On July 29, 2022, the State Bank of Vietnam issued Circular No. 10/2022/TT-NHNN (“Circular 10”) guiding foreign exchange management with regard to the issuance of international bonds by enterprises that are not guaranteed by the Government. Compared to the current Circular (Circular 17/2013/TT-NHNN – hereinafter referred to as “Circular 17”), Circular 10 pays more attention to clarify procedures for registration or registration of changes of international bonds[1] issuance of enterprises that are not guaranteed by the Government.
In this Legal Update, ATA would like to point out the highlights amended and supplemented in Circular 10 as follows:
A- Anulment of the procedure for appraising the international bonds issuance by the State Commercial Bank
According to Article 1, the scope of regulation of Circular 10 only includes procedures for registration of and registration of changes in international bond issuance by enterprises that are not guaranteed by the Government. Thus, the procedure for appraising the bond issuance of State-owned commercial banks specified in Circular 17 was no longer mentioned in Circular 10.
After reviewing more relevant regulations in this field (specifically: Decree 153/2020/ND-CP regulating private placement and trading of privately placed corporate bonds in domestic market and offering of corporate bonds in international market and relevant guiding documents), this procedure is not appeared in any other document. In this account, it could be affirmed that the procedures for appraising international bond issuance by the State Bank of Vietnam have been abolished.
B- Minimizing administrative procedures and simplifying dossiers for procedure for registration of and registration for changes in international bond issuance:
1. Circular 10 stipulates new principles for preparing and submitting dossiers towards reducing administrative procedures for enterprises:
- Principle 1: Only 1 set of dossiers.
This is a throughout principle which clearly shows the progress in administrative procedure reform in Circular 10.
Accordingly, in the past, under Circular 17, including the application for certification of the issuance limit and the application for confirmation of the issuance registration, only for the category of Written request, the issuer would have to submit at least 03 written request at 03 times: 1- A written request for confirmation of issuance limit at the time of the submission for confirmation of issuance limit; 2- A written request for issuance registration after the issuance limit is confirmed by the State Bank and before the issuance (on the basis of the last draft of the conditions and terms of the bonds); 3- A written request for issuance registration at the time of issuance (on the basis of official dossiers). However, in Circular 10, the issuer only submits one initial written request and only has to update or resubmit the request in case the result of the issuance according to the official dossiers changes the contents of “Issuance Information” in the 3rd Section of the Request.
- Principle 2: Allow multiple forms of dossier submission, including online or by mail.
However, the online application method is only applicable from January 1, 2023.
- Principle 3: Accept uncertified copies. Specifically, dossiers to be submitted online shall be scanned copies of the original; but hard-copy dossiers may only need to be confirmed by the issuer as a copy of the original.
This regulation is completely new and significantly facilitates businesses in the dossier preparation.
Concurrently with this principle, Article 12.3 of Circular 10 also stipulated: from September 15, 2022, Article 12 of “Circular No. 29/2015/TT-NHNN amending and supplementing a number of legal documents of the State Bank of Vietnam stipulating the components of dossier to be certified” also automatically become ineffective.
- Principle 4: In line with the permission and facilitation of enterprises in the aforementioned declaration and submission of documents, Circular 10 specifically emphasizes the fourth principle that “issuing organizations are responsible for the accuracy and truthfulness of the information stated in the dossiers”.
2. Simplify the process and reduce the number of dossiers in the procedure for confirmation of issuance registration:
- In line with the principle of one set of dossier, Circular 10 removed the procedure for requesting confirmation of the issuance limit. Accordingly, the consideration and confirmation of issuance limit becomes a content involving the process of consideration and settlement of the registration procedure for international bond issuance of the State Bank based on the same set of dossiers for initial issuance
- Removed the document category of Report and assessment on credit rating for non-convertible bonds (Article 12.2(đ) of Decree 153/2020/ND-CP only considered “Rating results given by credit rating agencies with respect to the issuer and type of bonds issued” as an optional item in the bond offering dossier).
- Document items in the dossier set will be submitted stage by stage and correspondingly to the progress of the issuer’s works with related parties.
3. Allow some cases where the registration for changes in international bond issuance is not required
In Circular 17, whenever there is a change compared to the contents of the written confirmation of registration of the issuance, enterprise shall be responsible for registering such change with the Sate Bank. However, Article 9.2 of Circular 10 only required businesses to notify in writing (by post or in person) to the Sate Bank (Foreign Exchange Management Department) without having to register the change in the following 07 cases:
- Change the time of capital withdrawal and principal repayment within 10 working days compared with the plan confirmed by the State Bank;
- Change of address of issuer;
- Change the name of the commercial transaction of the bank providing account services;
- Change the interest and fee payment plan but do not change the method of determining interest and fees specified in the bond terms and conditions;
- Change the amount of capital withdrawal, repayment of principal, interest and fees within 100 currency units of the foreign loan currency compared with the amount stated in the previous written confirmation;
- Change in the amount of principal repayment due to bonds being converted or swapped into shares for international bond issuances with convertible elements or swaps of public companies, securities companies, and public companies. securities investment fund management;
- Change the actual amount of capital withdrawal and principal repayment of a specific period less than the amount stated in the capital withdrawal and debt repayment plan on the previous written confirmation.
Particularly for the 7th case, before the capital withdrawal and the debt repayment of the remaining amount of the period where changes arise, the issuer is responsible for registering the change in the plan for capital withdrawal and debt repayment of the remaining amount.
4. Simplify the components of application for change of issuance.
In Circular 10, in addition to the Request for change in the amount of international bond issuance, the remaining documents (including signed adjustment agreements and written consent of the competent authority for the modification contents) are optional documents.
Circular 10 shall take effect from September 15, 2022 and shall replace Circular 17. However, registration dossiers submitted in advance of September 15, 2022, which have not yet been considered and settled, will still be implemented in accordance with Circular 17.
[1] Article 3.1 of Circular 10: “Bonds issued to the international market are bonds offered by the issuer to non-residents and not deposited at a depository organization in the Vietnamese territory (hereinafter referred to as international bonds)”.
Comment: