Circular 20/2024 on asset auction service fees has been issued, introducing significant changes in the field of asset auctions. This article provides detailed guidance on the new provisions and how to comply with them.

1. Overview of Circular 20/2024

Circular 20/2024 was issued to update and amend regulations on asset auction service fees, ensuring alignment with current market conditions and demands. This document replaces previous regulations and introduces significant improvements to the process of determining service fees for auctions.

2. Scope and Applicability

2.1. Applicable Entities (Article 2, Circular 20/2024)

  • The person owning the auctioned property according to the provisions of the Law on Asset Auctions when organizing the auction of assets. 
  • The asset auction organization according to the provisions of the Law on Asset Auctions, is an organization fully owned by the State eand stablished by the State Bank of Vietnam to handle bad debts of credit institutions, the Asset Auction Council in the case of an auction conducted by the Asset Auction Council. 
  • Other relevant organizations and individuals.

2.2. Scope of Regulation (Article 1, Circular 20/2024)

This circular regulates: 

  • The mechanisms and policies on the service fees for asset auctions that must be sold through auctions as required by law
  • The collection, payment, management, and use of the costs for publishing notices on selecting auction organizations, publicly announcing the auction on the National Asset Auction Portal, and using the National Asset Auction Portal for online auctions.

3. New Pricing Structure

The regulations on asset auction service fees in Circular 20/2024 are summarized as follows (Article 3, Circular 20/2024):

  • Service fees are calculated per auction session.
  • Fees are determined based on the asset’s value framework according to its starting price.
  • The Minister of Justice will issue the framework for asset auction service fees.
  • Service fees do not include value-added tax (VAT) and other auction-related costs.

Details:

  • Asset Value Framework Based on Starting Price
  • Auction-Related Costs: These include actual expenses incurred during the auction organization process. Such costs are agreed upon between the asset owner and the auction organization in the asset auction service contract.

3.1. Fees related to the National Asset Auction Portal (Article 6 of Circular 20/2024)

  • The fee for posting notices of selecting asset auction organizations and publicizing auction information (including selection and result notice) on the National Asset Auction Portal: 300,000 VND/notice
  • Publicized only once: 150,000 VND/notice.
  • The fee for using the National Auction Portal to conduct online auctions: 2,000,000 VND/auction (1,000,000 VND/auction if there are no participants).

3.2. Regulations on fee collection and payment (Article 7 of Circular 20/2024)

  • The organization operating the National Asset Auction Portal is responsible for collecting fees.
  • The deadline for paying fees: 7 – 20 days.
  • If fees are not paid on time, the violating party’s account will be temporarily suspended.
  • Auction organizations may agree to liquidate contracts for using the National Asset Auction Portal after fulfilling financial obligations.

4. Implementation Guidelines

4.1. Basic Procedures (Articles 3, 8, 33 of Circular 20/2024)

  • Determine the starting price of the auctioned asset: The laws applicable to each type of asset determine the starting price.
  • Apply the framework for auction service fees: Based on the starting price, the auction organization applies the corresponding service fee framework issued by the Minister of Justice.
  • Agree on auction costs: The asset owner and the auction organization agree on the auction costs (including actual expenses incurred during the auction process) in the asset auction service contract.
  • Draft an asset auction service contract: The asset owner signs the asset auction service contract with the auction organization.
  • Conduct auction procedures: The auction organization carries out auction procedures following the law.

For a detailed understanding of the mandatory auction process, please refer to the article: Guidelines on Compulsory Auctioned Assets Under Circular 20/2024 

4.2. Required Documentation

For the asset owner (Article 33 of Circular 20/2024):

  • Asset auction service contract: Signed between the asset owner and the auction organization.
  • Evidence proving ownership, usage rights, or the right to sell the asset: As required by law.
  • Other related documents: Depending on the type of auctioned asset and the auction organization’s requirements.

For auction participants (Articles 38, 39 of Circular 20/2024):

  • Auction participation file: Includes personal or organizational information and documents proving eligibility to participate in the auction as required.
  • Deposit: A minimum of 5% and a maximum of 20% of the asset’s starting price.

5. Impact on Stakeholders

5.1. For auction companies

  • Mandatory application of service fee framework: Auction companies must apply the service fee framework issued by the Minister of Justice. This may affect company revenue depending on the current pricing structure compared to the new framework.
  • Transparency in service fees: Companies must publicly post service fees at their headquarters, enhancing transparency in auction operations.
  • Compliance with regulations: Companies must comply with laws on pricing, asset auctions, and related legal provisions.

5.2. For auction participants

  • Cost estimation: The application of the service fee framework allows participants to easily estimate the costs involved in the auction.
  • Transparent information: Publicly posted auction service fees and clear auction procedures enhance transparency and protect the rights of participants.

6. Practical Advice

  • Thoroughly research auctioned assets: Study information about the asset, including legal status, market value, and sales conditions, before deciding to participate.
  • Prepare the necessary documentation: Ensure that the auction participation file is complete and valid according to regulations.
  • Understand the service fee framework: Refer to the service fee framework issued by the Minister of Justice to estimate auction costs.
  • Clarify contract terms: Carefully review the asset auction service contract before signing, particularly terms related to service fees, auction costs, and responsibilities of the parties.
  • Observe deadlines: Adhere to deadlines for auction registration, deposit payment, asset purchase payments, and other timelines as specified. Article 39 of the Law on Asset Auctions details the deadlines for deposit submission and handling.
  • Seek expert advice: If necessary, consult a lawyer or auction expert for guidance and support.

7. Conclusion

Circular 20/2024 introduces significant improvements to the regulation of asset auction service fees. Understanding and complying with the new provisions will ensure a smoother and more efficient auction process.

For more detailed information, please refer to the full text of Circular 20/2024 or contact Harley Miller for detailed advice.

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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