Nowadays, the application of information technology is widely implemented across various sectors and industries. Accordingly, auctions are also conducted via internet platforms in current, specifically online asset auctions. Although they are implemented in the forms of internet (online), online asset auctions also are property auctions in common. In this article, let’s explore with NPLAW the legal regulations and procedures for conducting online asset auctions.
I. What is an online asset auction?
An online asset auction is a form that allows participants to bid for products or services via the Internet. This method facilitates quick and convenient transactions between asset holders and buyers through auction platforms.
According to Point d, Clause 1, Article 40 of the Law on Property Auction 2016, online asset auctions are recognized as one form of property auction.
II. Benefits of online asset auctions
Online asset auctions offer many advantages, including:
- Diversifying auction methods, giving both sellers and buyers more options.
- Supporting the integration of information technology into auction practices, aligning with global development trends.
- Helping limit collusion and price manipulation.
- Saving time, effort, and expenses compared to in-person auctions. Additionally, it prevents crowd gatherings because participants only need Internet access to join from anywhere.
III. Principles of online asset auctions
To ensure effectiveness and legal compliance, online asset auctions must adhere to the following principles:
- The auction must strictly follow and implement the legal regulations on property auctions.
- Information confidentiality must be ensured, including login accounts, participant data, and other legal information.
- Objectivity, transparency, cyber safety, and security must be guaranteed.
- The online auction must protect the legitimate rights and interests of the asset holders, participants, and other related individuals or organizations.
Legal Basis: Article 8 of Decree 62/2017/ND-CP.
IV. Conditions for conducting online auctions
To conduct an online auction, the auction organization must establish an electronic auction website and meet the following conditions:
- Have the necessary technical infrastructure with the following minimum functionalities:
- Ensure security and safety of login accounts and data integrity, including bid participation, submitted prices, and bidder information.
- Record and store all bid prices, bid retractions, and essential data during the auction process.
- Publicly and truthfully display the bids submitted; allow extraction of bidding history.
- Display the highest bid recorded every 30 seconds for participants to view.
- Maintain a team of technical staff to operate and manage the electronic auction website.
- Develop and implement technical solutions to ensure safe operation of the system.
Legal Basis: Article 13 of Decree 62/2017/ND-CP.
V. Procedures for conducting online asset auctions
The online auction shall be implemented in the following steps:
- The auction organization publishes the Auction Rules on its electronic auction website.
- Upon registration, participants receive an access account and instructions on how to use the system, place bids, and other relevant information.
- Participants use their accounts to conduct bids according to the auction method, starting and ending times, and announced bid steps.
- At the end of the auction, bidder is assigned by the Property Auction Council, an organization in which the State owns 100% of the charter capital and established by the Government to handle bad debts of credit institutions, to be responsible for organizing the online auction to determine the auction winner as follows:
- For ascending bid auctions, the winner is the person who placed the highest bid recorded by the system at the auction's end.
- For descending bid auctions, the winner is the first person to accept the starting price or a reduced price recorded by the system.
- The auction system immediately announces the winner based on the applicable bidding method.
- The result is published on the system and sent to the registered email addresses of participants, the asset auction council, or the government-established organizations with 100% state capital in charge of handling non-performing loans of credit institutions.
Legal Basis: Article 10 of Decree 62/2017/ND-CP.
VI. Which platforms can be used to conduct online auctions?
According to Clause 2, Article 9 of Decree 62/2017/ND-CP, property auction organizations may conduct online auctions on:
- Their own electronic auction websites, or
- Through contracts with other auction organizations that already have online auction websites.
In cases where auctions are conducted by the Property Auction Council or organizations with 100% state-owned charter capital established by the Government to handle non-performing loans, those entities may contract with auction organizations having online platforms to implement the auctions.
Conclusion
In summary, online auctions bring many advantages to all parties involved. However, challenges remain in terms of investment and development of online auction websites. Additionally, the legal framework governing online auctions still has gaps and lacks strict regulation.
