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Official Gazette

Monday, June 27, 2022

Regulations on conversion of bank bonds into stocks drafted

Updated: 14:43’ - 13/02/2019
The State Bank of Vietnam (SBV) is revising Circular 34 of 2013 on issuance of promissory notes, bills, deposit certificates and domestic bonds by credit institutions and foreign bank branches.

Worthy of note, the draft clarifies matters related to convertible bonds and warrant-linked bonds. It stipulates in detail that before effecting the conversion of convertible bonds or permitting holders of warrant-linked bonds to purchase stocks, credit institutions must comply with the State Bank’s regulations on change of charter capital due to conversion of convertible bonds and purchase of stocks for warrant-linked bonds. In case credit institutions commit that such bonds will be converted into stocks after a certain period of time, bond purchasers must comply with all regulations on capital contribution and share purchase limits right at the time of bond issuance. In case credit institutions issue bonds to foreign investors, they must meet conditions for sale of shares to foreign investors right at the time of issuance. At the time of converting bonds or purchasing stocks, holders of convertible bonds or warrant-linked bonds must satisfy requirements on shareholding rates as prescribed.       

As for valuable papers, the draft says that credit institutions and foreign bank branches will pay the principal to purchasers when these valuable papers become mature. Meanwhile, the interest might be paid in advance, in lump sum upon maturity or on a periodical basis at fixed or periodically adjusted rates.

The repayment of valuable papers before they are due would be decided by credit institutions and foreign bank branches at the request of purchasers, ensuring conformity with regulations on organization, operation and assurance of operational safety of credit institutions and foreign bank branches.- (VLLF)

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