Vietnam: Rights and obligations of financial lessors

According to Decree No. 39/2014/NĐ-CP of Vietnam’s Government, operation of financial leasing companies includes:

- Financial leasing companies may conduct the operations specified in Articles 112 thru 116 of the Law on Credit Institutions and this Decree.

- Purchase and sub-lease.

- Sale of payable amounts from financial leasing contracts to organizations and individuals under the State Bank’s regulations.

In accordance with the above activities, the financial lessors shall have the following rights and obligations:

Rights of lessors:

- To own leased assets throughout the lease term and not to be affected in case the lessee goes bankrupt, is dissolved or involved in a dispute or lawsuit at court related to a third party. Leased assets are not regarded as assets of the lessee upon the handling of assets for payment of debts to other creditors.

- To affix their ownership signs onto leased assets throughout the lease term.

- To request lessees to pay deposits or to apply other security methods in accordance with law if necessary.

- To request lessees to provide information on suppliers, quarterly reports on their production and business activities, annual financial settlement as well as matters related to lessees and leased assets.

- To examine the management and use of leased assets.

- To transfer their rights and obligations in financial leasing contracts to other financial lessors. In this case, lessors shall notify such in writing to lessees.

- To request lessees to pay compensation when the latter violates terms and conditions of financial leasing contracts.

- To terminate leasing contracts ahead of schedule and request lessees to pay the remaining rent and expenses arising during the termination of financial leasing contracts ahead of schedule as lessees violate terms and conditions which constitute grounds for termination of contracts as prescribed in financial leasing contracts.

- To recover leased assets if lessees use and exploit leased assets in contravention of provisions of financial leasing contracts; to request competent state agencies to apply methods in accordance with law to ensure that lessors exercise the owner’s rights to leased assets.

- To recover irreparably damaged leased assets, request lessees to pay their remaining rent and expenses arising in the course of recovery of leased assets.

- Other rights prescribed in financial leasing contracts.

Obligations of lessors:

- To assess the financial capacity and prestige of legally operating suppliers; leased assets, including their technical specifications, types, prices and time limits for delivery, installation and warranty; the feasibility and efficiency of production and business investment projects, conditions on financial leasing, leased asset use purpose and lessees’ debt payment capacity.

- To purchase and import assets already agreed upon by both parties in financial leasing contracts.

- To register the ownership of, and carry out the procedures for buying insurance for, leased assets in accordance with law.

- To take no responsibility for the non-delivery of assets or failure to deliver the assets under the conditions already agreed upon between lessees and suppliers.

- To properly implement other terms and conditions in financial leasing contracts.

View more details at Decree No. 39/2014/NĐ-CP of Vietnam’s Government, effective from June 25, 2014.

Le Hai

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