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NEWS & LEGAL UPDATES

[Legal Updates] New social distance policies under the Directive No. 16/CT-TTg: How should it be understood?

1| New social distance policies under the Directive No. 16/CT-TTg: How should it be understood?

In the efforts to prevent the spread of Covid-19 epidemic, on March 31st, 2020, the Prime Minister of Vietnam issued Directive No. 16/CT-TTg on the Implementation of Immediate Measures for the Prevention of the COVID-19 pandemic (“Directive 16”). Under the Directive 16, there are several strict social distancing rules set forth on a nationwide basis for fourteen (14) days starting from April 1st, 2020, including:

  • Everyone is required to stay at home, except for essential trips such as buying food, medicine, for emergency circumstances, going to work at factories and businesses that do not close or suspend their operations;
  • A minimum distance of two meters is required for meetings;
  • Gatherings of more than two people are prohibited in all public places, except for workplaces, schools, and hospitals;
  • Factories and workshops are required to ensure a safe distance among employees, facemasks must be worn, and workplaces must be sterilized according to regulations;
  • All State agencies are required to implement work-from-home policy for their staff members, except for special needs;
  • Public transportation services will be suspended and travel from region to region will be minimized, except for essential goods and services; and
  • Border crossings between Vietnam and Cambodia and Laos will be temporarily closed from 1 April 2020. Immigration will be tightly controlled at all international border crossings; all those entering from Cambodia and Laos will be quarantined in central facilities for 14 days.

Currently, there are differences around the country in how Directive 16 is interpreted and what the companies should do to comply with this Directive. Therefore, on April 3rd, 2020, the Government Office issued an Official Dispatch no. 2601/VPCP-KGVX detailing the instructions on the implementation of the Directive 16 regarding a 14-day nationwide social distancing measures.

Some main points of the Official Dispatch include:

  • Factories and production units, traffic and construction sites, and organisations supplying essential goods and services – food, medicine, oil and gas, utility, energy, etc. – will still operate normally.
  • Banks, treasury offices, stock trading floors, and other services directly related to banking activities and businesses – notaries, lawyering, registration, or secured transactions – are also allowed to open.
  • Post offices, logistics services, funeral services and healthcare services can also still operate.
    • The Official Dispatch also noted that it’s up to each province and city administration’s discretion to make a list of what services and businesses would need to be temporarily shuttered.

Although this document is not a very comprehensive guide for Directive 16, it however provides much greater confirmation that Directive 16 does not, in fact, impose the lockdown measure.

2| The urgent Notice of the Intellectual Property Office of Vietnam on applying the laws on statutory deadline in the context of the Coronavirus outbreak

On March 31st, 2020, the Intellectual Property Office of Vietnam (VNIPO) issued urgent Notice No. 5277/TB-SHTT (“Notice No. 5277“), adopting measures in relation to the deadline extension for establishment procedures of industrial property rights affected by the global COVID-19 outbreak, and laying down guidance on transaction procedures between the VNIPO and the Applicants over this period, in particular:

  • All deadlines that relate to procedures for the establishment of industrial property rights and fall within the period from March 30th, 2020 to April 30th, 2020 will now be automatically extended until May 30th, 2020. The VNIPO has further elaborated on the procedures in this regard, including requests for claiming priority rights, submission of the required documents, submission of responses to the VNIPO’s notices/decisions, maintaining the validity of patents, renewal of certificates of trademark registration, fees payment, and submission of appeal petitions.
  • The VNIPO will begin to receive the requests for fast-track examination of patent applications filed under the PPH Program, pursuant to the agreement between the VNIPO and the Japan Patent Office, on May 4th, 2020, instead of the previously announced date of April 01st, 2020.
  • From April 01st, 2020 until further notice, all transactions between the VNIPO (including its representative offices in Da Nang and Ho Chi Minh City) and applicants will only be performed through post-office services or the VNIPO’s online filling system. The applicants’ payment of the fees to the VNIPO will be made through post or by bank transfer to the VNIPO’s account at The State Treasury of Vietnam until further notice.
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[Legal Updates] Letter Of Quick Legal Update 30/3/2020

1| The Government issued new Decree 35/2020/ND-CP guiding the implementation of the Competition Law 2018

The Decree 35/2020/ND-CP issued on March 24th 2020, providing detailed guidance on the implementation of the Vietnamese Law on Competition 2018. The Decree specifies two important points, namely:

a) The two cases considered as controlling, dominating the acquired company or certain business lines of such company, including:

  • The acquiring company owns more than 50% of the charter capital or more than 50% voting shares of the target company;
  • The acquiring company acquires the ownership right or usage right over more than 50% of the assets in all or some of the business lines of the target company.

b) Specifying the barriers to enter into or expand the market that restricts the market competition, including:

  • The legal barriers created by the laws and policies include regulations on import duties and restrictions; technical regulations; conditions and procedures for producing and trading in goods and services; regulations on the use of goods and services; professional standards and other administrative decisions of state agencies;
  • Financial barriers including costs of investment in production and trading of goods and services, accessing to capital, credit and other financial resources of companies;
  • Initial costs of entering a market that enterprises cannot recover when withdrawing from such market;
  • Barriers to access and hold supply and essential infrastructure for companies’ production and business operation; distribution network, consumption of goods and services on the market;
  • Consuming customs;
  • Business customs and practices;
  • Barriers related to the exercise of intellectual property rights of organizations and individuals, including copyright and neighbouring rights, industrial property rights and rights to plant varieties as prescribed by intellectual property laws;
  • Other barriers to enter or expand the market.

The Decree will be effective from May 15th, 2020.

2| The Decree 15/2020/ND-CP outlining the administrative fines for violations in telecommunications, radiofrequency, technology information, and e-transactions

Notably, Article 101 of the Decree regulates fines of between 10 million – 20 million VND for the following behaviours:

  • Providing and sharing fake information, untruthful information, misrepresenting, slandering, insulting the reputation of agencies, organizations, honour and dignity of individuals;
  • Providing and sharing information promoting the superstition, obscenity, depravity inconsistent with the traditions and customs of the nation;
  • Providing and sharing fabricated, confusing information, inciting violence, crimes, social evils, gambling or serving to gamble;
  • Advertising, propagating and sharing information about prohibited goods and services;
  • Providing and sharing images of Vietnam map but not showing or improperly displaying the national sovereignty;
  • Providing, sharing links to prohibited online contents.

The Decree will be effective from April 15th, 2020.

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[Legal Updates] Some new notable legal provisions during Covid-19 epidemic

1| Customer who affected by Covid-19 epidemics may have restructured of the term for debts payment, exempt or reduce interest/ fee, and keep intact of debts group at credit institutions

Circular No. 01/2020/TT-NHNN issued by the State Bank on March 13th 2020, providing for credit institutions and foreign bank branches restructure of the term for debts payment, exempt or reduce interest/ fee, keep intact of debt group to in support of customers affected by  Covid-19 epidemics. In there:

a. Cases restructured of the term for debts payment for principal balance and/ or interest, including:

  • Balance debt which is due or overdue up to 10 days from the due date of payment, to the time of debt payment under contracts, loan agreements or financial leases signed.
  • Balance debt (except for the overdue case mentioned above) within the period from January 23, 2020, to the next day after 15 days from the effective date of this Circular.

b. Accordingly, the principal balance and/ or interest, which restructured of the term for debt payment must meet the following conditions:

  • Arising from lending, financial leasing activities;
  • Arising the obligation to pay the principal debt and interest within the period from January 23rd, 2020, to the next day after 03 months from the date the Prime Minister announces the end of the Covid-19 epidemics;
  • Customers are unable to pay their debts on time according to contracts, loan agreements, financial leases signed due to the revenue and income are decreased from the effects of Covid-19 epidemics.

c. Credit institutions and foreign bank branches shall decide on the exemption and reduction of interests and fees according to internal regulations for balance debts arising from credit extension activities (except for activities of purchasing and investing in corporate bonds) for:

  • The obligation to pay the principal debt and interest is due within the period from January 23, 2020, to the next day after 03 months from the date the Prime Minister announces the end of the Covid-19 epidemics;
  • Customers are unable to pay their debts on time according to contracts, loan agreements, financial leases signed due to the revenue and income are decreased from the effects of Covid-19 epidemics.

d. Credit institutions and foreign bank branches keep intact of debt group (classified as prescribed) at the latest time before January 23, 2020, for:

  • Debt balance restructured of the term for debt payment;
  • Debt balance exempted or reduced interest;
  • Debt balance for the two types mentioned earlier and the whole debt balance has restructured of the term for debt payment, exempted, reduced interest, adjusted debt group as prescribed from January 23, 2020, to the next day after 15 days from the date of this Circular takes effect.

Circular No. 01/2020/TT-NHNN comes into effect on March 13th, 2020.

2| Some new highlights about certifying copies from the originals; authentication of signatures; authentication of contracts, transactions

On March 03rd, 2020, the Ministry of Justice issued Circular No. 01/2020/TT-BTP detailing and guiding the implementation of many Articles of Decree No. 23/2015/ND-CP of February 16, 2015, of the Government on the issuance of copies from master registers, certifying copies from the originals, authentication of signatures and authentication of contracts, transactions.

Accordingly, some new highlights are as follows:

a. Some papers issued by foreign competent authorities such as passport, identity card, permanent card, residence card, driver’s license, diploma, certificates, certificates and academic transcripts attached diploma. When certifying copies from the originals or authentication the translators’ signatures on the translation of these papers are also not consular legalized.

b. Authentication of signatures on power of attorney performed in the following cases:

  • Authorizing the submission and receipt of the dossiers, papers, unless not authorized by law;
  • Authorization to receive pensions, postal, subsidies, allowances;
  • Authorization for keeping the house;
  • Authorization of household members to borrow money at the Bank for Social Policies.

Note: The authorization mentioned above must meet the conditions: authorization without pay remuneration, without compensation responsibilities of the authorized party, and bearing no relation to the transfer of ownership of assets and the right to use estate.

Circular No. 01/2020/TT-BTP comes into effect on April 20th, 2020.

3| Applying the export licensing regulations for medical masks in the stage of Covid-19 epidemics prevention and control

The Resolution No. 20/NQ-CP of Government dated February 28th, 2020, regulating the application of export licensing for medical masks in the stage of epidemics Covid-19 prevention and control.

The essential contents approved by the Resolution include:

  • The Ministry of Health applies the granting of export licenses for medical masks in the period of Covid-19 epidemic prevention and control;
  • Only allow export of medical masks for international aid and assistance made by the Vietnamese Government (maximum of 25% of the production for export, 75% of the production for prevention and control epidemics in the country);
  • For export activities of export-processing enterprises that have granted investment certificates and enterprises producing medical masks for foreign traders that have signed producing contracts before March 01st, 2020, do not apply the above provisions;
  • Dossiers and procedures for granting export permits and determining standards for medical masks be carried out by the Ministry of Health, the Ministry of Industry and Trade and the Ministry of Finance;
  • Establishments producing medical masks are responsible for reporting on production capacity under the request of the Ministry of Health.
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ARTICLES

Covid-19: Freedom Of Speech: Is It Misused?

Pressure from the fight against Coronavirus (nCoV) is escalating. Governments, including Viet Nam, are making their best effort to control activities of many fields, which are being adversely impacted by the spreading of the virus. Information, as usual, is one of the most challenging problems for the government and society, with fake news has been widely dispersed on the Internet, especially on Facebook, since the appearance of the disease. Fortunately, there have been not any significant damage recorded so far caused by such misleading information. Yet, the way people posting and sharing wrong information on social media, deliberately or not, remains a concern that needs serious attention.

Back to the middle of the year 2018, when the national assembly of Viet Nam passed the law on cybersecurity, a public debate aggressively occurred across the nation, showing concern over the right to the freedom of speech in Viet Nam. Disapproving people believe that the law may prevent them from publicly raising an opinion or transmitting some pieces of information and that the government may violate their human rights, the right to express, for specific. However, since the law was implemented, internet users have been just fine with posting and sharing things on Facebook. No severe scenario happens as predicted by people who were against the law. In fact, just few cases have been imposed monetary fines for spreading false information about the epidemic, which may interfere with the fight against the disease.

Actually, some people come with a thought that the most dangerous thing is not the cybersecurity managing manner of the government, but it turns out that the way the nature of the right to liberty of speech is perceived by several individuals. The expression is seemingly misconstrued the level of “freedom” to infinity, which means people who stand for this perception permit themselves to express anything regardless of the negative effect it may cause to their community. Article 19 of the Universal Declaration of Human Rights in 1948 recognized that “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”. Certainly, referring only to this Article leads people to a thought that there is no exception to such right. As a consequence, people tend to make any statements or to share any posts that they want and sometimes with a negligent consideration about the truthfulness of shared information.

Article 19, indeed, is just a general principle that can be mutually recognized by nations without any conditions in return, and members of the United Nations shall commit to having it exercised in their territory. United Nations leaves the rule open so that countries can stipulate and apply it appropriately to their particular background. In practice, nations usually do provide exceptions to the right to the freedom of speech in their legal system. Depending on the perspective of each government and the importance of the information, exceptions are set forth to protect secrets regarding national defense, sensitive political issues, public health, public security, and order, etc. In such cases, people shall be restricted and prevented from exercising the right to express thoughts, believes, opinions, or statements.

Take the United States of America for example, its First Amendment to the Constitution provides six categories that restrain the freedom to make a speech. Such categories are incitement, fighting words, obscenity, defamation, commercial speech, and cases in which freedom of speech is outweighed by an even more compelling interest. Or, Article 10(2) of the European Convention on Human Rights states that “The exercise of these freedoms, since it carries with its duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.”.

In comparison with Vietnamese laws, restrictions on the freedom of speech are generally similar to those of the U.S.A and Europe. The lawmakers aim to eliminate expressions that violate the lawful rights of other people and the interests of the State. Any speech which intends to reveal national classified information, personal secrets, or incite wars, rebellion, or to defame, insult other individuals and organizations, or to provide false information that may harm customers, community’s interests, etc. shall be firmly banned. Additionally, legal punishment against the mentioned violations varies in levels, from monetary fines to tort damages or to criminal penalties, depending on the seriousness of specific cases. For instance, making defamatory statements on the Internet shall be fined an amount from VND 20,000,000 to 30,000,000[1]. Defamed victims are also entitled to make a claim to a court for the damages if they want[2]. Furthermore, using the Internet or technology to make defamation shall be sentenced to jail up to 03 years, and if the crime leads the victim to commit suicide, the violator shall be sentenced to jail up to 07 years.[3]

Practically, it is admitted that, sometimes, considering an action whether or not falling into the exceptions to the freedom of speech is far more difficult than it is expected, even with countries that have a developed judicial system such as U.S.A or some European nations. The reason is that there is no consistent definition or measurable unit to exam whether or not a speech infringes on exceptions. In fact, the consideration and decisions regarding the foregoing issue are left for the assessment of judicial authorities on the basis of case-by-case facts, evidence, and context. Therefore, it truly requires judges and other judicial officials to have a good sense of analysis and argument to make their decisions reasonable.

In conclusion, next time, when posting or sharing any important information, especially on social media, in regard to reputation, lawful rights of other individuals, to public health and security, and to national interests, please bear this in mind, “words must be weight, not counted”[4]

[1] Article 64.3 of the Decree No. 174/2013/ND-CP.

[2] Article 32.3 of the Civil Code 2015.

[3] Article 156 of the Criminal Penalty Code 2015

[4] English idiom

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Covid-19: Applying The Law On Bankruptcy To Collect Debts

A lack of money despite business statements revealing a profit result is a common problem of a company, which results from the issue of the “liabilities”. In fact, the profit and even the investing capital may be held by the debtors of the company. Currently, the term “appropriation of capital” has been commonly known and, for some people, it is proudly considered as a smart act to appropriate capital of other companies. However, such people must distinguish the differences between the “lawful holding of capital” and “illegal appropriation of capital”. Practically, it is legal to make a consensus with a supplier on the late payment within 45 days from the day the goods are delivered, which is considered that, from the economic perspective, the buyer is using lawfully the capital of the supplier for free in 45 days. Nevertheless, if the payment obligation is not fulfilled after the due date and the money is kept in upcoming months, then the buyer is said to breach the contract and a corresponding penalty (if any) shall be imposed. This act is the appropriation of capital.

In case a company breaches a contract to appropriate capital, its creditors have numerous approaches to collect the debt such as negotiation, mediation or making a claim to a court, arbitration … Additionally, since the day the Bankruptcy Law 2014 came into force, creditors have had one more option for debt collection.

Pursuant to the bankruptcy law, unsecured and partly secured creditors have the right to file a request for the commencement of the bankruptcy procedure against their debtors in case no payment is made although the debt has been overdue for over 03 months since the due date come.[1] A company under a Court’s decision on commencing the bankruptcy procedure means that it is unable to pay its debts; in other words, a company unable to pay its debts is the one who does not make any repayment within 03 months since the due date fell[2]. Accordingly, any liabilities, regardless of the scale and value, are overdue for 03 months since the due date fell but the debtor of such liabilities is unable to pay, then the competent Court will decide to commencement the bankruptcy procedure whenever there is a request from the creditors.

Within 03 working days since the competent Court receives an appropriate request for the commencement of bankruptcy procedure, the debtor and the creditor may, by writing, ask the Court for a negotiation to withdraw the request for the bankruptcy procedure. For the purpose of negotiation, the competent Court states a period for the debtor and the creditor, but it shall be limited within 20 days from the date the request for the bankruptcy procedure is received. So, before officially accepting the request, the Court allows the debtor and his creditors to try to reach a consensus on the payment. For a debtor who is, in fact, able to fulfill its liabilities, being imposed bankruptcy procedure may make pressure on it because if the procedure is being implemented, the debtor may undergo the loss of the right to make any decision itself[3]. In particular, after the bankruptcy procedure is decided to be implemented, the debtor can keep its business run, but the operation shall be put under the supervision of the Judge, an Asset Management Officer and a management and liquidation company[4]. Moreover, the debtor is prohibited to pay its unsecured liabilities[5], is supervised all the activities related to entering into any loan agreements, to making pledge, mortgage, guarantee, purchase, sale, transfer and lease of assets, selling, converting shares or transfer of ownership of property[6], or imposed one or some of the provisional emergency measures to preserve the assets of the debtor.[7]

In addition to all aforementioned issues, once the decision on implementing the bankruptcy procedure is officially issued, all the creditors will find the debtor to demand their own benefits. This would be the greatest pressure on the debtor because instead of paying the liabilities for only one creditor, it would have to pay all the creditors within a short period, not to mention its employee’s wages and tax duties… Therefore, if a creditor is able to implement flexibly the regulations of the Law on Bankruptcy, he will make his debtor fall into two choices, paying debts to one and only creditor at a time or having to be confronted with all the creditors at a time, and all the business activities of the debtor will be put under a strict supervision and restriction.

In conclusion, under the circumstance that a debtor is able to pay its debt but intentionally “appropriate capital illegally”, the implementation of the law on bankruptcy will be a useful approach for a creditor to negotiate with his debtor, especially for the creditors who have a precise set of evidence to prove the amount of liabilities and the due date. In practice, a written confirmation on liabilities, a written commitment to pay liabilities or any similar documents is recognized by the Court as the most valuable proof. On the other hand, if the debtor is truly unable to have its liabilities paid, the law on bankruptcy will help a creditor to preserve the assets of the debtor so that the creditor may have a part of his loan returned and to prevent the debtor conduct any acts to disperse all its assets.

[1] Law on Bankruptcy 2014, Article 5, Clause 1.

[2] Law on Bankruptcy 2014, Article 4, Clause 1.

[3] Law on Bankruptcy 2014, Article 37, Clause 1.

[4] Law on Bankruptcy 2014, Article 47, Clause 1.

[5] Law on Bankruptcy 2014, Article 48, Clause 1, Point b.

[6] Law on Bankruptcy 2014, Article 49, Clause 1, Point a.

[7] Law on Bankruptcy 2014, Article 70, Clause 1.

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Mortgage Of Assets To Ensure The Contractual Performance Obligations Of Enterprises

A property mortgage is one of nine (09) measures to ensure the performance of civil obligations, which are governed by Vietnamese law. Measures to ensure the fulfilment of civil obligations not only mean limiting the risks that may occur in transactions but are also currently used in many areas of commerce, especially to minimize risks and ensure the performance of contractual obligations between enterprises. To find out more about the legality of this guarantee, read the article below:

The Civil Code defines the property mortgage as follows: “Property mortgage means a party’s use of property under its ownership to secure the performance of obligations and not hand over the properties to the other party.”

Enterprises that want to participate in a property mortgage transaction must meet the same conditions as the subject of other transactions such as: Being legal entity under Vietnamese law and joining in property mortgage transactions for purposes not contrary to law provisions. Enterprises often mortgage property owned by the enterprise to serve the purpose of secured loans, ensure the performance of contractual obligations when entering into contracts with other enterprises, etc. The property used in property mortgage transactions is also the property under civil law and other regulations, including objects, money, valuable papers, and property rights. The property includes real estate and movable assets, which may be existing or future properties, whether tangible or intangible. Mortgaged property must meet certain conditions, including: (i) the mortgaged property must be in the possession of the enterprise, except for the cases of lien on property or title retention; (ii) the enterprise may directly or authorize another person to conduct mortgage transactions; (iii) the mortgaged property may be existing or future assets, including real estate, excluding land-use rights (Point c, Clause 2, Article 4, Decree No. 163/2006/ND-CP amended and supplemented by Decree No. 83/2010/ND-CP, Decree No. 05/2012/ND-CP and Decree No. 11/2012/ND-CP); (iv) The mortgaged property may be generally described, but must be identified; (v) The value of the mortgaged property may be equal to, greater than or less than the value of the guaranteed obligation. Mortgaged property may be used to secure the performance of multiple obligations if, at the time of the establishment of mortgage transactions, the value of the insurance is higher than the total amount of the secured debts. In this case, the enterprise using the Mortgaged of property is obliged to notify the later Mortgaged property recipients of the previous mortgage transactions. In addition, if documents related to the establishment of the mortgage property rights of an enterprise are held by the mortgagee, the enterprise must notify the mortgagee.

Mortgage of property transaction must be made in writing and takes effect from the time of conclusion unless otherwise agreed. When entering into a mortgage contract, the more legal issues a business clarifies, the less likely it is that a dispute will occur. After the parties enter into a mortgage contract, the mortgage enterprise may retain the property, or a third party holds it according to the parties’ agreement. Therefore, the mortgagor has the right to exploit the utility, enjoy the yield and profit from the mortgaged property. Thus, the mortgagee wants to receive both yields and profits as collateral, and it must agree in the mortgage contract that it also belongs to the mortgaged property.

The mortgagor may invest in the mortgaged property, which has the right to keep to increase the value of the mortgaged property, exploiting its utility, leasing, or lending the mortgaged property. These rights of the mortgagor are specified in civil law by the mortgagor. Therefore, the mortgagee has no right to restrict the mortgagee from doing the above. If this agreement is contrary to the law, this provision will likely be invalid. However, the right to invest in the mortgaged property of the mortgagor would be a risk for the mortgagee when the mortgagee is free of rights without the consent of the mortgagee. Also, the investment in collateral is likely not to increase the value of the property. But the worse situation may be that the cost of the insurance reduces. Since then, the decline in the value of the collateral will make the security transaction no longer highly secure when the mortgagor violates the contract. The solution for businesses that are mortgagees is to bind the mortgagor with a strict contractual clause that stipulates that the mortgagee wants to lease, invest, renovate, or the mortgagees must approve even. The exploitation and use of mortgaged properties. Also, the mortgagor is not entitled to sell the property, except in the case of sale to pay off the debt for the mortgage obligation.

Mortgages of property is a measure often applied by businesses in the course of their business activities. Therefore, understanding the nature of this type of transaction helps companies limit the risks that may arise during the contract performance and ensure the interests of their business.

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