Decree No. 08/2023/ND-CP: How to amend the bond distribution time in each offering wave in Vietnam?
What are the key contents of Decree 08 on corporate bonds in Vietnam?
The Government of Vietnam promulgates Decree No. 08/2023/ND-CP on amendments to and suspension of some articles of decrees prescribing private placement and trading of privately placed corporate bonds in domestic market and offering of corporate bonds in international market.
According to that, the key contents of Decree No. 08/2023/ND-CP include:
(1) The bond principal and interest can be paid with other assets
(2) Allowing enterprises to change terms and conditions of bonds
(3) Enterprises are allowed to extend the bond term up to 2 years
(4) Suspension of regulations on bond distribution time of each issuance until the end of December 31, 2023
(5) Suspension of the regulation on determining the status of professional securities investors as individuals until the end of December 31, 2023.
(6) Suspension of regulations on credit rating results for bond issuers until the end of December 31, 2023.
Decree No. 08/2023/ND-CP: How to amend the bond distribution time in each offering wave in Vietnam?
Is it allowed to extend the maximum bond term not more than 2 years?
Specifically, according to the provisions of Point b, Clause 3, Article 3 of Decree No. 65/2022/ND-CP as follows:
Transition
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3. With regard to corporate bonds in Vietnam which have been issued before the effective date of this Decree but are still outstanding at the effective date of this Decree:
a) The issuer shall comply with the provisions on reporting, periodic information disclosure and ad hoc information disclosure laid down in this Decree and specific guidelines given by the Ministry of Finance of Vietnam.
b) The issuer shall not be allowed to change the term of its issued bonds.
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Thus, with regard to corporate bonds in Vietnam which have been issued before the effective date of Decree No. 65/2022/ND-CP but are still outstanding, the issuer shall not be allowed to change the term of its issued bonds.
However, in order to support enterprises to be able to raise capital to serve production and business activities and to restructure debts, Article 2 of Decree No. 08/2023/ND-CP amends the provisions at point b Clause 3, Article 3 of Decree No. 65/2022/ND-CP as follows:
Amendments to Point b Clause 3 Article 3 of Government’s Decree No. 65/2022/ND-CP dated September 16, 2022 providing amendments to Government’s Decree No. 153/2020/ND-CP dated December 31, 2020 prescribing private placement and trading of privately placed corporate bonds in domestic market and offering of corporate bonds in international market (hereinafter referred to as “Decree No. 65/2022/ND-CP”)
“b) Changes in terms and conditions of bonds must comply with the following provisions:
- The compliance with Clause 3 Article 1 of this Decree must be ensured.
- The initial maturity of bonds, as defined in the issuance plan disclosed to investors, may be extended by up to 02 years.
- The issuer shall enter into a negotiation with the bondholder that does not accept changes in terms and conditions of the bond so as to ensure investors’ rights and benefits. If the bondholder refuses negotiation, the issuer shall perform all obligations to the bondholder according to the issuance plan disclosed to investors (even if changes in terms and conditions of bond have been accepted by bondholders representing at least 65% of total bonds).”
Thus, the new regulations allow bonds that have been issued previously with outstanding balances to be extended; the maximum extension period is 2 years.
Is it possible to amend the bond distribution time in each offering wave in Vietnam?
In Clause 7 Article 1 of Decree No. 65/2022/ND-CP and Clause 8 Article 1 of Decree No. 65/2022/ND-CP amending provisions in Clause 2, Article 10 of Decree No. 153/2020/ND-CP and point c, Clause 1 Article 11 of Decree No. 153/2020/ND-CP as follows:
Amendments to Decree No. 153/2020/ND-CP
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7. Clause 2 of Article 10 is amended as follows:
“2. Bonds offered in each offering wave must be distributed within 30 days from the date of disclosure of information before offering. Total duration for a multiple-wave offering shall not exceed 06 months from the issue date of the first offering wave.”
8. Point c Clause 1 Article 11 is amended as follows:
“c) The issuer shall organize the bond offering according to the methods prescribed in Article 14 of this Decree. The issuer shall complete the distribution of bonds within 30 days from the date of information disclosure before offering.”
Thus, bonds offered in each offering wave must be distributed within 30 days from the date of disclosure of information before offering. Total duration for a multiple-wave offering shall not exceed 06 months from the issue date of the first offering wave.
At the same time, the issuer shall complete the distribution of bonds within 30 days from the date of information disclosure before offering.
However, in Clause 2, Article 3 of Decree No. 08/2023/ND-CP, it is clear that the implementation of regulations on the time of bond distribution of each of the above offering waves is postponed. The deadline for the implementation of this regulation is the end of December 31, 2023.
Thus, in 2023, the bond distribution time of each offering wave will comply with the provisions of Clause 2, Article 10 of Decree No. 153/2020/ND-CP and point c, Clause 1, Article 11 of Decree No. 153/2020/ND-CP, specifically:
- Bonds offered in each wave must be distributed within 90 days from the date of disclosure of information before offering. Total duration for offering of bonds in multiple waves shall not exceed 12 months from the issue date of the first offering wave.
- The issuer shall organize the bond offering according to the methods prescribed in Article 14 of Decree No. 153/2020/ND-CP. The issuer shall complete the distribution of bonds within 90 days from the date of information disclosure before offering.
Note: From January 1, 2024, the issuer will continue to comply with the provisions of Decree No. 65/2022/ND-CP, reducing the distribution time for each offering wave to 30 days.
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