Vietnam: Procedures for application for a government guarantee for bond issue

According to Decree No. 91/2018/ND-CP of Vietnam’s Government, the procedures for application for a government guarantee for bond issue are prescribed as follows:

Application for a government guarantee for bond issue

In addition to the documents prescribed in Article 11 herein, the enterprise (also the issuer) that applies for government guarantee must provide the Ministry of Finance either directly or by post the following documents:

- The documents prescribed in Article 11 herein if the submitted ones need to be modified.

- The enterprise’s original application form for the government guarantee for bond issue.

- The certified copy of the project’s feasibility study report approved by a competent authority in accordance with regulations of the laws on investment and public investment.

- The original scheme for bond issuance which must be reviewed within 06 months before applying for the government guarantee, and include the following contents:

+ The originals or certified copies of the plan for bond issuance specifying date of bond issuance, and the plan for disbursement of funds for the project;

+ The planned quantity of bonds to be issued, sorted by term and issuance date according to the progress of the project and disbursement rate;

+ The decision, made by the Member Board or the Management Board of the obligor, on the allocation of owner’s equity to the project which must be at least 20% of total investment of the project as approved by a competent authority, enclosed with the plan for annual allocation of owner’s equity according to the project's progress.

- The original written approval for the bond issuance scheme granted the government guarantee, made by the representative agency if the obligor is an enterprise of which 100% charter capital is held by the State.

- The license for public offering issued by the State Securities Commission of Vietnam.

- The certified copies of the audited financial statements for the last 03 years preceding the year in which the application for issuance of government guarantee is submitted.

- The report given by the National Credit Information Center of Vietnam on the credit status of the obligor (the written report must bear the seal of the bank providing information).

- The original written commitment to pay debts if the obligor defaults, which is accompanied with the certification of an authorized person of the parent company, an organization or a person holding at least 65% of the enterprise’s charter capital.

- The written commitment made by shareholders or capital contributors individually holding at least 5% of the enterprise’s charter capital on their aggregated holding of at least 65% of the enterprise’s charter capital during the validity of government guarantee, enclosed with the list of these shareholders or capital contributors (if the enterprise is a joint-stock company).

- The documents supplemented during the appraisal of application for government guarantee for a bond issue (such as the approved fundamental design, the off-take agreement and explanations of technology and equipment).

- The plan for annual allocation of owner’s equity to the investment project, enclosed with documents proving the enterprise's financial capacity to allocate owner's equity which is at least 20% of total investment of the project.

- The documents proving the completion of investment procedures in accordance with regulations of the Law on investment.

- Documents proving the fulfillment of eligibility requirements for issuance of corporate bonds in accordance with the law regulations on issuance of corporate bonds.

Stage of appraisal and notification of issuance of corporate bonds

- The Ministry of Finance shall appraise an application for the government guarantee for an issue of corporate bonds according to contents and procedures applicable to domestic and foreign loans. The Ministry of Finance shall submit the contents of the letter of guarantee, accompanied by the report on appraisal results of an application for government guarantee, to the Prime Minister.

- After the Prime Minister makes a decision on issuance of government guarantee and gives approval for the guarantee limit, the Ministry of Finance shall give a written notification to the obligor of the limit on the quantity of guaranteed bonds the enterprise may issue.

- Based on the Ministry of Finance’s notification of the limit on quantity of guaranteed bonds to be issued:

+ At least 10 working days before the planned issuance date, the obligor must request the Ministry of Finance in writing to notify the bracket of interest on guaranteed bonds; Such written request must specify the planned issuance date, the planned quantity of bonds to be issued, bond term and issuance method;

+ At least 07 working days from the receipt of the obligor’s request, the Ministry of Finance shall give a written notification of the bracket of bond interest to the obligor.

- Based on the interest bracket notified by the Ministry of Finance and the market developments at the issuance date, the obligor shall organize the bond issuance, and carry out procedures for registering, depositing, listing and payment for bonds in accordance with applicable law regulations on securities.

After the stage of submission of documents and appraisal

Pursuant to the Decision on issuance of government guarantee for bond issue made by the Prime Minister, the Ministry of Finance shall issue a letter of guarantee to the obligor upon the completion of the following procedures:

- Enter into an agreement on mortgage of property for the entire guaranteed quantity of bonds to be issued with the Ministry of Finance. This mortgage agreement shall be reviewed and modified upon the completion of all bond issues in conformity with the value of guaranteed bonds;

- Provide the Ministry of Finance with the certified copy of the collateral insurance policy;

- Open a Project Account at the Serving Bank; give a written notification of Project Account number and existing deposit accounts opened at credit institutions, supported with letters of confirmations of these credit institutions, to the Ministry of Finance;

- Submit a report to the Ministry of Finance within 10 working days from the end of each issue in order to determine the actual guarantor's liability (and issue the letter of guarantee).

The letter of guarantee shall be issued after the obligor has fulfilled all procedures and within 05 working days from the date on which the Ministry of Finance receives the report on each issue. The letter of guarantee is issued for each issue in 05 original copies, among which:

+ 02 copies are kept by the Ministry of Finance;

+ 01 copy is delivered to the obligor;

+ The others are sent to relevant authorities.

The Ministry of Finance shall decide the number of original copies of the letter of guarantee issued to relevant authorities other than those mentioned above, if necessary.

View more details at Decree No. 91/2018/ND-CP of Vietnam’s Government, officially effective from July 01, 2018.

-Thao Uyen-

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