Coercive judgment enforcement measures applicable to commercial juridical persons

May 7th, 2020|

On the 8th of April, 2020, the Government has promulgated Decree No.44/2020/ND-CP relating to coercive judgment enforcement against commercial juridical persons (the “Decree 44/2020”). This decree provides rules, measures and procedures for applying measures to coercive judgment enforcement against commercial juridical persons at Law on Execution of Criminal Judgments 2019.

coercive judgment enforcement measures applicable to commercial juridical persons

Accordingly, Decree 44/2020 regulates as follows:

1. Coercive judgment enforcement measures against commercial juridical persons

  • Account freeze;
  • Distraint on property;
  • Temporary seizure of documents, records, e-data carriers; impoundment or withdrawal of seals.

Please remark the rules for applying coercive judgment enforcement measures against commercial juridical persons:

  • The coercion would only be applied upon a written coercive decision issued by a competent criminal judgment enforcement agencies;
  • A commercial legal person might be subject to one or more than one coercive measures at the same time  if a single coercive measure is not guaranteed for their execution;
  • The duration for applying coercive measures guaranteeing the judgment enforcement does not exceed the sentence-serving duration specified in the effective court judgments or decisions; the duration for guaranteeing the juridical remedy enforcement shall be determined once such juridical remedies are completely enforced.

2. Three cases to apply the account freezing measure:

Account freezing measures shall be applied in following situations:

  • Coercive enforcement to serve the sentences of suspension from operation for a definite term (in case of suspension of all areas);
  • Coercive enforcement to serve the sentences of prohibition from doing business and operating in certain areas (in cases of prohibition from doing business and activities of all fields); prohibition from raising capital;
  • Coercive enforcement to serve the juridical remedies.

3. Four types of properties cannot be distrained in commercial coercive judgment execution:

Properties not distrained under Decree 44/2020 includes:

  • Properties prohibited from circulation according to law provisions; properties serving national defense, security and public interest; properties provided by the state budget to agencies and organizations;
  • Medicines served for prevention and treatment for the laborers; food and instruments, equipment and others properties used for providing meals.to laborers;
  • Kindergartens, schools, health facilities and their equipment, vehicles, other properties, which are not for business purpose;
  • Equipment, facilities, tools ensuring labor safety, preventing and fighting against fire explosion and environmental pollution.

This decree also states that if a commercial juridical persons has no other property or its properties are insufficient to enforce a judgment, the criminal judgment enforcement agency shall be entitled to distrain or dispose those collateral properties in case their values exceed the debt and coercive judgment enforcement cost.

Decree 44/2020 enters into force on the 1st of June, 2020.