Circular No. 01/2021/TT-NHNN issuance of promissory notes by credit institutions and foreign bank branches

CIRCULAR

Prescribing the domestic issuance of promissory notes, treasury bills, deposit certificates and bonds by credit institutions and foreign bank branches^[1]

Pursuant to the June 16, 2010 Law on the State Bank of Vietnam;

Pursuant to the June 16, 2010 Law on Credit Institutions; and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the November 26, 2019 Law on Securities;

Pursuant to the June 17, 2020 Law on Enterprises;

Pursuant to the Government’s Decree No. 153/2020/ND-CP of December 31, 2020, on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam promulgates the Circular prescribing the domestic issuance of promissory notes, treasury bills, deposit certificates and bonds by credit institutions and foreign bank branches.

Article 1. Scope of regulation

This Circular prescribes the issuance of promissory notes, treasury bills and deposit certificates; and the domestic issuance and offering of bonds (below collectively referred to as issuance of bonds) by credit institutions and foreign bank branches in order to raise capital in the territory of Vietnam.

Article 2. Subjects of application

1. Issuers of promissory notes, treasury bills, deposit certificates and bonds (below collectively referred to as valuable papers) specified in Article 3 of this Circular.

2. Purchasers of valuable papers specified in Article 4 of this Circular.

3. Other organizations and individuals involved in the issuance of valuable papers by credit institutions and foreign bank branches.

Article 3. Issuers of valuable papers

Credit institutions and foreign bank branches issuing valuable papers under their establishment and operation licenses include:

1. Commercial banks.

2. Cooperative banks.

3. Foreign bank branches.

4. Financial companies and financial leasing companies.

Article 4. Purchasers of valuable papers

1. Purchasers of valuable papers include organizations (including credit institutions and foreign bank branches), Vietnamese individuals, and foreign organizations and individuals, except those specified in Clauses 2 and 3 of this Article.

2. Purchasers of valuable papers issued by financial companies or financial leasing companies include Vietnamese organizations and foreign organizations.

3. Purchasers of bonds must comply with the Law on Securities and guiding documents and relevant laws.

Article 5. Interpretation of terms

In this Circular, the term below is construed as follows:

Promissory note, treasury bill, deposit certificate or bond means an evidence that acknowledges the obligation of an issuing credit institution or foreign bank branch to repay debts to a purchaser of valuable papers within a certain time limit and under interest payment conditions and other conditions.

Article 6. Forms of issuance

1. Credit institutions and foreign bank branches shall issue valuable papers in the forms of certificates and book entries and other forms in accordance with the Law on Securities and guiding documents and relevant laws.

2. If issuing valuable papers in the form of certificates, credit institutions and foreign bank branches shall design and print such certificates in a way that avoids them from being counterfeited.

3. If issuing valuable papers in a form other than certificates, credit institutions and foreign bank branches shall issue certificates of ownership over valuable papers to purchasers.

Article 7. Currency used in issuance and payment

Valuable papers shall be issued and paid in Vietnam dong.

Article 8. Par values of valuable papers

1. Par value of a valuable paper is VND 100,000 (one hundred thousand) or a multiple of VND 100,000 (one hundred thousand).

2. Par value of a valuable paper (except bonds) issued in the form of a certificate shall be pre-printed or agreed upon between an issuing credit institution or foreign bank branch and a purchaser.

3. Par value of a bond issued in the form of a certificate shall be pre-printed on such bond.

4. Par value of a valuable paper issued in a form other than a certificate shall be agreed upon by an issuing credit institution or foreign bank branch and a purchaser.

Article 9. Interest rates

1. Interest rates of valuable papers shall be decided by issuing credit institutions or foreign bank branches in accordance with current regulations of the State Bank of Vietnam (below referred to as the State Bank) on interest rates in each period.

2. Methods of calculating interest rates of valuable papers must comply with the State Bank’s regulations.

Article 10. Term to maturity, date of issuance and maturity date of valuable papers

1. A bond’s term to maturity is one year or more. The specific term to maturity shall be defined by credit institutions. Bonds issued in the same drive and with the same term to maturity shall be written with the same date of issuance and the same maturity date.

2. The term to maturity, date of issuance and maturity date of promissory notes, treasury bills and deposit certificates shall be defined by credit institutions or foreign bank branches.

Article 11. Principles of issuance of promissory notes, treasury bills and deposit certificates

1. Credit institutions and foreign bank branches shall take the initiative in organizing drives of issuance of promissory notes, treasury bills and deposit certificates in accordance with this Circular when observing the prudential ratios specified in Clause 1, Article 130 of the Law on Credit Institutions (which was amended and supplemented) and the State Bank’s guidance.

2. Credit institutions and foreign bank branches shall issue promissory notes, treasury bills and deposit certificates directly to purchasers at lawful transaction locations within their operating networks.

3. A promissory note, treasury bill or deposit certificate issued in the form of a certificate or a certificate of ownership over promissory note, treasury bill or deposit certificate must have the following contents:

a/ Issuer’s name;

b/ Name of the promissory note, treasury bill or deposit certificate;

c/ Code and issuance serial number;

d/ Signature of the lawful representative of the issuing credit institution or foreign bank branch and other signatures prescribed by the credit institution or foreign bank branch;

dd/ Par value, term to maturity, date of issuance and maturity date;

e/ Interest rate, mode of interest payment, time of interest payment, and place for principal and interest payment;

g/ Full name, valid people’s identity card or citizen identity card or passport, and address of the individual purchaser (for an individual purchaser); or name, serial number of establishment license or enterprise identification number or serial number of business registration certificate (if the enterprise identification number is unavailable), and address of the institutional purchaser;

h/ The content stating that the owner may only transfer its/his/her ownership to an organization, for promissory notes, treasury bills or deposit certificates issued by financial companies or financial leasing companies;

i/ Other contents as decided by the credit institution or foreign bank branch.

Article 12. Principles of issuance of bonds

Credit institutions shall issue bonds in accordance with the Law on Securities and guiding documents, relevant laws, and this Circular. Regarding conditions for private placement of bonds specified at Point e, Clause 2, Article 31 of the Law on Securities, credit institutions shall comply with Clause 1, Article 130 of the Law on Credit Institutions (which was amended and supplemented) and the State Bank’s guidance.

Article 13. Requirements for issuance of convertible bonds and warrant-linked bonds

1. In case a credit institution issues convertible bonds or warrant-linked bonds, its bond issuance plan must contain the contents on conversion of bonds into stocks or execution of rights of warrants, specifically as follows:

a/ The bond purchaser shall comply with current regulations on limits on capital contribution, share purchase, and maximum holding rate for foreign investors upon conversion of bonds into stocks or execution of rights of warrants for warrant-linked bonds;

b/ The conversion of convertible bonds into stocks or execution of rights of warrants for warrant-linked bonds shall be carried out only after the State Bank approves the charter capital increase under the State Bank’s regulation on dossiers, order and procedures for approval of increase in charter capital of credit institutions.

2. Upon conversion of convertible bonds into stocks or execution of rights of warrants for warrant-linked bonds, credit institutions and owners of convertible bonds or warrant-linked bonds shall comply with the State Bank’s regulation on dossiers, order and procedures for approval of increase in charter capital of credit institutions.

Article 14. Process for issuance and payment of valuable papers

The process for issuance and payment of valuable papers shall be specified by credit institutions or foreign bank branches in compatibility with their characteristics and management models and in accordance with relevant laws, ensuring the accurate and safe issuance and payment of valuable papers. Credit institutions or foreign bank branches shall provide purchasers of valuable papers with adequate information about the process for issuance and payment of valuable papers.

Article 15. Premature redemption of bonds and bond swap

Credit institutions shall prematurely redeem bonds and swap bonds in accordance with the Law on Securities and relevant laws.

Article 16. Use of valuable papers as collaterals

Valuable papers may be used as collaterals under guidance of credit institutions or foreign bank branches in accordance with the law on secured transactions.

Article 17. Transfer of ownership over valuable papers and handling of risks

1. Ownership over valuable papers shall be transferred by modes of purchase, sale, giving as gifts, donation, exchange, and inheritance, and other modes in accordance with relevant laws.

2. Ownership over valuable papers issued by financial companies or financial leasing companies shall only be transferred between organizations.

3. Procedures for transferring ownership over valuable papers or handling risks (when valuable papers are creased, torn or lost and other risks) shall be specified by credit institutions or foreign bank branches in accordance with relevant laws and in conformity with their business characteristics and conditions, while guaranteeing the lawful interests of owners of valuable papers.

Article 18. Payment of valuable papers

1. Credit institutions and foreign bank branches shall pay principals and interests in full and on time to purchasers of valuable papers.

2. Methods of payment of principals and interests of valuable papers shall be decided by credit institutions or foreign bank branches in accordance with relevant laws, and informed to purchasers of valuable papers before the issuance of valuable papers.

3. The premature payment of valuable papers shall be decided by credit institutions or foreign bank branches at the request of purchasers of valuable papers, ensuring the safe operation of credit institutions and foreign bank branches. Interests applied in case of premature payment of valuable papers must comply with the State Bank’s regulations.

Article 19. Internal regulations

Pursuant to the Law on Credit Institutions, this Circular and relevant laws, credit institutions and foreign bank branches shall promulgate their internal regulations on issuance of valuable papers in compatibility with their management models and business characteristics and conditions, ensuring the safety of their operation. Such internal regulations must specify responsibilities and obligations of each division and individual involved in the issuance of valuable papers.

Article 20. Implementation provisions

1. This Circular takes effect on May 17, 2021.

2. This Circular replaces:

a/ The State Bank Governor’s Circular No. 34/2013/TT-NHNN of December 31, 2013, prescribing the domestic issuance of promissory notes, treasury bills, deposit certificates and bonds by credit institutions and foreign bank branches; and,

b/ The State Bank Governor’s Circular No. 33/2019/TT-NHNN of December 31, 2019, amending and supplementing a number of articles of the State Bank Governor’s Circular No. 34/2013/TT-NHNN of December 31, 2013, prescribing the domestic issuance of promissory notes, treasury bills, deposit certificates and bonds by credit institutions and foreign bank branches.

3. For bond issuance plans approved by competent authorities of credit institutions or by the State Bank before the effective date of this Circular, credit institutions shall continue to implement such plans. In case the State Bank Governor’s Decision allowing a credit institution to issue bonds has the provision stating that the credit institution redeeming bonds may include such bonds in tier-2 capital after obtaining the State Bank’s written approval, such provision shall become invalidated from the effective date of this Circular, and the inclusion of prematurely redeemed bonds in tier-2 capital must comply with the State Bank’s current regulations on limits and prudential ratios in operation of credit institutions.

Article 21. Organization of implementation

The Chief of the Office, the Director of the Monetary Policy Department, and heads of the units of the State Bank, credit institutions and foreign bank branches shall organize the implementation of this Circular.-

State Bank Governor
NGUYEN THI HONG