Lao People's Democratic Republic
Peace Independence Unity Democracy Prosperity
Government Reference no.: 248/Gov
Vientiane Capital, date: 26.07.2016
- Pursuant to the Law on Government, No. 69/NA, dated 15 December 2015;
- Pursuant to the Law on the Bank of Lao PDR, No. 05/NA, dated 14 October 1999;
- Pursuant to the Law on Enterprises, No. 46/NA, dated 26 December 2013;
- Pursuant to the Law on Contracts and Tort, No. 01/NA, dated 08 December 2008;
- Pursuant to the Law on Guarantee for Contract Compliance, No. 06/NA, dated 20 May 2005;
- Pursuant to the Letter from the Bank of Lao PDR, No. 128/BOL, dated 26 April 2016.
The Government hereby issued a Decree:
This Decree defines the principles, regulations on the establishment, operation, management and monitoring, inspection on pawn businesses for systematic operation and compliance of pawn businesses to laws and regulations, which aim to address financial difficulties of people and also to ensure debt repayment, contribute to the effective supervision of financial institutions.
A pawn business is a business unit that offers credit services in exchange for property which is established in accordance with laws, regulations and this Decree.
The terms used in this Decree have the following meanings:
This Decree applies to individuals, legal entities and organizations that are related to pawn and pawn business operation in the Lao PDR.
Establishment and Operation of Pawn Business
Pawn Business Establishment
Individuals, legal entities and organizations that wish to establish pawn business shall submit application for an enterprise registration to the Ministry of Industry and Commerce in accordance with the Law on Enterprises and shall obtain approval for pawn business operation from the Bank of Lao PDR as defined in this Decree.
Documents required for pawn business establishment include the following:
Individuals who wish to establish pawn businesses shall meet the following requirements:
A pawn shop shall meet the following requirements:
Individuals, legal entities and organizations that wish to open pawn business shall have minimum registered capital of One Billion Kip.
Pawn business entities can use registered capital into the two following objectives:
Internal Code of Conduct of a pawn business, apart from to be compliant with the Law on Enterprises, shall also have additional contents as following:
Internal code of conduct of a pawn business will be effective only if it is approved by the Bank of Lao PDR. Any changes made on the internal code of conduct of a pawn business shall be approved by the Bank of Lao PDR.
In case pawn business entities wish to make some amendment on contents of their business operating licenses such as the scope of business, registered capital, location, etc, they shall submit a request to the Bank of Lao PDR for consideration on the amendment of business operating licenses.
In case a pawnee violates laws, regulations and this Decree on Pawn Businesses, the Bank of Lao PDR has the rights to suspend or withdraw pawn business operating license.
After receiving written warning twice, a business operating license will be suspended.
After receiving the 3rd warning, the violation is still be continued, a business operating license will be withdrawn.
Pawn Business Operation
Currency used in pawn contracts shall be in Lao Kip and contracts shall be in written form according to the Law on Contracts and Tort between a pawnee and pawnor with witnesses.
The maximum pawn interest rate shall not exceed three percent per month.
Interest must be calculated on daily basis based on actual days of pawning. Repayment of principal and interest must be made based on the pawn contract.
Pawnee shall post the announcement on the interest rates in the area that is revealing and easy to be seen and strictly implement the interest rates exactly as described in the announcement.
Pledged properties shall be valued based on the agreement between a pawnee and a pawnor to set the pawn price.
Pawn business can offer loans to a pawnor not exceed five percent of the total registered capital.
Pawnees and pawnors shall follow their pawn contracts faithfully, adequately and correctly as specified in the contract.
Pawnors shall repay their principles and interests to redeem their pledged assets within the agreed timeframe defined in the contract.
In case of pawnors fail to redeem their pledged assets within the agreed timeframe, pawnees have the rights to buyout or sell such assets. In case the price of pledged assets is higher than the loan amount, the pawnees must pay the surplus amount to the pawnors after deducting principal, interest and other necessary costs.
In case of pawnors fail to redeem their pledge assets within the agreed timeframe due to unexpected events such as illness or unpredicted events, the pawnors must notify the pawnees in writing before the contract ends. However, the pawnees shall redeem their pledged assets within fifteen days after such events. The pawnees shall stop charging interest during the fifteen days after the contract ends.
Pawnees shall inform pawnors seven days before selling pledged assets for pawnors to take part in the selling such assets. If pawnors do not participate, pawnees have the rights to sell the pledged assets.
Selling pledge assets shall be recorded with the following contents:
Selling pledged assets without pawnors participation shall be attended by a representative from the village authorities where the pawn shop is located or relevant officials, officers based on the value, nature and types of pawn.
A pawn contract will be ended as in the following cases:
Acceptance and Management on Pledged Assets
In case pawnees accept pledged assets sincerely without knowing or having ability to know whether the assets are legally owned by pawnors.
In case owners find their assets at such pawn shop and want to claim them back, the owners must adequately pay loans with interest to the pawnees. The owners have the rights to sue the pawnors for the amount paid and report to relevant officers in order to take legal cases.
In case pawnees know or have ability to know that pledged assets are illegal obtained and still accept such pledged assets, the asset owners have the rights to claim such assets back without paying anything to the pawnees. Besides, the pawnees and pawnors shall be penalized by laws and regulations.
Pawnees shall store and keep pledged assets in original condition and if pledged assets are damaged or lost during their responsibility, the pawnees shall restorer such assets to their original condition by informing the pawnors or compensate for the damage occurred.
Pawnees have no rights to use and make profit from pledged assets, except that such rights are agreed in the contract.
Rights and Obligations of the Pawnees and Pawnors
Pawnees have the following rights:
Pawnees have the following obligations:
Pawnors have the following rights:
Pawnors have following obligations:
Dissolution of Pawn Businesses
Pawn businesses are to be dissolved for the following reasons:
The dissolution of pawn business due to reasons specified in Article 27 of this Decree shall be proceed based on steps defined in the Law on Enterprise, the Law on Enterprise Bankruptcy, and other relevant laws and regulations.
Individuals, legal entities or organizations are prohibited to behave as following:
Pawn business entities are prohibited to behave as following:
Relevant officers and government staff are prohibited to behave as following:
Supervision and Inspection of Pawn Business
The Bank of Lao PDR is directly assigned to be responsible for the supervision and inspection of pawn businesses in centralized and unified manners across the country in collaboration with the relevant ministries, sectors and provincial authorities.
Regarding the supervision of pawn businesses, the Bank of Lao PDR has the following rights and duties:
Relevant line Ministries and Stakeholders have the rights and duties to collaborate and coordinate with the Bank of Lao PDR on the supervision and inspection of pawn businesses and pawn business operation within their scope of responsibilities; and exercise their rights and perform their duties as defined by laws and regulations.
There are three approaches for inspection on pawn businesses as following:
Inspection of pawn businesses shall be strictly implemented in accordance with the relevant laws and regulations.
Pawn business inspection includes the following contents:
Pawn business entities shall report their business operation to the Bank of Lao PDR on monthly, quarterly, biannually and annual basis using report templates provided by the Bank of Lao PDR in each period.
Awards for Good Performance and Violator Measure
Individuals, legal entities or organizations with outstanding performance in implementing this Decree especially to supervise pawn businesses with quality, operate pawn businesses in accordance with laws and regulations will receive compliments or other appropriate policy according to regulations.
Individuals, legal entities or organizations that violate this Decree, especially the prohibitions defined in Article 29, 30 and 31 will be educated, disciple punished, fined, paid for damages on civil or received criminal penalties as defined in laws based on light or serious cases.
The Bank of Lao PDR is a assigned to effectively implementation of this Decree.
Relevant individuals, legal entities or organizations shall acknowledge and strictly follow this Decree.
This Decree is effective from the date of signature and fifteen days after fifteen days after publish in the Government Official Gazette.
This Decree replaces the Decree on Pawn Shops, No. 10/PM, dated 02 February 2002.
Any regulations and provisions that contradict to this Decree shall be cancelled.
The Government of Lao PDR
(Signature and Seal)
|Establishment criteria for enterprises in the pawn sector||An applicant for the establishment of an enterprise in the pawn sector must be Lao Nationality.||Active|
|Establishment criteria for enterprises in the pawn sector||An applicant for the establishment of an enterprise in the pawn sector must have details of sources of fund to invest in the pawning business.||Active|
|Establishment criteria for enterprises in the pawn sector||An applicant for the establishment of an enterprise in the pawn sector must have educational background or technical staff who hold at least a high level diploma degree.||Active|
|Establishment criteria for enterprises in the pawn sector||An applicant for the establishment of an enterprise in the pawn sector must have sound financial status, being reliable and recognized by the people and Village Administration.||Active|
|Establishment criteria for enterprises in the pawn sector||An applicant for the establishment of an enterprise in the pawn sector must never been sentenced by the court for criminal offences relating to finance, banking such as fraud, embezzlement and pawning business operation license has never been withdrawn.||Active|
|Minimum registered capital for enterprises in the pawn sector||The minimum registered capital for enterprises in the pawn sector is 1 billion LAK.||Active|
|Pawn sector interest rate limitations||The interest rate charged by enterprises in the pawn sector may not exceed a rate of 3%/month.||Active|
|Pawning business operation license requirement||All enterprises in the pawn sector are required to obtain a business operation license from Bank of Lao PDR.||Active|
|Requirement to register an enterprise to conduct the pawning business||Individuals, legal entities and organizations wishing to conduct pawning business must submit an application for enterprise registration with the Ministry of Industry and Commerce.||Active|