Officially delaying the implementation of regulations on determining the status of professional securities investors in Vietnam?
How to identify professional bond investors according to Decree 65 and Decree 153?
According to the provisions of Clause 1, Article 8 of Decree No. 153/2020/ND-CP (amended by Clause 6, Article 1 of Decree No. 65/2022/ND-CP) stipulating bond buyers as follows:
Bond buyers
1. Eligible bond buyers
a) Buyers of non-convertible bonds without warrant are professional investors as defined in the Law on securities.
b) Buyers of convertible bonds and warrant-linked bonds are professional investors and strategic investors of which the number of strategic investors of an issue is limited to 100.
c) Professional investors are investors that have financial capacity or securities qualifications as prescribed in Article 11 of the Law on securities. Organizations shall identify professional investors and obtain documents serving identification of professional investors as prescribed in Article 4 and Article 5 of the Government of Vietnam’s Decree No. 155/2020/ND-CP dated December 31, 2020 on elaboration of some articles of the Law on securities and its amending or superseding documents (hereinafter referred to as “Decree No. 155/2020/ND-CP”), except the identification of professional investors prescribed in Point d of this Article.
d) An individual that is identified as a professional investor as prescribed in Point d Clause 1 Article 11 of the Law on Securities shall be eligible to buy privately placed bonds if he/she holds a quantity of listed or registered securities, excluding securities borrowed to conduct margin transactions and those of repo transactions, of which the daily average price determined in a minimum period of 180 consecutive days preceding the date on which he/she is identified as a professional investor shall not be lower than VND 02 billion. The certification of a professional investor status as prescribed in this Point shall be valid for 03 months from the date of certification.
Thus, according to the above regulations, bond buyers must be professional investors and strategic investors and must secure an average holding portfolio of at least VND 2 billion within 180 days with the buyer's assets, excluding loans.
Officially delaying the implementation of regulations on determining the status of professional securities investors in Vietnam?
How to determine the status of a professional securities investor as an individual according to the latest regulations?
According to the provisions of Article 3 of Decree No. 08/2023/ND-CP, clearly stating that the following provisions of Decree No. 65/2022/ND-CP shall be suspended until the end of December 31, 2023, specifically:
The following regulations of Decree No. 65/2022/ND-CP shall be suspended until December 31, 2023 inclusively:
1. Regulations on determination of professional investors that are individuals in Point d Clause 1 Article 8 of the Decree No. 153/2020/ND-CP as amended in Clause 6 Article 1 of the Decree No. 65/2022/ND-CP.
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Previously, for professional securities investors who are individuals, Clause 6, Article 1 of Decree No. 65/2022/ND-CP stipulates that professional securities investors being individuals must secure an average holding portfolio of at least VND 2 billion within 180 days with the buyer's assets, excluding loans.
Regarding the issue of determining the status of securities investors, the Government of Vietnam decided to delay the application of the standard for identifying professional securities investors in Vietnam in order to facilitate the extension/repayment of debt, and subprime investors continue to buy new bonds for enterprises to reverse debt.
Thus, according to the provisions of Clause 1, Article 3 of Decree No. 08/2023/ND-CP, in 2023, bond buyers are regulated as follows:
- Buyers of non-convertible bonds without warrants are professional investors as defined in the Law on securities.
- Buyers of convertible bonds and warrant-linked bonds are professional investors and strategic investors of which the number of strategic investors of an issue is limited to 100.
- Professional investors are investors that have financial capacity or securities qualifications.
Organizations responsible for identifying professional securities investors and documents identifying professional securities investors must comply with the provisions of Articles 4 and 5 of Decree No. 153/2020/ND-CP.
Postponing the implementation time for mandatory credit rating requirements?
Previously, the report on credit rating of the issuer were specified at Point e, Clause 2, Article 12 of Decree No. 153/2020/ND-CP (amended in Clause 9, Article 1 of Decree No. 65/2022/ND-CP) as follows:
Bond offering dossier
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2. A bond offering dossier shall include the following documents:
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e) The report on credit rating of the issuer that is subject to compulsory credit rating as prescribed in Clause 2 Article 19 of the Decree No. 155/2020/ND-CP of which the time of application is prescribed in Clause 3 Article 310 of the same document.
Thus, this regulation requires credit rating results for bond issuers when:
- Total value of bonds at par value mobilized in each 12 months is more than VND 500 billion and more than 50% of equity.
- Or the total outstanding balance of bonds at par value up to the time of registration for offering is greater than 100% of equity.
This regulation leads to the fact that in the current economic context, it is difficult for enterprises to issue corporate bonds as well as meet credit rating requirements.
On March 5, 2023, in order to solve the above situation, the Government of Vietnam issued Decree No. 08/2023/ND-CP suspending the implementation of regulations on credit rating results for bond issuers, as follows:
Pursuant to Clause 3, Article 3 of Decree No. 08/2023/ND-CP stipulating as follows:
The following regulations of Decree No. 65/2022/ND-CP shall be suspended until December 31, 2023 inclusively:
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3. Regulations on reports on credit rating of issuers in Point e Clause 2 Article 12 of the Decree No. 153/2020/ND-CP as amended in Clause 9 Article 1 of the Decree No. 65/2022/ND-CP.
Thus, the above regulation allows to delay the application of the regulations on credit rating results for bond issuers at Point e, Clause 2, Article 12 of Decree No. 153/2020/ND-CP (amended in Clause 9, Article 1 of Decree No. 65/2022/ND-CP) to January 1, 2024.
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