Decree No. 61/2017/ND-CP provides detailed regulations on the valuation of initial prices for non-performing loans and collateral assets for non-performing loans, and the establishment of the Auction Committee for non-performing loans and collateral assets for non-performing loans with high value.

DECREE

Detailed regulations on the initial valuation of non-performing loans and collateral for non-performing loans, and the establishment of the Auction Committee for non-performing loans and collateral for non-performing loans,

collateral for non-performing loans for non-performing loans,

collateral for non-performing loans with high value

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Auctioning Assets dated November 17, 2016;

Based on the proposal of the Governor of the State Bank of Vietnam;

Detailed regulations on the initial valuation of non-performing loans and collateral for non-performing loans, and the establishment of the Auction Committee for non-performing loans and collateral for non-performing loans for non-performing loans, collateral for non-performing loans with high value.

The Government issues this Decree This Decree details Clause 4, Article 65 of the Law on Auctioning Assets, including:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. The initial valuation of non-performing loans and collateral for non-performing loans in cases where organizations wholly owned by the State established by the Government to handle non-performing loans of credit institutions conduct auctions themselves and hire auction organizations to carry out asset auctions.

2. The establishment of the Auction Committee for non-performing loans and collateral for non-performing loans for non-performing loans, collateral for non-performing loans with high value in cases where organizations wholly owned by the State established by the Government to handle non-performing loans of credit institutions conduct auctions themselves.

1. Organizations wholly owned by the State established by the Government to handle non-performing loans of credit institutions.

Article 2. Applicability

This Decree applies to:

2. Valuation organizations.

3. Auction Committee for non-performing loans and collateral for non-performing loans.

4. Credit institutions with non-performing loans sold to organizations wholly owned by the State established by the Government to handle non-performing loans of credit institutions.

5. Other organizations and individuals related to the auction of assets that are non-performing loans and collateral for non-performing loans.

1. Organizations wholly owned by the State established by the Government to handle non-performing loans of credit institutions are the Vietnam Asset Management Company under the provisions of Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on the establishment, organization, and operation of the Vietnam Asset Management Company and subsequent amendments and supplements (hereinafter referred to as the Asset Management Company).

Article 3. Explanation of Terms

In this Decree, the following terms are understood as follows:

2. Non-performing loans of the Asset Management Company are non-performing loans purchased from Vietnamese credit institutions by the Asset Management Company according to the provisions of Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on the establishment, organization, and operation of the Asset Management Company and subsequent amendments and supplements.

INITIAL VALUATION OF NON-PERFORMING LOANS AND COLLATERAL FOR NON-PERFORMING LOANS

Chapter II

Article 4. Cases requiring the initial valuation of non-performing loans and collateral for non-performing loans

1. Non-performing loans purchased by the Asset Management Company at book value through special bonds, when determining the initial price for auction, the Asset Management Company cannot agree with the selling credit institution on the initial price.

2. Non-performing loans purchased by the Asset Management Company at market value.

3. Collateral for non-performing loans, when determining the initial price for auction, the Asset Management Company cannot agree with the guarantor on the initial price.

3. Collateral assets for non-performing debts where the Asset Management Corporation cannot agree with the guarantor on the initial auction price when determining such price.

Article 5. Selection of appraisal enterprises to conduct initial valuation of non-performing debt and collateral for non-performing debt

1. Selection of appraisal enterprises in cases prescribed in Clause 1, Article 4 of this Decree:

a) Within seven working days, the Asset Management Corporation shall negotiate with the selling credit institution regarding the selection of the appraisal enterprise;

b) In case of failure to reach an agreement with the selling credit institution on the selection of the appraisal enterprise, the Asset Management Corporation shall publicly announce the hiring of an appraisal enterprise at least seven working days in advance on the website of the State Bank of Vietnam and the Asset Management Corporation's website for appraisal enterprises to register their participation. The Asset Management Corporation shall decide on the selection of the appraisal enterprise according to the principles stipulated in Clause 4 of this Article.

2. Selection of appraisal enterprises in cases prescribed in Clause 2, Article 4 of this Decree:

The Asset Management Corporation shall publicly announce the hiring of an appraisal enterprise at least seven working days in advance on the website of the State Bank of Vietnam and the Asset Management Corporation's website for appraisal enterprises to register their participation. The Asset Management Corporation shall decide on the selection of the appraisal enterprise according to the principles stipulated in Clause 4 of this Article.

3. Selection of appraisal enterprises in cases prescribed in Clause 3, Article 4 of this Decree:

a) Within seven working days, the Asset Management Corporation shall negotiate with the guarantor regarding the selection of the appraisal enterprise;

b) In case of failure to reach an agreement with the guarantor on the selection of the appraisal enterprise, the Asset Management Corporation shall publicly announce the hiring of an appraisal enterprise at least seven working days in advance on the website of the State Bank of Vietnam and the Asset Management Corporation's website for appraisal enterprises to register their participation. The Asset Management Corporation shall decide on the selection of the appraisal enterprise according to the principles stipulated in Clause 4 of this Article.

4. The selection of appraisal enterprises as prescribed in this Article must comply with the following principles:

a) The selected appraisal enterprise must be listed in the public list of qualified appraisal enterprises issued by the Ministry of Finance;

b) The selected appraisal enterprise must not fall under the circumstances prohibited from conducting appraisals as provided for in the Law on Prices and guiding documents.

5. The appraisal enterprise shall conduct the initial valuation of non-performing debt and collateral for non-performing debt in accordance with the Law on Prices and guiding documents.

Article 6. Rights and obligations of the Asset Management Corporation when required to conduct initial valuation of non-performing debt and collateral for non-performing debt

1. Selecting appraisal enterprises in accordance with Article 5 of this Decree.

2. Signing an appraisal contract with the selected appraisal enterprise.

3. Providing relevant files, documents, and data related to the non-performing debt and collateral for non-performing debt subject to appraisal to the appraisal enterprise.

4. Being authorized by the selling credit institution to carry out the activities specified in Clauses 1, 2, and 3 of this Article in cases where the non-performing debt and collateral for non-performing debt are purchased at book value through special bonds.

5. Other rights and obligations as prescribed by law.

Article 7. Using the appraisal results to determine the initial price of non-performing debts and collateral for non-performing debts

1. In cases where the initial price of non-performing debts and collateral for non-performing debts must be appraised according to the provisions of Article 4 of this Decree, the Asset Management Corporation shall decide on the initial price of non-performing debts and collateral for non-performing debts when auctioning for the first time based on the principle that the initial price shall not be lower than the value of non-performing debts and collateral for non-performing debts as determined by the appraisal results.

2. In cases where the auction of non-performing debts and collateral for non-performing debts as stipulated in Clause 1 of this Article does not succeed:

a) For the auction of non-performing debts purchased by the Asset Management Corporation at market value, the Asset Management Corporation shall decide on the initial price of non-performing debts. If the Asset Management Corporation decides to reduce the initial price, each reduction shall not exceed 10% of the initial price of the previous unsuccessful auction;

b) For the auction of non-performing debts purchased by the Asset Management Corporation at book value with special bonds, if continuing the auction, the Asset Management Corporation shall renegotiate with the credit institution selling the debt regarding the initial price of the non-performing debt. Within seven working days from the date of deciding to continue the auction without reaching an agreement with the credit institution selling the debt, the Asset Management Corporation shall decide on the initial price of the non-performing debt. If the Asset Management Corporation decides to reduce the initial price, each reduction shall not exceed 10% of the initial price of the previous unsuccessful auction;

c) For the auction of collateral for non-performing debts, if continuing the auction, the Asset Management Corporation shall renegotiate with the guarantor regarding the initial price of the collateral. Within seven working days from the date of deciding to continue the auction without reaching an agreement with the guarantor, the Asset Management Corporation shall decide on the initial price of the collateral. If the Asset Management Corporation decides to reduce the initial price, each reduction shall not exceed 10% of the initial price of the previous unsuccessful auction.

Chapter III

BOARD OF AUCTION FOR NON-PERFORMING DEBTS AND COLLATERAL FOR NON-PERFORMING DEBTS

Article 8. Non-performing debts and collateral for non-performing debts with high value

1. Non-performing debts or collateral for non-performing debts with high value are non-performing debts or collateral for non-performing debts of the Asset Management Corporation with an initial price of 100 billion VND or more.

2. The initial price specified in Clause 1 of this Article:

a) For non-performing debts and collateral for non-performing debts as stipulated in Clauses 1, 2, and 3 of Article 4 of this Decree, the initial price shall be determined according to Clause 1 of Article 7 of this Decree;

b) For non-performing debts and collateral for non-performing debts outside the cases specified in point a of this clause, the initial price shall be determined according to relevant laws.

Article 9. Establishment of the Board of Auction for Non-performing Debts and Collateral for Non-performing Debts

1. The Asset Management Corporation shall decide to establish and issue the Rules of Operation of the Board of Auction for Non-performing Debts and Collateral for Non-performing Debts for non-performing debts and collateral for non-performing debts with high value as stipulated in Article 8 of this Decree.

2. The Board of Auction for Non-performing Debts and Collateral for Non-performing Debts shall consist of: The Chairman of the Board of Members of the Asset Management Corporation or a person authorized by the Chairman of the Board of Members of the Asset Management Corporation as the Chairman of the Board, one auctioneer, one representative of the credit institution selling the debt (in cases where the auction of non-performing debts and collateral for non-performing debts purchased at book value with special bonds is conducted), representatives of related units under the Asset Management Corporation, and other members as decided by the Asset Management Corporation (if any).

3. The Asset Management Corporation shall establish the Board of Auction for Non-performing Debts and Collateral for Non-performing Debts to auction one non-performing debt, collateral for a non-performing debt, or multiple non-performing debts and collateral for non-performing debts.

Article 10. Principles of Operation of the Auction Council for Non-performing Loans and Collateral Assets

1. An auction conducted by the Auction Council for Non-performing Loans and Collateral Assets must have at least two-thirds of the Council members present, including an auctioneer and a representative of the credit organization selling the debt (in cases where the non-performing loan and collateral assets are purchased at book value with special bonds).

2. The Auction Council for Non-performing Loans and Collateral Assets operates under the principle of centralization, collective discussion, and majority decision-making through voting or secret ballot. In case of a tie vote or equal number of votes, the Chairman of the Council has the final decision-making power.

Article 11. Rights and Obligations of the Auction Council for Non-performing Loans and Collateral Assets

1. The Auction Council for Non-performing Loans and Collateral Assets has the following rights:

a) To disqualify individuals or organizations participating in the auction who engage in disruptive behavior, collusion, price suppression, or other actions that affect the objectivity and honesty of the auction, and to record such actions in a minutes document;

b) To halt the auction and report to the authority responsible for establishing the Council for handling when violations of auction procedures or acts of collusion, price suppression, or other actions affecting the objectivity and honesty of the auction by the auction controller are discovered;

c) To select the auction method prescribed in Clause 1, Article 40 of the Auction Law to conduct the auction;

d) Other rights as prescribed by law.

2. The Auction Council for Non-performing Loans and Collateral Assets has the following obligations:

a) To fulfill the obligations stipulated in Point d, Clause 2, Article 24 of the Auction Law;

b) To organize and implement the auction according to the Rules of Operation of the Council, the Rules of the Auction, and relevant laws;

c) To be responsible for the results of the auction before the law and the authority responsible for establishing the Council;

d) To resolve complaints and denunciations during the auction process; to accept and handle within their authority, or to recommend the authority responsible for establishing the Council to resolve complaints arising after the auction; to compensate for damages in accordance with the law;

e) To report the results of the asset auction and transfer the auction file to the authority responsible for establishing the Council after the conclusion of the auction;

e) Other obligations as prescribed by law.

Article 12. Duties and Authorities of the Chairman and Members of the Auction Council for Non-performing Loans and Collateral Assets

1. The Chairman of the Auction Council for Non-performing Loans and Collateral Assets has the following duties and authorities:

a) To organize and implement the rights and obligations of the Council as stipulated in Article 11 of this Decree;

b) To chair Council meetings; to assign responsibilities to each member;

c) Other duties and authorities as prescribed in the Rules of Operation of the Council and relevant laws.

2. Council members shall perform tasks assigned by the Chairman and are accountable to the Chairman.

3. Council members who are auctioneers are directly responsible for managing the auction.

Chapter IV

IMPLEMENTING PROVISIONS

Article 13. Effective Date

1. This Decree takes effect from July 1, 2017.

2. Abolish Clause 1, Article 27 of Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on the establishment, organization, and operation of the Vietnam Asset Management Company.

1. The Minister, Heads of Ministries equivalent to ministries, Heads of government agencies, Chairmen of provincial People's Committees under the central government, and related agencies, units, and individuals are responsible for implementing this Circular.

1. The Governor of the State Bank of Vietnam is responsible for guiding this Decree.

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of provincial People's Committees, Chairmen of municipal People's Committees directly under the Central Government, Chairmen of the Board of Directors, and General Directors of the Asset Management Company are responsible for implementing this Decree./.