New regulations on corporate bonds: Bond debt can be paid with 'other assets'

Mr. Bui Thanh Nhon wrote a letter to Novaland's creditors. Source: NVL

The above information is stated in the Decree amending, supplementing and suspending the implementation of a number of articles in the Decrees regulating the offering and trading of individual corporate bonds in the domestic market and the offering of corporate bonds to the international market, which was recently issued by the Government on March 5.

Accordingly, the Decree stipulates: For bonds offered in the domestic market, in case the issuing enterprise cannot fully and timely pay the principal and interest of the bonds in Vietnamese Dong according to the issuance plan announced to investors (as prescribed in Article 17 of this Decree), the enterprise can negotiate with the bond owner to pay the principal and interest of the due bonds with other assets.

Negotiations are based on the principle of compliance with the provisions of civil law and relevant laws. For conditional investment and business sectors, the provisions of the law on such conditional investment and business sectors must also be complied with.

However, the Decree clearly states that the negotiation must be approved by the bondholder. The issuing enterprise must disclose unusual information and take full responsibility for the legal status of the assets used to pay the principal and interest of the bonds in accordance with the law.

Another notable point of the Decree is that if an enterprise wants to extend the term of the bond, the maximum period must not exceed 2 years compared to the term in the bond issuance plan announced to investors.

For bondholders who do not agree to change the terms and conditions of the bond, the issuing enterprise is responsible for negotiating to ensure the rights of investors.

"In case a bondholder does not accept the negotiation plan, the enterprise must fully perform its obligations to the bondholder according to the bond issuance plan announced to investors (including cases where the change in terms and conditions of the bond has been approved by bondholders representing 65% or more of the total number of bonds)," the Decree requires.

The Decree takes effect from March 5.

Luong Bang