March
2019
On 4 December 2018, Vietnam’s Government issued Decree 163/2018 on issuance of corporate bonds (“Decree 163”). Decree 163 focuses on privately-issued bonds and came into effect on 1 February 2019, replacing its predecessor, Decree 90/2011 (“Decree 90”).
Below are salient features of Decree 163:
All issuers may sell their bonds to investors directly under Decree 163. Under Decree 90, this is only permitted for credit institutions.
Decree 90 provides that for bonds issued to fund programmes, projects, the issuer must maintain a minimum owners’ equity ratio of 20% of the total investment. Decree 163 removes this requirement.
Decree 163 requires issued bonds to be registered and deposited with the Vietnam Securities Depository or its members within 10 days after issuance.
Under Decree 163, sale of corporate bonds is limited to below 100 investors (excluding professional securities investor) within one year from the completion date of issuance. For convertible bonds, the one-year restriction period remains unchanged from Decree 90.
Decree 163 allows bonds to be issued in multiple tranches so long as all tranches are issued within 12 months from the date of the first tranche and each tranche is completed within 90 days.
Decree 163 introduces a new and comprehensive disclosure regime for bond issuers including disclosure before issuance, disclosure about issuance result, regular disclosure and irregular disclosure.
With the relaxed conditions for bonds issuance and the stringent requirements to issuers, Decree 163 is expected to create a boom in bonds transaction for the Vietnam market while also enhancing publicity, transparency and protecting interests of investors.
If you have any questions or require any additional information, please contact Duc Tran or the ZICO Law partner you usually deal with.
This alert is for general information only and is not a substitute for legal advice.