Complying with the regulations relating to corporate bond issuance

If providing inaccurate services with incomplete information and soliciting the wrong object, investors will be sanctioned according to the provisions of law.

The Ministry of Finance and State Securities Commission requested to review all records of corporate bond issuers. Source: Internet

Review the entire profile of the business

As of September 2021, the State Securities Commission has issued Official Letter No. 5225/UBCK-QLKD reminding securities companies to comply with the Government's Decree 153/2020/ND-CP dated December 31, 2020 stipulating the offering and trading of private placement corporate bonds in the domestic market and offering corporate bonds to the international market and Circular No. 122/2020/TT-BTC dated December 31, 2020 of the Ministry of Finance guiding the regime of information disclosure and reporting regime following Decree No. 153/2020/ND-CP.

Facing serious violations in the corporate bond market, leading to a number of individuals being prosecuted in recent years, the Ministry of Finance also issued Directive No. 01/CT-BTC dated April 25, 2022 on strengthening inspection, supervision and rectification of issuance, investment and service provider of private placement corporate bond market.

Implementing Directive No. 01/CT-BTC, related to the provision of consulting services on bond offering documents, bidding, guarantee, bond issuance agency, registration and depository of private placement corporate bonds, on April 29, 2022, the State Securities Commission issued Official Letter No. 2488/UBCK-QLKD requiring securities companies to continue implementing contents related to bond offering documents to guarantee; bidding, guarantee, bond issuance agent; registration and depository of bonds.

Accordingly, for bond offering documents, the State Securities Commission requested a strict review to ensure that the issuer fully meets the conditions for the bond offering and the bond offering documents as prescribed in Decree No. 153 2020/ND-CP and the law on securities, take responsibility before the law for their review.

For ongoing consulting contracts, it is necessary to review the entire dossier of the enterprise, the quality of the dossier components, especially the financial statements, documents proving the purpose of using capital from the bond issuance, the collateral documents to request the enterprise to re-disclose information to the Hanoi Stock Exchange (HNX) before the issuance.

At the same time, according to the State Securities Commission, the provision of consulting services on the bond offering documents of securities companies is subject to the management and supervision of the State Securities Commission, and the consulting organization must fulfill the obligation to report periodically to the State Securities Commission.

Requirements to comply with regulations on professional securities investors

Regarding the organization of bidding, guarantees, and bond issuance agents, the SSC required relevant individuals and units to comply with the provisions of Decree No. 153/2020/ND-CP and the supply contract signing services with issuers; fully and accurately disclose information of the issuer and bonds issuance to the investors following the issuance plan, the approved bond offering announcement and only offering bonds to investors that are eligible to buy bonds as prescribed in Clause 1, Article 8 of Decree No. 153/2020/ND-CP.

The acts of providing inaccurate, incomplete information and soliciting the wrong object of investors will be sanctioned for violations in accordance with the provisions of law.

For the registration and depository of bonds, the State Securities Commission requested to review all corporate bonds being registered and deposited in terms of the volume of registered and deposited bonds, the situation of payment of principal and interest, quantity and type of investors holding bonds as of April 15, 2022, report to HNX before May 5, 2022.

Related entities must also comply with regulations on the identification of professional securities investors when transferring private placement corporate bonds, reviewing and storing documents on certification of professional securities investors to ensure honesty and accuracy as prescribed in Article 11 of the Law on Securities, Articles 4 and 5 of Decree No. 155/2020/ND-CP.

Those who violate the provisions of the law when providing services in the registration and depository of bonds would also be sanctioned in accordance with the provisions of the law.

According to the Ministry of Finance, since September 2021, the Prime Minister has issued four instructions to strengthen the management, supervision, inspection and examination of the stock market and corporate bond market (No. 8857/CD-VPCP dated December 3, 2021, No. 10/CD-TTg dated March 30, 2022, No. 304/CD-TTg dated April 7, 2022, No. 311/CD-TTg dated April 11, 2022 on strengthening management, inspection, examination and reorganization of corporate bond market activities and measures to stabilize the market). The Minister of Finance has also issued three official dispatches directing units to strengthen management, supervision and inspection of the corporate bond market situation.

Minister of Finance Ho Duc Phoc said the Ministry of Finance offered solutions to raise awareness about the law, especially the Law on Enterprises and the Law on Securities and related regulations so that participating investors can choose, consider and be responsible for their investment.

At the same time, issuers must strictly comply with the provisions of the law on issuance, avoiding price manipulation in the market. Auditing companies, they must ensure the most accurate and correct audit reports.

“In other words, we apply both direct and indirect measures. Auditing firms directly check the audit work of the issuers and also check the audit firms that have audited the businesses. If violations are detected, the license will be withdrawn and independent audit units will be handled without responsibility for errors," the Minister said.