Vietnam: Are corporate bonds valuable papers deposited at the State Bank?
- What are corporate bonds according to Vietnamese regulations?
- Are corporate bond price papers deposited at the State Bank of Vietnam?
- Can corporate bonds deposited at the State Bank of Vietnam be pledged for corporate loans?
- How to handle when the pledger is unable to repay the interest on the loan in Vietnam?
What are corporate bonds according to Vietnamese regulations?
According to the provisions of Clause 4 Article 4 of Decree 153/2020/ND-CP as amended by Clause 1 Article 1 of Decree 65/2022/ND-CP, corporate bonds are securities with a maturity of 01 year or more issued by an enterprise, confirming the legitimate rights and interests of the owner for a part of the debt of the issuing enterprise.
Vietnam: Are corporate bonds valuable papers deposited at the State Bank?
Are corporate bond price papers deposited at the State Bank of Vietnam?
According to the provisions of Clause 1, Article 4 of Circular 16/2022/TT-NHNN, the valuable papers are deposited and used at the State Bank as follows:
Conditions, denominations and codes of valuable papers deposited at the State Bank
1. Valuable papers include:
a) State Bank bills;
b) Government bonds;
c) Bonds guaranteed by the Government to pay 100% of the principal and interest value when due;
d) Local government bonds used in transactions of the State Bank under the decision of the Governor in each period;
dd) Special bonds, bonds issued directly to credit institutions selling debts to buy bad debts at the market value of the Asset Management Company of Vietnamese credit institutions;
e) Bonds issued by commercial banks in which the State holds more than 50% of charter capital (except for commercial banks that have been compulsorily purchased); bonds issued by credit institutions (except for specially controlled credit institutions) and other enterprises;
g) Other valuable papers shall be decided by the Governor of the State Bank in each period.
Thus, bonds issued by enterprises shall be deposited and used at the State Bank when satisfying the conditions in Clause 2, Article 4 of this Circular as follows:
- Legally owned by members;
- Belonging to the type of valuable papers specified in Clause 1 of this Article;
- The right to receive principal and interest has not been finalized at maturity;
- Papers priced at depository certificates at the State Bank must be intact, not torn, damaged, not altered in color, faded with patterns, letters and numbers, not crumpled, crushed, blurred, dirty or erased.
At the same time, the par value of special bonds deposited at the State Bank is at least 100,000 VND or a multiple of 100,000 VND.
Can corporate bonds deposited at the State Bank of Vietnam be pledged for corporate loans?
According to the provisions of Clause 3 Article 5 of Circular 16/2022/TT-NHNN on this content as follows:
Use of papers with depository prices at the State Bank
...
3. Transactions of papers with depository prices at the State Bank among members include:
a/ Providing secured loans by pledging valuable papers among members;
b) Purchase and sale of valuable papers among members.
Accordingly, corporate bonds deposited at the State Bank are used in secured loan transactions by means of pledges to hold member enterprises and organizations.
Specifically, loan transactions secured by pledge of price papers between members shall comply with the provisions of Article 17 of Circular 16/2022/TT-NHNN as follows:
- Valuable papers used in loan transactions secured by pledge of valuable papers between members must be valuable papers that have not been used to ensure the fulfillment of obligations in professional activities at the State Bank.
These valuable papers must be deposited at the State Bank, including depository directly at the State Bank or deposited at the Customer Account of the State Bank at VSDC.
- When there is a need to pledge valuable papers for borrowing capital from another member enterprise (the pledgee), the member enterprise (the pledger) shall send it to the State Bank (Exchange) 01 (one) set of dossiers including:
- An application for pledge of valuable papers according to Annex 6a/LK issued together with this Circular;
- Contract for pledge of valuable papers between the pledger and the pledgee (original).
- The State Bank Exchange receives dossiers, carries out procedures for freezing valuable papers and transfers valuable papers from customer-priced paper accounts deposited by customers to depository price paper accounts for the purpose of granting credit on the interbank market of the pledger.
- During the pledge period, if agreed in writing by the pledgee, the pledger may request the State Bank (the Exchange) to extend the term of the pledge and/or exchange valuable papers that are being blocked by the State Bank with other valuable papers deposited at the State Bank. The State Bank shall consider implementing the pledger's request after receiving the confirmation of the pledgee.
- The State Bank shall transfer valuable papers from depository valuable paper accounts for credit granting purposes on the interbank market to customer value paper accounts deposited by members upon receiving a request to release valuable papers according to Appendix 6b/LK issued together with this Circular of the pledger with confirmation of the pledgee agrees to release valuable papers.
How to handle when the pledger is unable to repay the interest on the loan in Vietnam?
According to the provisions of Clause 6 Article 17 of Circular 16/2022/TT-NHNN on this content as follows:
- In case the pledger is unable to repay on time all or part of the loan principal and interest to the pledgee, within 05 (five) working days from the date of receipt of the written request of the pledgee, the State Bank shall carry out procedures for transferring ownership of valuable papers from the pledger to the pledgee according to written request of the pledgee without confirmation of the pledger (owner of valuable papers) if the two parties have agreed in the Pledge Agreement.
- In case the pledger and the pledgee do not have an agreement on the procedures for transferring ownership of valuable papers from the pledger to the pledgee in the pledge contract, the State Bank shall only carry out the procedures for transferring ownership of valuable papers from the pledger to the pledgee at the written request of the pledgee. try to have the confirmation of the pledger (the owner of the valuable paper) and the minutes of debt settlement between the two parties.
- In case the pledger fails to perform its obligations and does not confirm the use of secured assets instead of debt repayment obligations, the State Bank shall not release valuable papers and handle secured assets in accordance with law.
LawNet
