Circular No. 27/2002/TT-BTC guides the financial regime for companies managing debts and exploiting assets directly under commercial banks.

CIRCULAR

Guidelines on the financial regime for debt management companies

and asset exploitation directly under commercial banks

Implementing Decision No. 150/2001/QĐ-TTg dated October 5, 2001 of the Prime Minister on the establishment of debt management and asset exploitation companies directly under commercial banks, the Ministry of Finance issues guidelines on the financial regime for debt management and asset exploitation companies directly under commercial banks as follows:

I. GENERAL PROVISIONS

Article 1. The subjects to which this circular applies are debt management and asset exploitation companies directly under commercial banks established in accordance with Decision No. 150/2001/QĐ-TTg dated October 5, 2001 of the Prime Minister.

Debt management and asset exploitation companies directly under commercial banks (hereinafter referred to as the Company) have legal personality, independent accounting, and operate in compliance with the provisions of the Model Charter "on the organization and operation of debt management and asset exploitation companies directly under commercial banks" issued by the Governor of the State Bank of Vietnam.

Article 2. In this circular, collateral assets for loans mean pledged, mortgaged, or assigned assets, or assets decided by the court to be transferred to commercial banks, which are within the disposal rights of commercial banks for the purpose of recovering loan debts.

3.The Company is not required to pay value-added tax on the sale of collateral assets for loans conducted through the commission of commercial banks when implementing the handling of collateral assets for loans as stipulated in Clause 2, Article 34 of Decree No. 178/1999/NĐ-CP dated December 29, 1999 of the Government on loan guarantees of credit organizations.

II. SPECIFIC PROVISIONS

Chapter A. Management and Use of Capital and Assets:

1.The operating capital of the Company includes:

Charter capital provided by commercial banks.

Loans from financial institutions and other credit organizations both domestic and foreign.

Funds that the Company is permitted to establish.

Other capital as prescribed by law.

Article 2. The operating capital of the Company must be used for specific purposes, effectively, safely, and for the following purposes:

Investing in and purchasing fixed assets necessary for the Company's operations according to the principle of suitability with the needs of the Company's activities and the remaining value of total fixed assets not exceeding 50% of the Company's charter capital. Investments in and purchases of fixed assets by the Company must comply with the regulations of the State on investment management and construction.

Handling collateral assets for loans through appropriate measures such as:

Renovating, repairing, upgrading assets for sale, leasing, exploitation, business, joint venture, or joint stock by assets to recover debts.

Supervising and protecting collateral assets for loans.

Insuring collateral assets for loans.

Advertising and brokerage to sell or lease collateral assets for loans.

Hiring inspection, evaluation, and valuation of collateral assets for loans to sell, lease, invest, or form joint ventures.

Organizing public auctions of collateral assets for loans through auction centers.

Paying land rent, land tax, and land transfer tax (if applicable).

Other necessary activities for handling collateral assets for loans.

Purchasing and selling non-performing debts of other credit organizations, other debt management and asset exploitation companies of commercial banks.

Other lawful activities serving the Company's business operations.

Article 3. The use of the Company's operating capital for the above activities to handle collateral assets for loans must ensure the following principles and requirements:

The capital used must be truly necessary and effective in handling collateral assets for loans to recover debts and be reimbursed from the proceeds obtained from debt recovery, sales, leases, exploitation, business, investments, or joint ventures using collateral assets for loans to recover debts, in accordance with the principle stated in Point 6, Section II.A of this circular.

All expenses for activities to handle collateral assets for loans must have invoices and receipts in accordance with the regulations of the State on invoices and receipts.

Expenses for activities to handle collateral assets for loans mentioned above do not include expenses for the staff of the Company participating in the implementation of those activities.

For expenses to upgrade, renovate, or repair collateral assets for loans, the following requirements must also be adhered to:

Investment capital for upgrading, renovating, or repairing collateral assets for loans must be effective, ensuring that the assets can be sold or put into exploitation, leasing, or business to recover debts and offset costs incurred in line with the process of handling non-performing debts of the Bank as approved by the Prime Minister.

For cases involving basic construction investment, they must be implemented in accordance with the State's regulations on investment and construction management.

For brokerage fees to sell or lease collateral assets for loans, the following requirements must also be ensured:

Commission fees cannot be applied in cases where the broker is an employee of the Company or in cases where there is an auction organization.

Payment of commission fees must be based on contracts or confirmation letters between the Company and the recipient of the commission, including essential contents such as the name of the recipient, the nature of the expense, the amount, payment method, time of execution and completion, and responsibilities of the parties.

The maximum brokerage fee for leasing one asset shall not exceed 5% of the rental price of the asset over the actual leasing period but shall not exceed 50 million VND per year.

The maximum brokerage fee for selling one asset shall not exceed 3% of the selling price of the asset but shall not exceed 50 million VND.

The Chairman of the Board of Directors of the commercial bank establishing the Company has the responsibility to issue regulations on the use of the Company's operating capital for activities to handle collateral assets for loans to recover debts, ensuring strict and effective management based on the aforementioned principles and requirements.

Article 4. For debts and collateral assets for loans entrusted by commercial banks, the Company is responsible for managing and implementing measures to recover debts in accordance with the content entrusted by commercial banks and in compliance with current State regulations on handling loan debts and collateral assets for loans.

Article 5. For collateral assets for loans that are allowed to be sold, the Company must sell them at market prices through one of the following methods:

The Company sells openly on the market.

The company sells through a service center for auctioning assets.

The company sells to the State-owned debt buying company.

The Chairman of the Commercial Bank's Board of Directors establishes the company with the responsibility to specify in detail the cases where the company can organize the sale of collateral assets on its own and the procedures and formalities for the company to sell collateral assets independently.

6.Revenue from the exploitation of collateral assets, debt recovery, selling debts, selling remaining collateral assets after deducting the portion required to be paid as tax according to the prescribed regulations (if applicable) shall be handled in the following order:

a.For entrusted debts:

a.1.To cover the costs incurred to handle the collateral assets mentioned in Point 2, Section II.A that the company has spent using its operating capital to process such collateral assets.

a.2.To transfer back to the entrusting party according to the entrustment contract.

The handover of debts, collateral assets, and payments between the company and the commercial bank shall be carried out according to the entrustment contract between both parties.

b.For purchased debts:

b.1.To cover the costs incurred to handle the collateral assets mentioned in Point 2, Section II.A that the company has spent using its operating capital to process such collateral assets.

b.2.To recover the value of the debt secured by such collateral assets.

b.3.The remainder shall be further processed as follows:

In case the debtor still owes other debts to the company, and these debts are overdue and the debtor does not have the means to repay, the remaining amount mentioned above shall be used to continue repaying the company unless there are other agreements between the company and the debtor.

In case the debtor no longer owes the company, the remaining amount mentioned above shall be returned to the debtor or to individuals or organizations entitled to inherit the debtor's property if the debtor has been legally determined to be deceased, missing, dissolved, or bankrupt.

In case the debtor has been legally determined to be deceased, missing, dissolved, or bankrupt but there is no person or organization entitled to inherit or manage the debtor's property according to the law, the company shall include the remaining amount mentioned above in the company's extraordinary income.

7The company is allowed to set aside provisions for securities price reduction, inventory price reduction, and risk provisions for the debts it purchases. The setting aside and handling of securities price reduction provisions and inventory price reduction provisions shall be carried out according to the regulations stipulated for commercial banks establishing the company. As for the risk provisions for the debts purchased by the company, the timing, basis, and rate of provision shall be specified by the Chairman of the Commercial Bank's Board of Directors establishing the company and must be clearly defined in the company's financial regulations, but must ensure the principle that at the time of closing the accounting books, the balance of the risk provision set aside must not be less than 5% of the balance of the cost of the debts purchased by the company. The balance of the cost of the debts purchased by the company is determined by subtracting the amount the company actually collects from the debts to recover the capital from the purchase price of the debts. The handling of risk provisions for the debts purchased by the company shall be applied similarly to the handling of securities price reduction provisions and inventory price reduction provisions.

8.The company is responsible for opening accounting books according to the prescribed regulations to monitor all assets and operating capital of the company as well as the debts and collateral assets entrusted to the company by customers; to implement accounting and statistics in accordance with current regulations, fully, accurately, and promptly reflecting the situation of the use and changes of capital and assets during the company's operation.

Any loss (damage, loss) of the company's assets and collateral assets entrusted by customers must be documented to determine the extent of the loss, the cause of the loss, the responsibility of the collective or individual causing the loss, and must be handled according to the principle of asset loss handling regulations stipulated for commercial banks establishing the company.

B. Management of Revenue and Expenses:

1. The revenue of the company is determined as the amount actually collected by the company during the period from the following sources of income::

aIncome from business operations, including:

Service fees for managing debts and managing collateral assets.

Service fees for selling debts, selling or exploiting (leasing, investing, joint ventures) collateral assets.

Interest from purchased debts.

Other service fees.

b.Income from financial activities and extraordinary income, including:

Interest from deposits at credit institutions.

Recovery of risk provisions.

Extraordinary income.

Other income as prescribed by law.

Generally, the level of service fees is agreed upon between the company and the entrusting party and stipulated in the entrustment contract signed between both parties and must ensure the principle of thrift, efficiency, and sufficient coverage of the company's expenses in performing tasks entrusted by the bank regarding debt management and collateral asset management. The service fee for managing debts and managing collateral assets does not include the costs for handling collateral assets mentioned in Point 2, Section II.A of this circular.

Interest from purchased debts is determined when the recovered value of the debt actually collected by the company according to Point 6.b.2, Section II.A of this circular exceeds the purchase price of the debt. The excess difference is determined as interest from purchased debts.

2. The company's expenses are determined as the actual expenses incurred by the company during the period, including::

a.Interest expense on loans.

b.Expenses related to assets, including:

Depreciation of fixed assets of the company.

Rent for fixed assets.

Maintenance and repair expenses for fixed assets of the company.

Tools and equipment.

Insurance for fixed assets of the company.

ofc.Expenses for employees, including:

Salaries and allowances with the nature of salaries.

Social insurance, health insurance, trade union fees.

Meal allowance for company employees during shifts.

Severance pay for employees.

Expenses for female workers.

Protective equipment and transaction attire expenses for company employees.

d.Tax payment expenses according to regulations (if applicable).

đ.Loss from purchased debts.

e.Other expenses, including reasonable expenses not included in the above items as prescribed by the state.

All the above expenses shall be applied according to the current regulations of the state applicable to commercial banks establishing the company.

Clause losses from purchased debts shall be determined when the recovery value ofthe debt mentioned in point 6.b.2 Section II.A Circular herein is lower than thepurchase price of the debt. The smaller difference shall be identified as lossesfrom purchased debts.

C. Distribution of profits and establishment of reserves:

The distribution of profits, establishment of reserves, and purposes of usingreserves of the Company shall be carried out in accordance with the currentprovisions of the State applicable to commercial banks establishing theCompany.

D. Accounting system, inspection, audit, reporting, and financial disclosure:

1.The Company implements the accounting system prescribed by the Governor of theState Bank after coordination with the Ministry of Finance.

2.The fiscal year of the company begins on January 1 and ends on December 31 of theGregorian calendar year.

3.The Company conducts final settlement, prepares and submits financial reports,financial disclosure, and financial audit in accordance with the currentprovisions of the State applicable to commercial banks establishing theCompany. The Company bears responsibility for the accuracy and truthfulness ofits financial reports.

4The Ministry of Finance is responsible for inspecting the compliance with thefinancial regime of the Company. Financial inspections are conducted in thefollowing forms:

Regular or surprise financial inspections.

Financial inspections according to specific topics at the request of financialmanagement work.

III. IMPLEMENTATION

1.Based on the guidance in this Circular and the current financial regimes of theState, the Chairman of the Board of Management of the commercial bank isresponsible for issuing financial regulations for the Company managing debts andexploiting assets directly under the bank.

2.This Circular takes effect fifteen days from the date of signature.

3.In case of difficulties during implementation, please reflect them to theMinistry of Finance for consideration and resolution./.