Draft of the Law on Property Auction is being rapidly completed by the Economic Committee of the National Assembly to replace the regulations on property auction implemented under Decree 17/2010/ND-CP on property auction, which is outdated and has many inadequacies.
Article table of contents
Asset auction is a form of selling assets that involves the participation of two or more individuals in an auction according to the principles and procedures stipulated in this Law. The new Draft Law on Asset Auction (temporarily called Draft Law 2016) has many new points compared to the Draft Asset Auction Law issued in 2015 (temporarily called Draft Law 2015) and Decree 17/2010/ND-CP.
In principle, Draft Law 2016 regulates all activities related to asset auctions; the auction of assets must comply with established legal procedures, and self-organized auction activities will not be recognized. Thus, when individuals or organizations have assets they wish to auction, they are required to hire auction companies to organize it according to regulations.
- It is prohibited to lease, lend, or allow other organizations or individuals to use their Auctioneer Certification for conducting auctions (Point a Clause 1 Article 8)- Restrict individuals and organizations from participating in auctions in violation of the law; (Point d Clause 1 Article 8)
Mandatory Auction Regulations for Bad Debt
Under Clause 4 Article 2 of Decree 17/2010/ND-CP and Clause 6 Article 2 of Draft Law 2015, the same regulation applies whereby “Auctioned assets include movable assets, real properties, valuable papers, and property rights allowed to be transacted under the law.” In Draft Law 2016, auctioned assets are specifically regulated in Article 3 as follows:
Assets that are legally required to be auctioned include:
Assets:
- State assets as defined by laws on the management and use of state assets;- Assets for the enforcement of judgments as stipulated by laws on civil judgment enforcement;- Confiscated administrative violation objects and tools to be deposited in the state treasury;- Secured assets in secured transactions;- Bad debts and secured assets of bad debts purchased by the Vietnam Asset Management Company for Credit Institutions;- Assets established under state ownership rights;- National reserves as prescribed by laws on national reserve;- Road infrastructure assets and rights to collect fees for the use of road infrastructure as specified by laws on management, use, and exploitation of road traffic infrastructure;- Fixed assets of enterprises where the state holds 100% of charter capital;- Assets of businesses or cooperatives declared bankrupt.
Property Rights:
- The right to exploit minerals as prescribed by the laws on minerals;- The right to use radio frequencies as specified by the laws on radio frequencies;- The right to use land;- Other assets that the law requires to be sold through auctions.
Additionally, auctioned assets also include those voluntarily chosen by individuals or legal entities to be sold through auctions.
It can be seen that the list of assets required to be sold at auction as approved by Draft Law 2016 mostly comprises public assets or assets of credit institutions, including bad debts purchased by the Vietnam Asset Management Company for Credit Institutions. Furthermore, as stipulated in Article 54 of this Draft, “The Vietnam Asset Management Company for Credit Institutions shall conduct auctions or enter into service contracts with asset auction organizations to auction bad debts and secured assets of bad debts purchased by the Company.” This can be considered a "controversial priority" granted by Draft Law 2016 to the Vietnam Asset Management Company (VAMC) compared to other enterprises.
Allowing Concurrent Business Practices
According to Article 21 of the Draft, organizing asset auctions can be considered a conditional business activity as auction enterprises are established, organized, and operate in the form of private enterprises and partnerships under this Law and relevant laws. Besides, enterprises registering for asset auction activities must meet requirements on human resources and infrastructure:
A private enterprise with the business owner as an auctioneer, also the Director of the enterprise; a partnership must have at least one general partner being an auctioneer, and the General Director or Director of the partnership being an auctioneer;
Having an office, infrastructure, and necessary equipment to ensure the conduct of asset auction activities.
Thus, the new Draft abolishes the prohibition "Asset auction enterprises shall not concurrently engage in other business activities,” which is a rational step in the process of building and developing the right to freedom of business under the Enterprise Law. Since asset auction enterprises also operate under enterprise laws, the prohibition stemmed from concerns that other business activities might affect the conditions and capacity of enterprises participating in auctions.
