This is one of the notable principles mentioned in Circular No. 20/2017/TT-NHNN of the State Bank of Vietnam on sale of receivables from financial leasing contracts.
According to Circular No. 20/2017/TT-NHNN of the State Bank of Vietnam, in a transaction of selling receivables, the seller (financial companies and financial leasing companies) may not sell the receivables in the following cases:
- The buyer is the seller’s subsidiary;
- The seller and the lessee sign an agreement that the receivables must not be sold;
- The receivables are used as a security for the performance of a civil obligation at the time of sale of receivables, unless the lessee agrees in writing on the sale of receivables.
Moreover, the seller must promulgate internal regulations on receivables sale before conducting the sale of receivables, which clearly state:
- The decentralized competence;
- Methods of receivables sale;
- Process of receivables sale;
- Receivables assessment process
- Receivables auction process for receivables auctioned by commercial companies or financial leasing companies themselves.
More details can be found in Circular No. 20/2017/TT-NHNN of the State Bank of Vietnam, which takes effect from February 12, 2018 and replaces Circular No. 09/2006/TT-NHNN dated October 23, 2006.
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