A transaction is carried out at VPBank (Photo: vtc.vn)

Hanoi (VNA) - The first ever legal framework for debt trading activities in Vietnam is available.

Decree No 69/2016/ND-CP, which took effect on July 1, stipulates the following major conditions for enterprises dealing in the debt trading business:

- The companies must have at least 100 billion VND, or 4.4 million USD, in charter capital. Firms dealing in debt trading floor services must have at least 500 billion VND in equity.

- Agreements in documents do not state that the debts cannot be transferred; the debts are not used as a mortgage for a civil duty at the time that transactions take place; debt buyers and sellers are not related parties in accordance with regulations of the Enterprise Law.

- Debt transactions must be contracted in documents based on agreements of relevant parties, guaranteeing their legal rights and interests. The documents are to specify the rights and responsibility of debt buyers and sellers.

- Debt trading companies must not use loans of credit institutions and foreign bank branches to buy debts from other borrowers of these lenders. Also, the firms are not to use a guarantee of credit institutions and foreign bank branches to buy debts from customers of the lenders.

- Debt buyers and sellers and relevant parties must obey current regulations on foreign exchange management in case debt trading forms a foreign lending/borrowing relation and requires foreign exchange in the debt transactions.

- Managers of debt trading firms must have adequate civil capacity and are not banned from corporate management in accordance with regulations of the Enterprise Law. They must have a bachelor’s degree or higher degrees either in economics, business management, laws or a certain field that they are going to assume in their jobs. They are to have at least five years working directly in areas such as banking and finance, accounting, auditing, laws, asset evaluating or debt trading.

Persons who already worked for a debt trading firm, whose business registration certificates were revoked, can become managers of another debt trading company if they did not manage the old firm in the last three consecutive years.

Dau Anh Tuan, Head of the Vietnam Chamber of Commerce and Industry (VCCI)’s Legislation Department, said debt trading remained on a list of business areas where enterprises must satisfy specific conditions, as attached in Appendix 4 of the Investment Law.

“I think debt trading should not be on this list. It should be developed widely,” Tuan told Vietnam News in a phone call on July 5.

“I have no specific idea about developments in the domestic debt trading market, but activities here apparently remain feeble,” he said.

State Bank of Vietnam (SBV) Governor Le Minh Hung said last week that banking authorities would accelerate steps to form a market for debt trading, as part of national efforts to restructure the credit institution system and settle bad debts.

This was also part of an action plan of the banking sector to support the domestic business environment and national competitiveness with a vision towards 2020.

Decree No 69/2016/ND-CP is one of about 50 decrees that have become effective and provided guidelines for the enterprise and investment laws. These laws took effect on July 1.-VNA