Decision No. 1179-TC/KBNN on the issuance of the Interim Regulation on Government Bond Auctions and State-Owned Enterprise Bonds

Pursuant to …;

OF THE MINISTER OF FINANCE NUMBER 1179-TC/KBNN DATED DECEMBER 5, 1994

REGARDING THE ISSUE OF PROVISIONAL REGULATIONS ON BIDDING FOR GOVERNMENT BONDS AND STATE ENTERPRISE BONDS

STATE CAPITAL PORTFOLIO, GOVERNMENT BONDS AND STATE ENTERPRISE SHARES

THE MINISTER OF FINANCE

Pursuant to Decree No. 178-CP dated October 28, 1994 of the Government on the tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 72-CP dated July 26, 1994 of the Government on the issuance of regulations for the issuance of government bonds;

Pursuant to Decree No. 120-CP dated September 17, 1994 of the Government on provisional regulations for the issuance of shares and state enterprise bonds;

After consultation with the Governor of the State Bank of Vietnam,

DECISION:

Article 1

The attached Decision hereby promulgates the provisional bidding regulations for various types of government bonds and state enterprise bonds.

Article 2

This Decision shall take effect from the date of signing.

Article 3

The Minister, Heads of Ministries equivalent to Ministries, Heads of Government Agencies, Chairmen of People's Committees of provinces and centrally governed cities shall be responsible for coordinating with the Ministry of Finance to implement these regulations. The Director of the State Treasury, Heads of Units under the Ministry of Finance, and Directors of Provincial Finance and Price Departments shall be responsible for guiding and implementing these regulations.

REGULATIONS

PROVISIONAL BIDDING FOR GOVERNMENT BONDS,

STATE ENTERPRISE BONDS

(Attached to Decision No. 1179-TC/KBNN dated December 5, 1994)

of the Minister of Finance).

Article 1

The terms used in these Rules are understood as follows:

1. Bidding for government bonds and state enterprise bonds (hereinafter referred to collectively as bonds) is a form of bond issuance where the interest rate is formed through the bidding results.

2. Directed interest rate is the maximum bid interest rate of the bonds, announced by the bidding organization in the bidding announcement.

3. Fixed interest rate is the bond interest rate used to calculate the interest paid to the bondholder at maturity, announced by the bidding organization in the bidding announcement.

4. Bid interest rate is the bond interest rate proposed by the bidding participant (referred to as the bidder), expressed as a percentage (%) per annum and rounded to a maximum of two decimal places after the percent sign. Interest rates exceeding two decimal places after the percent sign or exceeding the directed interest rate will not be accepted.

5. Bid volume is the total value of bonds that the bidder commits to purchase at the bid interest rate.

6. Winning bid volume is the value of bonds that the bidder has the right to purchase based on the bidding results.

7. Issue price of the bond is the amount that the winning bidder must pay to the bidding organizer based on the bidding results.

8. Deposit money is the amount each bidder must prepay to the bidding organizer to participate in the bidding, with a minimum of 5% of the planned bid volume and without interest during the deposit period. This deposit may be used (in part or in full) to purchase bonds (if successful), returned to the bidder (if unsuccessful), or used to pay late payment penalties to the bidding organizer.

Article 2

The bidding organizing body includes:

- The Ministry of Finance for treasury bonds and project bonds.

- The Ministry of Finance and the Central State Bank for treasury bills issued through the State Bank.

- State enterprises determined by the Ministry of Finance for state enterprise bonds.

Article 3

Principles of bond bidding:

1. Confidentiality of all bidding information of bidders.

2. Open and equal treatment of rights and obligations among bidders.

3. The winning bidder has the authority and responsibility to purchase bonds according to the winning bid volume and interest rate.

Article 4

Participants in bond bidding include:

- Vietnamese enterprises in all sectors and economic components, including commercial banks, credit organizations, financial companies, insurance companies, insurance funds, investment funds...

- Foreign-invested enterprises operating under the Law on Foreign Investment in Vietnam and the Banking Ordinance.

Article 5

Bidders must meet the following conditions:

1. Legal entity status, established in accordance with current Vietnamese laws.

2. Possession of a Vietnamese dong account at a bank or state treasury.

3. Deposit of a guarantee deposit into an account as required by the bond bidding organizer before the day of opening bids, as stipulated in Point 8, Article 1 of these Regulations.

4. Minimum bid volume as specified by the bidding organizer.

5. Compliance with all procedures and regulations of these Regulations and specific announcements of the bidding organizer.

Article 6

The minimum bid volume for each bidder in a bond bidding round is determined and announced by the bidding organizer, while the minimum bid volume for short-term treasury bills (bills) is regulated and announced by the Ministry of Finance and the Central State Bank. The maximum bid volume shall not exceed the total capital needed to be raised as announced in the bidding notice.

, Clause 1, Clause 2 Article 7a of this Regulation.

Bond bidding announcement:

Seven days prior to each bond bidding round, the bond bidding organizer must widely announce on mass media the necessary information about the bidding round, including:

- Type of bond being bid: Term; face value; fixed interest rate; directed interest rate of the bidding round.

- Total capital needed to be raised.

- Registration period for bidding.

- Address of the agency receiving registration forms and bid sheets.

- Date and location of the bidding.

- Minimum bid volume.

- Deposit location.

- Payment method for the winning bid volume.

- Principal and interest repayment of the bond upon maturity.

- Other relevant information.

 Article 8

Bidders must submit a registration form according to the prescribed model to the bidding organizer at least two working days before the opening date (sent directly or via fax).

 Article 9

Bidding: Bidders must submit a bid sheet to the bidding organizer before 12:00 noon on the opening date. Bid sheets are sealed in envelopes and placed in the bid box. The bid box is closed on five sides, with the sixth side having a slot large enough to insert a bid sheet, and is locked. No bid sheet can be withdrawn or modified once it has been submitted to the bidding organizer.

Article 10

Bidding opening: At 12 o'clock on the bidding day, the bidding organizing agency proceeds to open the bid sheets, classify valid and invalid bid sheets. All bid sheets that do not comply with regulations are deemed ineligible for participation in the bidding process and will be returned to the bidder immediately after the winning bid results are announced.

Article 11

Determining the volume of successful bids:

- The volume of successful bids is calculated in ascending order of the bid interest rate: from the lowest bid interest rate to the highest within the range of the directed interest rate sufficient to raise the required capital amount.

- In cases where the volume of bids at the highest successful bid interest rate exceeds the capital raising target, the volume of successful bids will be allocated to each bid sheet proportionally according to the volume of bids at that interest rate.

Article 12

Determining the issue price of bonds: The determination of the bond issue price is carried out according to the following methods:

Method 1: Discount issuance price method.

Under this method, instead of paying interest, the issue price is set lower than the bond value and is repaid at the bond value upon maturity. The formula for calculating the bond issue price is as follows:

Where:

- G: Issue price.

- MG: Value of the volume of successfully bid bonds.

- Lst: Bid interest rate of each successful bidder.

- T: Bond term.

Method 2: Fixed interest rate issuance price method.

Under this method, the bond holder receives interest payments at maturity based on a fixed interest rate of the bond, and the bond issue price is calculated based on the fixed interest rate and the bid interest rate of each bidder according to the following formula:

Where:

- G = Issue price.

- MG = Value of the volume of successfully bid bonds.

- Lst = Bid interest rate.

- LsCĐ = Fixed interest rate.

- T = Bond term.

- n = Number of interest payments during the bond term.

Article 13

Announcement of the auction results:

The bidding results are announced at the end of the bidding opening day through mass media, publicly posted at the bidding organizing committee, and sent to all bidders on the day following the bidding day.

The content of the bidding result announcement includes:

+ Number of valid and invalid bid sheets; number of successful bid sheets.

+ Total volume of successfully bid bonds, lowest and highest volumes of successfully bid bonds.

+ Lowest and highest bid interest rates, average bid interest rate.

The successful bid results of each bidder (interest rate, volume of successfully bid bonds, issue price) will be directly notified to each successful bidder.

Article 14

Payment of the volume of successfully bid bonds:

- All successful bidders must be responsible for making full payment by check or bank transfer of the entire volume of successfully bid bonds within two working days after the bidding day.

- The bond issuance date is set for the second day after the bidding day. Simultaneously, successful bidders receive bond certificates or ownership certificates (if it is a numbered bond form).

- Successful bidders who delay payment between one to five days after the specified payment period will be subject to late payment penalties deducted from the deposit. If payment is not made within five days, the bidder is considered to have abandoned the successfully bid volume, and the entire deposit of the bidder will be submitted to the state budget.

Article 15

Bond repayment at maturity:

The bond owner is fully paid the principal and interest by the bond issuing agency or the payment agent according to the prescribed regulations.

Article 16

The bond issuing agency establishes a Bond Bidding Organizing Committee.

The Bond Bidding Organizing Committee consists of 5 to 7 members, including the Chairman, Deputy Chairman, members, and secretary. For the Bond Bidding Organizing Committee of state-owned enterprises, there must be participation from the Ministry of Finance.

All members of the Bond Bidding Organizing Committee must strictly keep confidential information about bidders and internal information of the bond bidding round.

The duties of the Bond Bidding Organizing Committee include:

- Preparing and announcing relevant contents related to the bidding round.

- Guiding and inspecting the conditions of participating bidders.

- Receiving and checking the validity of registration forms and bid sheets.

- Organizing the bidding opening, determining the volume of successful bids, and the issue price.

- Announcing the bidding results.

- Resolving complaints. 

Article 17

All costs related to organizing the bond bidding are included in the bond issuance costs according to the regulations of the Ministry of Finance.

Article 18

Bidders are allowed to file complaints regarding issues related to the bond bidding organization. Within ten days of receiving the complaint, the bidding organizing agency must provide a specific response to the complainant. If the complainant is unsatisfied, they have the right to appeal to relevant authorities with jurisdiction.

Article 19

This regulation takes effect from the date of signature and applies uniformly to government bond bidding and state-owned enterprise bond bidding.

For Treasury bills issued through the State Bank in the form of bidding, this regulation and detailed guidance from the State Bank - Ministry of Finance Joint Circular shall apply.