To allow payment of bond principal and interest with other assets in Vietnam

To allow payment of bond principal and interest with other assets in Vietnam (Internet image) 

The Government of Vietnam issued Decree 08/2023/ND-CP dated March 5, 2023 amending and suspending the implementation of a number of articles in the Decrees regulating the offering and trading of individual corporate bonds in the domestic market and the offering for sale of corporate bonds in the international market.

To allow payment of bond principal and interest with other assets in Vietnam

Specifically, according to Article 1 of Decree 08/2023/ND-CP (amended Clause 3, Article 34 of Decree 153/2020/ND-CP) allowing bond issuers to pay the principal and interest due on bonds with other assets in Vietnam.

The bond issuer is responsible for paying in full and on time the bond principal and interest upon maturity and for exercising the attached rights (if any) to the bondholder according to the bond's terms and conditions.

For bonds offered for sale in the domestic market, in case the issuing enterprise is unable to pay in full and on time the bond principal and interest in Vietnam dong according to the issuance plan announced to investors according to the provisions of Article 17 of Decree 153/2020/ND-CP, enterprises may negotiate with bondholders to pay the bond principal and interest with other assets according to the following principles:

- Comply with the provisions of civil law and relevant laws. For conditional business lines and investment lines, they must also comply with the provisions of law on such conditional investment and business lines.

- Must be approved by the bond holder.

- The issuer must disclose unusual information and take full responsibility for the legal status of the assets used to pay bond principal and interest in accordance with the law.

(Previously, only required bond issuers to pay in full and on time the bond interest and principal upon maturity and exercise the attached rights (if any) to the bondholder according to the bond's terms and conditions.)

Other responsibilities of the bond issuer in Vietnam

In addition to regulations on additional responsibilities of the bond issuer for the payment of bond principal and interest upon maturity, a number of other responsibilities of the bond issuer in Vietnam include:

- Comply with regulations on offering of bonds herein.

- Properly manage and use funds raised from issuance of bonds according to bond issuance plans approved by competent authorities and regulations of law.

- Make full and timely payments of bond principal and interests when they become due, and exercise associated rights (if any) for bondholders under terms and conditions of bonds.

- Assume legal responsibility for accuracy, truthfulness and adequacy of bond offering dossiers and disclosed information; comply with regulations on financial management, statistical accounting and auditing as prescribed by law.

- Issuers that fail to comply with regulations herein shall be liable to administrative penalties or criminal prosecution depending on the nature and severity of the violation. The imposition of administrative penalties shall comply with regulations on penalties for administrative violations against regulations on securities and securities market, and relevant laws.

- Provide explanations for investors about the issuance plan, legal risks, investment risks, risks associated with use of funds, rights, benefits and legal liabilities of the issuer and of the investor.

- Compulsorily redeem bonds before maturity as prescribed in Clause 3 Article 7 of this Decree.

(Based on Article 34 of Decree 153/2020/ND-CP, amended by Decree 65/2022/ND-CP)

Decree 08/2023/ND-CP takes effect from the date of signing and promulgation.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE