Rights and benefits of bond buyers in Vietnamese market

Rights and benefits of bond buyers in Vietnamese market (Internet image)

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

1. Rights and benefits of bond buyers in Vietnamese market

Specifically, in Clause 3, Article 8 of Decree 153/2020/ND-CP (amended in Decree 65/2022/ND-CP), rights and benefits of bond buyers

- Access adequate information disclosed by the issuer as prescribed in this Decree, and bond offering dossiers as requested.

- Receive full and timely payments of bond principal and interests when they become due, and perform other corporate actions (if any) under terms and conditions of bonds and as agreed upon with the issuer.

- Request the issuer to redeem bonds before maturity as prescribed in Clause 3 Article 7 of this Decree.

- When buying bonds in the secondary market, request bond sellers to provide adequate information which has been disclosed by the issuer as prescribed in this Decree.

2. Eligible bond buyers in Vietnamese market

Pursuant to Clause 1, Article 8 of Decree 153/2020/ND-CP (amended in Decree 65/2022/ND-CP), which stipulates who buys bonds in the domestic market 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 strategic investors of which the number of strategic investors of an issue is limited to 100.

- Professional investors are investors that have financial capacity or securities qualifications as prescribed in Article 11 of the Law on securities.

Organizations shall identify professional investors and obtain documents serving identification of professional investors as prescribed in Article 4 and Article 5 of Decree 155/2020/ND-CP, except the identification of professional investors prescribed in Point d of Article 8 of Decree 153/2020/ND-CP.

3. Responsibilities of bond buyers in Vietnamese market

According to Clause 2, Article 8 of Decree 153/2020/ND-CP, responsibilities of bond buyers

- Fully access the 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.

- Clearly understand risks that may occur during investment and trading of bonds; clearly understand and ensure compliance with regulations on eligible bond buyers, and trading of privately placed corporate bonds in accordance with regulations of Decree 153/2020/ND-CP and relevant laws.

- Self-assess and assume responsibility for their investment decisions as well as incur any risks which may occur during investment and trading of bonds. The State provides no guarantee that the issuer will make full and timely payment of bond principal and interest amounts when they become due, and exercise other rights for bondholders.

- Before buying bonds (both in primary market and secondary market), each investor must sign a written certification of compliance with the provisions of Points a, b and c of Clause 2, Article 8 of Decree 153/2020/ND-CP, and shall assume responsibility for its decision to buy bonds after signing the certification.

The written certification shall be made using the form in Appendix V enclosed with Decree 153/2020/ND-CP, and shall be kept together with the bond offering dossier or by the securities company where the investor conducts bond transactions in accordance with regulations of law.

- Conduct bond transactions according to the provisions of Article 16 of Decree 153/2020/ND-CP; not sell bonds to or make joint investment in bonds with investors that are not professional investors in any forms. Capital mobilization and purchase/investment in corporate bonds by credit institutions, FBBs and fund management companies shall comply with specialized laws.

- When selling bonds in the secondary market, provide bond buyers with adequate information which has been disclosed by the issuer as prescribed in Decree 153/2020/ND-CP.

Ho Quoc Tuan

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