Circular 11/2024/TT-NHNN amend Circular 16/2021/TT-NHNN purchase and sale of corporate bonds by credit institutions

CIRCULAR

Amending and supplementing a number of articles of the Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the Governor of the State Bank of Vietnam providing the purchase and sale of corporate bonds by credit institutions and foreign bank branches

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

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022, 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 amending and supplementing a number of articles of the Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the Governor of the State Bank of Vietnam, providing the purchase and sale of corporate bonds by credit institutions and foreign bank branches.

Article 1. To amend and supplement a number of articles of the Circular No. 16/2021/TT-NHNN

1. To amend Clause 4 Article 1 as follows:

“4. For the purchase and sale of corporate bonds between credit institutions placed under special control and supporting credit institutions, compulsory transferees must comply with plans for restructuring of credit institutions placed under special control that are approved by competent authorities.”

2. To add Clause 14 to Article 4 as follows:

“14. A bond issuer must send credit institutions the information about affiliated persons as defined in the Law on Credit Institutions before the credit institution purchases corporate bonds. Affiliated persons of a bond issuer include organizations and individuals having relations with the bond issuer as specified in Clause 24 Article 4 of the Law on Credit Institutions.

The information about an affiliated person being individual includes: full name; personal identification number; nationality, passport number, date of issue, place of issue for a foreigner; relationship with the bond issuer.

The information about an affiliated person being organization includes: name, identification number and head office address of the enterprise, number of enterprise registration certificate or equivalent legal papers; at-law representative, relationship with the bond issuer.”.

 3. To add Clause 15 to Article 4 as follows:

“15. Credit institutions must use the non-cash payment service for the purpose of payment for the purchase and sale of corporate bonds in accordance with the law on non-cash payment.”.

4. To amend and supplement Clause 2 Article 7 as follows:

“To monitor and supervise the bond issuer’s use of proceeds from bond issuance; to request the bond issuer to redeem premature bonds if detecting that the bond issuer uses proceeds from bond issuance not for the purpose stated in the plan or in the written commitment with the credit institution. In case the bond issuer doesn’t redeem premature bonds under commitment and as requested by the credit institution, the credit institution shall handle and recover bond principals and interests in accordance with law regulations.”.

5. To amend and supplement Clause 1 Article 8 as follows:

“1. The total outstanding amount of purchased corporate bonds (including corporate bonds issued by an enterprise and its affiliated persons) shall be included in the total outstanding loan balance for a client or for a client and affiliated persons under the Law on Credit Institutions and the State Bank of Vietnam’s regulations on limits and prudential ratios in operations of credit institutions.”.

Article 2. To replace phrases and repeal a number of articles of the Circular No. 16/2021/TT-NHNN

1. To replace the phrase “the Law on Credit Institutions (amended and supplemented)” in Clause 1 Article 2, Clause 2 and Clause 4 Article 4, Clause 1 Article 6 by “the Law on Credit Institutions”.

2. To repeal Clauses 11 and 12, Article 4 of the Circular No. 16/2021/TT-NHNN.

Article 3. Responsibility of implementation organization

Chief of Office, Director of the Monetary Policy Department, Heads of units of the State Bank of Vietnam; Directors of branches of the State Bank of Viet Nam of provinces and centrally-run cities, credit institutions, foreign bank branches shall be responsible for organizing the implementation of this Circular.

Article 4. Implementation provisions

1. This Circular takes effect on August 12, 2024.

2. For corporate bond purchase or sale contracts signed before the effective date of this Circular, credit institutions and clients may continue to perform such contracts in accordance with the law effective at the time of contract signing. From the effective date of this Circular, the modification of those contracts may be made only when the to-be-modified contents comply with this Circular./.