More types of collateral clearly recognized will open up more opportunities and facilitate banks and businesses to carry out secured transactions.
Legal grounds:
- Decree No. 21/2021/ND-CP.
-
Clarifying about types of collaterals
Decree No. 21/2021/ND-CP, effective from May 15, 2021, has more clearly defined the types of assets that can be used to secure the performance of obligations that were previously restricted transactions by banks due to unclear legality and risks of handling collateral to recover loan capital. Some notable types of regulated collateral include:
- Property rights arising from contracts: the right to claim debt, the right to demand other payment; the right to performance and manage investment projects; the right to lease or sublease; the right to enjoy yields, profits and other benefits could be valued in money formed from contracts; right to compensation for damage; other rights with monetary value arising from contracts.
- Assets formed from capital contribution: shares, contributed capital, right to buy contributed capital; profits arising from shares and contributed capital.
- The right to exploit natural resources: the right to exploit minerals; products of natural forests, excluding animals; natural seafood; water resources, except for natural water used for agriculture, forestry, fishery and salt production; natural bird’s nest.
- Property rights arising from intellectual property rights, information technology, scientific and technological activities
- Investment projects, assets belonging to investment projects: The investor may use the entire investment project, other property rights or other assets belonging to the investment project to secure the performance of obligations.
-
Protection of the bank’s interest in collateral
Decree No. 21/2021/ND-CP affirms the interests of secured banks with respect to collateral assets.
Accordingly, the bank has the right to recourse to the the collateral in case the collateral is transferred to another person. This is the basis to protect the bank’s ability to recover debts and also a warning for parties who want to disperse assets to avoid debt repayment obligations.
