. The seizure of collateral assets must be documented in a seizure record, witnessed by representatives of the local People's Committee where the party holding the collateral asset resides or where the collateral asset is located, and relevant agencies.

3.4. During the process of the credit institution seizing the collateral asset for disposal, if the party holding the collateral asset engages in acts of resistance, obstruction against officials performing their duties, or other acts aimed at reclaiming the asset, or infringing on the life and health of officials performing their duties, causing disorder, the police authority has the responsibility to apply measures prescribed by law to prevent and promptly handle such acts; the People's Committee has the responsibility to create conditions to support the credit institution, dispatch personnel to participate, and resolve any issues arising during the credit institution's process of seizing the collateral asset for disposal.

C. IMPLEMENTATION AND EFFECTIVE ENFORCEMENT

I. This Circular is applied to the disposal of collateral assets and recovery of debts for credit institutions as defined in Article 12 of the Law on Credit Institutions. The disposal of collateral assets to recover debts for domestic individuals and legal entities; foreign individuals and legal entities that are not credit institutions shall be carried out in accordance with the provisions of Decree No. 165/1999/NĐ-CP dated November 19, 1999 of the Government on secured transactions.

II. Credit contracts that have exceeded the debt repayment deadline before this Circular takes effect but the collateral has not yet been disposed of shall be subject to the provisions of this Circular for disposal.

III. In cases where credit institutions provide credit in other forms, if the parties have agreed on security measures, they may apply the provisions of this Circular for disposal.

IV. For collateral assets that are evidence in criminal cases, the provisions of Joint Circular No. 06/TTLT/TANDTC-VKSNDTC-BCA-BTC-BTP dated October 4, 1998 of the Supreme People's Court, the Supreme People's Procuracy, the Ministry of Public Security, the Ministry of Justice, and the Ministry of Finance guiding certain issues regarding the preservation and disposal of assets that are evidence and assets seized during the investigation, prosecution, and trial of criminal cases shall be applied.

V. This Circular shall take effect fifteen days from the date of signature. During implementation, if there are any difficulties, relevant sectors shall report them for inter-sectoral explanation, supplementation, and timely amendment. Any amendments and supplements to this Circular shall be decided by the Governor of the State Bank, the Minister of Justice, the Minister of Public Security, the Minister of Finance, and the Director General of the Land Administration.