Decree No. 21/2021/ND-CP on elaboration of the Civil Code 2015 regarding security for performance of obligations

On March 19, 2021, the Government issued Decree No. 21/2021/ND-CP detailing the implementation of the Civil Code on security for performance of obligations (“Decree No. 21”) which was amended and supplemented regulations as well as specified problematic provisions on security for performance of obligations in accordance with the Civil Code 2015.

1. In comparison with Decree No. 163/2006/ND-CP and Decree No. 11/2012/ND-CP dated February 22, 2012 amending and supplementing a number of articles of Decree 163/2006 /ND-CP, Decree No. 21 has new points as follows:
  • To add a number of definition such as “Assets attached to land”, “Security Contract”, “Certificate”, or “Reasonable Period”
  • To have some remarkable regulations such as: Regulations on Assets used to perform obligations; Establishment and implementation of security contracts, security measures in form of marital property; Entitlement for reclaiming collateral, realization of collateral; and there are no separate provisions on cases which registration of secured transactions is required.
2. The provisions in Decree 21 concretize and clarify some matters in the Civil Code 2015
In case parties in security relationship for fulfillment of obligations have agreements other than those specified in Decree 21 and conforming to basic principles of civil laws, without violating the conditions for effectiveness of civil transaction and the limitation on execution of civil rights as prescribed by the Civil Code and other relevant laws, the agreement of the parties shall be implemented.
In general, Decree No. 21 has completed the shortcomings that were not to specified in the old Decree, and concretize problematic provisions in the Civil Code. It also creates a more favorable legal framework for the parties in secured transactions strictly comply with the basic principles of the civil law, especially removing many inadequacies and obstacles in the operation of credit institutions during the implementation of secured transactions.