Circular No. 211/2012/TT-BTC guiding the implementation of certain provisions of Government Decree No. 90/2011/NĐ-CP dated October 14, 2011 on corporate bond issuance

CIRCULAR

Guidelines for Implementing Certain Provisions of Decree No. 90/2011/NĐ-CP

dated October 14, 2011 of the Government on Issuing Corporate Bonds

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Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

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 Provisions of the Securities Law;

At the proposal of the Director of the Department of Financial Institutions and Financial Organizations;

The Minister of Finance issues this Circular guiding the implementation of certain provisions of Decree No. 90/2011/NĐ-CP dated October 14, 2011 of the Government on Issuing Corporate Bonds.

Article 1. Scope of Application and Subject Matter

1. This Circular guides the implementation of certain provisions of Decree No. 90/2011/NĐ-CP dated October 14, 2011 of the Government on Issuing Corporate Bonds (hereinafter referred to as Decree No. 90/2011/NĐ-CP).

2. The subject matter of this Circular includes corporate bond issuers, organizations, and individuals related to corporate bond issuance activities.

3. Enterprises operating in the securities and banking sectors when issuing bonds must comply with the provisions of Clause 3, Article 1 of Decree No. 90/2011/NĐ-CP and implement notification and reporting systems as stipulated in this Circular.

Article 2. Interpretation of Terms

In addition to the terms defined in Article 2 of Decree No. 90/2011/NĐ-CP, the terms in this Circular shall be understood as follows:

1. "Bond maturity period" is the time from the date of bond issuance to the bond maturity date.

2. "Date of bond issuance" is the date when the bond becomes effective and serves as the basis for determining the payment dates for principal and interest on the bond.

3. "Nominal interest rate of the bond" is the percentage (%) ratio between the annual interest amount on the face value of the bond that the issuer must pay to the bondholder according to the conditions and terms of the bond.

4. "Issuance yield of the bond" is the interest rate determined by the issuer based on the results of the bond issuance round and serves as the basis for calculating the bond price.

5. "Conversion period of the bond into shares" is the time required to complete the conversion of the convertible bond into shares.

Article 3. Conditions and Terms of Bonds

1. The enterprise must ensure the public disclosure of the conditions and terms of the bonds to be issued in accordance with the requirements of the issuance market.

2. For bonds issued in the domestic market, the conditions and terms of the bonds must include the following basic contents:

a) Bond maturity period;

b) Volume of bonds expected to be issued;

c) Currency for issuance and settlement of bonds;

d) Face value of the bond;

đ) Form of the bond;

e) Type of bond expected to be issued:

e1) For convertible bonds, the issuer must clearly specify the conditions and terms related to the conversion of bonds before issuance, including:

- Conversion period of the bond into shares, specifying the registration date and location, start date, and end date of the conversion;

- Principles for determining the conversion ratio of bonds into shares;

- Procedures and processes for converting bonds into shares;

- Commitments of the issuer to bondholders regarding the fulfillment of obligations;

- Compensation plan for bondholders in case the issuer fails to convert bonds into shares according to the conditions and terms announced at the time of bond issuance.

e2) For non-convertible bonds accompanied by warrant rights, the issuer must clearly specify the conditions and terms related to the warrant rights for investors, including:

- Number of warrants issued with the bonds;

- Transfer conditions for warrants;

- Procedures and processes for exercising the right to purchase shares;

- Commitments of the issuer to bondholders regarding the fulfillment of obligations;

- Compensation plan for bondholders if the issuer fails to fulfill the conditions and terms of the warrants announced at the time of bond issuance.

e3) For bonds with payment guarantees, the issuer must clearly specify the terms related to the guarantee of payments to investors, including: payment guarantee methods; scope of payment guarantees; procedures and processes for implementing payment guarantees when the issuer cannot make payments; documentation proving the payment guarantee in accordance with the law on registration of security transactions; commitments of the issuer to bondholders regarding the fulfillment of obligations.

g) Method of bond issuance;

h) Provisions on the repurchase and exchange of bonds (if applicable).

3. For bonds issued to international markets, the issuer must disclose information and the conditions and terms of the bonds in accordance with the requirements of the issuance market.

Article 4. Issuing bonds in multiple tranches on the domestic market

1. Enterprises issuing bonds in multiple tranches must meet the following conditions:

a) Meeting the conditions stipulated in Article 13 of Decree No. 90/2011/NĐ-CP.

b) Having a need to raise capital in multiple tranches that align with investment projects or business plans of the enterprise.

c) The bond issuance plan must clearly specify the target, number of tranches, issuance value, and expected issuance time for each tranche.

2. Enterprises meeting the issuance conditions specified in Clause 1 of this Article may issue bonds in multiple tranches but not exceeding 12 months in total. In cases where tranches are issued in different fiscal years, the enterprise must go through new issuance procedures.

3. Approving and approving the issuance plan for bonds in multiple tranches

a) In addition to the documents required under Clause 2 of Article 14 and Clause 2 of Article 15 of Decree No. 90/2011/NĐ-CP, the issuance plan must specifically outline the target, number of tranches, issuance value, and expected issuance time for each tranche, along with the project or plan for using funds raised in multiple tranches.

b) The approval or consent document from the competent authority must clearly state the number of tranches, the value of each tranche, and the expected issuance time.

Article 5. Methods of issuing bonds on the domestic market

1. Auctioning bonds

a) Principles for organizing auctions:

- Maintaining confidentiality regarding all tender information submitted by bidders and related interest rate auction information;

- Conducting the process openly, transparently, and equally in terms of rights and obligations for all participants;

- Ensuring compliance with legal regulations concerning the issuance of individual securities.

b) Enterprises issuing bonds must fully disclose information related to the auction, including the following main contents:

- Participants in the auction;

- Time, location of the auction, specifying the tender submission deadline, closing time, and announcement time of the auction results;

- Tender volume;

- Conditions and terms of the proposed bond issuance;

- Auction format and tender volume for each format: competitive interest rate, non-competitive interest rate, or a combination of both;

- Principles and procedures for determining the auction result (winning interest rate and volume, winning price), including the case of determining the winning volume when multiple investors bid at the same interest rate.

2. Guaranteeing bond issuance

a) Participants in guaranteeing bond issuance:

- Participants in guaranteeing bond issuance include securities companies, credit institutions, and other financial institutions permitted to provide issuance guarantee services according to current laws.

- For each issuance tranche, enterprises can choose one or more qualified organizations to perform the guarantee. If multiple guarantors are selected, the enterprise chooses one primary guarantor based on conditions determined by the enterprise.

b) Guaranteeing issuance process carried out according to the agreement between the issuing enterprise and the guarantee organization in accordance with legal provisions and market practices for each type of guarantee. The issuing enterprise must sign a guarantee contract with the chosen organization. The guarantee contract must include the following basic contents:

- Name, address, and legal representative of the issuing enterprise and the guarantee organization;

- Type of guarantee;

- Bond conditions and terms;

- Guaranteed issuance volume;

- Rights and obligations of the parties involved;

- Principles for handling disputes;

- Guarantee fees agreed upon by both parties based on the nature of the bond issuance guarantee.

3. Agency for bond issuance

a) Depending on the nature of the bond issuance, the issuing enterprise selects an agent with the necessary qualifications to provide agency issuance services or simultaneously provide agency issuance and payment services for principal and interest on bonds.

b) Participants in agency issuance include securities companies, credit institutions, and other financial institutions permitted to provide agency issuance services according to current laws.

c) The agency issuance process is carried out according to the agreement between the issuing enterprise and the agency organization in accordance with legal provisions and market practices.

d) The issuing enterprise must sign an agency issuance contract with the agency organizations. The agency issuance contract must include the following basic contents:

- Name, address, and legal representative of the issuing enterprise and the agency organization;

- Type of agency;

- Issuance volume through the agency;

- Bond conditions and terms;

- Rights and obligations of the parties involved;

- Principles for handling disputes;

- Agency fees agreed upon by both parties based on the nature of the bond issuance.

4. Retail sale of bonds

a) Only credit institutions as issuing enterprises are allowed to sell bonds directly to investors according to Point d Clause 1 Article 17 of Decree No. 90/2011/NĐ-CP.

b) Credit institutions must comply with guidelines from the State Bank of Vietnam regarding methods of retail bond sales.

Article 6. Notification and Registration for Issuing Bonds

1. The notification and registration for issuing bonds on domestic and international markets as stipulated in Article 30 of Decree No. 90/2011/NĐ-CP shall be carried out as follows:

a) At least three (3) working days before the bond issuance date, the issuer enterprise must submit the registration (notification) to the Ministry of Finance for the Ministry of Finance to compile and monitor the situation of corporate bond issuance according to the tasks specified in Clause 2, Article 34 of Decree No. 90/2011/NĐ-CP.

b) The content of the bond issuance notification is attached as Appendix 1 to this Circular.

c) When submitting the bond issuance notification to the Ministry of Finance, the enterprise has the responsibility to notify the bond issuance plan to the competent authority that approves or agrees with the bond issuance plan.

2. The enterprise's notification of the bond issuance plan is for the Ministry of Finance to compile and monitor the situation of corporate bond issuance, and does not mean that the Ministry of Finance approves the bond issuance plan of the enterprise or confirms that the enterprise meets the conditions for bond issuance.

Article 7. Reporting System

1. The issuer enterprise is responsible for reporting to the competent authority that approves or agrees with the bond issuance plan and the Ministry of Finance on the issuance situation. In case of issuing bonds to the international market, the enterprise must also send to the State Bank of Vietnam. The time and content of the report are as follows:

a) Report on the results of issuance:

- Deadline for submission of the report: no later than fifteen (15) days from the completion date of the issuance period, the issuer enterprise is responsible for reporting the issuance results.

- Content of the report according to Appendix 2 attached to this Circular.

b) Periodic reports on the situation of interest and principal payments until the maturity of the bonds:

- Deadline for submission of the report: no later than thirty (30) days from the end of the second quarter (for the first six months' report) and the end of the year (for the annual report).

- Content of periodic reports according to Appendix 3 attached to this Circular.

c) Report after the due date for full payment of principal and interest: no later than fifteen (15) days from the due date for full payment of principal and interest, the issuer enterprise is responsible for reporting the situation of principal and interest payments according to Appendix 3 attached to this Circular.

2. For enterprises issuing convertible bonds or bonds accompanied by warrant rights, they must comply with the reporting system as stipulated in Clause 1 of this Article and Clause 3, Article 32 of Decree No. 90/2011/NĐ-CP.

3. For enterprises issuing bonds that are public companies, in addition to complying with the reporting system as stipulated in Clause 1 of this Article, they must also comply with the reporting requirements under securities laws and the securities market.

4. In cases where enterprises have notified bond issuance as stipulated in Article 6 of this Circular but have not proceeded with bond issuance, they must submit a written report to the competent authority that approves or agrees with the bond issuance plan, the Ministry of Finance. In case of issuing bonds to the international market, the enterprise must also send to the State Bank of Vietnam.

Article 8. Implementation organization

1. This Circular takes effect from January 20, 2013.

2. Enterprises issuing bonds at the time when this Circular takes effect shall implement the periodic reporting system as stipulated in Article 7 of this Circular.

3. During the implementation process, if there are difficulties or obstacles, enterprises issuing bonds and related units shall promptly report to the Ministry of Finance for specific guidance. /