Circular No. 75/2004/TT-BTC guiding the issuance of bonds to the public

CIRCULAR

Guidelines for Issuing Bonds to the Public

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Implementing Decree No. 144/2003/ND-CP dated November 28, 2003 of the Government on Securities and the Securities Market (referred to as Decree 144), the Ministry of Finance provides guidelines for issuing bonds to the public as follows:

I. GENERAL PROVISIONS

1. These Circulars regulate the issuance of bonds to the public within the territory of the Socialist Republic of Vietnam, except for the issuance of government bonds, local government bonds, corporate bonds guaranteed by the Government, and bonds issued by credit institutions.

2. Bonds issued to the public under these Circulars may be secured bonds, unsecured bonds, convertible bonds, and bonds accompanied by warrant certificates.

Secured bonds are those guaranteed for partial or full payment by a financial institution, or secured by assets of the issuer or a third party.

Unsecured bonds are those issued based solely on the creditworthiness of the issuer without any asset collateral or payment guarantee.

Convertible bonds are those that can be converted into ordinary shares of the same issuer under predetermined conditions.

3. Bond certificates issued to the public under these Circulars must contain all necessary information as prescribed by law. In cases where bonds are issued in book-entry form, bondholders shall be issued ownership certificates.

II. SPECIFIC PROVISIONS

1. Conditions for Issuing Bonds to the Public

Organizations registering to issue bonds to the public must meet the following conditions:

1.1. The subscribed charter capital at the time of registration for issuance must be at least 10 billion VND, as recorded in the books.

1.2. Profitable business operations mean that the organization registering to issue bonds must have positive net income after tax in the year immediately preceding the year of registration, and there must be no accumulated losses up to the year of registration.

1.3. A feasible plan for using and repaying the funds raised from the bond issuance must be approved by the Board of Directors (for joint-stock companies), the Board of Members (for limited liability companies with two or more members), the Capital Owner (for limited liability companies with one member), or the State Capital Owner (for state-owned enterprises). For joint-stock companies issuing convertible bonds, the feasible plan must be approved by the General Meeting of Shareholders.

1.4. There must be an underwriting organization. Underwriting can apply to the entire or part of the planned bond issuance volume.

1.5. The representative of bondholders as stipulated in Clause 5, Article 8 of Decree 144 must be a commercial bank or securities company licensed for custody services by the State Securities Commission, except in the following cases:

- Simultaneously being the guarantor for the debt repayment of the organization registering to issue bonds;

- Being a major shareholder of the organization registering to issue bonds or an organization with a major shareholder who is the organization registering to issue bonds or has the same major shareholder as the organization registering to issue bonds;

- Being an organization with the same management personnel as the organization registering to issue bonds or subject to the control of another organization.

2. Registration Documents for Issuance

2.1. An issuance registration form prepared according to Model 01 attached to this Circular;

2.2. A certified copy of the Business Registration Certificate, including any Business Change Registration Certificates;

2.3. The Company Charter containing provisions consistent with the laws;

2.4. The Decision approving the issuance of bonds to the public and the Decision approving the feasible plan for using and repaying the funds raised from the bond issuance by the Board of Directors (for joint-stock companies), the Board of Members (for limited liability companies with two or more members), the Capital Owner (for limited liability companies with one member), or the State Capital Owner (for state-owned enterprises).

For joint-stock companies issuing convertible bonds, the Decision approving the issuance of bonds to the public and the Decision approving the feasible plan for using and repaying the funds raised must be approved by the General Meeting of Shareholders.

If the bond issuance includes a portion sold directly to institutional investors, the Decision approving the issuance of bonds to the public must specify the ratio of public offering.

2.5. A prospectus prepared according to Model 02 attached to this Circular and must meet the following requirements:

- Contain all necessary information, truthful and clear, enabling investors and securities companies to accurately assess the financial situation, business operation status, and prospects of the organization registering to issue bonds;

- Financial data in the Prospectus must correspond to the audited financial statements in the registration documents;

- Must bear the signatures of the Chairman of the Board of Directors, the Head of the Supervisory Board, the Director (General Director), the Chief Accountant of the organization registering to issue bonds, and the Legal Representative of the main underwriting organization (if any). In case of proxy signing, a power of attorney must be provided.

2.6. A list and curriculum vitae of Board of Directors, Management Board, and Supervisory Board members prepared according to Model 03 attached to this Circular;

2.7. Two consecutive annual financial reports prior to the year of registration for issuance must meet the following requirements:

- Comply with the current accounting regulations of the State;

- Annual financial reports must be confirmed by an auditing organization; Audit opinions on financial reports must express full acceptance or acceptance with reservations. In cases where the audit opinion is acceptance with reservations, the excluded items must not significantly affect the financial situation of the organization registering to issue bonds.

- In case the period from the end of the fiscal year of the most recent financial report to the date of submitting the registration application to the Securities Commission exceeds ninety days, the issuing organization must prepare additional financial reports up to the latest month or quarter;

- If there are unusual changes after the end of the fiscal year of the most recent financial report, the issuing organization needs to prepare additional financial reports up to the latest month or quarter;

- Financial statements, if they are copies, must be valid copies as prescribed by law;

2.8. Guarantee of issuance according to the model at Appendix No. 04 attached hereto. In case of a joint guarantee of issuance, the guarantee of issuance of the main guarantor organization must be accompanied by a contract between the guarantor organizations. Documents regarding the guarantee of issuance shall be submitted after other documents but no later than the date when the Securities Commission issues the Certificate of Registration for Issuance;

2.9. Contract between the bond issuer and the representative of bondholders according to the model at Appendix No. 05 attached hereto;

2.10. Commitment to fulfill the obligations of the bond issuer towards investors; including issuance conditions, payment terms, debt-to-equity ratio, protection of bondholders' rights, and other conditions;

In case of convertible bonds or bonds with attached warrants, the commitment to fulfill the obligations of the bond issuer includes the following main contents:

- Conditions and time limit for conversion;

- Conversion ratio and method of calculating the conversion price;

- Method of calculating and compensating losses in case the bond issuer cannot issue shares to meet the conversion right;

- Other terms (if any);

2.11. Detailed list of collateral assets accompanied by legitimate documents proving ownership of the registering organization or third parties and insurance contracts (if any) for these assets; Minutes determining the value of collateral assets or Letter of approval for payment guarantee issued by the guarantor organization in case of guaranteed bond issuance;

2.12. In case the registering organization is a listed company exempted from the documents prescribed in points 2.2, 2.3, 2.6, and 2.7 above;

3. Issuance Guarantee

3.1. The guarantor organization must have a License for Issuance Guarantee issued by the Securities Commission;

3.2. A guarantor organization may only guarantee for one issuance with a total value of bonds not exceeding thirty percent of its own capital. The own capital referred to herein is the own capital reflected in the most recent audited financial report before the submission of the application, and the value of the bonds permitted to be guaranteed is calculated based on the issue price;

3.3. In case of joint issuance guarantee involving two or more guarantor organizations, a joint issuance guarantee organization must be established and operate based on a contract between the guarantor organizations. The main guarantor organization represents the joint issuance guarantee organization in signing the issuance guarantee contract with the issuer. The liability of the guarantor organizations in distributing bonds can be either joint or independent;

3.4. Documents proving that the guarantor organization meets the conditions for performing guarantees as stipulated above must be submitted along with the issuance guarantee commitment to the Securities Commission;

4.  Registration for Issuance

4.1. The bond issuance registration application must be prepared in two sets (one original set and one certified true copy) and submitted to the Securities Commission;

4.2. Amendments and supplements to the application can be made when the registering organization deems it necessary to make such amendments or supplements, or when requested by the Securities Commission. The amended and supplemented version must bear the signatures of those who signed the original registration application submitted to the Securities Commission or of persons holding the same positions as those individuals;

4.3. Registering organizations may not issue bonds to the public without the Bond Issuance Registration Certificate issued by the Securities Commission and without publishing the Prospectus;

4.4. After the issuance registration certificate has been issued, if the Securities Commission or the issuer finds it necessary to amend or supplement the issuance registration application, the issuer must submit supplementary documents for the prospectus and promptly notify on the information channels that have announced the issuance, while providing the investor with the required information;

4.5. Within thirty working days from the date of receipt of complete and valid documents, the Securities Commission shall issue the Bond Issuance Registration Certificate; In case of refusal to issue the Bond Issuance Registration Certificate, the Securities Commission shall provide a written explanation of the reasons;

5. Information Prior to Issuance and Announcement of Issuance

5.1. During the period when the Securities Commission is reviewing the issuance registration application, the registering organization, the guarantor organization, and related parties may not advertise, solicit, or distribute bonds to the public in any form. Market research materials may not contain misleading information compared to the main contents of the full prospectus submitted to the Securities Commission;

5.2. The issuance must be announced within the prescribed time frame with the contents specified in the Issuance Notice model (Appendix No. 06 attached hereto);

5.3. Materials serving the issuance include: Issuance Notice, Full Prospectus or Summary Prospectus, and supplementary documents for the Prospectus (if any), all of which have been approved by the Securities Commission. The issuer and related organizations and individuals may not distribute materials containing misleading information that could mislead investors. The Summary Prospectus must truthfully reflect the main contents of the Full Prospectus and include major headings similar to those in the Full Prospectus approved by the Securities Commission;

6. Distribution of Bonds

6.1. The issuer or distributor organization must distribute the bonds according to the method stated in the fully registered Prospectus with the Securities Commission.

6.2. When distributing bonds to the public, the issuer organization must create favorable conditions for individual investors to purchase the bonds. The bond subscription form must clearly state the location where the Prospectus will be provided.

6.3. The purchase price of the bonds must be transferred into a frozen account at the bank until the issuance period is completed.

6.4. In the event that the bond purchaser suffers losses due to misleading or concealed information in the Prospectus and other issuance documents, the Issuer Organization, Chairman, and members of the Board of Directors, Head of the Supervisory Board, Director (General Director), Chief Accountant, and individuals involved in preparing the registration issuance documentation, the Consulting Organization, the Bond Issuance Guarantee Organization, the Independent Auditing Organization, and those who sign off on the audit report confirming the financial statements for the Issuer Organization will be subject to administrative penalties as prescribed in the regulations governing securities and the securities market.

6.5. The Issuer Organization and the Bond Issuance Guarantee Organization must transfer the bonds or ownership certificates to the purchasers within thirty days from the end of the issuance period.

6.6. The Issuer Organization or Distributor Organization must complete the distribution of the bonds within ninety days from the date the Registration Certificate becomes effective. Upon expiration of this period, if there are still unsold bonds, the Issuer Organization wishing to continue the distribution must submit a request to the Securities Commission for an extension of the Registration Certificate, specifying the reasons and distribution plan for the remaining bonds.

7. Revocation of the Registration Certificate

7.1. Within five working days from the date the Securities Commission decides to revoke the Registration Certificate, the Issuer Organization must announce the revocation on the information channels that had published the issuance, including the following contents:

- Number and date of the Decision to revoke the Registration Certificate;

- Reasons for revoking the Registration Certificate;

- Timeframe for refunding the purchase amount or deposit to the investors;

- Location for refunding the purchase amount or deposit to the investors;

- Payment method.

7.2. In addition to the specific cases of revocation stipulated in Article 17 of Decree 144, the Registration Certificate will also be revoked if the Issuer Organization fails to complete the bond distribution within the time limit specified in Clause 6.6, Section II of this Circular.

8. Reporting and Information Disclosure System

8.1. The issuance result report shall be prepared according to the model attached as Appendix No. 07 to this Circular and submitted along with the confirmation from the bank where the frozen account was opened regarding the amount collected during the issuance.

8.2. The reporting and information disclosure of the Issuer Organization shall be carried out in accordance with the provisions of Chapter VI of Decree 144 and the Circular guiding the information disclosure system issued by the Ministry of Finance.

8.3. Annually, the bond-issuing organization has the obligation to send the following reports to the Securities Commission and the Representative of Bondholders:

8.3.1 Report on the debt ratio, guarantees provided by the bond-issuing organization to other organizations that may cause the total debt of the bond-issuing organization to exceed the committed debt ratio;

8.3.2 Report on events that could be causes leading to the bond-issuing organization not having the ability and conditions to maintain collateral for payment capacity (if applicable).

III. IMPLEMENTATION

1. This Circular takes effect fifteen days after its publication in the Official Gazette.

2. During implementation, if there are any difficulties, it is recommended that related organizations and individuals reflect them to the Ministry of Finance for research, guidance, and resolution./.