Circular No. 19/2011/TT-NHNN guiding foreign exchange management for the issuance of international bonds by enterprises not guaranteed by the Government

CIRCULAR

Guidelines on foreign exchange management for the issuance of international bonds

by enterprises not guaranteed by the Government

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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 Foreign Exchange Ordinance No. 28/2005/PL-UBTVQH11 dated December 13, 2005;

Pursuant to Decree No. 134/2005/NĐ-CP dated November 1, 2005 of the Government promulgating the Regulation on management of foreign borrowing and repayment;

Pursuant to Decree No. 160/2006/NĐ-CP dated December 28, 2006 of the Government detailing the implementation of the Foreign Exchange Law;

Pursuant to Decree No. 53/2009/NĐ-CP dated June 4, 2009 of the Government on the issuance of international bonds;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Pursuant to Directive No. 1568/CT-TTg dated August 19, 2010 of the Prime Minister on the implementation of Conclusion No. 78-KL/TW dated July 26, 2010 of the Politburo;

The State Bank of Vietnam (hereinafter referred to as "The State Bank") issues guidelines on foreign exchange management for foreign borrowing by enterprises through the issuance of international bonds not guaranteed by the Government as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

This Circular stipulates the management of foreign exchange for the implementation of foreign loans by enterprises through the issuance of international bonds not guaranteed by the Government to be issued to the international financial market.

The objects subject to this Circular are organizations and individuals related to the issuance of international bonds not guaranteed by the Government to be issued to the international financial market.

Article 2. Interpretation of Terms

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

1. Authorized credit institutions are credit institutions, branches of foreign banks in Vietnam that are allowed to operate foreign exchange and provide foreign exchange services according to Vietnamese laws.

2. Commercial bank is a state-owned commercial bank established and operating under the Law on Credit Institutions, with the State owning more than 50% of the charter capital.

3. Issuance amount is a medium- and long-term foreign loan of enterprises under the form of issuing international bonds not guaranteed by the Government.

4. Confirmation of issuance limit is a document of the State Bank confirming the issuance value of international bonds of enterprises within the total commercial foreign borrowing limit of the country approved annually by the Prime Minister.

5. Registration of issuance is the act of enterprises registering with the State Bank foreign loans through the issuance of international bonds.

6. Confirmation of registration of issuance amount is a document of the State Bank confirming that enterprises have registered the issuance amount in accordance with this Circular.

7. Confirmation of registration of changed issuance amount is a document of the State Bank confirming that enterprises have registered changes to the issuance amount when there are changes to the contents already confirmed by the State Bank in the confirmation of registration.

8. Foreign loan and repayment account is a foreign currency account opened by enterprises at one (01) authorized credit institution in Vietnam to implement foreign loans through the issuance of international bonds.

9. Lender's representative is an organization representing foreign bondholders regarding obligations, rights, and responsibilities to execute matters related to bonds issued by enterprises. Depending on the structure of the issuance, enterprises determine the lender's representative (if any) and register with the State Bank in the issuance amount registration dossier.

Article 3. Responsibilities of enterprises issuing international bonds

1. Comply with regulations on issuance conditions, develop an issuance proposal, submit the issuance proposal to competent authorities for approval, organize the issuance, and implement matters related to the issuance of international bonds as prescribed by the Government on the issuance of international bonds.

2. Be responsible for using the proceeds from the issuance effectively for the purposes specified in the approved international bond issuance proposal in accordance with the law. Enterprises must comply with securities laws, foreign exchange management laws, other current laws, and relevant international laws when implementing the issuance of international bonds.

3. Open and use one (01) foreign loan and repayment account at one (01) authorized credit institution to implement foreign loans through the issuance of international bonds. Enterprises may only withdraw funds from the issuance of international bonds for purposes approved in the issuance proposal after the State Bank confirms the registration.

4. In cases where bond conversion into shares is implemented, enterprises must comply with current laws on convertible bonds; ensure the holding ratio of foreign investors, reporting and disclosure requirements, and other relevant legal provisions; prepare a calculation table of amounts payable to bondholders after conversion; commit to the accuracy compared to the registration dossier of the issuance amount already confirmed by the State Bank and relevant provisions on bond conversion into shares for authorized credit institutions to know and have a basis for executing payment transactions.

Article 4. Right to Purchase Foreign Currency for Payment of International Bonds

Enterprises have the right to purchase foreign currency from credit institutions permitted to do so for the purpose of repaying principal, interest on international bonds, and related fees based on presenting documents and texts proving the need for payment in accordance with the regulations of the permitted credit institution, consistent with current foreign exchange management regulations.

Article 5. Issuance Plan for International Bonds of State-Owned Commercial Banks

The issuance plan for international bonds of state-owned commercial banks must be approved by the State Bank. The procedures and documents for requesting the State Bank's approval of the issuance plan for international bonds of state-owned commercial banks shall be carried out in accordance with the guidelines issued by the State Bank regarding long-term foreign borrowing by state-owned commercial banks.

Chapter II

CONFIRMATION OF LIMIT ON ISSUANCE OF FOREIGN BONDS

Article 6. Time of Requesting Confirmation of Issuance Limit

1. State-owned enterprises that are economic groups or state-owned corporations must obtain the consent of the competent ministry before requesting confirmation of the issuance limit for international bonds.

2. State-owned commercial banks must obtain the State Bank's approval of the issuance plan for international bonds before requesting confirmation of the issuance limit for international bonds.

3. Enterprises not falling under the categories mentioned in Clause 1 and Clause 2 of this Article shall request confirmation of the issuance limit after the issuance plan for international bonds has been approved by the Shareholders' Meeting, Board of Directors, Board of Members, or the capital owner of the enterprise in accordance with the law.

Article 7. Documents for Requesting Confirmation of Issuance Limit

1. For state-owned commercial banks, the documents for requesting confirmation of the issuance limit include:

a) An application form for confirming the issuance limit of international bonds (as per Appendix 01 attached to this Circular);

b) Report on compliance with current regulations on safety ratios in the operation of credit institutions at the time of requesting confirmation of the issuance limit.

2. For enterprises that are not state-owned commercial banks, the documents for requesting confirmation of the issuance limit include:

a) An application form for confirming the issuance limit of international bonds (as per Appendix 01 attached to this Circular);

b) Legal documents of the enterprise: Certified copies of the Enterprise Registration Certificate or Business Registration Certificate or Investment Certificate as stipulated by law and any amendments (if any);

c) Copy of the enterprise charter;

d) Certified copy of the international bond issuance plan already approved by the competent authority;

đ) Certified copy of the decision approving the international bond issuance plan by the Shareholders' Meeting, Board of Directors, Board of Members, or the capital owner of the enterprise in accordance with the law;

e) Certified copy of the document agreeing to the international bond issuance plan of the enterprise by the competent ministry (for state-owned enterprises that are economic groups or state-owned corporations);

g) Certified copy of the document approving the project or investment plan or business plan to be implemented using funds raised from the issuance of international bonds, as stipulated by current laws;

h) Report on compliance with current regulations on safety ratios in the operation of credit institutions at the time of requesting confirmation of the issuance limit (applicable to enterprises that are credit institutions).

Article 8. Time for Confirmation of Issuance Limit

The enterprise shall directly send or send via postal service to the State Bank one set of documents as prescribed in Article 7 of this Circular. Within a maximum period of 15 working days from the date of receipt of complete and valid documents of the enterprise, the State Bank shall cooperate with the Ministry of Finance to confirm the issuance limit of enterprises issuing international bonds. In case of refusal to confirm the issuance limit, the State Bank shall issue a document clearly stating the reasons.

Chapter III

REGISTRATION OF ISSUANCE ITEMS

Article 9. Documents for Registration of Issuance Amount

1. The bond issuance registration form for international bonds (as per Appendix 02 attached to this Circular).

2. A copy of the assessment report of the Ministry of Finance regarding the project of issuing international bonds of the enterprise (for state-owned enterprises).

3. A certified copy from the original document approving the project of issuing international bonds by the Prime Minister (for state-owned enterprises).

4. A copy in a foreign language and a Vietnamese translation thereof for:

a) The bond issuance guarantee contract or the bond purchase and sale contract;

b) The contract specifying the organization acting as the lender's representative (if applicable);

c) Agency agreements: financial agency and payment agency, transfer agency, trust agency;

d) The issuance advisory contract.

5. A copy in a foreign language and a Vietnamese translation of other contracts or agreements (if any) that the enterprise has signed with foreign parties binding it to pay fees related to the issuance amount of the enterprise.

Article 10. Procedure for Registration of Issuance Amount

1. After selecting the underwriting organizations, agents, and legal advisors, the enterprise shall directly send or send via postal service to the State Bank one set of documents as prescribed in Article 9 of this Circular to register the issuance amount.

For the documents prescribed in Clause 1, Clause 4, and Clause 5 of Article 9 of this Circular, the enterprise shall submit the final drafts specifying in detail the relevant conditions of the bonds.

2. Within 10 working days from the date of receiving the complete registration documents of the enterprise as prescribed in Clause 1 of this Article, if clarification, supplementation, or modification of the relevant content is required, the State Bank shall notify the enterprise to complete the registration documents for the issuance amount.

3. When implementing the issuance period, the enterprise completes the bond issuance amount registration documents with the following materials:

a) An application for registration of the issuance amount with full information on the loan;

b) A copy in a foreign language and a Vietnamese translation (with confirmation by the enterprise) of the documents prescribed in Clause 4 and Clause 5 of Article 9 of this Circular.

Article 11. Time for Confirmation of Registration of Issuance Amount

1. The State Bank shall examine and confirm the registration of the issuance amount of international bonds within two working days from the date of receipt of complete documents in the following cases:

a) Contracts and agreements officially signed in accordance with the final drafts submitted to the State Bank as prescribed in Clause 1 of Article 10 of this Circular.

b) Officially signed contracts and agreements with contents different from the final drafts submitted to the State Bank as prescribed in Clause 1 of Article 10 of this Circular, but the contents of the officially signed contracts and agreements still ensure compliance with Vietnamese laws. In this case, the enterprise needs to submit a report detailing the relevant contents to the State Bank.

2. In case the requirements of Clause 1 of this Article are not met, within two working days from the date of receipt of the documents, the State Bank shall notify the enterprise to supplement and modify the registration documents for the issuance amount.

Article 12. Sending confirmation registration documents for issuance amount

The State Bank shall send copies of the confirmation registration documents for the issuance amount of enterprises to the Ministry of Finance for coordination in monitoring and managing the borrowing and repayment activities of enterprises through international bond issuance.

Chapter IV

REGISTRATION OF CHANGES TO THE ISSUANCE AMOUNT

Article 13. Registration of changes to the issuance amount

In case there is a change compared to the contents stated in the confirmation registration document for the issuance amount, the enterprise shall be responsible for registering such changes with the State Bank within thirty working days from the date of signing the agreements or contracts for changes and before implementing the changed content.

Article 14. Documents for registration of changes to the issuance amount

1. Application for registration of changes to the issuance amount of international bonds (in accordance with Appendix 03 attached hereto);

2. Copies in foreign language and Vietnamese translation (confirmed by the enterprise) of the agreements or contracts for changes that have been signed;

3. Approval opinion of the competent authority approving the issuance plan of international bonds of the enterprise if the content of the change has not yet been agreed upon in the approval document of the competent authority regarding the issuance plan of international bonds of the enterprise.

Article 15. Time limit for confirming registration of changes to the issuance amount

1. The enterprise shall directly submit or send via post office one set of documents in accordance with Article 14 of this Circular to the State Bank. Within a maximum period of fifteen working days from the date of receipt of complete and valid registration change documents, the State Bank shall issue a document agreeing or refusing to confirm the registration of changes to the issuance amount. In case of refusal, the State Bank shall issue a document specifying the reasons.

2. In case additional information is required to have sufficient basis for confirming or refusing to confirm the registration of changes to the issuance amount, the State Bank shall notify the enterprise within ten working days from the date of receipt of the enterprise's documents.

Chapter V

RESPONSIBILITIES OF PERMITTED CREDIT INSTITUTIONS AND UNITS UNDER THE STATE BANK

Article 16. Responsibilities of authorized credit institutions

1. Open foreign borrowing and repayment accounts for enterprises issuing international bonds.

2. Carry out the receipt of proceeds from bond sales; transfer issuance fees and principal and interest payments of bonds on the basis of the State Bank's confirmation registration document for issuance amounts, registration change documents (if any), and agreements or contracts presented by the enterprise with related parties for the international bond issuance round.

3. Conduct verification and cross-checking of relevant documents to ensure compliance with registered transactions, changes registered with the State Bank, and applicable laws.

REQUIREMENTS FOR REPORTING, INSPECTION WORK, AND VIOLATION HANDLING

5. Guide enterprises to comply with current regulations on foreign borrowing and repayment, foreign exchange management for foreign borrowing through international bond issuance, and promptly report to the State Bank in case of violations of current laws.

Chapter VI

REQUIREMENTS FOR REPORTING, INSPECTION WORK, AND VIOLATION HANDLING

Article 17. Reporting system for enterprises

1. Immediately after the completion of the issuance round and receipt of bond sale proceeds, the enterprise shall report to the competent authority approving the issuance round, the State Bank, the State Bank branch in the province/city where the enterprise is headquartered, and the Ministry of Finance about the results of the issuance round.

2. Quarterly and annually, the enterprise shall be responsible for reporting to the State Bank branch in the province/city where the enterprise is headquartered, sending copies to the State Bank on the implementation of the issuance of international bonds (in accordance with Appendix 04 attached hereto). The reporting deadlines are as follows:

b\. For annual reports: no later than January 31 of the following year.

3\. Annually, no later than January 31, state-owned commercial banks issuing international bonds shall be responsible for submitting to the State Bank of Vietnam a report on the repayment of principal and interest on the bonds and the use of funds raised from the bond issuance in the previous year.

3. In case of emergencies, enterprises issuing international bonds shall report according to the requirements of the State Bank.

Article 18. Reporting Requirements for Licensed Credit Institutions

1. On a monthly and annual basis, licensed credit institutions shall be responsible for reporting to the State Bank on the situation of implementing international bond issuance by enterprises according to their lending and repayment accounts with foreign entities (as per Appendix 05 attached to this Circular). The reporting deadlines are as follows:

2\. In exceptional cases, credit institutions and foreign bank branches permitted shall prepare reports as required by the State Bank of Vietnam.

3\. Annually, no later than January 31, state-owned commercial banks issuing international bonds shall be responsible for submitting to the State Bank of Vietnam a report on the repayment of principal and interest on the bonds and the use of funds raised from the bond issuance in the previous year.

2. In exceptional cases, licensed credit institutions shall report as required by the State Bank.

Article 19. Inspection and Handling of Violations

1. When necessary, the State Bank and relevant agencies shall conduct inspections on the implementation of loans through international bond issuance by enterprises, and the opening and operation of lending and repayment accounts with foreign entities by licensed credit institutions as stipulated in this Circular. Enterprises and licensed credit institutions subject to inspection shall be responsible for providing necessary documents and materials to ensure timely and effective inspections.

2. In case of violations of the provisions of this Circular, depending on the severity of the violation, enterprises and licensed credit institutions will be subject to administrative penalties under current regulations governing administrative offenses in the monetary and banking sectors.

Chapter VII

IMPLEMENTATION

Article 20. Implementation Provisions

1. This Circular takes effect from October 15, 2011.

2. International bond issuances by enterprises that have been registered and confirmed by the State Bank before the effectiveness of this Circular shall continue to be implemented according to the registration confirmation documents issued by the State Bank. For transactions arising after the effectiveness of this Circular related to bond issuances already registered and confirmed by the State Bank, enterprises shall comply with the provisions of this Circular.

Article 21. Organization of Implementation

1. The Director of the Office, the Head of Banking Inspection and Supervision, 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 Management Boards, and General Managers (Directors) of credit institutions within their respective functions shall be responsible for organizing and implementing this Circular.

2. Ministries, sectors, and management agencies of enterprises within their respective functions shall coordinate to direct the implementation of this Circular. Relevant enterprises and organizations shall be responsible for implementing this Circular./.