No more capital requirement for debt collection service providers

No more capital requirement for debt collection service providers

Minh Tam

HCMC – Debt collection service providers will not be bound by the current requirements like legal capital or professionalism of managers when a relevant Government decree issued in 2007 is scrapped.

Instead, providers will have to meet social order and security requirements because this is one of 28 conditional business sectors provided by the Government’s Decree 96/2016/ND-CP.

When  Decree 104/2007/ND-CP on debt collection service is abolished is unknown. The Ministry of Finance proposed the Government not issue any new legal document to replace this decree although the ministry had planned for a revised version.

According to information posted on the ministry’s website, the reason for its proposal is due to Deputy Prime Minister Truong Hoa Binh’s earlier order to stop building a substitution decree.

The ministry said having no replacement for Decree 104 would not affect the management of debt collection service, leave no loopholes that threaten social security and order, life, health and human dignity, and have no influence on the rights and responsibilities of the parties concerned.

Firstly, the operating principle of debt collection is based on an authorization contract signed by the lender or debtor with the service provider. The authorization contract is provided in the 2015 Civil Code.

Secondly, as stipulated in Decree 104, debt collection service providers must have at least VND2 billion in legal capital, but it runs counter to the 2014 Enterprise Law since there is no such requirement except for some particular businesses like banking or securities.

Moreover, stipulations on educational and professional requirements (college diploma or higher in economics, management, law and security) for managers and workers as cited in Decree 104 are unnecessary. The education and professionalism of managers and workers only benefit their own business and have no influence on other firms or the economy.

More importantly, the requirements for managers’ and workers’ background checks and social security guarantees are stipulated in Decree 96/2016 and under the direct management of the Ministry of Public Security.

The Ministry of Finance has worked on a replacement of Decree 104, with many drafts put out to get public feedback. In the latest draft, the ministry proposed abolishing some stipulations on legal capital and requirements for managers and workers, in line with the 2014 Enterprise Law.

However, enterprises engaging in debt collection service must get a business registration certificate with declaration of business services including debt collection at the National Business Registration Portal.

Besides, debt collection service providers must get a certificate on social security and order as the Government’s regulations on conditional businesses. The Ministry of Finance also proposed the Ministry of Public Security to be in charge of debt collection service management.


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