The Ministry of Finance (MoF) has just finalized and introduced a draft decree guiding the issuance of corporate bonds, devoting a separate chapter on bond issuance abroad.
The 39-article draft decree is designed to replace Government Decree No. 52/2006/ND-CP of May 19, 2006, on the issuance of corporate bonds and relevant provisions on issuance of corporate bonds, on international capital markets in Decree No. 53/2009/ND-CP of June 4, 2009.
Under the draft decree, joint-stock companies, limited liability companies and state-owned enterprises during their transformation into limited liability companies or joint-stock companies may issue corporate bonds on domestic and international capital markets.
To be allowed to issue corporate bonds, enterprises must have operated for at least one year, have the financial statement of the year preceding the year of issuance audited by the State Audit or a lawful independent audit firm (if enterprises issue bonds prior to April 1, they may submit an unaudited statement); and have earned profits from production and business activities in the year preceding the year of issuance. As for the issuance of international bonds, the total value of to-be-issued bonds must be within the total foreign commercial loan limit approved annually by the Prime Minister. Bonds would be issued through public bidding at bond issuers, bidding through intermediary financial institutions or bidding via Stock Exchanges.
However, legal experts argued that it was questionable as to whether or not foreign-invested companies had to register the issuance of bonds under the draft decree with the Planning and Investment Department as part of their respective investment certificates.
“It will be difficult for state management agencies to allow foreign-invested companies to issue bonds to raise capital because it will exceed the total investment capital cap under their investment certificates,” said Dang Duong Anh, executive partner of Vilaf Hong Duc law firm.
The draft decree is now available at the MoF’s website: mof.gov.vn.-