The State Bank of Vietnam (SBV) has just issued Circular No. 11 dated June 28, 2024 amending and supplementing a number of articles of Circular No. 16/2021 of the Governor regulating the purchase and sale of corporate bonds by credit institutions (CIs).

Specifically, the regulations on the purchase and sale of corporate bonds between specially controlled credit institutions and supporting credit institutions, the transferee is required to comply with the restructuring plan of the specially controlled credit institution approved by the competent authority.

The issuing enterprise must send to the credit institution information about related persons as prescribed in the Law on Credit Institutions before purchasing corporate bonds. Related persons of the issuing enterprise are organizations and individuals having relations with the issuing enterprise as prescribed in Clause 24, Article 4 of the Law on Credit Institutions.

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Illustration photo (Nam Khanh).

Information about the individual concerned, including: full name; personal identification number; nationality, passport number, date of issue, place of issue for foreigners; relationship with the issuing enterprise.

Information about the related person is an organization, including: name, business registration number, head office address of the enterprise, business registration certificate number or equivalent legal documents; legal representative, relationship with the issuing enterprise.

Credit institutions must use non-cash payment services when making payments in the purchase and sale of corporate bonds in accordance with the provisions of law on non-cash payments.

Circular 11 requires credit institutions to monitor and supervise the use of proceeds from bond issuance by issuing enterprises; in case the issuing enterprise is found to be using proceeds from bond issuance for purposes other than those stated in the plan or commitment, the credit institution shall request the bond issuing enterprise to repurchase the bonds before maturity.

In case the issuing enterprise does not buy back the bonds before maturity as committed, the credit institution shall handle and recover the principal and interest of the bonds in accordance with the provisions of law.

The total balance of corporate bond purchases (including bonds issued by enterprises and related parties of that enterprise) is included in the total outstanding credit balance for a customer, for a customer and related parties according to the provisions of the Law on Credit Institutions and the State Bank's regulations on limits and safety ratios in the operations of credit institutions.

The Circular takes effect from August 12.

Tuan Nguyen