CONDITIONS OF CORPORATE BONDS ACCORDING TO LEGAL PROVISIONS

Table of Contents

1. What are corporate bonds?

2. Principles of issuance and use of bonds according to legal provisions

3. Conditions of corporate bonds according to legal provisions

1. What are corporate bonds?

Pursuant to Clause 3, Article 4 of the 2014 Securities Law:“3. Bond means a type of securities certifying the lawful rights and interests of an owner of a part of the debt of the issuing organisation.”

At the same time, according to Decree 153/2020/ND-CP regulating the offering and trading of individual corporate bonds in the domestic market and the offering of corporate bonds to the international market, corporate bonds are understood as securities with a term of 01 year or more issued by an enterprise, confirming the legal rights and interests of the owner for a part of the debt of the issuing enterprise.

2. Principles of issuance and use of bonds according to legal provisions

Pursuant to Article 5 of Decree 153/2020/ND-CP and Clauses 2 and 3, Article 1 of Decree 65/2022/ND-CP, the principles of issuance and use of corporate bond capital are stipulated as follows:

“1. Enterprises issue bonds on the principle of self-borrowing, self-repaying, self-responsibility for the efficiency of capital use and ensuring debt repayment ability.

2. The purpose of issuing bonds is to implement investment programs and projects, to restructure the enterprise’s own debt or to issue bonds in accordance with the provisions of specialized laws. Enterprises must specify the purpose of issuance in the issuance plan as prescribed in Article 13 of this Decree and disclose information to investors registering to buy bonds. The use of capital mobilized from bond issuance by enterprises must ensure the correct purpose according to the issuance plan and the content of information disclosure to investors.

3. For green bond issuance, in addition to the provisions in Clauses 1 and 2 of this Article, capital from bond issuance must be accounted for, managed and monitored separately and disbursed for projects in the field of environmental protection, projects that bring environmental benefits according to the approved issuance plan.

4. For bonds issued in the domestic market, enterprises may only change the conditions and terms of the bonds prescribed in Article 6 of this Decree when meeting the following regulations:

a) Approved by the competent authority of the issuing enterprise;

b) Approved by the number of bondholders representing 65% or more of the total number of bonds of the same type in circulation;

5. Information on changes in conditions and terms of the bonds must be disclosed by the issuing enterprise in an extraordinary manner in accordance with the provisions of Article 22 of this Decree.”

3. Conditions of corporate bonds according to legal regulations

Pursuant to Article 6 of Decree 153/2020/ND-CP and Clause 4, Article 1 of Decree 65/2022/ND-CP, the basic conditions and terms of corporate bonds are stipulated as follows:

“1. Bond term: decided by the issuing enterprise for each offering based on the enterprise’s capital needs.

2. Issuance volume: decided by the issuing enterprise for each offering based on the enterprise’s capital needs.

3. Bond issuance and payment currency

a) For bonds offered in the domestic market, the currency for issuance, interest payment, and bond principal is Vietnamese Dong.

b) For bonds offered in the international market, the currency for issuance, interest payment, and bond principal is foreign currency according to the regulations of the issuing market and in compliance with the provisions of the law on foreign exchange management.

4. Bond face value

a) Bonds offered in the domestic market, the face value is one hundred million (100,000,000) Vietnamese Dong or multiples of one hundred million (100,000,000) Vietnamese Dong.

b) Bonds offered on the international market, the face value is implemented according to the regulations in the issuing market.

5. Form of bonds

a) Bonds are offered in the form of certificates, book entries or electronic data.

b) The issuing enterprise shall decide specifically on the form of bonds for each offering according to the regulations in the issuing market.

6. Nominal bond interest rate

a) The nominal bond interest rate may be determined by one of the following methods: fixed interest rate for the entire bond term; floating interest rate; or a combination of fixed and floating interest rates.

b) In case the nominal interest rate is a floating interest rate or a combination of fixed and floating interest rates, the issuing enterprise must specify the reference basis for determining the nominal interest rate in the issuance plan and disclose information to bond-buying investors about the reference basis used.

c) The issuing enterprise shall decide on the nominal interest rate for each offering in accordance with its financial situation and debt repayment capacity. The interest rate of bonds issued by credit institutions, in addition to complying with the provisions of this Decree, must comply with the interest rate regulations of the State Bank of Vietnam. 7. The type of bond shall be decided by the issuing enterprise in accordance with the provisions of law.

8. The method of payment of interest and principal of bonds is decided by the issuing enterprise based on capital needs and market practices to be announced to investors before offering bonds.”