New regulations on private placement of corporate bonds

The Government has just issued Decree 65/2022 amending and supplementing a number of articles of Decree 154/2020 on the offering and trading of individual corporate bonds in the domestic market and the offering of corporate bonds to the international market.

Decree 65/2022 amends the regulations on the purpose of bond issuance in order to strengthen the responsibilities and obligations of the issuer in using the proceeds from the bond issuance for the right purposes.

Accordingly, the purpose of issuing bonds is to implement investment programs and projects, to restructure debts of the enterprise or to issue bonds in accordance with specialized laws.

The enterprise must specify the issuance purpose in the issuance plan and disclose information to investors registering to buy bonds. The use of capital raised from the issuance of bonds by the enterprise must ensure the correct purposes according to the issuance plan and the content disclosed to investors.

Regarding the method of identifying professional securities investors, Decree 65/2022 supplements the method of determining professional securities investors who are allowed to invest in and trade privately issued corporate bonds. odd.

Specifically, professional securities investors are investors with financial capacity or professional qualifications in securities as prescribed in Article 11 of the Law on Securities.

Organizations responsible for identifying professional securities investors and documents to identify professional securities investors must comply with the provisions of Articles 4 and 5 of Decree No. 155/2020 of the Government detailing implement a number of articles of the Law on Securities and its amendment, supplement and replacement documents, except for the identification of professional securities investors specified at Point d of this Clause.

The identification of professional securities investors as individuals according to the provisions of Point d, Clause 1, Article 11 of the Law on Securities to buy private-issued corporate bonds must ensure the list of securities listed and registered for trading. held by investors with a value of at least VND 2 billion determined by the daily average market value of the securities portfolio for at least 180 consecutive days prior to the date of determination of securities investor status. professional securities, excluding the loan value for margin trading and the value of securities for resale.

The identification of professional securities investors at this point is valid within 3 months from the date of confirmation.

Notably, Decree 65 also clearly stipulates the responsibilities of investors buying bonds. In addition to the need for investors to clearly understand the terms and commitments of the issuing company, as well as understand the risks arising in the investment and trading of bonds, investors also need to be responsible for themselves, responsibility for their investment decisions.

The State does not guarantee that bond-issuing enterprises pay in full and on time the interest, bond principal upon maturity and other rights for investors to buy bonds.

In particular, it is forbidden to trade bonds with investors who are not professional securities investors in any form.