Vietnam: Can I use my stock trading account balance as collateral? What types of assets does collateral include?
What types of assets does collateral include in Vietnam?
Pursuant to Article 105 of the 2015 Civil Code of Vietnam, it provides as follows:
Article 105. Property
1. Property comprises objects, money, valuable papers and property rights.
2. Property includes immovable property and movable property. Immovable property and movable property may be existing property or off-plan property.
Along with that, Article 295 of the Civil Code of Vietnam 2015 is guided by Article 8 of Decree 21/2021/ND-CP as follows:
Article 8. Collateral for security for obligation fulfillment
Collateral for security for obligation fulfillment includes:
1. Current properties or off-plan properties, except for cases where the Civil Code or other relevant laws forbid sale, transfer or other change of ownership at the time of establishing security contracts, security measures;
2. Properties sold under property sale agreements with retention of ownership;
3. Properties considered as subjects of obligations under infringed bilateral contracts in case of lien measures;
4. Properties under general public’s ownership if prescribed by relevant laws.
Collateral is a type of asset that includes: things, money, valuable papers and property rights.
Vietnam: Can I use my stock trading account balance as collateral? What types of assets does collateral include?
Can I use my stock trading account balance as collateral in Vietnam?
Based on the content of answers about valuable papers in Official Dispatch 141/TANDTC-KHXX, there are listed some types of valuable papers as follows:
"1. Article 163 of the 2005 Civil Code of Vietnam states: "Property includes things, money, valuable papers and property rights". According to the provisions of Point 8, Article 6 of the Law on the State Bank of Vietnam in 2010, valuable papers are "proof of debt repayment obligations between the issuer of valuable papers and the owner of valuable papers within a certain period of time, interest payment conditions and other conditions". Based on the provisions of current law, valuable documents include:
a) Debt collection drafts, bills of exchange for receiving debts, checks and other transfer instruments specified in Article 1 of the Law on Transfer Instruments in 2005;
b) Government bonds, company bonds, promissory notes and shares specified at Point c, Clause 1, Article 4 of the Foreign Exchange Ordinance in 2005;
c) Bills, drafts, bonds, bonds and other instruments giving rise to debt repayment obligations specified at Point 16, Article 3 of the 2009 Law on Public Debt Management;
d) Types of securities (stocks, bonds, fund certificates; right to buy shares, warrants, call options, put options, futures contracts, groups of securities or stock indices; Investment capital contribution contract; other types of securities prescribed by the Ministry of Finance) specified in Clause 1, Article 6 of the 2006 Securities Law (amended and supplemented with a number of articles in 2010);
dd) Corporate bonds specified in Article 2 of the Government's Decree No. 52/2006/ND-CP dated May 19, 2006 on "Corporate bond issuance"...
2. According to the above provisions, certificates of property ownership (land use right certificates; Certificate of ownership of housing, Certificate of registration of motorcycles and motorcycles; Car registration certificate...) is not a "valuable document" specified in Article 163 of the 2005 Civil Code of Vietnam; therefore, if there is a request for the Court to resolve to compel the occupier to return these documents, the Court shall not accept the settlement."
Therefore, from the provisions on securities are also 1 type of asset, assets are they securities can be used as collateral.
However, in the case you are referring to the balance of a securities trading account, there are no specific regulations on this issue.
If in the case of this amount is cash, which is a fixed amount, this will be a type of asset used to carry out secured transactions as usual.
If this balance is not cash, then it is possible for this balance to fluctuate over time. So if used for security, this balance cannot fluctuate, which means forcing the securities company to block this account to fulfill the obligation to secure the account owner.
Since there are currently no specific regulations on this issue, you can contact the mortgagee to know more about the conditions, in which cases to be approved as collateral.
What are the prohibited acts in securities trading in Vietnam?
Pursuant to Article 12 of the Law on Securities 2019 of Vietnam stipulates as follows:
Article 12. Securities-related offences
1. Direct or indirect commission of frauds, forgery of documents, provision or disclosure of false information to conceal true information or omit necessary information in a manner that causes misunderstanding, adversely affects the offering, listing, trading, investment of securities and provision of securities-related services.
2. Use of internal information to buy or sell securities to oneself or another person; revelation or provision of internal information; advising another person to buy or sell securities based on internal information.
3. Use of one or several accounts of oneself or another person, trading securities in a manner that creates artificial demand or supply; collaborating with another person in trading securities to manipulate securities prices; use of other methods, with or without false information, to manipulate securities prices.
4. Engaging in securities trade or provision of securities-related services without a license, certification or approval from SSC.
5. Use of a client’s account or asset without the client’s authorization or against the law; abuse of trust to appropriate a client’s assets.
6. Allowing another person to borrow the account to trade securities, hold securities in the name of another person for the purpose of manipulating securities prices.
7. Organizing the securities market against regulations of this Law.
As such, the above-mentioned provisions are prohibited acts in securities trading.
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