What are conditions for bond offering in Vietnamese market? (latest)

What areconditions for bond offering in Vietnamese market? (Illustration)

The conditions for bond offering are specified in Article 9 of Vietnam's Decree 153/2020/ND-CP. Specifically, there are 03 groups of conditions for 03 different types of bonds:

- In order to carry out the offering of non-convertible bonds without warrant (except the offering of bonds by securities companies or fund management companies that are not public companies), the issuer is required to meet the following requirements:

• It is a joint-stock company or limited liability company duly established and operating in accordance with the law of Vietnam.

• It has fully paid principals and interests of bonds issued or due debts in the last 03 consecutive years preceding the bond offering (if any), except the offering of bonds to creditors that are selected financial organizations.

• It has maintained adequacy ratios and prudential ratios in operations in accordance with regulations of specialized laws.

• It must have a bond issuance plan approved and accepted as prescribed in Article 13 hereon.

• Its financial statements of the year preceding the year of issuance have been duly audited by an accredited audit organization according to regulations herein.

• Entities participate in the offering according to Point a Clause 1 Article 8 of Decree 153/2020/ND-CP.

- In order to carry out the offering of non-convertible bonds without warrant, the securities companies or fund management companies that are not public companies shall meet the following requirements in Point a, Point c, Point dd and Point e Clause 1 of this Article.

- In order to carry out the offering of convertible bonds or warrant-linked bonds, the following requirements must be met:

• The issuer is a joint-stock company.

• Entities participate in the offering according to Point b Clause 1 Article 8 of Decree 153/2020/ND-CP.

• The offering conditions in Point b, Point c, Point d and Point dd Clause 1 of this Article are satisfied.

• There is an interval of at least 06 months between two private placements of convertible bonds or warrant-linked bonds.

• The conversion of bonds into shares and execution of warrants must ensure the ratio of holding by foreign investors as prescribed by law.

In addition, Vietnam's Decree 153/2020/ND-CP also stipulates conditions for offering of bonds in multiple waves in Article 10. An enterprise that wishes to offer bonds in multiple waves must satisfy the following conditions:

• Meet the requirements for bond offering laid down in Article 9 hereof;

• Have demands for funds in multiple stages in conformity with the purposes of bond issuance approved according to Clause 2 Article 13 of Vietnam's Decree 153/2020/ND-CP;

• Have a bond issuance plan in which the quantity of bonds to be offered, issuing time and plan to use funds raised from each offering wave must be specified.

Note: Bonds offered in each wave must be distributed within 90 days from the date of disclosure of information before offering. Total duration for offering of bonds in multiple waves shall not exceed 12 months from the issue date of the first offering wave.

Compared to the previous Vietnam's Decree 163/2018/ND-CP, these conditions have only a few minor changes. In Decree 163, in order to issue Non-convertible bonds or bonds without warrants, in addition to the above conditions, enterprises are also bound by the following regulations: Have operated for the minimum period of 01 year after first issuance of the Business Registration Certificate or Business Registration Certificate or License of equivalent validity in accordance with law. Furthermore, for the issuance of convertible bonds or warrant-linked bonds, Point dd, Clause 2, Article 10 of Decree 163 stipulates: Convertible bonds and warrants attached to bonds shall not be transferable for at least 01 year from the date of completion of the issuance, unless they are transferred to or between professional securities investors or they are otherwise prescribed by the decision of the Court or they are inherited according to the provisions of law.

Thus, at present, Decree 153/2020/ND-CP (replacing Decree 163/2018/ND-CP) has eliminated these two regulations. From that, it can be seen that the conditions for private bond issuance in the domestic market according to the current law are somewhat easier than before.

Note: Decree 153/2020/ND-CP does not regulate the offering of corporate bonds to the public in the domestic market in accordance with the provisions of the Law on Securities 2019.

Above are all the conditions for private placement of bonds in the domestic market. We hope that this information will help our clients and members of the LAWNET to understand more about the legal regulations in the field of trade, investment and securities.

Le Thanh

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE