Decision No. 02/2005/QD-NHNN On Issuing the Regulation on the Issuance of Valuable Papers by Credit Institutions for Domestic Fundraising

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Regarding the issuance of the Regulation on the issuance of securities by credit institutions to raise domestic capital

to raise domestic capital

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam dated December 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam dated June 17, 2003;

Pursuant to the Law on Credit Institutions dated December 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated June 15, 2004;

Pursuant to Decree No. 86/2002/ND-CP dated November 5, 2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;

Pursuant to the proposal of the Director of the Monetary Policy Department,

DECISION:

Article 1. This Decision promulgates the "Regulation on the Issuance of Securities by Credit Institutions to Raise Domestic Capital."

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette and shall supersede Decision No. 1287/2002/QĐ-NHNN dated November 22, 2002 of the Governor of the State Bank of Vietnam on the issuance of the Regulation on the Issuance of Securities by Credit Institutions to Raise Domestic Capital.

Article 3The heads of units under the State Bank of Vietnam; the Governors of the State Bank of Vietnam branches in provinces and centrally governed cities; the Chairmen of the Boards of Management, General Directors (Directors) of credit institutions are responsible for implementing this Decision./.

REGULATIONS

ISSUANCE OF SECURITIES BY CREDIT INSTITUTIONS

TO RAISE DOMESTIC CAPITAL

(Pursuant to Decision No. 02/2005/QĐ-NHNN dated January 4, 2005)

of the Governor of the State Bank)

PART I

General Provisions

Article 1. Scope of Regulation and Applicability

This Regulation stipulates the issuance of securities by credit institutions to raise capital from organizations and individuals within the territory of Vietnam.

Article 2. Credit institutions issuing securities

1. Credit institutions issuing securities are credit institutions established and operating under the Law on Credit Institutions and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions, and meeting the conditions set forth in this Regulation, including:

- State-owned credit institutions.

- Joint-stock credit institutions.

- Central People's Credit Funds.

- Joint venture credit institutions.

- Foreign credit institutions with 100% foreign capital and foreign bank branches permitted to operate in Vietnam.

2. Leasing companies may only issue securities with a term exceeding one year.

Article 3. Purchasers of securities

Purchasers of securities include:

- Vietnamese organizations and individuals.

- Foreign organizations and individuals residing and operating legally in Vietnam.

Article 4. Definitions

In this Regulation, the following terms shall be understood as follows:

1. Securities are certificates issued by credit institutions to raise capital, confirming the obligation to repay a certain amount of money within a specified period, interest payment conditions, and other commitments between the credit institution and the purchaser.

2. Short-term securities are securities with a term of less than one year, including promissory notes, short-term deposit certificates, discount bills, and other short-term securities.

3. Long-term securities are securities with a term of one year or more from the date of issuance until maturity, including bonds, long-term deposit certificates, and other long-term securities.

4. Registered securities are securities issued in the form of certificates or book entries that record the name of the holder.

5. Unregistered securities are securities issued in the form of certificates without recording the name of the holder. Unregistered securities belong to the owner holding the security.

6. Face value is the principal amount printed or recorded on the security issued in the form of a certificate or recorded on the ownership certificate for securities issued in the form of book entries.

7. Total face value is the sum of the face values of securities issued by credit institutions in one year or in one issuance round.

8. Term of securities is the period from the date the credit institution receives the debt until the final repayment date.

9. Issuance period is the period from the date the credit institution begins issuing securities until the end of the issuance round.

10. Fixed interest rate is the interest rate that does not change throughout the term of the security.

11. Adjustable periodic interest rate is the interest rate that changes periodically according to the market, agreed upon by the credit institution and the purchaser at the time of issuance.

12. Prepaid interest is the sale of securities at a price lower than the face value, with the purchaser being repaid the face value when due.

13. One-time interest payment at maturity is the payment of interest once along with the principal (face value) when due.

14. Periodic interest payment is the payment of interest based on the periodic interest payment voucher every six months or annually for long-term securities.

Article 5. Forms of Issuance

1. Credit organizations issue securities in the form of registered certificates, bearer certificates, and book-entry records.

2. In cases where securities are issued in the form of book-entry records, credit organizations shall issue to the buyer a certificate of ownership of the securities.

Article 6. Form and Elements of Securities

1. Securities issued in the form of certificates must contain the following elements:

- Name of the issuing credit organization.

- Name of the security (draft, promissory note, short-term deposit certificate, long-term deposit certificate, bond...).

- Face value.

- Term.

- Issue date.

- Due date for payment.

- Interest rate; Method of interest payment; Time and place of interest payment.

- Redemption method.

- Place of principal repayment of the security.

- Clearly marked as either registered or bearer security.

In case it is a registered security, it must clearly state: name of the organization, number of establishment license or business registration certificate, address of the purchasing organization (if the purchaser is an organization); name, identification number, address of the individual purchasing the security (if the purchaser is an individual).

- Signature of the General Director or authorized representative and other signatures prescribed by the credit organization.

- Serial number and issuance code.

- Conditions and terms regarding transfer, discounting, and collateralization of the security at the issuing credit organization; Handling of risk cases and non-payment cases.

2. In addition to the elements stipulated in Clause 1 of this Article, the issuing credit organization may specify additional notes and instructions related to the security.

3. For securities issued in the form of book-entry records, the elements stipulated in Clause 1 of this Article must be recorded on the certificate of ownership of the security.

4. For securities that pay interest periodically, the interest payment voucher accompanying the security must include details related to the security (serial number, face value), interest rate, amount receivable, and interest payment period.

5. Securities issued in the form of certificates must be designed and printed to ensure high anti-counterfeiting capabilities.

Article 7. Currency of Issuance and Payment

1. Securities can be issued in Vietnamese Dong or foreign currency.

2. The issuance, payment, and transfer of securities in foreign currency must comply with the regulations on foreign exchange management of the Socialist Republic of Vietnam.

Article 8. Methods of Issuance

Credit organizations implement the issuance of securities through the following methods:

1. Direct issuance of securities.

2. Issuance through credit organizations acting as agents or entrusted to issue securities.

Article 9. Issuance Period

The issuance period of each issuance round shall not exceed 60 days, including holidays and public holidays as prescribed by law. Credit organizations may only extend beyond this period with the approval of the Governor of the State Bank of Vietnam.

Article 10. Interest Rate

The interest rate of securities issued by credit organizations must be set in accordance with market interest rates, ensuring business efficiency and operational safety for the credit organization.

Article 11. Procedures for Issuing and Settling Valuable Papers

The procedures for issuing and settling valuable papers shall be stipulated by credit organizations in accordance with their characteristics and management models to ensure accurate and secure issuance and settlement of valuable papers.

Article 12. Principal and Interest Settlement

1. Credit organizations shall settle the principal amount to the buyer of valuable papers when such papers reach their maturity date.

2. Credit organizations may agree to pay interest at a fixed rate or an adjustable rate on a periodic basis.

3. Credit organizations shall implement interest payment methods including pre-payment of interest, one-time payment of interest upon maturity, or periodic interest payments.

Article 13. Transfer of Ownership of Valuable Papers, Dispute Resolution, and Handling Other Risk Cases

1. Valuable papers may be transferred through purchase, sale, gift, exchange, or inheritance in accordance with the provisions of the law.

2. The procedures for transferring ownership of valuable papers, handling cases of damage, loss, or other risks shall be stipulated by credit organizations in compliance with the law, taking into account their business characteristics and conditions, and ensuring the legitimate rights of buyers of valuable papers.

3. Disputes related to valuable papers shall be resolved in accordance with the current laws of the Socialist Republic of Vietnam.

Article 14. Pledging, Discounting, and Re-discounting of Valuable Papers

1. Valuable papers may be pledged as collateral at credit organizations in accordance with the legal provisions on loan guarantees if the credit organization agrees.

2. Valuable papers may be discounted or re-discounted in accordance with the current legal provisions on discounting and re-discounting of valuable papers.

Article 15. Storage, Delivery, and Transportation of Valuable Papers

The storage, delivery, and transportation of valuable papers by credit organizations shall comply with the current regulations of the Government and the State Bank of Vietnam.

Chapter II

Short-term Valuable Paper Issuance

Article 16. Face Value of Short-term Valuable Papers

The face value of short-term valuable papers shall be printed or agreed upon by the issuing credit organization with the buyer.

Article 17. Conditions for Issuing Short-term Valuable Papers

Credit organizations may issue short-term valuable papers provided they fully comply with restrictions to ensure safety in operations as prescribed by the Law on Credit Organizations, the Law Amending and Supplementing Certain Provisions of the Law on Credit Organizations, and guidelines from the State Bank of Vietnam.

Article 18. Organization of Short-term Valuable Paper Issuance

1. Credit organizations shall independently organize multiple issuances of short-term valuable papers within a year.

2. At least twenty working days before each issuance, credit organizations must submit an issuance notice for the planned issuance to the State Bank of Vietnam.

The issuance notice shall include the following contents:

- Name of the issuing credit organization.

- Name of the valuable paper (short-term promissory note, short-term bill, short-term deposit certificate...).

- Total face value of the issuance.

- Term of the valuable paper; Form of issuance.

- Issue date.

- Due date for payment.

- Interest rate; Method of interest payment; Time and place of interest payment.

- Redemption method.

- Place of principal repayment of the security.

- Results of previous short-term valuable paper issuances in the fiscal year (if applicable).

- Additional information to be announced by the issuing credit organization.

Chapter III

Long-term Valuable Paper Issuance

Article 19. Face value of long-term securities

1. The face value of long-term securities denominated in Vietnamese dong issued in the form of certificates shall be a minimum of one million dong and a maximum of one billion dong. Face values greater than the minimum face value must be multiples of the minimum face value.

2. The face value of long-term securities denominated in foreign currency issued in the form of certificates shall be a minimum of one hundred US dollars or equivalent foreign currency, and a maximum of one hundred thousand US dollars or equivalent foreign currency. Face values greater than the minimum face value must be multiples of the minimum face value.

3. The face value of long-term securities in the form of bonds issued in the form of certificates shall be printed on the security.

4. The face value of long-term securities in the form of long-term deposit certificates issued in the form of certificates shall be printed on the security or agreed upon by the issuing credit institution with the buyer.

5. The face value of long-term securities issued in the form of book-entry securities shall be agreed upon by the issuing credit institution with the buyer.

Article 20. Issuance date and maturity date of long-term securities that are bonds

Long-term securities that are bonds issued in the same issuance shall be recorded with the same issuance date and the same maturity date.

Article 21. Conditions for issuing long-term securities

Credit institutions may issue long-term securities when they fully meet the following conditions:

1. Complying with restrictions to ensure safety in operations as prescribed by the Law on Credit Institutions, the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions, and guidelines of the State Bank.

2. Having sound financial conditions as assessed by the Banking Inspection Agency.

Article 22. Documents for requesting issuance of long-term securities

The documents for requesting issuance of long-term securities for the fiscal year include:

1. Request for issuance of long-term securities for the fiscal year.

2. Plan for issuance of long-term securities for the fiscal year, specifying the purpose of issuance, usage plan, number of expected issuances, total issuance face value, face value, name of the security, term, interest rate, issuance scope, method and location for principal and interest repayment; conditions and terms regarding rights and obligations of the credit institution and the buyer. The issuance plan for long-term securities must be approved by the Board of Directors.

3. Financial reports for the two most recent consecutive years and up to the time of the issuance request. Credit institutions operating for less than two years shall submit financial reports from their start of operation to the time of the issuance request. These financial reports must be audited by an independent auditing organization meeting the requirements set forth by the State Bank. The content of the financial reports shall comply with current regulations of the Governor of the State Bank concerning reporting systems for credit institutions.

4. Business plan; plan for sources of funds and fund utilization for the fiscal year.

5. Charter and Operating License (for credit institutions issuing for the first time).

6. Changes in organizational structure and other changes (if any).

Article 23. Form and Time Limit for Reviewing Decisions

1. Based on reviewing the issuance application file and issuance conditions, the Governor of the State Bank shall issue a decision regarding the issuance of long-term securities of credit institutions for the fiscal year.

2. The time limit for reviewing and issuing a decision on the issuance of long-term securities of credit institutions for the fiscal year shall not exceed fifteen working days from the date of receipt of the complete issuance application file of the credit institution.

Article 24. Issuing Organization

1. Credit institutions proactively organize issuance sessions of long-term securities within the approved issuance plan for the fiscal year. Credit institutions may only issue beyond the approved plan if there is a supplementary written decision by the Governor of the State Bank.

The application file for reviewing the supplementary issuance plan of long-term securities for the fiscal year includes: the issuance application form for supplementary long-term securities, adjusted long-term security issuance plan, and adjusted business plan for the fiscal year.

2. At least twenty working days before the issuance date, credit institutions must send a notification of the issuance plan session of long-term securities to the State Bank (Department of Monetary Policy). If the State Bank does not provide written comments ten working days before the planned issuance date, the credit institution may proceed with the issuance of long-term securities.

3. The issuance announcement includes the following contents:

- Name of the issuing credit organization.

- Name of the security (bonds, long-term deposit certificates...)

- Total face value of the issuance.

- Term of the valuable paper; Form of issuance.

- Issue date.

- Due date for payment.

- Interest rate; Method of interest payment; Time and place of interest payment.

- Redemption method.

- Place of principal repayment of the security.

- Results of previous long-term security issuance sessions in the fiscal year (if applicable).

- Additional information to be announced by the issuing credit organization.

Chapter IV

Responsibilities of credit institutions, units under the State Bank of Vietnam, and provincial/municipal branches of the State Bank

The State of Vietnam and the State Bank branch at provincial and municipal levels

Article 25. Responsibilities of Credit Institutions

1. Submit the application file for the issuance of long-term securities for the fiscal year to the State Bank (Department of Monetary Policy).

2. Send announcements of short-term and long-term security issuance sessions to the State Bank (Department of Monetary Policy).

3. Publicly announce the issuance of securities and the organization of security issuance according to Articles 18 and 24 of this Regulation.

4. Pay principal and interest on time and in full to the purchasers of securities.

5. Report in writing about the results of the security issuance to the State Bank (Department of Monetary Policy) and the provincial/municipal branch of the State Bank where the credit institution's main office is located, no later than ten working days after the end of the issuance session.

Article 26. Responsibilities of Provincial/Municipal Branches of the State Bank

Coordinate with the Department of Monetary Policy (when necessary) to present to the Governor for review and decision on the annual issuance of long-term securities by credit institutions in their jurisdiction.

Article 27. Responsibilities of Units Under the State Bank of Vietnam

1. Monetary Policy Department

a. Receive the application files for the annual issuance of long-term securities, announcements of short-term and long-term security issuance, and reports on the results of security issuance by credit institutions.

b. Take the lead and coordinate with relevant units to review the annual issuance application of long-term securities by credit institutions to submit to the Governor of the State Bank for decision.

c. Study the issuance situation of securities by credit institutions to recommend the Governor of the State Bank to amend and supplement regulations on the issuance of securities by credit institutions.

2. Department of Banks and Non-Bank Credit Institutions

a. Provide the Department of Monetary Policy with information on the organizational structure and operations of credit institutions and changes in credit institutions approved by the State Bank.

b. Coordinate with the Department of Monetary Policy to review and provide opinions on the handling of the annual issuance application of long-term securities by credit institutions.

3. Banking Inspection

a. Provide the Department of Monetary Policy with information on compliance with restrictions to ensure safety in the operations of credit institutions applying for the issuance of long-term securities as stipulated in the Law on Credit Institutions; the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions, and guidelines of the State Bank.

b. Provide the Department of Monetary Policy with banking inspection evaluations on the operational and financial status of credit institutions applying for the issuance of long-term securities through on-site inspections and remote monitoring.

c. Coordinate with the Department of Monetary Policy to review and provide opinions on the handling of the annual issuance application of long-term securities by credit institutions.

d. Inspect and supervise the issuance of securities by credit institutions; handle according to authority and recommend the Governor of the State Bank to handle cases of violation of the provisions of this Decision.

4. Foreign Exchange Management Department

Coordinate with the Department of Monetary Policy to review and provide opinions on the handling of the annual issuance application of long-term securities denominated in foreign currency by credit institutions.

5. Accounting and Finance Department

Guide accounting entries for short-term and long-term security issuance transactions of credit institutions.

6. Issuance and Treasury Bureau

Advise credit institutions on designing templates and printing securities to ensure high anti-counterfeiting capabilities when requested by credit institutions.

Article 28. Handling Violations

Organizations and individuals violating the provisions of this Regulation will be subject to administrative penalties in the field of monetary policy and banking activities or criminal prosecution depending on the nature and extent of the violation.

Article 29. Amendment and supplementation

The amendment and supplementation of this Regulation shall be decided by the Governor of the State Bank../.