Is it possible for non-public companies to offer warrant-linked bonds in Vietnam?
Is it possible for non-public companies to offer warrant-linked bonds in Vietnam?
Pursuant to Clause 3, Article 9 of Decree 153/2020/ND-CP, conditions for offering warrant-linked bonds in the market are as follows:
Conditions for bond offering
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3. In order to carry out the offering of convertible bonds or warrant-linked bonds, the following requirements must be met:
a) The issuer is a joint-stock company.
b) Entities participate in the offering according to Point b Clause 1 Article 8 hereof.
c) The offering conditions in Point b, Point c, Point d and Point dd Clause 1 of this Article are satisfied.
d) There is an interval of at least 06 months between two private placements of convertible bonds or warrant-linked bonds.
dd) The conversion of bonds into shares and execution of warrants must ensure the ratio of holding by foreign investors as prescribed by law.
Accordingly, in order to carry out the offering of warrant-linked bonds, the issuer must be a joint-stock company. This regulation does not mention whether this company is a public company. Thus, a joint stock company that is not a public company is still allowed to offer warrant-linked bonds.
- In addition, the offering of warrant-linked bonds must also satisfy the following conditions:
+ Entities participating in the offering must be professional investors and less than 100 strategic investors.
+ The offering conditions as follows must be satisfied:
++ The issuer shall send 01 set of the bond offering dossier prescribed in Point a of this Clause to the State Securities Commission of Vietnam (SSC). Within 10 days from the receipt of adequate and valid dossier, SSC shall give written approval. If a dossier is refused, SSC shall give a written response in which reasons for such refusal must be specified.
++ After obtaining the written approval from SSC, the issuer shall disclose information before the offering and organize the issuance of bonds according to Point b, Point c Clause 1 of this Article. Proceeds from the offering shall be transferred to the escrow account opened at a bank or foreign bank branch. Opening and use of escrow account shall comply with regulations on offering, issuance of securities and tender offer laid down in the Decree providing guidelines for implementation of the Law on Securities.
++ Within 10 days from the completion date of the offering, the issuer shall submit a report on offering results, made according to the form in Appendix III enclosed herewith, enclosed with confirmation of proceeds given by the bank or foreign bank branch where the escrow account is opened, to SSC. Within 03 working days from the receipt of the adequate report on offering results, SSC shall give a notification to the issuer and publish information about the offering results on its website.
++ After receiving the notification from SSC, the issuer shall have the proceeds from the bond offering in escrow released.
+ There is an interval of at least 06 months between two private placements of convertible bonds or warrant-linked bonds.
+ The conversion of bonds into shares and execution of warrants must ensure the ratio of holding by foreign investors as prescribed by law.
Is it possible for non-public companies to offer warrant-linked bonds in Vietnam?
What are the procedures for offering bonds with warrants of non-public companies in Vietnam?
Pursuant to Clause 1, Article 11 of Decree 153/2020/ND-CP (amended by Clause 8, Article 1 of Decree 65/2022/ND-CP) has the following provisions:
Bond offering procedures
1. With regard to the offering of non-convertible bonds without warrant by public companies and companies other than public companies, and the offering of convertible bonds and warrant-linked bonds by companies other than public companies (excluding securities companies and fund management companies):
a) The issuer shall prepare a bond offering dossier as prescribed in Article 12 hereof.
b) The issuer shall disclose information before the bond offering as prescribed in Article 19 hereof.
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.
d) The issuer shall carry out registration and depositing of bonds as prescribed in Article 15 hereof.
Accordingly, the procedures for offering warrant-linked bonds of non-public companies include the following steps:
Step 1: The issuer shall prepare a bond offering dossier as prescribed in Article 12 hereof.
Step 2: The issuer shall disclose information before the bond offering as prescribed in Article 19 hereof.
Step 3: 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.
Step 4: The issuer shall carry out registration and depositing of bonds as prescribed in Article 15 hereof.
What are the methods of offering bonds with warrants of non-public companies in Vietnam?
Pursuant to Clause 1, Article 14 of Decree 153/2020/ND-CP (amended by Clause 11 Article 1 of Decree 65/2022/ND-CP) there are regulations on the method of corporate bond issuance as follows:
Issuance methods and related service providers
1. Corporate bonds shall be issued adopting the following methods:
a) Bidding: a method adopted to select investors that meet the issuer’s requirements to buy bonds.
b) Underwriting: a method of selling corporate bonds to investors through an underwriter or underwriter syndicate.
c) Brokerage: a method whereby an entity is authorized by the issuer to sell its corporate bonds to investors.
d) Selling bonds directly to investors if the issuer is a credit institution.
Accordingly, warrant-linked bonds of non-public companies may be offered by the following methods:
- Bidding
- Underwriting
- Brokerage
- Selling bonds directly to investors
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