THE LAW ON PRIVATE PLACEMENT AND BOND TRANSACTIONS OF ENTERPRISES

Clause 20 Article 4 of the Enterprise Law 2019 stipulates that private placement of bonds is the issuance of bonds in two forms of offering to less than 100 investors, excluding professional securities investors or only offering for sale to professional securities investors. 

I. Purpose and principles of private bond issuance

According to Article 5 of Decree 153/2020; Clause 2, Clause 3 Article 1 of Decree 65/2022, the purpose and principles of private bond issuance activities include:

• The purpose of bond issuance is to implement investment programs and projects, restructure the enterprise's own debt or the purpose of issuing bonds in accordance with specialized laws. Note: Enterprises must specify the purpose of issuance in the issuance plan and disclose information to investors registering to buy bonds. 

• Bond issuers on the principle of self-borrowing, self-payment, self-responsibility for capital use efficiency and ensuring debt repayment capacity.

• For green bond issuance, in addition to the provisions of Clauses 1 and 2, Article 5 of Decree 153/2020, capital sources from bond issuance must be accounted for, managed separately and disbursed to projects in the field of environmental protection or projects bringing environmental benefits according to the approved issuance plan.

• For bonds issued in the domestic market, enterprises may only change the conditions and terms of bonds specified in Article 6 of Decree 65/2022/ND-CP when meeting the following regulations:

• Approved by competent authorities of the issuing enterprise;

• Approved by the number of bondholders representing 65% or more of the total number of bonds of the same type in circulation.

• Information on changes in conditions and terms of bonds must be disclosed by the issuer in accordance with Article 22 of Decree 65/2022/ND-CP.

II. Individual corporate bond transactions

According to the provisions of Article 16 of Decree 153/2020/ND-CP and Clause 13 Article 1 of Decree 65/2022/ND-CP, corporate bonds offered for private sale may only be traded between professional securities investors, except for the case of execution according to the judgment, the decision of the Court has the force of law, the decision of the Arbitrator or inheritance in accordance with law. 

Convertible bonds, bonds with warrants are restricted from transferring according to the provisions of Point c, Clause 1, Article 31 of the Law on Securities No. 54/2019/QH14. After the transfer restriction period, convertible bonds, bonds with warrants are only allowed to be traded between professional securities investors and strategic investors, except for cases where they comply with legally effective court judgments, decisions, arbitral decisions or inheritances in accordance with law.

The order and procedures for registration of transactions on the corporate bond trading system offered for private sale at the Stock Exchange are specified in Clause 13 Article 1 of Decree 65/2022 as follows:

• Enterprises shall register bond transactions no later than 15 working days from the date of issuance of the Certificate of Bond Registration by the Depository Corporation and clearing Vietnamese stocks.

• The issuer shall send the transaction registration dossier to the Stock Exchange electronically in accordance with the Regulations of the Stock Exchange. 

• Within 05 working days from the date of receipt of the dossier, the Stock Exchange shall issue a notice of the bonds registered for trading on the corporate bond trading system offered for private sale at the Stock Exchange, and at the same time publish information on the website of the Stock Exchange. In case of refusal, the Stock Exchange must reply in writing clearly stating the reason.

• Within 10 working days from the date on which the Stock Exchange issues a notice of the bond registered for trading, the issuer is responsible for putting the bonds into trading on the corporate bond trading system offered for private placement at the Exchange stock translation. Above is an article that provides basic contents about private placement and bond transactions of enterprises.

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Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

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