What are contents of a privately placed corporate bonds issuance plan in domestic market in Vietnam?

What are contents of a privately placed corporate bonds issuance plan in domestic market in Vietnam?

Pursuant to Clause 10 Article 1 of the Decree 65/2022/NĐ-CP stipulating as follows:

1. The issuer shall formulate a bond issuance plan which shall, inter alia, include the following contents:

a) Particulars of the issuer (including name, type of business, headquarters address, enterprise registration certificate or business registration certificate or another license of equivalent validity as regulated by law); number of account used for receiving payments for offered bonds;

b) Bond issuance purposes, including information about the investment program/project (including information about the legal status and investment risks that may occur of the program/project); restructured debt (including information about value and term of the restructured debt). The bond issuance purposes of a credit institution are to increase tier-2 capital, or raise funds for granting loans, making investments or serving other purposes as prescribed in specialized laws.

c) Description of fulfillment of each of the bond offering conditions laid down in Article 9 and Article 10 of this Decree;

d) Terms and conditions of the bond to be offered. In case of a multiple-wave bond offering, the planned number of bond offering waves, quantity of bonds to be offered in each offering wave, and offering time of each offering wave must be specified. In case of offering of secured bonds, information about the type of assets used as collateral, and value of the collateral determined by a qualified valuation service provider, the legal status and registration of collateral as security interest as prescribed by law on registration of security interest, and the order of payments made to bondholders when the collateral is used for debt payment.

dd) The plan for conversion of bonds into shares in case of offering of convertible bonds (requirements, time limit, ratio or method of determining conversion price, compliance with regulations on holding of shares by foreign investors as prescribed by law, and other terms);

e) The plan for exercise of warrant in case of offering of warrant-linked bonds (conditions for warrant exercise, time limit, ratio, price or pricing method, compliance with regulations on holding of shares by foreign investors as prescribed by law, and other terms);

g) Cases, terms, conditions and commitments by the issuer to redeem bonds before maturity or conduct bond swap;

h) Some financial indicators of the issuer in 03 consecutive years preceding the year of issuance and any changes therein after the bond issuance, including:

- Equity (including detailed information about the paid-in capital, funds established using after-tax profits and undistributed after-tax profits, differences upon asset revaluation, and exchange rate differences, etc.);

- Total debts payable, including loans given by banks, debts from issuance of bonds, and other debts payable (information on the debt must be specified);

- Capital structure, including total debts/total assets ratio, debt to equity ratio;

- Liquidity ratios, including: current ratio (current assets/current liabilities), quick ratio ((current assets – inventories)/current liabilities);

- Outstanding bond debts (including all types of bonds)/equity;

- Pre-tax profits, after-tax profits (in case of losses, losses incurred in the fiscal year and accumulated losses must be specified);

- Profitability ratios, including: return on assets (ROA), return on equity (ROE);

- Financial soundness indicators and prudential ratios in accordance with regulations of specialized laws.

i) Payment of principal and interest amounts of the issued bonds and matured debts (excluding bond debts) over the last 03 consecutive years preceding the bond offering.

k) Reporting on bond issuance and use of funds raised from the bond issuance in respect of outstanding bonds, including: total quantity of bonds issued; bond principal and interest amounts paid; remaining outstanding bond debts; use of funds raised from bond issuance and plan to payment of bond principal and interest; violations against regulations on issuance of corporate bonds according to decisions issued by competent authorities within 03 consecutive years preceding the bond offering (if any);

l) Assessment of the issuer’s financial status and solvency to pay matured debts and debts from bonds to be issued;

m) The auditor’s audit or review opinions about the financial statements;

n) Bond issuance methods;

o) Eligible bond buyers that are required to meet the provisions of Clause 1 Article 8 of this Decree. If bonds will be offered to professional investors that are individuals, the issuer is required to meet requirements regarding the dossier of offering of bonds to individuals laid down in this Decree.

p) The plan for use of funds raised from the bond issue, including the plan for use of idle funds raised from the bond issue which are disbursed according to a specified schedule;

q) The plan for arrangement of funding sources and method of bond principal and interest payment;

r) The issuer’s commitment to disclose information;

s) Other commitments to bondholders (if any);

t) Provisions on registration and depositing of bonds as prescribed in Article 15 of this Decree;

u) Provisions on trading of bonds as prescribed in Article 16 of this Decree;

uu) Rights and responsibilities of bondholders, including information on the specific number of votes necessary to settle an issue requiring bondholders’ approval which shall not be lower than the number of votes of bondholders that represent at least 65% of total outstanding bonds of the same type;

v) Rights and responsibilities of the issuer;

x) Responsibilities and obligations of each bond issue-related service provider;

y) Criteria for selection of strategic investors and list of strategic investors in case of issuance of convertible bonds or warrant-linked bonds.

What are regulations on authority to approve and accept the privately placed corporate bonds issuance plan in domestic market in Vietnam?

Pursuant to Clause 2 Article 13 of the Decree 153/2020/NĐ-CP stipulating authority to approve and accept the privately placed corporate bonds issuance plan in domestic market in Vietnam as follows:

2. Authority to approve and accept the bond issuance plan:

a) With regard to a joint-stock company:

- The plans for private placements of convertible bonds and warrant-linked bonds must be approved by the GMS. Voting for ratification of the resolution on approval of the bond issuance plan must be carried out according to the Law on enterprises.

- The plan for offering of non-convertible bonds without warrant shall be approved by a competent authority as prescribed in the company’s charter. Unless otherwise prescribed by the company’s charter, the Board of Directors is entitled to approve the bond issuance plan but must report it to the nearest GMS. Such report must be enclosed with the bond offering dossier and relevant documents.

b) The authority to approve the bond issuance plan of a limited liability company is given to the Board of Members or President or owner of the company as prescribed in the company’s charter.

c) Apart from the provisions in Point a and Point b of this Clause, state enterprises shall comply with regulations on limits on and authority to decide on raising of funds in accordance with provisions of the Law on management and use of state funds invested in enterprises’ business and production activities and the Law on enterprises.

d) Apart from the provisions in Point a, Point b and Point c of this Clause, the authority to approve the bond issuance plan of an enterprise operating in conditional business lines shall comply with the specialized law (if any).

What are methods for issuance of privately placed corporate bonds in domestic market in Vietnam?

Pursuant to Clause 11 Article 1 of the Decree 65/2022/NĐ-CP (amending Clause 1 and 2, Article 14 of the Decree 153/2020/NĐ-CP) stipulating as follows:

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.

2. The issuer shall decide the issuance method to be adopted and notify it to investors.

Best regards!