Methods of issuing corporate bonds in Vietnam

Methods of issuing corporate bonds in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What are corporate bonds?

According to Clause 1, Article 4 of Decree 153/2020/ND-CP, corporate bond means a type of debt security with a term to maturity of at least 01 year, issued by an enterprise to confirm the bondholder's legitimate rights and interests over a part of its debts.

2. Methods of issuing corporate bonds in Vietnam

Corporate bonds shall be issued adopting the following methods:

- Bidding: a method adopted to select investors that meet the issuer’s requirements to buy bonds.

- Underwriting: a method of selling corporate bonds to investors through an underwriter or underwriter syndicate. 

- Brokerage: a method whereby an entity is authorized by the issuer to sell its corporate bonds to investors.

- Selling bonds directly to investors if the issuer is a credit institution.

(Clause 1, Article 14 of Decree 153/2020/ND-CP, as amended by Decree 65/2022/ND-CP)

3. Conditions for making public offering of bonds in Vietnam

Pursuant to Clause 3, Article 15 of the Law on Securities 2019, Article 19 of Decree 155/2020/ND-CP, the conditions for making public offering of bonds include:

- The contributed charter capital is at least 30 billion VND on the offering date according to the accounting books;

- The issuer has profit in the preceding year and has no accumulated loss on the offering date; there is no debt that is overdue for more than 01 year;

- There is a plan for issuance, use and repayment of the capital generated by the offering ratified by the General Meeting of Shareholders, Board of Directors, the Board of members or the company president;

- The issuer has a commitment to fulfill its obligations to the investors in terms of conditions for issuance, payment, assurance of the lawful rights and interests of investors and other conditions;

-  The offering is consulted by a securities company, unless the issuer is already a securities company;

- The issuer is not undergoing criminal prosecution and does not have any unspent conviction for economic crimes;

- The issuer or offered bonds are rated by a credit rating organization that is granted the certificate of eligibility by the Ministry of Finance in the following cases:

+ The total value of bonds at their face value raised in every 12 months exceed 500 billion VND and exceed 50% of the equity according the latest annual financial statement that is audited (or examined half-year financial statement if the issuer is required to disclose the examined half-year financial statement) by an accredited audit organization; or

+ The bond outstanding at face value on the offering registration date exceed 100% of the equity according the latest annual financial statement that is audited (or examined half-year financial statement if the issuer is required to disclose the examined half-year financial statement) by an accredited audit organization.

- The issuer has a commitment to have its shares listed on the securities trading system after the end of the offering.

Nguyen Thi Hoai Thuong

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE