Circular No. 16/2016/TT-NHNN Amending and Supplementing Certain Provisions of Circular No. 34/2013/TT-NHNN dated December 31, 2013 of the Governor of the State Bank of Vietnam on the issuance of promissory notes, bills of exchange, deposit certificates, and domestic bonds of credit institutions and foreign bank branches

CIRCULAR

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

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Securities Law No. 70/2006/QH11 dated June 29, 2006 and the Law Amending and Supplementing Certain Articles of the Securities Law No. 62/2010/QH12 dated November 24, 2010;hereinafter referred to as the Securities Law);

Pursuant to the Enterprise Law No. 68/2014/QH13 dated November 26, 2014;

Pursuant to Decree No. 90/2011/NĐ-CP dated October 14, 2011 of the Government on the issuance of corporate bonds;

Pursuant to Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law Amending and Supplementing Certain Articles of the Securities Law (amended and supplemented by Decree No. 60/2015/NĐ-CP dated June 26, 2015 of the Government) (hereinafter referred to as Decree No. 58/2012/NĐ-CP);

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, of the Government stipulating 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 amending and supplementing some articles of Circular No. 34/2013/TT-NHNN dated December 31, 2013, issued by the Governor of the State Bank of Vietnam on the issuance of promissory notes, bills of exchange, deposit certificates, and domestic bonds of credit institutions and foreign bank branches (hereinafter referred to as Circular No. 34/2013/TT-NHNN).

1. The interest rate of securities issued by credit institutions and foreign bank branches shall be determined in accordance with the current regulations on interest rates of the State Bank during each period. Specifically, for bond interest rates, they must comply with the provisions of the Securities Law, Decree No. 163/2018/ND-CP, and other guiding documents of the Securities Law.

1. Amend and supplement Clause 5 of Article 16 as follows:

“5. Credit institutions and foreign bank branches may only carry out the repurchase of bonds they have issued when the repurchase plan has been approved by the competent authority. In cases where credit institutions and foreign bank branches issue bonds to the public, and state-owned credit institutions issue private placement bonds, the repurchase plan must be approved by the State Bank of Vietnam in the approval document for the bond issuance plan for the fiscal year.”

2. Amend and supplement Article 20 as follows:

“Article 20. Principles of Bond Issuance

1. The issuance of bonds by credit institutions and foreign bank branches must comply with the provisions of this Circular and related documents.

2. Public offerings of bonds by credit institutions and foreign bank branches must comply with the conditions stipulated in Clause 2 of Article 12 of the Securities Law, Articles 15, 16, 17, and 18 of Decree No. 58/2012/NĐ-CP.

3. Private placements of bonds by credit institutions and foreign bank branches must comply with the conditions stipulated in Article 13 of Decree No. 90/2011/NĐ-CP dated October 14, 2011 of the Government on the issuance of corporate bonds. However, the condition regarding meeting the capital adequacy ratio requirements and other restrictions to ensure safety in operations shall be followed according to Clause 1 of Article 130 of the Law on Credit Institutions and the guidance of the State Bank of Vietnam.

4. Private placements of bonds by state-owned credit institutions holding more than 50% of the charter capital and public offerings of bonds by credit institutions and foreign bank branches must be reviewed and approved by the State Bank of Vietnam for the bond issuance plan.

The review and approval of the bond issuance plan as stipulated in this clause shall be conducted once per fiscal year.”.

3. Amending and supplementing Clause 2 Article 21 as follows:

“2. Competent authorities approve the bond issuance plans of credit institutions and foreign bank branches:

a) The General Shareholders' Meeting or the Board of Directors, or the Board of Members of the credit institution approves the bond issuance plan based on the organizational structure of the credit institution and the Charter of the credit institution; the General Director or the Director approves the bond issuance plan of the foreign bank branch;

b) In cases of issuing convertible bonds or warrant-linked bonds by credit institutions organized as joint-stock companies, the bond issuance plan must be approved by the General Shareholders' Meeting.”.

4. Amend and supplement Article 22 as follows:

“Article 22. Documents for requesting the State Bank to approve the issuance plan of bonds for the fiscal year of credit organizations owned by the state with more than 50% of charter capital issuing individual bonds, and credit organizations, foreign bank branches issuing bonds to the public

1. The request for approval of the bond issuance plan for the fiscal year shall be signed by the legitimate representative of the credit organization or foreign bank branch.

2. The bond issuance plan for the fiscal year has been approved by the competent authority in accordance with Article 21 of this Circular.

3. A certified copy or a copy confirmed by the credit organization or foreign bank branch of the audited financial statements of the immediately preceding year before the issuance year and the most recent quarterly financial report. The audited financial statement must be a full acceptance audit report. In case of issuance before April 1st each year without an audited financial statement of the immediately preceding year, there must be:

a) An audited financial statement of the year prior to the immediately preceding year showing profitable business results;

b) The most recent quarterly financial report showing profitable business results, audited (if available);

c) The financial statement of the immediately preceding year before the issuance year showing profitable business results, approved by the Board of Directors or Board of Members for credit organizations; approved by the General Director or Director for foreign bank branches.

4. Plan on sources of funds and use of funds for the fiscal year.

5. In case of credit organizations or foreign bank branches issuing bonds to the public, a report on cumulative losses up to the registration year for public offering, overdue debts over one year (if any).

6. A certified copy or a copy confirmed by the credit organization of the Charter and a copy of the License for credit organizations issuing bonds for the first time; a copy of the Establishment License for foreign bank branches issuing bonds for the first time.

7. The plan to increase the charter capital from the issuance of convertible bonds, warrant-attached bonds, approved by the Shareholders' Meeting, which must include contents according to the current regulations of the State Bank regarding changes in the level of charter capital of credit organizations (for the case of issuing convertible bonds, warrant-attached bonds).

8. Other relevant documents related to the conditions for issuing bonds (if any).”

5. Amend and supplement Article 23 as follows:

“Article 23. Procedures for approving the issuance plan of bonds for the fiscal year

1. Credit organizations owned by the state with more than 50% of charter capital issuing individual bonds, and credit organizations, foreign bank branches issuing bonds to the public shall directly send or send through postal service one set of documents for requesting approval of the issuance plan of bonds for the fiscal year as stipulated in Article 22 of this Circular to the State Bank.

2. For requests for approval of the issuance plan of bonds (excluding convertible bonds, warrant-attached bonds), within thirty working days from the date of receipt of complete and valid documents, the State Bank will provide a written response regarding the approval or disapproval of the issuance plan of bonds for the fiscal year of credit organizations, foreign bank branches.

3. For requests for approval of the issuance plan of convertible bonds, warrant-attached bonds, within forty-five working days from the date of receipt of complete and valid documents, the State Bank will provide a written response regarding the approval or disapproval of the issuance plan of convertible bonds, warrant-attached bonds for the fiscal year of credit organizations.

6. Amend and supplement Article 24 as follows:

“Article 24. Limits on credit institutions issuing convertible bonds and warrant-linked bonds and purchasers thereof

1. In cases where a credit institution issuing convertible bonds commits to the purchaser that the bond will be converted into shares upon maturity, the following shall apply:

a) The purchaser of the bond must comply with current legal provisions regarding limits on capital contribution and share purchase at the time of issuance;

b) In cases of issuance to foreign investors, the credit institution issuing the bond must meet the conditions for selling shares to foreign investors as stipulated by current laws from the time of issuance.

2. Upon the conversion period into shares or the purchase period of shares, the purchaser of convertible bonds and warrant-linked bonds must ensure the shareholding ratio in accordance with the current regulations of the Law on Credit Institutions and related legal documents.

"2. Serving as the focal point for implementing the settlement of expenses for civil servants participating in the supervision of currency destruction according to current regulations."

"2. Credit institutions and foreign bank branches organizing the issuance of bonds according to the approved bond issuance plan must comply with the provisions of the Securities Law, Decree on Issuance of Corporate Bonds, and guiding documents of the Securities Law."

8. Amend and supplement Clause 3 of Article 26 as follows:

"3. Shall be responsible for the accuracy, truthfulness, and completeness of the documents and materials in the application file requesting the State Bank's approval of the bond issuance plan for the fiscal year."

9. Amend and supplement Point a and c of Clause 1 of Article 27 as follows:

"a) Shall take the lead and coordinate with relevant units to examine the request for approval of the bond issuance plan for the fiscal year of state-owned credit institutions holding more than 50% of the charter capital, and credit institutions and foreign bank branches publicly offering bonds to submit to the Governor of the State Bank for consideration and decision."

"c) Receive reports on the results of the issuance of securities by credit institutions and foreign bank branches."

10. Amend and supplement Point a and c of Clause 2 of Article 27 as follows:

"a) Provide upon request of the Monetary Policy Department the following information:

- Business operation results according to the audited financial report of the immediately preceding year and business operation results up to the most recent quarter of the credit institution and foreign bank branch.

- Assessment of compliance with safety ratios of the credit institution and foreign bank branch as prescribed in Clause 1, Article 130 of the Law on Credit Institutions and guidelines of the State Bank.

- Compliance of the credit institution and foreign bank branch with the conditions for publicly offering bonds as stipulated in Point a and b, Clause 2, Article 12 of the Securities Law.

- Assessment of the operational situation of the credit institution and foreign bank branch through the inspection and supervision process."

"c) Coordinate with the Monetary Policy Department to review and provide specific opinions on whether to approve or not approve the bond issuance plan for the fiscal year of state-owned credit institutions holding more than 50% of the charter capital issuing individual bonds, and credit institutions and foreign bank branches publicly offering bonds."

11. Amend and supplement Clause 3 of Article 27 as follows:

"3. Coordinate with the Monetary Policy Department to review and provide specific opinions on whether to approve or not approve the bond issuance plan for the fiscal year of state-owned credit institutions holding more than 50% of the charter capital issuing individual bonds, and credit institutions and foreign bank branches publicly offering bonds."

Article 2. Effective Date

1. This Circular takes effect from July 1, 2016.

2. Repeal Article 15 of Circular No. 29/2015/TT-NHNN dated December 22, 2015 of the Governor of the State Bank on amending and supplementing certain legal documents of the State Bank of Vietnam regarding the components of the application file containing certified copies of documents and papers.

Article 3. Implementation Organization

The Director of the Office, the Head of the Monetary Policy Department, and the Heads of units under the State Bank; the Governors of the State Bank Branches in provinces and centrally-administered cities; the Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Managers (Directors) of credit institutions and foreign bank branches are responsible for implementing this Circular./.