(+84) 9 61 57 18 18
info@vietanlaw.com

Conditions for establishing a pawn company in Vietnam

Today, the pawn business is one of the highly profitable industries, so pawnbrokering has become an extremely familiar and chosen activity by many people. However, this is a conditional business that will be subject to strict management by the State. Therefore, not everyone knows or meets the conditions to set up a pawn company. Therefore, to answer customers’ questions, Viet An Law Firm offers the article on conditions for establishing a pawn company below.

pawn company

Legal bases

  • Civil Code 2015.
  • Enterprise Law 2020.
  • Decree 96/2016/ND-CP stipulates security and order conditions for a number of conditional investment and business lines, amended and supplemented by Decree 31/2021/ND-CP and Decree 56/2023/ND-CP.

What is a pawn company in Vietnam?

Pawnbrokering under Vietnamese civil law is a form of pledge of property at a pawn shop, whereby people will hand over the property to the pawnbroker to borrow a certain amount of money. Pawn service business includes money lending service business and the borrower must have lawful assets brought to the pawn service business for pledge.

Normally, people having pawned property will have to pay back the loan amount and the corresponding interest (if any) in full within the stipulated period and receive the pledged property back. At the expiration of the agreed redemption period, the pawnbroker would automatically becomes the owner of the object.

Pawn company means an enterprise established in accordance with current laws and providing pawn services for loans, a conditional business line as prescribed by law.

Conditions for establishing a pawn company in Vietnam

Currently, in Vietnam, the pawn service business is mostly operated in the form of pawn shops, organized by an individual or household. However, the establishment of a pawn company will make pawn activities more professional, thereby also making it easier for the State to manage this activity. Foreign investors can still operate this service and ensure the same business investment conditions as Vietnamese investors. However, in practice, this condition is very difficult to meet for foreigners.

Accordingly, to establish a pawn company, it is necessary to meet the following basic conditions:

Conditions on security and order

According to the provisions of the Investment Law 2020, pawn business is a conditional business line, namely security and order conditions. Therefore, when established, it is imperative to meet security and order conditions for this type of business.

Accordingly, pursuant to Articles 7 and 9 of Decree 96/2016/ND-CP, the person responsible for the security and business order of the pawn service shall meet the following business conditions:

  • Be registered, licensed or established in accordance with the laws of Vietnam.

In addition, the person responsible for security and order of the business establishment must not fall into one of the following cases:

For Vietnamese:

  • Have been criminally prosecuted for which the Vietnamese or foreign procedural authorities are conducting investigation, prosecution and trial.
  • Or have previous convictions for crimes of infringing upon national security or other crimes committed by intentional error, sentenced to more than 03 years in prison or more, and have not yet had their convictions cleared. Or during the period of suspension of imprisonment; is serving a non-custodial rehabilitation sentence. Or are on probation, banned from residing, prohibited from holding office, prohibited from doing business in investment lines and business lines subject to security and order conditions according to the decision of the Court.
  • He or she is being subjected to educational measures in communes, wards or townships. A decision is being taken to apply administrative sanctions pending the implementation of the decision; are addicted to drugs; are being temporarily postponed or temporarily suspended from observing decisions on admission to compulsory education institutions or compulsory detoxification establishments or have been subjected to administrative handling measures but have not yet expired to be considered as having not been subjected to administrative handling measures.

For overseas Vietnamese or for foreigners:

  • Residence permit has not been granted by the competent authority of Vietnam.

In addition, specific requirements for pawn services must be met such as:

  • Meet the conditions for fire safety and fighting in accordance with the law on fire prevention and fighting.
  • Such person must have permanent residence for at least 05 years in the commune, ward or township where the location of pawn business is registered.
  • During the preceding 05 years before the time of business registration, pawnbrokering activities shall not be administratively sanctioned by competent agencies for acts such as resisting persons on duty, disrupting public order, intentionally causing injury, lending heavy interest, etc gambling, organizing gambling or gambling, theft of property, fraudulent misappropriation of property, unlawful seizure of property.

In addition to the conditions on the responsible person, the pawn service company also needs to have the following responsibilities:

  • It is mandatory to check the identity documents of the person who brought the property to pledge including: identity card, citizen identity card or passport or other personal document issued by the State, these documents must still be valid.
  • When conducting pawnbrokering, a contract for pledging property must be drawn up in accordance with the provisions of law.
  • Only such assets may be pledged with full ownership certificates for assets with ownership certificates as prescribed by law and the business company must retain the originals of such papers during the period of pledge of assets.
  • For pledged assets owned by other related persons, a valid written authorization of the owner is required.
  • For assets of unknown origin or assets due to illegal acts, they cannot receive pledges.
  • The interest rate for lending money when pledging property must not exceed the interest rate prescribed by the Civil Code.
  • The estate of the person who brought the property to pledge must be secured in the property storage warehouse.

Conditions on business type and name

Depending on the type of enterprise, when it is necessary to choose the type of business to suit the number of members, capital contributors as well as the ratio of business target capital of their company.

Currently, the enterprise law stipulates that there are popular types of enterprises as follows:

  • Private enterprise.
  • Limited liability company (1 member or 2 more members).
  • Joint stock company.

For the name of the pawn company can also be Vietnamese or foreign. If the name is in a foreign language, the name must be printed or written in a smaller font size than the Vietnamese name at the company’s business locations. The name must not be identical or confusing with other companies that have been registered nationwide and must ensure at least two elements in the name: Type of business and proper name.

Seal conditions

According to the current law, the pawnbroker’s company will be entitled to decide on the type of seal, the number of seals or the form and content of the seal and are not required to notify the seal sample. However, the pawnbroker will have to manage, use and store its seal in accordance with the provisions of the company’s charter and regulations promulgated by the company, branch or representative office or other unit of the pawn company bearing the seal.

Conditions on charter capital

Based on the current law, pawn business does not fall into the prescribed cases requiring the minimum and maximum capital of the company. Therefore, the pawn company can freely choose the charter capital to establish the company.

Therefore, the selection of charter capital for registration should be suitable and corresponding to the actual conditions of the company to be more favorable in doing business, creating the most optimal profit source from the capital you spend.

The procedure after the establishment of the pawn company in Vietnam

Dossier of application for the Certificate of satisfaction of security and order conditions

After carrying out the procedures for establishing an enterprise at the Business Registration Office – Department of Planning and Investment, in order for the enterprise to provide pawn services, the enterprise needs to carry out procedures for applying for a Certificate of satisfaction of security and order conditions. At that time, you need to prepare the following documents:

  • A written request for a certificate (in the prescribed form).
  • A copy of the company’s business registration certificate.
  • Background statement (according to the prescribed form) enclosed with criminal record card or personnel affidavit for subjects specified in Clause 4, Article 19, Decree 96/2016/ND-CP.

After preparing all the above documents, you will submit the documents to the Police Department for Administrative Management of Social Order of the Police of provinces and centrally-run cities (can be submitted by post, in person or via the portal).

Deadline for settlement

The time limit for settling procedures for issuance of certificates of eligibility for security and order is five working days (05 days).

Reporting responsibilities of pawn companies

  • Within 05 days from the date of commencement of business activities, the company must issue a written notice together with a copy of the Certificate of satisfaction of security and order conditions to the Police of the commune, ward or township where the establishment does business
  • The company must make quarterly or irregular reports on the security and order situation under the guidance of the Ministry of Public Security

In addition, within 20 days from the commencement of operation, the pawnbroker’s business shall provide the competent police agency with the following documents:

  • List of people who work in the pawn business.
  • Background statement, personnel affidavit of the person responsible for security and order of the pawn business, except for the person named in the Certificate of eligibility for security and order.
  • Other documents proving that the business establishment fully meets the conditions for each type of industry and trade specified in current law.
  • Statistics of means for protection work.

If you want to find out more information about the conditions for establishing a pawn company, please contact Viet An Law Firm for our best support!

Related Acticle

Establish a healthcare company in Vietnam

Establish a healthcare company in Vietnam

Currently, with the liberal regulations of Vietnamese law, health care is not only the task of public hospitals but also includes the participation of non-public and non-public medical examination and…
Set up a vaccination clinic business in Vietnam

Set up a vaccination clinic business in Vietnam

Along with the development of medical investment and the current vaccination needs of the people, private vaccination facilities and non-public vaccination services have developed in both quality and quantity. This…
Establish a cement business company in Vietnam

Establish a cement business company in Vietnam

In the current period of industrialization and modernization, the construction industry is one of the leading industries and has made a significant contribution to the country’s development, attracting the attention…
Establishing a foreign law firm in Vietnam

Establishing a foreign law firm in Vietnam

Establishing a foreign law firm in Vietnam become more popular with the foster of Vietnamese market. Besides companies in the fields of securities, construction, insurance, and banking, there are more…
Set up a business in Vietnam for goods processing

Set up a business in Vietnam for goods processing

Processing goods is an increasingly popular business activity, especially in the export sector. However, to establish a goods processing company, it is necessary to fully meet the conditions prescribed by…

CONTACT VIET AN LAW

Hanoi Head-office

#3rd Floor, 125 Hoang Ngan, Hoang Ngan Plaza, Trung Hoa, Cau Giay, Hanoi, Vietnam

info@vietanlaw.com

Ho Chi Minh city office

Room 04.68 vs 04.70, 4th Floor, River Gate Residence, 151 – 155 Ben Van Don Street, District 4, HCM, Viet Nam

hcm@vietanlaw.com

SPEAK TO OUR LAWYER

English speaking: (+84) 9 61 57 18 18 - Lawyer Dong Van Thuc ( Alex) (Zalo, Viber, Whatsapp)

Vietnamese speaking: (+84) 9 61 37 18 18 - Dr. Lawyer Do Thi Thu Ha (Zalo, Viber, Whatsapp)