On 9 July 2020, the Vietnamese Government issued Decree 81/2020/ND-CP (“Decree 81”) on amendments to the Government’s previous Decree 163/2018/ND-CP (“Decree 163”) dated 4 December 2018 on the issuance of corporate bonds.

In general, Decree 81 amends and supplements 14 provisions specified in Decree 163 to strictly and prudently control the private placement of bonds by relevant organizations and individuals.

Some new supplementary regulations in Decree 81

  1. Decree 81 supplements regulations requiring enterprises to satisfy financial safety ratios and safety ratios in operations in accordance with specialized laws. In particular, total outstanding debt on corporate bonds issued through the private placement at the time of issuance (including the planned amount of bonds to be issued) does not exceed five times the owner’s equity stated in the financial statements of the latest quarter preceding the time of issuance approved by a competent authority. Under such regulation, the risk of debt for the bond issuers is controlled, which will help to orient the cash flow into practical production and business activities, and avoid misuse of capital sources causing potential risks in the market.
  2. Decree 81 provides new regulations to restrict the situation where enterprises divide the issuance of separate corporate bonds into different groups and courses to increase mobilization from individual investors. In particular, each bond issuance must be completed within 90 days from the date of publishing of information before the bond issuance; the interval between two issuances must be at least six months; bonds in an issuance must have the same terms and conditions. This new regulation will present new issuers from dividing the bond issuance into several courses, creating many bond codes and issuing continuously.
  3. Decree 81 supplements regulations requiring the purposes of bond issuance. In particular, including information about the investment program or project; business operations requiring funds; debts (name, value and term of debt) restructured by funds raised from the bond issue. The credit institution’s purposes of bond issuance are to increase its Tier-2 capital and to raise funds for granting loans, making investments or serving other purposes.
  4. Decree 81 enhances the supervision possibility of private placement of bonds by enterprises. Accordingly, Article 10 Clause 1 of Decree 163 has been amended and requires a consulting contract with a consultancy organization providing consultancy on bond issuance, unless the issuer is legally licensed to provide consultancy on bond issuance dossiers.
  5. Decree 81 also requires to publish and consolidate information on corporate bonds sufficiently and specifically. Particularly, counselling organizations shall submit reports on consultancy on issuance of corporate bonds to the Ministry of Finance every six months and on an annual basis. This amendment will positively impact on information disclosure, consolidation of the market situation, so authorities are able to promptly regulate the market’s development.

The Government’s Decree 81 comes into force from 1 September 2020. It is expected that these amendments will help to create a healthier market and diminish future business risks.


This LBN newsletter are NOT legal advice. Readers are advised to retain a qualified lawyer, should they wish to seek legal advice. VCI Legal are certainly among those and happy to be retained, yet VCI Legal is not to be hold responsible should any reader choose to interpret/apply the regulations after reading this LBN without engaging a qualified lawyer.

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