Since the beginning of November this year, both businesses planning to issue individual corporate bonds this year and securities companies participating in consulting on offering documents have wanted to speed up the work progress as soon as possible. One of the main reasons is that on December 11, 25, Circular 12/2024/TT-BTC[1] ( “Circular 76”) will officially take effect and replace Circular 122/2020/TT-BTC[2] ( “Circular 122“).
Compared to Circular 122, Circular 76 has updated and clearly classified the forms of information disclosure, and detailed regulations on reporting by consulting organizations, bidding organizations, underwriters, bond issuance agents, and bondholder representatives. These changes represent necessary adjustments to ensure that bond-issuing enterprises fully, clearly, and promptly disclose information to bond investors.
In this article, we only focus on analyzing the material changes to the preparation of information disclosures of issuing enterprises (“DNPH”), an important document that lawyers are responsible for assisting bond offering consultancy organizations in preparing and reviewing before issuing bonds, is prepared according to the form in Appendix I issued with Circular 76.
firstIn addition to the commitment to having reviewed the full compliance with the regulations on conditions and offering documents, confirming that the issuing enterprise meets all the conditions, the bond offering document consulting organization must also commit to being legally responsible for the results of its review in accordance with the provisions of law.
Monday, DNPH is responsible for adding information of the person in charge so that bond investors can contact to be provided with bond offering documents.
Tuesday, DNPH is required to provide more financial indicators of the enterprise and must specify the payable debts. Point 8 Section I.5 Part 3 Appendix I stipulates that DNPH registering to do real estate business must publish financial safety indicators, capital safety ratio according to the provisions of specialized laws. Is it the ratio of outstanding credit debt, outstanding bond debt to the owner’s equity specified in Point a Clause 1 Article 5 Decree 96/2024/ND-CP[3] or not? We are not clear on how this will be determined and may have to wait for more specific guidance from the Ministry of Finance.
Wednesday, the issuing enterprise must provide information on the issuance and capital use situation for outstanding bonds and must clarify any violations of the law (if any) regarding bond issuance in the 3 consecutive years prior to the bond offering (specify the type of violation, the agency that issued the decision on the violation, remedial measures, and the status of the remedial actions).
Thursday, Section 1.6 Part 3 Appendix I requires the issuing enterprise to disclose the total value of bonds issued at par value mobilized in each 12 months and the ratio of the total value of bonds at par value in each 12 months compared to the owner’s equity. However, we believe that the provision of information in this case is unclear: specifically, when is each 12-month period calculated from and to? When is the owner’s equity determined? According to separate or consolidated financial statements? It is required to be according to the financial statements of the year or of the previous year.
FridayRegarding the purpose of the bond issuance, in addition to clearly describing it as prescribed in Clause 2, Article 1 of Decree 65/2022/ND-CP, the issuing enterprise must also list in detail the legal documents on the purpose of the bond issuance in the Appendix of the information disclosure.
Saturday, DNPH is required to list in detail the documents on registration of security measures according to the provisions of law on registration of secured transactions. For security by assets, DNPH must provide information on (i) type of assets, (ii) detailed list of secured assets, value of secured assets, (iii) ratio of value of secured assets/total expected issuance value, (iv) detailed information on form of security (detailed list of valuation organization name, calculation method, information on registration of security measures, payment order of bondholders when handling secured assets to pay debts…). For payment guarantees, DNPH must provide information on (i) payment guarantee contract (if any), (ii) value guaranteed for payment according to contract
Eighth, in the section on the plan to use the proceeds from the offering, the enterprise is required to provide additional information including: (i) the implementation status of the investment program/project up to the time of information announcement (completed items, items in progress, expected implementation, expected time of putting into operation, exploitation), explanation of changes compared to the approved plan (if any); (ii) the capital arrangement status for the investment program/project (clearly stating equity capital, borrowed capital, other mobilized capital, etc.); explanation of changes in total investment capital, capital structure compared to the approved plan; capital compensation plan in case of adjustment of total investment level, capital structure.
NinthCircular 76 requires that certain legal documents as listed in the Appendix of the information disclosure must be provided in the form of certified copies by the competent state management agency. The documents include internal documents of the enterprise such as the company charter, financial statements, bond issuance plan with approval documents, etc. We believe that these requirements are not really suitable for reality, increasing working time and costs for the enterprise. We have consulted the regulations issued by the State Bank of Vietnam guiding the preparation of foreign loan registration dossiers and international bond issuance registration and found that these types of documents as well as some other types of documents only require providing certified copies of the enterprise.
Above are some of the changes or problems that we have noticed during the process of reviewing and studying Circular 76. We hope that in the near future, the Ministry of Finance will issue further instructions and answers to clarify these issues.
[1] Circular 76/2024/TT-BTC dated November 6, 11 of the Ministry of Finance guiding the information disclosure and reporting regime on the offering and trading of individual corporate bonds in the domestic market and the offering of corporate bonds to the international market.
[2] Circular 122/2020/TT-BTC dated December 31, 12 of the Ministry of Finance guiding the information disclosure and reporting regime according to the provisions of Decree No. 2020/153/ND-CP
[3] Decree 96/2024/ND-CP dated July 24, 7 of the Government detailing a number of articles of the Law on Real Estate Business
Disclaimer: This article was prepared by PTN Law Firm LLC (“PTN Legal”) is for informational purposes only. PTN Legal does not warrant or guarantee the accuracy or completeness of this information. The content of the article may be changed, adjusted, or updated without prior notice. PTN Legal is not responsible for any errors or omissions in this article or damages arising from the use of this article in any case.