Regulations on escrow deposit under Vietnamese Law

by QuynhHuong

Accordingly, obligation security is a legal institution that is of great interest to jurists and society to learn and research; because it plays an important role in promoting the development of civil and indirect exchanges to play an important role in economic and social development. Because it plays an important role in promoting the development of civil; and indirect exchanges to play an important role in economic and social development. So, what are the regulations on escrow deposit under Vietnamese Law? Let’s find out with LSX in this article!

  • Civil Code 2015;
  • Other relevant legal documents.

The concept of margin

Hence the regulations in the Civil Code 2015, which deposits mean as follows:

Article 330. Deposits

  1. Escrow means the obligor depositing a sum of money or precious metals, gems, or valuable papers into an escrow account at a credit institution to secure the performance of the obligation.
  2. In case the obligor fails to perform or improperly performs the obligation; the obligee shall be paid and compensated by the credit institution where the deposit occur; for damage caused by the obligor, after deducting expenses.
  3. Procedures for sending and paying shall comply with the provisions of law.

Thus, escrow is a measure to secure the performance of an obligation through the fact that; the obligor will have to deposit a sum of money or precious metals, gems; or valuable papers into an escrow account at a credit institution to secure the performance of its obligations.

From the above provisions, several characteristics can be drawn to identify margin measures as follows:

  • Regarding the subject: there are 3 parties, namely the escrow party, the bank (credit institution) receiving the deposit, and the party entitled to receive payment and compensation from the bank.
  • Regarding the object: the object of the deposit method is money, precious metals, gems, and other valuable papers.
  • In terms of nature: an obligation arising from a civil obligation security measure in the form of an escrow is an obligation dependent on the main obligation, not arising from the performance of the main obligation.
  • Purpose: To ensure that the subject has the right to use for compensation for damage when the escrow party fails to perform or improperly performs its obligations.

The legal system such as the law on investment, environment, banking, and other fields strictly regulates escrow. However, the most typical is in the field of investment and environment. Therefore, Lawyer X will clarify the regulations on escrow in these two areas of law.

In investment law

Accordingly, escrow is a measure to secure the implementation of the investor’s investment project. An investor must deposit in case the State allocates or leases land or permits the change of land use purpose to implement an investment project; except for the following cases:

  • Investor who wins the auction of land use rights to implement an investment project is allocated land by the State with the collection of land use levy, or leases the land with one-off rental payment for the entire lease period;
  • The investor who wins the bid to execute an investment project using land in accordance with the law on bidding;
  • The investor who allocated or leased land by the State on the basis of receiving the transfer of an investment project has a deposit for the capital contribution or capital mobilization according to the schedule specified in the Investment Registration Certificate.
  • Investors allocated or leased land by the State for the implementation of investment projects; on the basis of receiving a transfer of land use rights and land-attached assets from other land users;
  • Investors are non-business units with income, hi-tech park development companies established under decisions of competent state agencies to implement investment projects; that allocated or leased land by the State for developing infrastructure of industrial parks, export processing zones, high-tech zones, and functional zones in economic zones.

Deposit time

  • For investment projects, investment policies must be decided: after the investment, the project is decided on investment policies; but before the time of land allocation, land lease, land use purpose change is on-going
  • For investment projects that are not subject to the decision on investment policies,;he time of deposit is the time of land allocation, land lease, permission to change land use purpose.

Margin level

Accordingly, the margin level is a percentage of the investment capital of the investment project specified in the decision on investment policy; or the investment registration certificate as follows:

  • For capital up to 300 billion dongs, the margin is 3%;
  • The capital portion over 300 billion VND to 1,000 billion VND, the deposit level is 2%;
  • For capital over 1,000 billion VND, the margin is 1%.

Depositing bank

Basically, the deposit will stay in the account of the Investment Registration Authority opened at a commercial bank in Vietnam at the investor’s choice. The investor bears the costs associated with the opening; maintaining the margin account and executing the transactions related to the margin account. Investors who have advanced money for ground clearance and resettlement can postpone the performance of their deposit obligations; corresponding to the advanced amount of ground clearance and resettlement.

In environmental law

Hence Decree No. 38/2015/ND-CP, stipulates for each type of imported scrap and weight to apply different deposit levels. In which, organizations and individuals importing scrap paper and scrap plastic under 100 tons must deposit 15% of the total value of the shipment; importing from 100 tons to less than 500 tons must pay a deposit of 18% of the total value of the shipment and import from 500 tons or more must deposit 20% of the total value of the shipment.

Organizations and individuals that import scrap other than the above must make a security deposit for imported scrap with the specified amount of 10% of the total value of the imported scrap shipment. Besides, the purpose of the deposit is to ensure that organizations and individuals importing scrap are responsible for overcoming environmental risks; caused by non-compliance with the provisions of the law on environmental protection in scrap import activities.

In fact, the deposit will be made at the Vietnam Environmental Protection Fund; otherwise, the commercial bank where the organization or individual opens the main trading account. The deposit is paid and refunded in Vietnam Dong and enjoys interest without term from the date of deposit. In particular, the deposit must be made before the customs clearance procedures for imported scrap are carried out at least 15 working days.

Lastly, thank you for paying attention to our article on “Regulations on escrow under Vietnamese Law”. Hope that this article will help you solve your problem. In case you have any questions, please feel free to contact Lawyer X for quick and best legal services: +84846175333.

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