Circular No. 01/2021/TT-NHNN on the issuance of promissory notes, bills of exchange, deposit certificates, and domestic bonds by credit institutions and foreign bank branches

CIRCULAR

Provisions on issuance of promissory notes, bills of exchange, deposit certificates, domestic bonds of credit institutions, foreign bank branches

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Securities Law promulgated on November 26, 2019;

Pursuant to the Law on Enterprises dated June 17, 2020;

Pursuant to the Government Decree Decision No. 153/2020/NĐ-CP dated December 31, 2020 of the Government stipulating the issuance of private placement corporate bonds in the domestic market and the issuance of corporate bonds in the international market;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Article 1.

The Governor of the State Bank of Vietnam issues this Circular stipulating the issuance of promissory notes, bills of exchange, deposit certificates, domestic bonds of credit institutions, foreign bank branches.

Article 1. Scope of Regulation

This Circular stipulates the issuance of promissory notes, bills of exchange, deposit certificates; the issuance and offering of domestic bonds (hereinafter referred to as bond issuance) of credit institutions, foreign bank branches for raising capital within the territory of Vietnam.

Article 2. Applicability

1. The issuers of promissory notes, bills of exchange, deposit certificates, bonds (hereinafter referred to as securities) shall be governed by Article 3 of this Circular.

2. The buyers of securities shall be governed by Article 4 of this Circular.

Other organizations and individuals related to the issuance of securities of credit institutions, foreign bank branches.

Article 3. Issuers of Securities

Credit institutions, foreign bank branches issue securities in accordance with their Licenses for Establishment and Operation, including:

1. Commercial banks.

2. Cooperative banks.

3. Branches of foreign banks.

4. Financial companies, financial leasing companies.

Article 4. Buyers of Securities

1. The buyers of securities are organizations (including credit institutions, foreign bank branches), Vietnamese individuals and foreign organizations and individuals, except in cases provided for in Clause 2 and Clause 3 of this Article.

2. The buyers of securities issued by financial companies and financial leasing companies are Vietnamese organizations and foreign organizations.

3. The buyers of bonds must comply with the Securities Law, guiding documents of the Securities Law, and relevant laws.

Article 5. Definitions

In this Circular, the following terms are understood as follows:

Promissory notes, bills of exchange, deposit certificates, bonds are evidence confirming the obligation of credit institutions, foreign bank branches to repay the buyer of securities within a certain period, interest payment conditions, and other conditions.

Article 6. Forms of Issuance

1. Credit institutions, foreign bank branches issue securities in the form of certificates, book entries, and other forms consistent with the Securities Law, guiding documents of the Securities Law, and relevant laws.

2. In the case of issuing securities in the form of certificates, credit institutions, foreign bank branches must design and print them to ensure high anti-counterfeiting capabilities.

3. In the case of issuing securities not in the form of certificates, credit institutions, foreign bank branches issue ownership certificates to the buyers.

Article 7. Currency for Issuance and Settlement

Valuable papers shall be issued and settled in Vietnamese Dong.

Article 8. Face Value of Valuable Papers

1. The face value of valuable papers is 100,000 (one hundred thousand) Vietnamese Dong or multiples thereof.

2. The face value of valuable papers (excluding bonds) issued in the form of certificates shall be printed in advance or agreed upon by credit institutions, foreign bank branches issuing such papers with the buyers.

3. The face value of bonds issued in the form of certificates shall be printed on the bonds.

4. The face value of valuable papers issued not in the form of certificates shall be agreed upon by credit institutions, foreign bank branches issuing such papers with the buyers.

Article 9. Interest Rate

1. The interest rate of valuable papers issued by credit institutions, foreign bank branches shall be determined in accordance with the current regulations on interest rates of the State Bank of Vietnam (hereinafter referred to as the State Bank) during each period.

2. The method of calculating interest on valuable papers shall be implemented in accordance with the regulations of the State Bank.

Article 10. Term, Issue Date, and Due Date for Settlement of Valuable Papers

1. Bonds have a term of one year or more, with the specific term determined by credit institutions. Bonds issued in the same batch and with the same term shall be recorded with the same issue date and due date for settlement.

2. The term, issue date, and due date for settlement of promissory notes, bills of exchange, and deposit certificates shall be stipulated by credit institutions, foreign bank branches.

Article 11. Principles for Issuing Promissory Notes, Bills of Exchange, and Deposit Certificates

1. Credit institutions, foreign bank branches shall proactively organize issuance batches of promissory notes, bills of exchange, and deposit certificates in accordance with this Circular while complying with safety ratios as prescribed in Clause 1, Article 130 of the Law on Credit Institutions (amended and supplemented) and guidelines from the State Bank.

2. Credit institutions, foreign bank branches shall directly issue promissory notes, bills of exchange, and deposit certificates to buyers at legitimate transaction locations within their operational network.

3. Promissory notes, bills of exchange, and deposit certificates issued in the form of certificates or ownership certificates must include the following contents:

a) Name of the issuing organization;

b) Name of the promissory note, bill of exchange, or deposit certificate;

c) Issuance code and serial number;

d) Signature of the authorized representative of the credit institution, foreign bank branch issuing the paper and other signatures as prescribed by the credit institution, foreign bank branch;

đ) Face value, term, issue date, due date for settlement;

e) Interest rate, payment method, payment time, location for principal and interest repayment;

g) Full name, identification card number, citizen identity card number, passport number still valid, address of the buyer (if the buyer is an individual); name of the purchasing organization, establishment license number or business code or business registration certificate number (in case the enterprise has not yet obtained a business code), address of the purchasing organization (if the buyer is an organization);

h) For promissory notes, bills of exchange, and deposit certificates issued by finance companies or financial leasing companies, it must clearly state that the owner can only transfer ownership rights to organizations;

i) Other contents of promissory notes, bills of exchange, and deposit certificates as decided by credit institutions, foreign bank branches.

Article 12. Principles for Issuing Bonds

Credit institutions issuing bonds must comply with the provisions of the Securities Law, guiding documents of the Securities Law, relevant laws and regulations, and the provisions of this Circular. Regarding the conditions for issuing individual bonds as stipulated in point e, Clause 2, Article 31 of the Securities Law, credit institutions shall comply with the provisions of Clause 1, Article 130 of the Law on Credit Institutions (amended and supplemented) and the guidance of the State Bank.

Article 13. Requirements for Issuing Convertible Bonds and Bonds with Warrants

1. In cases where credit institutions issue convertible bonds and bonds with warrants, the issuance plan must include contents regarding the conversion of bonds into shares and the exercise of warrants as follows:

a) The bond purchaser must meet the current legal provisions on the limit of capital contribution, purchase of shares, and the maximum foreign investor shareholding ratio when converting bonds into shares and exercising warrants for bonds with warrants.

b) The conversion of convertible bonds into shares and the exercise of warrants for bonds with warrants can only be carried out after the State Bank's approval to increase the charter capital according to the State Bank's regulations on the documents, procedures, and formalities for approving the increase in the charter capital of credit institutions.

2. When converting convertible bonds into shares and exercising warrants for bonds with warrants, credit institutions and holders of convertible bonds and bonds with warrants must follow the State Bank's regulations on the documents, procedures, and formalities for approving the increase in the charter capital of credit institutions.

Article 14. Procedures for Issuing and Settling Valuable Instruments

The procedures for issuing and settling valuable instruments are determined by credit institutions and foreign bank branches in accordance with their characteristics and management models, ensuring compliance with relevant laws and regulations, and guaranteeing the accuracy and security of the issuance and settlement of valuable instruments. Credit institutions and foreign bank branches must provide full information to purchasers of valuable instruments about the procedures for issuing and settling valuable instruments.

Article 15. Early Redemption of Bonds and Bond Swaps

Credit institutions' early redemption of bonds and bond swaps must comply with the Securities Law and relevant laws and regulations.

Article 16. Using Valuable Instruments as Collateral

Valuable instruments may be used as collateral in accordance with the guidelines of credit institutions and foreign bank branches, consistent with the legal provisions on secured transactions.

Article 17. Transfer of Ownership of Valuable Instruments and Handling Other Risk Cases

1. Valuable instruments may be transferred through purchase, sale, gift, exchange, inheritance, and other forms in compliance with relevant legal provisions.

2. Valuable instruments issued by finance companies and financial leasing companies can only be transferred between organizations.

3. Procedures for transferring ownership of valuable instruments and handling risk cases (such as damage, tearing, loss of valuable instruments, and other risk cases) are regulated by credit institutions and foreign bank branches in accordance with relevant legal provisions, business characteristics, and conditions of credit institutions and foreign bank branches, and ensure the legitimate rights and interests of the owners of valuable instruments.

Article 18. Payment of negotiable instruments

1. Credit institutions and foreign bank branches shall be responsible for fully and timely paying the principal and interest on negotiable instruments to the purchasers of such instruments.

2. The method of payment of the principal and interest on negotiable instruments shall be determined by credit institutions and foreign bank branches in accordance with relevant legal provisions and shall be announced to the purchasers of negotiable instruments prior to the issuance of such instruments.

3. Early payment of negotiable instruments shall be decided by credit institutions and foreign bank branches based on the request of the purchasers of negotiable instruments, ensuring the safe operation of credit institutions and foreign bank branches. The interest rate applicable in cases of early payment of negotiable instruments shall comply with the regulations of the State Bank of Vietnam.

Article 19. Internal Regulations

Based on the provisions of the Law on Credit Institutions, this Circular, and relevant legal provisions, credit institutions and foreign bank branches shall issue internal regulations on the issuance of negotiable instruments that are consistent with their management models, characteristics, business conditions, and ensure the safe operation of credit institutions and foreign bank branches. The internal regulations must clearly define the responsibilities and obligations of each department and individual involved in the issuance of negotiable instruments.

Article 20. Implementation Provisions

This Circular takes effect from May 17, 2021.

2. This Circular replaces the following documents:

a) Circular No. 34/2013/TT-NHNN dated December 31, 2013, issued by the Governor of the State Bank of Vietnam, regarding the issuance of promissory notes, bills of exchange, deposit certificates, and domestic bonds by credit institutions and foreign bank branches;

b) Circular No. 33/2019/TT-NHNN dated December 31, 2019, issued by the Governor of the State Bank of Vietnam, amending and supplementing certain articles of Circular No. 34/2013/TT-NHNN dated December 31, 2013, issued by the Governor of the State Bank of Vietnam, regarding the issuance of promissory notes, bills of exchange, deposit certificates, and domestic bonds by credit institutions and foreign bank branches.

3. For bond issuance plans approved by the competent authority of credit institutions or approved by the State Bank of Vietnam before the effective date of this Circular, credit institutions shall continue to implement the approved bond issuance plans; however, in cases where the Governor's Decision allows credit institutions to repurchase bonds to be counted towards Tier 2 capital after written approval by the State Bank of Vietnam, such provisions shall cease to be effective from the effective date of this Circular, and the early repurchase of bonds to be counted towards Tier 2 capital must comply with current State Bank of Vietnam regulations on limits and ratios for ensuring safety in the operations of credit institutions.

Article 21. Organization of Implementation

The Director of the Office, the Head of the Monetary Policy Department, the Heads of units under the State Bank of Vietnam; credit institutions and foreign bank branches are responsible for implementing this Circular./.