Revised regulations on corporate bonds under the Government’s Decree No. 08/2023/ND-CP
To remove difficulties for the corporate bond market, on March 5, 2023, the Government of the Socialist Republic of Vietnam issued Decree No. 08/2023/ND-CP amending, supplementing, and ceasing the effect of, a number of articles of the Decrees on private placement of corporate bonds and trading of privately placed corporate bonds on the domestic market and offering of corporate bonds to the international market.
Principal provisions specified in this Decree include:
Negotiation to pay matured bond principals and interests with other assets is allowed
This provision is applicable to bonds placed on the domestic market (including privately placed bonds or bonds offered to the public) only when a bond-issuing corporation is unable to pay fully and on time bond principals and interests in Vietnam dong.
This Decree does not stipulate the obligation to prove the bond-issuing corporation’s inability to pay fully and on time bond principals and interests, but perhaps with the general obligation of the bond-issuers, at the time of negotiation, the bondholder’s representative will ask the bond-issuing corporation to provide documents proving its financial status.
The Decree also prescribes that the negotiation to pay bonds with other assets will only be carried out in adherence to the following principles:
a) Compliance withcivil law and relevant laws. For conditional business investment sectors or trades, compliance with regulations on such sectors or trades is also required.
b) Consent of bondholders.
c) Extraordinary information disclosure by the bond-issuing corporation that shall take total responsibility for the legal status of assets used for payment of bond principals and interests in accordance with law.
Allow to make changes in terms and conditions of bonds already issued
This provision is only applicable to corporate bonds (regardless of privately placed bonds or bonds offered to the public) that have been issued before Decree No. 65/2022/ND-CP comes into force and remains outstanding by the effective date of Decree No. 65/2022/ND-CP. Accordingly, changes in bond terms and conditions must adhere to the following principles:
a) Compliance with Clause 3, Article 1 of this Decree (Decree No. 65/2022/ND-CP).
b) In case of extension of the bond term, the extended term must not exceed 2 years compared to the original term stated in the bond issuance plan notified to investors.
c) For bondholders who do not consent to changes in bond terms and conditions, the bond-issuing corporation shall negotiate with such bondholders in order to ensure interests of investors. In case there is a bondholder not consenting to the negotiation plan, the corporation shall fully perform its obligations toward such bondholder under the bond issuance plan notified to investors (even in case where the change in bond terms and conditions has been consented to by bondholders representing at least 65% of total bonds).
Cease the effect of provisions on the determination of the status of individual professional securities investors, bond distribution period, and results of credit rating of a bond-issuing corporation of Decree No. 65/2022/ND-CP through December 31, 2023.
Provisions of which the effect is ceased through December 31, 2023 include:
a) The provision on the determination of the status of individual professional securities investors specified at Point d, Clause 1, Article 8 of Decree No. 153/2020/ND-CP, which is amended under Article 1 of Decree 65/2022/ND-CP.
b) The provision on bond distribution period for each private placement specified in Clauses 7 and 8, Article 1 of Decree No. 65/2022/ND-CP.
c) The provision on results of credit rating of a bond-issuing corporation specified at Point e, Clause 2, Article 12 of Decree No. 153/2020/ND-CP, which is amended under Clause 9, Article 1 of Decree No. 65/2022/ND-CP.
Decree No. 08/2023/ND-CP takes effect on the date of its signing (March 5, 2023).