Laws of Vietnam

In furtherance of the Government’s Resolution No.11/2000/NQ-CP of July 31, 2000 on a number of measures to execute the socio-economic development plan in the last six months of 2000;

In order to create conditions for borrowers being enterprises to secure loans for credit institutions in conformity with the realities, the State Bank of Vietnam, the Ministry of Justice, the Ministry of Finance and the General Land Administration hereby jointly guide the security of loans of credit institutions as prescribed at Points b and c, Clause 6, Section III of Resolution No.11/2000/NQ-CP of July 31, 2000 as follows:

1. The keeping of papers on enterprises’ mortgaged assets by credit institutions

1.1. The keeping of papers on the land use right

a/ Enterprises allocated or leased land by the State, which are fully qualified to morgage the land use right at credit institutions for loans according to the provisions of the land legislation, though having not yet been granted land use right certificates, shall still be allowed to mortgage their land use right, provided that they possess one of the following papers:

- Land allocation decisions of the competent State agency, accompanied by land use levy payment vouchers as prescribed by law;

- Land lease decisions of the competent State agency, accompanied by land lease contracts and land rental payment vouchers according to the provisions of law.

b/ For enterprises with land allocated or leased by the State, which are fully eligible for mortgaging the land use right at credit institutions for loans according to the provisions of the land legislation, and have not yet been granted land use right certificates, the order and procedures for mortgaging their land use right shall comply with the provisions in Sections 2 and 3, Chapter VI of the Government’s Decree No.17/1999/ND-CP of March 29, 1999, Chapter II of the Government’s Decree No.178/1999/ND-CP of December 29, 1999 and the documents of the General Land Administration and the State Bank of Vietnam guiding the implementation of these Decrees. Particularly for the land use right mortgage dossiers prescribed in Clause 2, Article 28 of Decree No.17/1999/ND-CP, the "land use right certificate" shall be replaced by papers specified at Point a, Clause 1.1, Section 1 of this Circular. When carrying out the registration of the land use right mortgage, the provincial/municipal Land Administrations or Land and Housing Administrations shall clearly inscribe that "this is a land use right mortgage without land use right certificate granted by the competent State agency.

After completing the procedures for mortgaging the land use right, enterprises shall send their dossiers to the provincial/municipal Land Administrations or Land and Housing Administrations of the localities where the land is situated, for proceeding with the procedures to grant the land use right certificates to such enterprises according to the provisions of law. Each dossier comprises the following papers:

- Application for land use right certificate,

- Index map of the land plot,

- Copies (not to be notarized) of papers prescribed at Point a, Clause 1.1, Section 1 of this Circular.

After the People’s Committees of the competent level have signed for granting of land use right certificates to enterprises, the provincial/municipal Land Administrations or Land and Housing Administrations shall make entries in the land use right certificate granting books and send the granted land use right certificates to the concerned credit institutions (the mortgagees) for being added to the credit dossiers.

1.2. For the land use right mortgage registration and registration deletion, the provincial/municipal Land Administrations or Land and Housing Administrations shall comply with the provisions in Sections 2 and 3, Chapter VI of the Government’s Decree No.17/1999/ND-CP of March 29, 1999 and Section VI of the General Land Administration’s Circular No.1417/1999/TT-TCDC of September 18, 1999 and hold off the registration of security transactions for the right to use land and real estate affixed to land according to the Government’s Decree No.08/2000/ND-CP of March 10, 2000 on the registration of security transactions until the concerned ministries and branches promulgate documents specifically guiding the order, procedures and fee for registering security transactions.

1.3. When pledging machinery and equipment installed in workshops, construction works and other assets affixed to land, for which the ownership right registration is not yet required by law, enterprises must have papers evidencing that such assets are under their lawful ownership or under their management and use, for State enterprises, and hand the originals of such papers to the concerned credit institutions for keeping.

Papers evidencing that assets are under enterprises’ lawful ownership or under the management and use right of State enterprises include: asset purchase, sale, presentation or donation contracts; purchase and/or sale invoices as prescribed by the Finance Ministry; goods purchase payment vouchers; documents on hand-over of assets by the competent State agency(ies) to State enterprises, written records on the pre-acceptance test of projects; and other papers according to the provisions of law.

2. The keeping of papers on pledged assets by credit institutions in cases where enterprises hold such pledged assets

2.1. For assets being movables (transport means, fishing ships and boats,...) for which the ownership certificates have been granted, enterprises shall hand the originals of such ownership certificates to the concerned credit institutions for keeping according to the provisions of Article 12, Chapter II of the Government’s Decree No.178/1999/ND-CP of December 29, 1999 and Section 6, Chapter II of the State Bank’s Circular No.06/2000/TT-NHNN1 of April 4, 2000.

2.2. For movables being machinery and equipment, which are not installed in workshops, construction works and other assets not affixed to land, which are being used in production and/or business without ownership certificates, if accepted by credit institutions as pledge, the pledging enterprises must have papers proving that such assets are under their lawful ownership or under their management and use right, for State enterprises, and hand the originals thereof to the credit institutions. The enterprises may hold such assets to continue their production and/or business activities. Such papers shall include those specified in Clause 1.3, Section 1 of this Circular. As soon as the national registry for security transactions is established and commences its operation, credit institutions and enterprises shall carry out the security transaction registration for the pledge of such assets according to the law provisions on security transaction registration.

2.3. For machinery and equipment kept in enterprises’ warehouses and not yet put in use, the provisions of Article 12, Chapter II of the Government’s Decree No.178/1999/ND-CP of December 29, 1999 and Section 6, Chapter II of the State Bank’s Circular No.06/2000/TT-NHNN1 of April 4, 2000 shall apply.

3. For airplanes and sea-going ships which operate on international air routes and shipping lines, credit institutions shall keep the copies of registration certificates thereof, notarized by the State Notary Public, while the means owners shall keep the originals of such registration certificates for circulation of their airplanes and sea-going ships when pledging or mortgaging such assets for borrowing capital from credit institutions.

4. Regarding the procedures prescribed in Clause 2.2, Section 2 of this Circular, enterprises shall be held responsible before law for the legality and truthfulness of the papers evidencing their ownership right or their management and use right (for State enterprises), and ensure that their assets are dispute-free. Enterprises must not use such papers to make pledge or mortgage at many credit institutions for capital borrowing.

5. In cases where a credit institution and an enterprise agree that the asset pledge or mortgage contract must be certified by the State Notary Public or authenticated by the People’s Committees of the competent level, such State Notary Public or People’s Committees of the competent level, as prescribed by law, shall base themselves on the papers evidencing that the pledged or mortgaged assets are under the enterprise’s ownership or its management and use (in case of State enterprises) as specified in Clause 1.3, Section 1 of this Circular to certify or authenticate the pledge or mortgage contracts for the involved parties.

6.1. This Circular takes effect 15 days after its signing.

6.2. The State Bank’s branches, the Justice Services, Finance Services, Land Administrations or Land and Housing Administrations of the provinces and centrally-run cities and credit institutions shall have to implement this Circular.

For the State Bank Governor
Deputy Governor
DUONG THU HUONG

For the Justice Minister
Vice Minister
UONG CHU LUU

For the Finance Minister
Vice Minister
LE THI BANG TAM

For the General Administrator of Land
Deputy General Administrator
TRIEU VAN BE