MoF requests strengthening supervision of corporate bond market

	Ensuring the healthy development of the corporate bond market
	Complete legal framework for private placement of corporate bonds
	Investors should be cautious in corporate bond market: experts

The MoF requests relevant units to urgently inspect and supervise the issuance, trading and service provision of corporate bonds. Photo: Internet

Request to review issuers with outstanding balances on privately placed bonds

Minister of Finance Ho Duc Phoc has signed Directive 01 on strengthening inspection, supervision and rectification of issuance, investment and service provision in the private placement market.

The corporate bond market has become a medium and long-term capital mobilization channel for enterprises. However, the fast-growing market has posed potential risks, some private placement activities have been violated and some serious cases have been prosecuted, said the MoF.

Accordingly, from September 2021, the Prime Minister has issued four directives on strengthening the management, supervision, inspection and examination of the stock market, corporate bond market and the Minister of Finance has issued three official dispatches to request its units to strengthen the management, supervision and inspection of the corporate bond market.

On April 18, 2022, the Government Office issued a written notice of the conclusion of Deputy Prime Minister Le Minh Khai at the meeting on the implementation of the Prime Minister's directives. The Minister of Finance requests the units to urgently review and amend the regulations related to the offering and trading of corporate bonds.

Accordingly, the Minister of Finance requests relevant units such as the Finance and Banking Department and the SSC to urgently review and complete regulations on corporate bond offering and trading.

Regarding the strengthening of management, supervision and inspection of the corporate bond market, the Minister requests the VNX and HNX to review the issuers which have outstanding balances on privately placed bonds (as of March 31, 2022) to list enterprises that need to be inspected to the MoF and the SSC. The review must finish before May 3, 2022.

Moreover, the VNX and HNX shall review the implementation of periodic information disclosure by issuers, the implementation of the reporting regime by service providers; review, update data and improve the database system on the issuance, redemption, payment of principal, interest, outstanding balance, transactions and transfer of private corporate bonds.

For issuers that have announced information before the issuance but have not yet issued bonds or have not finished the offering, the consulting organization is required to review the eligibility and offering documents and implementation of information disclosure obligations for outstanding bonds, report on management and use of capital from issued bonds required for review of the audit organization at the latest within six months (if any) and disclose information to HNX before the issuance.

Review all dossiers of enterprises

The MoF also requests the SSC to assume the prime responsibility for, and coordinate with the Department of Finance and Banking, the Inspectorate of the Ministry, the Legal Department, the Department of Corporate Finance, and HNX to urgently inspect and supervise the issuance, transaction, and services on corporate bonds at securities companies and large issuers to report to the leaders of the Ministry.

This work must be completed before May 10, 2022. In case of identifying signs of non-compliance with law provisions, penalties will be applied.

Regarding strict supervision of the private placement of corporate bonds, the Ministry of Finance requests the SSC to guide organizations that provide consultancy services on bond offering, bidding, underwriting, bond issuance agents, bond registration and depository to reorganize service provision on private corporate bonds before April 28, 2022.

In particular, organizations that advise on bond offering documents are required to closely review and ensure that the issuer fully meets the conditions for the offering and offering documents as prescribed in Decree 153/2020 and the securities law, and take responsibility under the law for their review.

For ongoing consulting contracts, it is necessary to review the entire dossiers of the enterprises, the quality of the provided dossier components, especially the financial statements, documents proving the purpose of using capital from the bond issuance, documents on collateral to request enterprises to disclose information again to the HNX before issuance.

The provision of consulting services on bond offering documents of securities companies is managed by the SSC. The consulting organization must fulfill the obligation of periodic reports to the SSC. Violations of the law when providing services will be punished.

The MoF requires bidding, underwriting organizations and bond issuance agents, to comply with Decree 153/2020 and service provision contracts signed with issuers; disclose complete and accurate information of the issuer and bonds to investors according to the approved issuance plan, and the bond offering announcement and only offer bonds to investors who are eligible to buy bonds as prescribed in Clause 1, Article 8 of Decree 153/2020/ND-CP.

"The act of providing inaccurate and incomplete information and offering to ineligible investors will be sanctioned in accordance with the law," the Directive stated.

Furthermore, the MoF requests to review all corporate bonds which were registered and deposited in terms of volume, payment situation of principal and interest, quantity and type that investors hold as of April 15, 2022 and report to HNX before April 30, 2022.

The investors must also comply with regulations on professional securities investors when transferring privately issued corporate bonds; review and save documents on certification of professional securities investor status to ensure completeness, honesty and accuracy in accordance with Decree 155/2020. Violations of the law when providing services will be handled.

Rectify audit activities of financial statements and information disclosure records of enterprises

In the Directive, the Minister of Finance requests the Accounting and Auditing Supervision Department to issue documents to rectify the activities of auditing organizations, accounting and auditing service providers, people who practice accounting and auditing strictly complies with legal provisions on auditing, accounting and auditing standards, ensures the independence and objectivity in the audit process, and professional ethics when providing services. The audit of financial statements and information disclosure records of bond issuers must be completed before April 28, 2022.

Moreover, the MoF requires strengthening inspection and supervision of accounting and auditing service providers and strictly handling violations in the provision of audit services.

The Department of Price Management is also required to rectify activities of the price appraisal organizations and practitioners in compliance with the law on price appraisal. The assessment of collateral assets of corporate bond issuers must be done before April 28, 2022; it is necessary to strengthen the inspection and supervision of appraisal service providers and handle violations.

Regarding the work of strengthening information, the Ministry of Finance requests the Finance and Banking Department to continue to assume the prime responsibility for, and coordinate with the SSC and the Ministry's Office to proactively provide information on the corporate bond market, recommendations, early warnings of corporate bond risks for investors to ensure market stability.

The SSC must take the initiative in providing official information related to the sanctions for violations during the inspection of issuance, investment, and service provision of private corporate bonds.