Only professional investors are allowed to buy corporate bonds in Vietnam

Only professional investors are allowed to buy corporate bonds in Vietnam (Artwork)

Specifically, bond buyers are specified in Article 8 of Vietnam's Decree 153/2020/ND-CP as follows:

• Buyers of non-convertible bonds without warrant are professional investors as defined in the Law on securities;

• Buyers of convertible bonds and warrant-linked bonds are professional investors and less than 100 strategic investors.

• Organizations responsible for determination of professional investors and documents proving professional investors shall comply with the Decree providing guidelines for implementation of the Law on Securities.

Compared to before, Vietnam's Decree 163/2018/ND-CP has completely different regulations on this issue:

Bond buyers are Vietnamese or foreign organizations or individuals.

Investors purchasing bonds shall carry out the self-assessment of level of risks arising from investments in bonds, restrictions on transaction of bonds to be bought and shall exercise responsible autonomy for their investment decisions.

It can be seen that, in the previous Decree 163, the object eligible to buy bonds can be any organization or individual, but up to now, there is only one object entitled to buy bonds, which are professional investors. According to Article 11 of the Enterprise Law 2019, professional investors are investors that have adequate financial capacity or securities qualifications, including:

• Commercial banks, foreign branch banks (FBB), finance companies, insurers, securities companies, fund management companies, securities investment funds, international financial institutions, off-budget financial funds, state-owned financial institutions permitted to buy securities as prescribed by relevant laws;

• Any company whose contributed charter capital exceeds 100 billion VND; every listed or registered organization;

• Holders of securities professional certifications;

• Any individual holding a quantity of listed or registered securities that is worth at least 02 billion VND as confirmed by the securities company;

• Any individual whose taxable income in the latest year is at least 01 billion according to his/her submitted tax return or tax deduction documents of his/her income payer.

In addition, Decree 153/2020/ND-CP also requires investors who buy bonds to have fully access information disclosed by the issuer; have a thorough grasp of terms and conditions of bonds, and other commitments of the issuer before deciding to buy and trade bonds.

At the same time, investors shall self-assess and assume responsibility for their investment decisions as well as incur any risks from the investment and trading in bonds. The State provides no guarantee that the issuer will make full and timely payment of bond principals and interests when they become due, and exercise other rights for bondholders.

In addition, investors must clearly understand and comply with regulations on eligible bond buyers, purchase and trading of privately placed corporate bonds in accordance with regulations herein and relevant laws.

Investors also have the right to be paid in full and on time by the issuer of the bond interest and principal upon maturity, and to exercise the attached rights (if any) according to the bond's terms and conditions and agreements. with the issuer; may use bonds for transfer, donation, donation, inheritance or discount; may use bonds as collateral in civil and commercial relations as prescribed by law.

In summary, from January 1, 2021, only one professional securities investor is allowed to buy bonds.

Le Thanh

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