Regulations on establishment and implementation of security contracts, security measures in form of marital property in Vietnam

What are the regulations on establishment and implementation of security contracts, security measures in form of marital property in Vietnam? - Thanh Trung (Thanh Hoa)

Establishment and implementation of security contracts, security measures in form of marital property in Vietnam

Pursuant to Article 27 of Decree 21/2021/ND-CP, establishment and implementation of security contracts, security measures in form of marital property as follows:

(1) In case marital properties used as security for obligation fulfillment are balance of deposit in credit institutions, branches of foreign banks, securities or other movable properties that are not required by the law for registration, either spouse who makes deposit in form of money or securities or possesses movable properties may, by themselves, establish and implement security contracts and/or security measures, except for following cases:  

- Property policies under agreements regulate otherwise or spouses agree otherwise and secured parties have been informed of these regulations or agreements; or

- Spouses and secured parties agree otherwise.

(2) In case spouses agree on unilaterally contributing marital properties to commercial juridical persons, non-commercial juridical persons that are social enterprises or to establishment of sole proprietorships, contributors and legal owners of sole proprietorships may, by themselves, implement security contracts and security measures relating to their contributions in juridical persons and properties owned by sole proprietorships.

Cases where spouses do not produce written agreements on contributing marital properties as specified under this Clause while the contribution has been implemented as per relevant law provisions and persons who do not directly conduct business know or are supposed to know about the contribution but do not object to the contribution shall be considered to have had agreements produced.

(3) In case security contracts or security measures have been established according to (1) and (2) and spouses divorce, persons who have established security contracts or security measures shall continue to execute said security contracts and security measures unless otherwise decided by legally valid judgments or decisions of courts.

Regulations on establishment and implementation of security contracts, security measures in form of marital property in Vietnam

Regulations on establishment and implementation of security contracts, security measures in form of marital property in Vietnam (Internet image) 

Regulations on the effectiveness of security contracts in Vietnam

Pursuant to Article 22 of Decree 21/2021/ND-CP regulating the validity of warranty contracts as follows:

- Security contracts certified, verified under the Civil Code or relevant law provisions or at request shall enter into force from the date on which they are certified, verified.

- Security contracts not specified under Clause 1 of Article 22 of Decree 21/2021/ND-CP shall enter into force from the date agreed upon by all parties.  In case no agreement is made, security contracts shall enter into force from the date on which the contracts are signed.

- In case collateral is withdrawn under agreement, sections of security contracts that relate to the withdrawn collateral shall no longer be effective; in case collateral is added or replaced, revision of security contracts relating to this collateral shall be implemented according to the Civil Code 2015 and other relevant law provisions.

- Security measures that have not entered into effect against a third individual shall not alter or nullify security contracts.

Relationship between security contracts and contracts with secured obligations in Vietnam

Pursuant to Article 29 of Decree 21/2021/ND-CP, security contracts that are nullified, annulled or unilaterally terminated shall not terminate contracts with secured obligations.

In case contracts with secured obligations are nullified, annulled or terminated, proceed as follows:

- terminate security contracts in case parties have not executed contracts with secured obligations;

- do not terminate security contracts when parties have executed parts or all of contracts with secured obligations.  Secured parties have the right to realize collateral to pay for repayment obligations with parties which they have obligations to. 

Mai Thanh Loi

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