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In the context of continuous improvement in asset auction laws, Circular 20/2024 has been issued to provide detailed regulations on the compulsory auction of assets. This article will provide detailed guidance on the procedures, processes, and related legal requirements.

I. Overview of Circular 20/2024

Circular 20/2024 marks an important milestone in standardizing the process of compulsory asset auctions in Vietnam. This document takes effect in 2024 and applies to all cases of compulsory asset auctions as prescribed by law.

Scope of Application

The circular stipulates factoring and other services related to factoring provided by credit institutions and foreign bank branches to customers. Article 4 of the Law on Asset Auctions lists assets that must be sold through auctions:

  • State assets as prescribed by law
  • Assets established as public ownership
  • Assets are materials, vehicles involved in administrative violations that are confiscated or assets seized for the enforcement of administrative penalty decisions according to the law
  • National reserve assets
  • Fixed assets of enterprises under the law on management and use of state capital invested in production and business activities at enterprises
  • Land use rights as prescribed by law
  • Collateral assets as prescribed by law
  • Assets for enforcement of judgments as prescribed by law
  • Assets of enterprises, cooperatives declared bankrupt
  • Infrastructure assets for roadways and the rights to collect tolls on these infrastructure assets
  • Other assets that must be auctioned according to the law.

II. Types of Assets Subject to Mandatory Auction

  1. Real Estate

  • Land and houses subject to enforcement: These are assets seized or handled by competent authorities during enforcement procedures, often related to bad debts, disputes, or economic cases.
  • Construction projects violating urban order: These projects are often built illegally or fail to comply with legal regulations, leading to enforcement and handling through auctions.
  • Liquidated public assets: These are state-owned assets that are no longer in use or have become obsolete, requiring auction sales to recover capital or reinvest.

  1. Movable Property

  • Confiscated vehicles: This includes vehicles violating the law (such as smuggling, tax evasion, or improper use) that are seized and placed on the auction list.
  • Goods confiscated for administrative violations: These are typically smuggled goods, trade fraud items, or products failing to meet market circulation standards.
  • Liquidated machinery and equipment: This includes industrial, production, or technological equipment that has been used, is no longer suitable for initial needs or is seized due to violations.

III. Mandatory Auction Process (Articles 3, 6, 7, 22 of Circular 20/2024/TT-BTP, Articles 6, 33, 38, 40, 44, 45, 55 of the Law on Asset Auctions)

Preparation stage: 

  • Selecting the asset auction organization: The asset owner selects the asset auction organization as prescribed. The asset owner can post a notice to select the auction organization on the National Asset Auction Portal and must pay the notification fee. 
  • Asset appraisal: The asset is appraised to determine the starting price. 
  • Signing the auction service contract: The asset owner and the asset auction organization sign the auction service contract, which includes agreements on the auction service fee, auction costs, and other terms. The determination of the auction service fee. 
  • Preparing auction documents: The asset auction organization prepares the necessary documents related to the auctioned asset.

Auction organization stage: 

  • Posting auction notice: The asset auction organization posts an auction notice on the National Asset Auction Portal and must pay the required fees. 
  • Public posting of auction: Auction information is publicly posted at the headquarters, the location where the asset is displayed (if any), and the location of the auction. 
  • Receiving registration forms and advance payments: Receiving auction registration forms and advance payments from participants. 
  • Organizing the auction: The auction is organized publicly and transparently according to regulations. In the case of an online auction on the National Asset Auction Portal, the auction organization must pay the portal usage fee as prescribed. 
  • Determining the winning bidder: The winning bidder is determined according to regulations. 
  • Creating the auction minutes: The auction minutes are created, and the auction results are publicly posted.

Post-auction stage: 

  • Signing the asset sale contract: The winning bidder and the asset owner sign the asset sale contract. 
  • Payment: The asset owner must pay the auction service fee and auction costs to the auction organization within 20 days from the end of the auction. The winning bidder pays for the asset according to the agreement. 
  • Asset delivery: The asset owner delivers the asset to the winning bidder according to the agreement.

IV. Rights and Obligations of the Parties

  1. The Person Owning the Auctioned Property (Article 47 of the 2016 Law on Asset Auctions) 

Rights:

  • Supervise the auction process;
  • Participate in the auction;
  • Request to halt the auction if there is a violation of the law;
  • Request the auctioneer to stop the auction in case of violations by the auctioneer or participants;
  • Have the right to terminate or cancel the auction service contract or the asset sale contract, or request the court to declare the contract invalid;
  • Exercise other rights as prescribed by law.

Obligations:

  • Be responsible for the assets brought to auction;
  • Sign the asset sale contract or submit the auction result for approval by the competent authority;
  • Deliver the assets and related documents to the buyer according to the agreement in the contract or as required by law;
  • Report to the competent authority on the selection of the auction organization, the progress, and the results of the state asset auction;
  • Fulfill other obligations as prescribed by law.

  1. The Winning Bidder (Article 48 of the 2016 Law on Asset Auctions) 

Rights:

  • The asset owner must sign a sale contract or submit the auction results for approval by the competent authority as prescribed by law.
  • They have the right to receive and own the auctioned asset according to the regulations.
  • If the asset requires registration of ownership or usage rights, they will be issued a certificate of ownership or usage rights by the competent state agency.
  • In addition, they have other rights as per the asset sale contract and legal regulations.

Obligations:

  • Sign the auction minutes and the asset sale contract;
  • Fully pay the purchase price of the auctioned asset to the seller according to the contract or legal regulations;
  • Fulfill other obligations as agreed in the contract and as prescribed by law.

V. Important Notes

Time Limits and Deadlines

  • Asset auction listing period (Article 35 of the Law on Asset Auctions):
    • For movable assets: at least 07 working days before the auction starts.
    • For immovable assets: at least 15 days before the auction starts.
  • Apply: within the period from the date of posting the auction of assets until two days before the auction starts (Article 38 of the Law on Asset Auctions). 
  • Payment: according to the agreement in the asset sale contract or according to relevant legal regulations (Article 80 of the Law on Asset Auctions).
  • Right to complain: Bidders or successful bidders have the right to file a complaint against the actions of the Auction Committee and may file a lawsuit if they disagree with the resolution. The time for resolving complaints is 30 days from the date of receipt of the complaint. (Article 74 of the Law on Asset Auctions).

Carefully Assess the Competence and Reputation of Auction Organizations

  • The Law on Asset Auction does not specify criteria for evaluating the competence and reputation of auction organizations, leaving it to asset owners to decide based on general factors such as facilities, auction plans, experience, and service fees.
  • Asset owners should actively research and thoroughly evaluate information about auction organizations, consulting experts, or state management agencies to make an accurate choice and avoid risks arising from engaging incompetent or untrustworthy organizations.

VI. Frequently Asked Questions

  1. Who can participate in mandatory asset auctions? (Article 38 of the Law on Asset Auction)

  • Vietnamese citizens aged 18 and older with full civil capacity.
  • Meet the registration conditions for auction participation as stipulated.
  • Do not fall under the prohibited cases following the law.

  1. How to register for auction participation? (Article 38 of the Law on Asset Auction)

  • Purchase the auction participation dossier
  • Submit a valid participation dossier and a deposit to the auction organization as per regulations.
  • Submit the deposit.
  • Provide identification documents.

VII. Conclusion

Circular 20/2024 has established a strict and clear legal framework for mandatory asset auctions. Compliance with these regulations ensures the protection of the parties involved and the efficiency of the auction process.

For more detailed information, please refer to the full text of Circular 20/2024 or contact the relevant competent authorities.

Harley Miller Law Firm “HMLF”

  • Address: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
  • Phone: +84 937215585
  • Website: hmlf.vn
  • Email: [email protected]

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