In September 2020, the Ministry of Justice (MOJ) published a draft decree (Draft Decree) on security interests such as mortgages, or pledges in Vietnam. Once issued, the Draft Decree will replace Decree 163/2006 on the same topic. Some important changes are discussed below:

· Legal basis for the Decree - Unlike Decree 163/2006 which implements the Civil Code 2005 only, the Draft Decree is stated to implement the Land Law 2013 and the Housing Law 2014 on secured transactions.

· Parties’ autonomy - The Draft Decree appears to allow the parties to a secured transaction to agree on any issue relating to a secured transaction as long as such agreement complies with the fundamental principles of the Civil Code 2015. However, it is not clear if the parties can agree not to follow the provisions of the Draft Decree as long as such agreements comply with the fundamental principles of the Civil Code 2015.

· Flexible formality requirements – The Draft Decree expressly allows a secured transaction to exist in the form of a separate security contract, a part of another contract, power of attorney, or other unilateral undertakings unless otherwise restricted by law.

· Definitions of secured assets - The Draft Decree introduces various definitions of certain types of assets that can be used as secured assets in a secured transaction. In particular, the Draft Decree defines property rights (quyền tài sản) to include the right to claim debt, right to request for payment, interests arising from a contract, project development rights, right to sublease right to lease infrastructure in an industrial zone of which rent is paid a lump sum, or right to claim damages.

In September 2019, the Supreme Court has given an important opinion to lower courts about how to deal with a loan agreement by a borrower who has failed to obtain appropriate corporate approval. The opinion relates to a borrower being a limited liability company which has failed to obtain Members Council’s approval for a bank loan. However, the opinion should generally be applicable for borrower being joint stock companies. The court’s opinion is not a law. But it could still help lenders in protecting their loans in case a corporate borrower wants to get out of the loans on the ground the loan does not have appropriate corporate approvals.