You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 14, 2021

Vietnam’s Decree 21 Updates Regulations on Security for Performance of Obligations

Subscribe to Updates

On May 15, 2021, Decree No. 21/2021/ND-CP of the Government of Vietnam dated March 19, 2021, guiding the implementation of the Civil Code of 2015 on security for performance of obligations (Decree 21) will come into effect and replace Decree No. 163/2006/ND-CP of the Government dated December 29, 2006, on security transactions, as amended by Decree No. 11/2012/ND-CP (together, “Decree 163”).

One of the most significant changes of Decree 21 in comparison to Decree 163 is the new system of terminology in relation to security for performance of obligations. In particular, the new decree provides new definitions for existing terms such as “guarantor” and “guarantee” and sets out the definitions of newly added terms such as “secured obligator,” “security contract,” and “reasonable duration.” This change reflects the intention of the legislators to unify the relevant terminology in accordance with the Civil Code of 2015.

Article 4 of Decree 21 lists out principles for the application of laws and the parties’ agreements on security for performance of obligations. Accordingly, in cases where the laws on specialized areas such as land, housing, insurance, banking, aviation, or intellectual property have provisions on security assets, establishment and implementation of means of security, or enforcement of security assets, the provisions of the specialized laws will prevail. Moreover, if the parties have agreements that are different from provisions in Decree 21 but do not violate (i) fundamental principles of civil law or (ii) conditions for a civil transaction to be valid or (iii) limitations on the exercise of civil rights in accordance with the Civil Code or other relevant laws, such agreements may be enforced.

Decree 21 devotes an entire chapter to regulations on security assets (collateral) which includes definitions and descriptions of security assets and detailed provisions on 10 types of security assets including land use rights and assets attached to land, objects, valuable papers, etc. Notably, Decree 21 no longer provides that a security asset may not be attached by the courts or authorities to perform the guarantor’s other obligations if the security transaction is valid and effective against third parties and the laws do not regulate otherwise, as provided under Decree 163. This change makes the new decree consistent with the existing regulations on enforcement of civil judgments which state that mortgaged or pledged assets may still be attached for the purpose of enforcement of civil judgments, provided that the applicable conditions are satisfied.

The new decree provides detailed regulations on the establishment and implementation of means of security and enforcement of security assets. Accordingly, a means of security may be established based on the agreement of the parties via a security contract or a lien. For enforcement of security assets, Decree 21 goes into detail on the enforcement of future assets or invested mortgaged assets for the first time.

Decree 163 will still be applicable to security agreements or security interests which were established and implemented prior to May 15, 2021. The parties to such security agreements or security interests which have not been implemented or have been implemented but contain provisions different from provisions under Decree 21 may, but are not required to, agree to amend the existing security agreements or security interests to comply with the new decree.

Related Professionals

Practices

Banking and Finance

Corporate/M&A

Location

RELATED INSIGHTS​ 

October 30, 2025
Recent events at a Thai listed company, where a proposal to remove the director was not successful, amid claims that a competitor was attempting to gain control of the company, illustrate how disputes over corporate control can unfold differently at the board level and shareholder level. At the board level, removing directors of a listed company mid-term to gain corporate control is not an easy task under Thai law, as it requires a higher threshold than appointing a new director, which typically only requires a simple majority vote in a listed company. At the shareholder level, Thailand’s tender offer and competition regimes add complexity where different shareholder groups act in concert to remove opposing board representatives or otherwise influence control. In this article, we will explore why the attempted removal of a director may fail, and how the tender offer regime may apply. Key Issues at a Glance Shareholder groups may seek to convene meetings to propose changes to board composition or company authority. Such proposals can be delayed or complicated by regulatory requirements and the need for additional disclosures. Regulatory authorities and minority shareholders may raise concerns when major shareholders coordinate to influence board control, especially if such actions could trigger tender offer or merger control obligations. Companies often respond by seeking further information on shareholder relationships and potential conflicts before proceeding. Why the Director Removal Failed Under Section 76 of the Public Limited Companies Act B.E. 2535 (as amended), the early removal of a director requires two conditions to be satisfied at the same meeting of shareholders: Headcount test: At least 75% of shareholders attending and entitled to vote must vote in favor. If multiple shareholders appoint the same person as proxy, each proxy is counted as a separate head for the purpose of the headcount test,
Read More
October 24, 2025
On October 22, 2025, the Thai government posted a directive not to grant gambling licenses for gambling involving poker nationwide to crack down on illegal gambling activities. The directive was issued by Thailand’s Ministry of Interior to align with government policies to prevent the legalization of all types of gambling businesses, including poker as a sporting activity. This will result in the revocation of poker activities as sport and institute a strict ban on such activities nationwide. Businesses should note the new government’s strict approach toward gambling activities as the legal situation regarding gambling in the country continues to draw close attention.
Read More
October 1, 2025
In September 2025, Thailand’s Securities and Exchange Commission (SEC) accused a company listed on the Stock Exchange of Thailand (SET), including its current and former directors, of concealing material information in connection with its filing registration and draft prospectus. This recent enforcement action demonstrates the serious consequences of making false statements or appearing to conceal material information in IPO filings and ongoing disclosures. In addition to being subject to criminal penalties, such actions can impact the eligibility of directors and executives to serve and may cause lasting reputational damage. Key Legal Risks The Securities and Exchange Act B.E. 2535 (1992) (as amended) imposes strict liability for making false statements or concealing material information in IPO registration statements and draft prospectuses. In such cases, investors can claim for damages, and there are also criminal penalties, including imprisonment for up to five years and substantial fines, may apply to the company, its directors, and responsible officers. However, misstatements or omissions in IPO filings do not, by themselves, disqualify directors or executives from holding office, whether arising from an SEC accusation or even a final court judgment. In contrast, for ongoing disclosures after listing, such as financial statements, annual reports, and meeting notices, false or misleading statements or concealment of material information can result in not only criminal liability but also immediate disqualification of directors and executives. If the SEC accuses a listed company or its directors or executives of such misstatements or omissions, those directors or executives are immediately disqualified from their positions, even before a final court judgment. Director and Executive Qualifications Directors and executives must meet the SEC’s specified standards of trustworthiness, as set out in the relevant rules. The SEC clearly defines characteristics that are considered to demonstrate a lack of trustworthiness. For ongoing disclosures, being involved in
Read More
September 30, 2025
Vietnam’s higher education system is at a pivotal stage of reform, with the government taking decisive steps to strengthen its policy and regulatory framework. In response to obstacles encountered during the implementation of the Law on Higher Education, issued in 2012 and amended in 2018, the third draft of the amended Law on Higher Education (Draft Law) is scheduled for submission to the National Assembly in October 2025. The Draft Law reflects the state’s commitment to aligning the education sector with international standards while addressing persistent structural challenges. The Draft Law emphasizes clarifying institutional mandates, enhancing accountability, and modernizing governance models to enable higher education institutions to operate with greater autonomy and efficiency. Against this backdrop, we outline below several notable provisions of the third draft and their potential implications for higher education institutions (HEIs) in Vietnam. Applicable Entities In addition to HEIs as defined and covered under existing legislation, the Draft Law extends its scope of applicable entities. The current Law on Higher Education does not regulate training institutions under state agencies, the armed forces, or political and social organizations, nor does it provide specific provisions for institutions offering only postgraduate education. To address this, the Draft Law introduces the term “institutions with higher education activities,” expanding its scope to include: (a) academies and research institutes established by the prime minister, mandated to provide doctoral-level training; (b) educational institutions affiliated with state agencies, political organizations, socio-political organizations, and the people’s armed forces, authorized to offer higher education programs in their specialized fields; and (c) institutions established pursuant to international treaties or by decision of the prime minister, with authorization to deliver certain levels of higher education. The inclusion of “institutions with higher education activities” represents a significant development both legally and institutionally. In an increasingly diversified higher education
Read More