New rules for private placement of corporate bonds
New rules for private placement of corporate bonds
As the corporate bond market has shown signs of fast growth, some capital mobilisation through bonds did not comply with the provisions of the law.
Therefore, to ensure the market develops sustainably, transparently and effectively, it is necessary to continue to improve the legal framework, and strengthen management and supervision.
The Ministry of Finance has assessed the market situation to develop a draft Decree amending and supplementing a number of articles of the Decree on private placement of corporate bonds.
There are some notable contents in the draft Decree, including amending regulations on the purposes of bond issuance to strengthen the responsibilities and obligations of issuers in using funds from bond issuance.
Secondly, it will supplement regulations on credit ratings for some types of issued bonds to raise publicity and transparency of issuances, contributing to improve the quality of issued bonds, and help the market get used to credit ratings to assess the risks of bonds, in line with international practices, to limit risks for investors.
The draft also supplemented regulations on bondholders' representatives to strengthen the supervision of the purpose of using the capital, as well as other commitments of the issuer.
In addition, the ministry adds regulations to accelerate the establishment of the private placement of corporate bond markets at stock exchanges for professional investors to increase liquidity.
It proposed to amend a number of regulations on terms and information disclosure, and enhance the transparency of bond issuers.
Besides completing the legal framework, the ministry continues to direct the State Securities Commission (SSC) and other units to strengthen management and supervision, and deploy inspection teams to control the bond issuance of real estate enterprises, credit institutions related to real estate enterprises, enterprises with large issuance volume or high interest rates, enterprises with negative business results, and issuers without collateral.
