Decree No. 104/2007/NĐ-CP on debt collection services

DECREE

Regarding the business of debt collection services

___________

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Civil Code dated June 14, 2005;

Pursuant to the Enterprise Law dated November 29, 2005;

Pursuant to the Ordinance on Administrative Violation Handling dated July 2, 2002;

Considering the proposal of the Minister of Finance.

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of application

1. This Decree regulates the business of debt collection services within the territory of the Socialist Republic of Vietnam.

2. The business of debt collection services as prescribed in this Decree shall only be carried out for debts that have all the following elements:

a) There are sufficient grounds to prove it is a lawful debt;

b) It has exceeded the payment deadline.

3. The scope of regulation of this Decree does not include: debts being enforced according to court judgments or decisions with legal effect; debts of creditors or debtors who are political organizations, socio-political organizations, state agencies, people's armed forces units, or debts between Vietnam and international organizations or other states.

Article 2. Applicability

The subjects to which this Decree applies are economic organizations, individuals related to the activity of debt collection services in Vietnam, including:

1. Creditors;

2. Debtors;

3. Enterprises engaged in debt collection services;

4. Other organizations or individuals related.

Article 3. Definitions

3. Creditor is an economic organization, individual, or other civil transaction subject having the right to demand payment.

1. Debt: is the obligation of an economic organization or individual to pay assets to another economic organization or individual;

2. Creditor: is an economic organization or individual having the right to demand repayment of a debt;

3. Debtor: is an economic organization or individual having the obligation to repay a debt;

4. Overdue debt: is a debt that has not been paid by the debtor to the creditor beyond the agreed payment deadline between the creditor and the debtor or beyond the payment deadline determined by a competent state authority.

Article 4. Principles of debt collection service activities

1. Only enterprises that have been granted a Business Registration Certificate for debt collection services may engage in debt collection service activities.

2. An enterprise engaged in debt collection services may not conduct any other industries, trades, or services except debt collection services.

3. An enterprise engaged in debt collection services may only implement debt recovery measures in accordance with the provisions of the law.

4. Debt collection service activities shall be carried out pursuant to a power of attorney contract concluded between the creditor or debtor and the enterprise engaged in debt collection services within the scope of rights recognized by law.

Article 5. Fulfillment of tax obligations, accounting systems, auditing, and reporting

1. An enterprise engaged in debt collection services shall fulfill its tax obligations in accordance with the laws on taxation.

2. An enterprise engaged in debt collection services shall implement accounting, statistical, auditing, and reporting systems in accordance with the laws applicable to enterprises.

Chapter II

DEBT COLLECTION SERVICE ACTIVITIES

Article 6. Contents of debt collection service activities

1. Representing the creditor to determine the debts, relevant contents related to the fulfillment of the debtor's obligation to repay the debt; urging the debtor to repay the debt; collecting the debt.

2. Representing the creditor to work with organizations or individuals related to collect the debt.

3. Representing the debtor to determine the debts, measures to handle the debt with the creditor.

4. Providing legal advice to the creditor or debtor regarding the determination of the debt; measures, procedures, and formalities for handling the debt.

Article 7. Measures in debt collection service activities

1. An enterprise engaged in debt collection services representing the creditor:

a) Implement appropriate measures to gather, analyze, and compare relevant information, clearly identifying the debts;

b) Notify the debt collection and request the debtor to provide information, cooperate, or apply appropriate measures consistent with the law for the debtor to fulfill their obligation to repay the debt;

c) Receive assets from the debtor or other related organizations or individuals to fulfill the debtor's obligation to repay the debt under the creditor's authorization.

2. An enterprise engaged in debt collection services representing the debtor: may apply appropriate measures as stipulated in Clause 1 of this Article to negotiate and bargain with the creditor regarding the contents authorized by the debtor.

Article 8. Responsibilities and powers of the creditor and debtor

1. The creditor and debtor have the responsibility to cooperate with each other and with the enterprise engaged in debt collection services to clearly identify the debts; the debtor has the responsibility to repay the debt to the creditor.

2. Granting authorization to the enterprise engaged in debt collection services for matters and tasks related to debt handling in accordance with the provisions of the law.

3. Providing necessary information, documents, and means related to the debt to the enterprise engaged in debt collection services.

4. Paying service fees and reasonable expenses to the enterprise engaged in debt collection services as stipulated in the signed contract.

5. Refusing to work when the representative of the enterprise engaged in debt collection services cannot present valid documents or if the representative violates prohibited acts as stipulated in Clause 2 of Article 11 of this Decree.

6. Requesting the enterprise engaged in debt collection services to provide full and regular notifications about the implementation of the contents related to debt handling as stipulated in the signed contract.

7. Requesting the return of assets collected from the debt and documents, assets handed over to the enterprise engaged in debt collection services as stipulated in the signed contract.

8. Working directly or arranging an authorized representative to work with the representative of the enterprise engaged in debt collection services.

9. Not bearing joint liability for actions violating the law committed by the enterprise engaged in debt collection services.

Article 9. Responsibilities and powers of the enterprise engaged in debt collection services

1. Conducting business operations within the scope permitted by law and authorized by the creditor or debtor; not delegating or authorizing individuals outside the enterprise or other organizations to carry out these activities, except where such organization is also an enterprise engaged in debt collection services and the delegation must be approved in writing by the creditor or debtor (the party signing the power of attorney contract with the enterprise engaged in debt collection services).

2. Notifying the creditor or debtor and other related organizations or individuals about the authorization given to the enterprise engaged in debt collection services to handle the debt.

3. Safeguarding and returning to the creditor or debtor the documents and assets entrusted to perform debt collection services as stipulated in the signed contract.

4. Providing full and regular notifications to the creditor or debtor about the implementation of the authorized contents as stipulated in the contract.

5. Compensate the creditor or debtor for damages caused by breach of contract, loss or damage to documents, assets entrusted, and assets obtained from the debt.

6. Collect debts and return assets obtained from the debt to the creditor according to the signed contract.

7. Be liable under the law for violations of prohibited acts set forth in Clause 2, Article 11 of this Decree and actions exceeding the scope authorized by the creditor or debtor.

8. Issue letters of introduction for employees directly performing debt collection services.

9. Issue employee cards to employees meeting the criteria for performing debt collection activities as stipulated in Articles 14 and 15 of this Decree. The card must contain a photograph, clearly stating the name and position of the assigned person, and bear the seal of the enterprise.

10. Request the creditor or debtor to provide necessary information, documents, and assets related to the debt.

11. Be paid service fees and other expenses by the creditor or debtor according to the agreed terms.

12. Not be responsible to the creditor or debtor for issues arising outside the scope of authorized tasks.

Article 10. Responsibilities of employees of debt collection service enterprises when carrying out debt collection activities

1. Only perform tasks within the lawful scope of operations of the debt collection service enterprise.

2. Not violate prohibited acts set forth in Clause 2, Article 11 of this Decree.

3. Individuals not wearing employee cards or without letters of introduction from the debt collection service enterprise shall not work directly with creditors or debtors or with other organizations or individuals related to them.

Article 11. Prohibited acts in debt collection services

1. For creditors or debtors:

a) Authorizing the debt collection service enterprise to carry out activities exceeding the rights recognized by law for creditors or debtors;

b) Committing or through others committing fraudulent acts, using violence or threatening to use violence against personnel of the debt collection service enterprise.

2. For debt collection service enterprises:

a) Committing or through others committing acts that infringe upon the lives, health, dignity, honor, personal freedom, property rights, and other civil rights of debtors, creditors, and other related organizations or individuals;

b) Using information obtained from debt collection services to the detriment of creditors and debtors for purposes other than those authorized or disclosing such information to other organizations or individuals except where otherwise provided by law;

c) Carrying out activities or actions exceeding the rights recognized by law or exceeding the scope authorized by creditors or debtors;

d) Representing both the creditor and the debtor simultaneously in dealing with the same debt.

Article 12. Debt Collection Service Fees

Creditors, debtors, and debt collection service enterprises agree on debt collection service fees and record them in the contract signed between the two parties.

Chapter III

CONDITIONS FOR OPERATING DEBT COLLECTION SERVICES

Article 13. Capital Conditions

The statutory capital requirement for the debt collection service business is 2,000,000,000 VND (Two billion VND).

Throughout its operation, the debt collection service enterprise must maintain registered capital at no less than the statutory capital requirement.

Article 14. Conditions regarding standards for managers and branch directors of debt collection service enterprises:

1. Possess full capacity for civil conduct.

2. Have a university degree or higher in one of the following fields: economics, management, law, security.

3. Have no criminal record.

4. Individuals who have worked for other debt collection service enterprises that had their business registration certificates revoked must also satisfy the condition of not having held the position of manager in such enterprises within the three years immediately preceding the date of application.

Article 15. Conditions regarding standards for workers involved in debt collection services:

1. Workers must be hired under an indefinite-term labor contract or a definite-term labor contract of six months or longer.

2. Possess full capacity for civil conduct.

3. Have a college degree or higher in one of the following fields: economics, management, law, security.

4. Have no criminal record.

Article 16. Documents for registering to operate debt collection services:

When registering to operate debt collection services, in addition to the provisions on registration documents as stipulated by law, enterprises must provide:

1. Documents proving capital conditions:

a) Minutes of capital contributions from founding shareholders for joint-stock companies or founding members for limited liability companies with two or more members; decision on capital transfer from the owner for a single-member limited liability company where the owner is an organization; investment capital registration form of the enterprise owner for private enterprises and for single-member limited liability companies where the owner is an individual;

b) For capital contributed in cash, there must be confirmation from a commercial bank authorized to operate in Vietnam regarding the amount of deposit made by founding members. The deposit amount must equal the cash contribution of founding members and can only be released after the enterprise has been issued a business registration certificate for debt collection services;

c) For capital contributed in assets, there must be a valuation certificate from a valuation organization in Vietnam regarding the valuation result of the assets being contributed. The certificate must remain valid until the submission of the documents to the competent registration authority.

2. Documents proving the conditions regarding standards for managers and branch directors of enterprises, including:

a) A certified true copy of a bachelor's degree in one of the fields specified in Clause 2 of Article 14 of this Decree. In case the degree is issued by a foreign country, it must be translated into Vietnamese and notarized;

b) Criminal record sheet.

In case the individual is a foreigner, they must provide a certificate from the local government of their home country stating that the individual has no criminal record in that country. The certificate must be translated into Vietnamese and notarized.

Article 17. Changes to managers, branch directors of enterprises and registered capital

When changing managers, branch directors of enterprises, or registered capital, debt collection service enterprises must comply strictly with current laws and regulations on business registration and must meet the required capital conditions and personnel qualifications for managers and branch directors as stipulated in Articles 13 and 14 of this Decree.

Chapter IV

STATE MANAGEMENT OF

DEBT COLLECTION SERVICES ACTIVITIES

Article 18. Responsibilities of the Ministry of Public Security

1. Drafting and submitting to competent authorities for issuance, or issuing according to their jurisdiction, normative legal documents governing debt collection services activities.

2. Guiding, inspecting, and supervising the operations of debt collection service enterprises.

Article 19. Responsibilities of the People's Committee of provinces and centrally governed cities

1. Conducting inspections and supervision of debt collection services activities within their province or city and handling violations within their authority against acts violating debt collection services activities.

2. Reporting to the Ministry of Finance on the situation of debt collection services activities within their province or city on a semi-annual and annual basis, and at any time when necessary.

Article 20. Responsibilities of business registration authorities

1. Receiving and examining applications for registration to operate debt collection services and issuing business registration certificates for enterprises when the applications meet the requirements set forth in Articles 13, 14, and 16 of this Decree.

2. Reporting to the People's Committee of the province or centrally-administered city about issuing business registration certificates for enterprises (or operating licenses for branches).

Chapter V

ADMINISTRATIVE PENALTIES FOR VIOLATIONS

IN DEBT COLLECTION SERVICES ACTIVITIES

Article 21. General provisions on administrative penalties in debt collection services activities

1. Acts of violation with specific characteristics in debt collection services activities subject to administrative penalties as prescribed in this Decree, including:

a) Violations of the provisions on entities permitted to engage in debt collection services;

b) Violations of the conditions for engaging in debt collection services;

c) Violations of operational requirements in debt collection services activities.

2. Other acts of violation in debt collection services activities outside those specifically provided for in Clause 1 of this Article shall be handled according to other current laws.

3. Principles of penalty imposition, statute of limitations for penalties, aggravating circumstances, mitigating circumstances, procedures for imposing penalties, and enforcement of penalty decisions for violations stipulated in this Decree shall be implemented in accordance with current laws on administrative violations.

Article 22. Forms of administrative penalties in debt collection services activities

Acts of violation in debt collection services activities specifically provided for in Point 1 of Article 21 of this Decree shall be subject to administrative penalties in one of the following forms:

1. Warning;

2. Fine;

The maximum fine is 70,000,000 VND (Seventy million Vietnamese dong).

3. In addition to the forms of penalty mentioned in Clauses 1 and 2 of this Article, debt collection service enterprises committing violations shall also be subject to remedial measures: being ordered to comply with the provisions governing debt collection services activities as stipulated in this Decree.

4. In addition to the forms of administrative punishment prescribed in Clauses 1, 2, and 3 of this Article, a business operating debt collection services that commits violations may also be subject to the following supplementary form of administrative punishment: revocation of the Business Registration Certificate in accordance with the provisions of the Law on Handling Administrative Violations regarding business registration.

Article 23. Forms of administrative punishment for violations concerning the permitted entities to operate debt collection services

1. A fine of from VND 40,000,000 to VND 50,000,000 shall be imposed on organizations and individuals who are not businesses operating debt collection services for their first violation of engaging in debt collection services.

2. A fine of from VND 60,000,000 to VND 70,000,000 shall be imposed on organizations and individuals who are not businesses operating debt collection services for repeated violations of engaging in debt collection services.

3. Measures to remedy the consequences: immediate cessation of the operation of debt collection services.

Article 24. Forms of administrative punishment for violations concerning the conditions for operating debt collection services

1. Warning shall be imposed on a business operating debt collection services for its first violation of any of the following acts:

a) Engaging in other trades or services outside the activities of debt collection services as stipulated in this Decree;

b) Failing to maintain the statutory capital level as prescribed in this Decree;

c) Electing or appointing persons who do not meet the prescribed standards under this Decree to managerial positions or branch manager positions within the business.

2. A fine of from VND 15,000,000 to VND 20,000,000 shall be imposed on a business operating debt collection services for each subsequent violation of any of the acts mentioned in Clause 1 of this Article.

3. Apply remedial measures:

a) Immediate cessation of operations outside the activities of debt collection services;

b) Ensuring compliance with the capital requirements and conditions for managers or branch managers of the business.

Article 25. Forms of administrative punishment for violations concerning the operational requirements in the business of debt collection services

1. Warning shall be imposed on a business operating debt collection services for its first violation of any of the following acts:

a) Failing to issue employee cards to persons directly assigned to perform debt collection service activities;

b) Employee cards lacking the required contents as prescribed;

c) Failing to issue introduction letters to employees directly assigned to perform debt collection service activities;

d) Employees directly assigned to perform debt collection service activities not wearing employee cards or failing to present introduction letters when working directly with debtors, creditors, or other related organizations or individuals.

2. A fine of from VND 10,000,000 to VND 15,000,000 shall be imposed on a business operating debt collection services for any of the following acts:

a) Delegating authority to organizations or individuals not permitted to engage in debt collection services;

b) Repeatedly violating any of the acts mentioned in Clause 1 of this Article.

3. A fine of from VND 20,000,000 to VND 25,000,000 shall be imposed on a business operating debt collection services for each subsequent violation of the act mentioned in Point a of Clause 2 of this Article.

4. Measures to address consequences:

a) Immediate cessation of delegating authority to organizations or individuals not permitted to engage in debt collection services;

b) Restoring the original state prior to the changes caused by delegating authority to organizations or individuals not permitted to engage in debt collection services;

c) Complying with the regulations on issuing employee cards and introduction letters as prescribed in this Decree.

Article 26. Competence to impose administrative punishments for violations stipulated in Articles 23, 24, and 25 of this Decree

1. The Chairpersons of People's Committees at all levels have the authority to impose administrative punishments for violations stipulated in this Decree within the scope of their administrative punishment authority as prescribed in Articles 29 and 30 of the Law on Handling Administrative Violations.

2. Inspectors of the Ministry of Finance and Inspectors of the Department of Finance performing their duties have the right:

a) To issue warnings;

b) To apply measures to remedy the consequences as prescribed in this Decree.

3. The Chief Inspector of the Department of Finance has the right:

a) To issue warnings;

b) To impose fines up to VND 20,000,000;

c) To apply remedial measures as prescribed in this Decree.

4. The Chief Inspector of the Ministry of Finance has the right:

a) To issue warnings;

b) To impose fines up to the maximum amount prescribed in this Decree;

c) To apply remedial measures as prescribed in this Decree.

Chapter VI

IMPLEMENTING PROVISIONS

Article 27. Effectiveness

This Decree shall take effect fifteen days after its publication in the Official Gazette.

Article 28. Application to businesses already permitted to operate debt collection services before the effective date of this Decree

1. For businesses solely engaged in debt collection services:

a) Businesses that have met all the conditions prescribed in Articles 13, 14, and 15 of this Decree need not re-register their business; however, within 60 days from the effective date of this Decree, they must submit proof of meeting the conditions for debt collection services to the business registration agency. The documents include:

- Proof of capital conditions: the balance sheet of the business at the end of the most recent month;

- Proof of conditions for managers and branch managers as prescribed in Clause 2 of Article 16 of this Decree.

b) Businesses that have not met the new conditions for debt collection services must supplement these conditions and submit the documents as prescribed in Points a and b of Clause 1 of this Article to the business registration agency within 60 days from the effective date of this Decree; otherwise, their Business Registration Certificate will be revoked.

2. For businesses that have been granted a business registration certificate and among which there is the activity of debt collection services, they must comply with the provisions of this Decree.

Article 29. Implementation

1. The Minister of Finance shall be responsible for guiding the implementation of this Decree;

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees directly under the central government shall be responsible for enforcing this Decree./.