Decree No. 01/2000/NĐ-CP Issuing the Regulation on the Issuance of Government Bonds

DECREE OF THE GOVERNMENT

ISSUING REGULATIONS ON THE ISSUE OF GOVERNMENT BONDS

 

THE GOVERNMENT

On the basis of pursuant to the Law on the Organization of the Government dated September 30, 1992;

pursuant to the State Budget Law dated March 20, 1996;

pursuant to the Law Amending and Supplementing Certain Provisions of the State Budget Law No. 06/QH10 dated May 20, 1998;

At the request of the Minister of Finance.

DECREE:

Article 1. THESE REGULATIONS ON THE ISSUE OF GOVERNMENT BONDS ARE ISSUED TOGETHER WITH THIS DECREE.

Article 2. THIS DECREE SHALL TAKE EFFECT 15 DAYS FROM THE DATE OF SIGNATURE AND SHALL REPLACE GOVERNMENT DECREE NO. 72/CP DATED JULY 26, 1994.

THE MINISTER OF FINANCE SHALL BE RESPONSIBLE FOR GUIDING THE IMPLEMENTATION OF THIS DECREE.

Article 3. THE MINISTERS, HEADS OF GOVERNMENTAL AGENCIES AT THE MINISTERIAL LEVEL, HEADS OF GOVERNMENTAL AGENCIES, CHAIRMEN OF PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT SHALL BE RESPONSIBLE FOR ENFORCING THIS DECREE./.

(ISSUED TOGETHER WITH GOVERNMENT DECREE NO. 01/2000/NĐ-CP DATED JANUARY 13, 2000)

 PART I

GENERAL PROVISIONS

Article 1Scope of Regulation

THESE REGULATIONS PROVIDE FOR THE ISSUE OF GOVERNMENT BONDS AND RELATED ISSUES CONCERNING GOVERNMENT BONDS IN THE SOCIALIST REPUBLIC OF VIETNAM.

Article 2.Explanation of terms

IN THESE REGULATIONS, THE FOLLOWING TERMS SHALL BE UNDERSTOOD AS FOLLOWS:

1. GOVERNMENT BONDS ARE A TYPE OF SECURITIES ISSUED BY THE MINISTRY OF FINANCE, WITH A SPECIFIED TERM, FACE VALUE, INTEREST RATE, AND CONFIRMING THE GOVERNMENT'S OBLIGATION TO REPAY THE HOLDER OF THE BONDS.

2. THE ISSUE OF GOVERNMENT BONDS IS THE SALE OF GOVERNMENT BONDS TO INDIVIDUALS AND ORGANIZATIONS.

3. RETAIL THROUGH THE NATIONAL TREASURY SYSTEM IS THE SALE OF GOVERNMENT BONDS DIRECTLY TO BUYERS BY TREASURY UNITS.

4. AUCTION OF GOVERNMENT BONDS IS THE SALE OF GOVERNMENT BONDS TO ORGANIZATIONS AND INDIVIDUALS PARTICIPATING IN THE AUCTION WHO MEET THE REQUIREMENTS OF THE MINISTRY OF FINANCE AND HAVE THE LOWEST BID RATES.

5. DISTRIBUTION AGENT IS THE AGREEMENT BETWEEN ORGANIZATIONS PERMITTED TO ACT AS DISTRIBUTION AGENTS FOR GOVERNMENT BONDS AND THE MINISTRY OF FINANCE TO SELL GOVERNMENT BONDS. IF NOT SOLD OUT, THE DISTRIBUTION AGENT SHALL RETURN THE REMAINING BONDS TO THE MINISTRY OF FINANCE.

6. GUARANTEED ISSUE IS THE ASSISTANCE PROVIDED BY AN ORGANIZATION TO THE MINISTRY OF FINANCE IN COMPLETING PROCEDURES BEFORE ISSUING GOVERNMENT BONDS TO THE MARKET, INCLUDING PURCHASING GOVERNMENT BONDS TO RESALE OR TO PURCHASE ANY REMAINING GOVERNMENT BONDS THAT HAVE NOT BEEN FULLY DISTRIBUTED.

7. DEPOSIT OF GOVERNMENT BONDS IS THE STORAGE AND PRESERVATION OF GOVERNMENT BONDS OF CUSTOMERS AND ASSISTING CUSTOMERS IN EXERCISING RIGHTS AGAINST GOVERNMENT BONDS.

8. PAYMENT AGENT FOR GOVERNMENT BONDS IS THE AUTHORIZATION BY THE MINISTRY OF FINANCE TO ORGANIZATIONS TO HANDLE PRINCIPAL AND INTEREST PAYMENTS FOR GOVERNMENT BONDS WHEN DUE.

9. PLEDGE IS THE HANDOVER OF GOVERNMENT BONDS BY THE HOLDER TO AN INDIVIDUAL OR ORGANIZATION TO SECURE A CIVIL OBLIGATION.

Article 3.TYPES OF GOVERNMENT BONDS

1. TREASURY BILLS ARE GOVERNMENT BONDS WITH A TERM OF LESS THAN ONE YEAR ISSUED TO TEMPORARILY COVER SHORTFALLS IN THE STATE BUDGET AND TO PROVIDE ADDITIONAL TOOLS FOR THE MONEY MARKET.

2. TREASURY BONDS ARE GOVERNMENT BONDS WITH A TERM OF ONE YEAR OR MORE ISSUED TO RAISE FUNDS ACCORDING TO THE ANNUAL STATE BUDGET PLAN APPROVED BY THE NATIONAL ASSEMBLY.

3. INVESTMENT BONDS ARE GOVERNMENT BONDS WITH A TERM OF ONE YEAR OR MORE, INCLUDING THE FOLLOWING TYPES:

a) BONDS TO RAISE FUNDS FOR SPECIFIC PROJECTS FUNDED BY THE STATE BUDGET, INCLUDED IN THE INVESTMENT PLAN APPROVED BY THE GOVERNMENT BUT NOT ALLOCATED FUNDS IN THE PLANNED YEAR;

b) BONDS TO RAISE FUNDS FOR THE DEVELOPMENT SUPPORT FUND ACCORDING TO THE ANNUAL INVESTMENT CREDIT DEVELOPMENT PLAN APPROVED BY THE GOVERNMENT.

ARTICLE 4.ISSUE OF GOVERNMENT BONDS

1. GOVERNMENT BONDS MAY BE ISSUED AND SETTLED IN VIETNAMESE DONG OR FOREIGN CURRENCY. THE ISSUE OF GOVERNMENT BONDS IN FOREIGN CURRENCY SHALL APPLY ONLY TO INVESTMENT PROJECTS REQUIRING FUNDS IN FOREIGN CURRENCY; THE MINISTRY OF FINANCE SHALL DEVELOP A SPECIFIC ISSUE PLAN TO BE SUBMITTED TO THE PRIME MINISTER FOR DECISION.

2. GOVERNMENT BONDS MAY BE ISSUED IN THE FORM OF CERTIFICATES OR BOOK-ENTRY, WITH OR WITHOUT NAME.

3. THE FACE VALUE OF GOVERNMENT BONDS SHALL BE DETERMINED AS FOLLOWS:

a) FOR GOVERNMENT BONDS ISSUED AND SETTLED IN VIETNAMESE DONG, THE MINIMUM FACE VALUE IS 100,000 VIETNAMESE DONG, WITH THE SPECIFIC FACE VALUE TO BE DETERMINED BY THE MINISTER OF FINANCE;

b) FOR GOVERNMENT BONDS ISSUED AND SETTLED IN FOREIGN CURRENCY, THE MINISTER OF FINANCE SHALL SPECIFY THE FACE VALUE FOR EACH ISSUE.

4. THE ISSUE OF GOVERNMENT BONDS SHALL BE CONDUCTED IN STAGES. THE MINISTRY OF FINANCE SHALL DECIDE ON THE ISSUE METHOD, ISSUE OBJECTS, ISSUE AMOUNT, FACE VALUE, TERM, INTEREST RATE, AND RULES FOR PRINCIPAL AND INTEREST PAYMENTS. PRIOR TO EACH ISSUE OF GOVERNMENT BONDS, THE MINISTRY OF FINANCE SHALL ANNOUNCE SPECIFIC RULES IN THE MEDIA.

Article 5.THE OBJECTS ELIGIBLE TO PARTICIPATE IN THE PURCHASE OF GOVERNMENT BONDS ARE DOMESTIC ORGANIZATIONS AND INDIVIDUALS, VIETNAMESE RESIDENTS ABROAD, AND FOREIGN ORGANIZATIONS AND INDIVIDUALS LEGALLY WORKING AND LIVING IN VIETNAM. DOMESTIC ORGANIZATIONS SHALL NOT USE FUNDS FROM THE STATE BUDGET TO PURCHASE GOVERNMENT BONDS.

Article 6.RIGHTS OF HOLDERS OF GOVERNMENT BONDS

1. THE GOVERNMENT SHALL GUARANTEE THE FULL AND TIMELY PAYMENT OF PRINCIPAL AND INTEREST ON GOVERNMENT BONDS WHEN DUE.

2. HOLDERS OF GOVERNMENT BONDS MAY USE THEM FOR SALE, GIFTS, DONATIONS, LEGACIES, OR AS COLLATERAL.

3. INDIVIDUAL HOLDERS ARE EXEMPT FROM INCOME TAX ON INCOME RECEIVED IN THE FORM OF GOVERNMENT BONDS.

, Clause 1, Clause 2 Article 7a of this Regulation..GOVERNMENT BONDS SHALL NOT BE USED TO SUBSTITUTE FOR CIRCULATING CASH OR TO SATISFY FINANCIAL OBLIGATIONS TO THE STATE BUDGET.

Article 8.HOLDERS OF GOVERNMENT BONDS MAY DEPOSIT THEIR BONDS WITH ORGANIZATIONS PERMITTED TO DEPOSIT SECURITIES UNDER CURRENT LAWS OR DEPOSIT THEM WITH THE NATIONAL TREASURY FOR SAFEKEEPING.

Article 9.GOVERNMENT BONDS WITH A TERM OF ONE YEAR OR MORE SHALL BE LISTED AND TRADED ON THE CONCENTRATED SECURITIES EXCHANGE MARKET (SECURITIES EXCHANGE CENTER, SECURITIES EXCHANGE BOARD). THE LISTING AND TRADING OF BONDS SHALL BE CONDUCTED IN ACCORDANCE WITH THE LAWS ON SECURITIES AND THE SECURITIES MARKET.

Article 10.The owner of government bonds is responsible for preserving and safeguarding theirbond certificate. Fake or damaged bond certificates that cannot retain theiroriginal shape or content will not be redeemed. The Ministry of Finance shallprovide detailed guidance on specific cases where government bonds are notredeemable.

Article 11. Loss or Misplacement of Government Bonds

1. Unregistered government bonds lost or misplaced will not be redeemed.

2. Registered government bonds lost or misplaced, if the person who lost the bond canprove ownership and the bond has not been fraudulently redeemed, will be settledfor redemption at maturity by the issuing authority.

Article 12.Any act of exploiting, destroying, or forging government bonds shall be dealt withaccording to the law.

 

PART II

TYPES OF GOVERNMENT BONDS

Section I. Treasury Bills

Article 13.Treasury bills are issued through auction via the State Bank.

The quantity and interest rate of treasury bills are determined based on the resultsof the auction.

The State Bank acts as an agent for the Ministry of Finance in issuing and redeemingtendered treasury bills and receives fees as prescribed by the Ministry of Finance.

Article 14.Eligible participants in the auction of treasury bills.

1. Banking organizations operating in Vietnam including commercial banks,development banks, investment banks, policy banks, cooperative banks, jointventure banks, foreign bank branches, and other types of banks operating underthe Law on Credit Institutions.

2. Financial companies, insurance companies, insurance funds, and investment fundsserving in Vietnam.

Article 15.Treasury bills may be traded on the money market or discounted at the State Bank'sTrading Department. The State Bank is responsible for organizing and managing thetreasury bill market.

Article 16.All loans from treasury bills are centralized in the central budget.

The central budget ensures the source for redeeming treasury bills at maturity.

Article 17.The Ministry of Finance agrees with the State Bank to issue regulations on organizingthe auction of treasury bills and guidelines for managing the treasury bill market. 

Section II. Government Bonds

Article 18.Methods of Issuing Government Bonds

1. Retail through the National Treasury System:

a) The National Treasury directly sells government bonds to eligible entities;

b) Retail government bonds issued through the National Treasury system are sold at adiscount or at par value.

2. Auction through the centralized securities trading market:

The issuance of government bonds through the centralized securities trading marketshall be conducted according to the regulations of the Ministry of Finance and theSecurities Commission.

Eligible participants in the auction of government bonds through the centralizedsecurities trading market include:

a) Securities companies;

b) Entities specified in Article 14 of this Regulation;

c) State-owned corporations established pursuant to Decision No. 90/TTg and DecisionNo. 91/TTg dated March 7, 1994 of the Prime Minister;

d) Other entities participating in the auction of government bonds must meet theconditions stipulated by the Ministry of Finance and the Securities Commission.

3. Agents for Issuance:

a) Organizations selected as agents for issuing government bonds include securitiescompanies, financial companies, and banking organizations operating under theLaw on Credit Institutions;

b) The agent organization receives a fee agreed upon with the Ministry of Finance forissuing government bonds and selling them to the public.

4. Guarantee for Issuance:

a) Organizations selected to guarantee the issuance of government bonds includesecurities companies, financial companies, and banking organizations operatingunder the Law on Credit Institutions;

b) The guarantor organization purchases government bonds to sell to the public andreceives a fee agreed upon with the Ministry of Finance. In case of unsold bonds, theguarantor organization is responsible for purchasing the remaining bonds.

Article 19.Redemption of Principal and Interest on Government Bonds.

1. The National Treasury organizes the redemption of principal and interest ongovernment bonds for the owners when they reach maturity for bonds issuedthrough the National Treasury system.

2. Payment agents or depository organizations handle the redemption of principaland interest on government bonds for the bondholders when they reach maturityfor bonds issued through auction, agency, or guaranteed issuance methods.

Article 20.Transfer of Government Bonds Upon Sale, Gift, Donation, or Inheritance.

1. For non-listed government bonds traded in the centralized securities tradingmarket, the transfer of government bonds shall be carried out as follows:

a) Unregistered bonds transferred do not need to be registered with the issuingauthority;

b) Registered bonds transferred must go through procedures at the National Treasurywhere the bonds were issued or at the agencies or guarantors handling the issuancesof the bonds, following the guidelines of the Ministry of Finance.

2. For listed government bonds traded in the centralized securities trading market, thetransfer of government bonds shall be conducted in accordance with Decree No.48/1998/NĐ-CP dated July 11, 1998 on securities and the securities market.

Article 21.All loans from government bonds are centralized in the state budget for use inmeeting budgetary needs approved by the National Assembly.

Article 22.The central budget ensures the source for redeeming principal, interest, and feesfor organizing the issuance and redemption of government bonds.

Section III. Investment Bonds

Article 23. Investment bonds for raising capital for projects:

When there is a need to raise capital for projects funded from the state budget, includedin the state's investment plan but not yet allocated funds within the annual plan,Ministries and sectors (for central-managed projects) shall prepare plans forissuing investment bonds and submit them to the Ministry of Finance for review.

Article 24. Conditions for issuing investment bonds to raise capital for projects:

1.The project must be listed in the annual state investment plan.

2.There must be a bond issuance plan, loan utilization plan, and debt repayment planapproved by the Prime Minister. The contents of the plan must meet the followingrequirements:

a)There must be confirmation from the Minister of Finance (for centrally-managedprojects) or the Chairman of the People's Committee of provinces and cities directlyunder the Central Government (for locally-managed projects) regarding the allocationof sources to repay bond debts when due according to the state plan.

b)For locally-managed projects, the total outstanding balance of raised capital at thetime of fundraising shall not exceed 30% of the annual basic construction investmentbudget of the provincial government (commonly referred to as the provincial budget).

Article 25. Loans from investment bonds issued to raise capital for projects shall be implementedin accordance with treasury bonds stipulated in Articles 18, 19, and 20 of this Regulation.

Article 26. Loans from investment bonds issued to raise capital for projects shall be centralizedinto the state budget (central budget and provincial budget) to fund projects that havebeen approved by the Prime Minister for the issuance plan.

Article 27. Sources for principal, interest, and issuance fees for investment bonds issued to raisecapital for projects shall be guaranteed by the state budget (central budget andprovincial budget) and arranged in the annual development investment plan.

In cases where repayment is due but the provincial budget has not been able to allocatefunds, the Ministry of Finance will deduct from the additional central budget for theprovince during the year or draw from the provincial budget reserve to repay thebonds.

Article 28.Issuance of investment bonds to raise capital for the development support fundaccording to the state's credit investment development plan shall be carried out asfollows:

1.Based on the credit investment development plan approved by the Government, theDevelopment Support Fund shall develop a plan and issuance scheme for investmentbonds and submit it to the Ministry of Finance for decision.

2.The issuance method, payment, and transfer of bonds shall be carried out as withtreasury bonds stipulated in Articles 18, 19, and 20 of this Regulation.

3.Loans from bonds shall be transferred to the Development Support Fund. The Develop-ment Support Fund shall be responsible for managing and using the funds raisedthrough bond issuance in accordance with the regulations of the Charter on theOrganization and Operation of the Development Support Fund and must ensure sourcessufficient to repay principal, interest, and issuance fees for bonds on time.

 

CHAPTER III

DUTIES AND LIMITS OF STATE MANAGEMENT

ON GOVERNMENT BONDS

Article 29.The Ministry of Finance shall have the responsibility:

1.Issue detailed guidelines for the issuance and payment of various types of governmentbonds.

2.Prepare annual plans for the issuance and payment of government bonds.

3.Unify management of printing of various types of government bond certificates.

4.Organize the issuance and payment of government bonds.

5.Review plans for issuing investment bonds.

6.Ensure sources for repaying investment bonds for centrally-managed projects.

7.Organize accounting and bookkeeping in accordance with state regulations.

8.Cooperate with the State Bank to organize the auction market for treasury bills.

9.Cooperate with the Securities Commission to organize the auction market for govern-ment bonds, agency issuance, and guarantee issuance.

10.Supervise the use of funds raised through bond issuance.

11.Decide to suspend bond issuance.

Article 30.The State Bank shall be responsible for:

1.Cooperating with the Ministry of Finance to organize treasury bill auctions throughbanks, managing and operating the treasury bill auction market.

2.Cooperating with the Securities Commission to manage the activities of banks actingas agents and guarantors for bond issuance.

3.Participating with the Ministry of Finance in determining the interest rate ongovernment bonds.

Article 31.The Securities Commission shall be responsible for:

1.Cooperating with the Ministry of Finance to organize the government bond issuancemarket through centralized securities exchange auctions.

2.Managing and supervising the activities of agents, guarantors, listing, and tradingof government bonds through centralized securities exchanges.

Article 32.Ministries, sectors, People's Committees of provinces and cities directly under theCentral Government with plans to issue investment bonds shall be responsible for:

1.Preparing annual plans for issuing investment bonds and submitting them to theMinistry of Finance;

2.Preparing plans for issuing investment bonds and submitting them to the Ministry ofFinance for review and approval by the Prime Minister;

3.Cooperating with the Ministry of Finance in organizing the issuance and payment ofbonds, inspecting, and supervising the use of funds and recovery of investmentcapital.

4.For investment bonds for locally-managed projects, the People's Committees ofprovinces and cities directly under the Central Government shall be responsible forbalancing the provincial budget to ensure sources for bond repayment when due inaccordance with the Law on State Budget and implementing regulations of the Lawon State Budget.

Article 33.Handling Violations

Organizations and individuals violating the provisions of this Regulation shall be subjectto administrative penalties, disciplinary actions, and if material damage is caused,compensation shall be provided in accordance with the law. Serious violations mayresult in criminal liability being pursued./.