Strictly handle violations and perfect the mechanism for the corporate bond market
The State Securities Commission has issued a decision to cancel 9 bond offerings with a total value of VND 10,030 billion by 3 companies of Tan Hoang Minh Group.
Hot growth market, many mistakes of enterprises
The corporate bond market has recently developed rapidly to become a medium and long-term capital mobilization channel for enterprises in accordance with the State’s policy on balanced development of the capital market, gradually reducing dependence on bank credit. row. However, the rapid development of the bond market has also generated risks affecting the operation of the market, which need to be managed, closely monitored and handled.
Minister of Finance Ho Duc Phuc said that the Ministry of Finance regularly follows market developments to analyze, evaluate and adjust the law accordingly. The Securities Law 2019, the Enterprise Law 2020, will be applied from January 1, 2021, and the guiding decrees have regulated the separate management between private placement and issuance of corporate bonds to the public.
Accordingly, privately-issued corporate bonds can only be sold to professional securities investors in the form of self-borrowing, self-paying, self-responsibility. Issuing enterprises must disclose information fully and honestly to investors, disclose information to the Stock Exchange, and at the same time have the responsibility to use capital for the right purposes, return bond principal and interest. on time…
In the context of the market showing signs of hot development, the Minister of Finance continuously directed functional agencies of the financial sector to strengthen inspection and supervision work to correct and strictly handle violations. in issuing and providing services on corporate bonds.
Since 2019, the Ministry of Finance has organized more than 30 inspection teams at issuers, securities companies, and commercial banks. Through inspection, the management agency has sanctioned administrative violations and requested remedial measures at two enterprises, VsetGroup and Apec Group; at the same time sanctioning VIS Securities Company. The Ministry of Finance also directed the State Securities Commission to coordinate and provide documents for the authorities to consider violations.
Most recently, on April 3, 2022, based on dossiers, documents and proposals of competent authorities on the cancellation of 9 bond issuances of Viet Star Company, Winter Palace Company. , Soleil Company under Tan Hoang Minh Group due to the act of disclosing false information, concealing information in private bond issuance, the State Securities Commission issued Decision No. 181/ QD-UBCK canceled the above 9 offerings with a total value of 10,030 billion VND.
The Ministry of Finance is also directing the State Securities Commission to inspect issuing advisory organizations, issuance agents and service providers for the offerings of the three companies mentioned above. Violations will be strictly handled according to their competence and provisions of law.
In order to improve the quality of financial statements, the Ministry of Finance has also directed functional units to strengthen and step up the inspection, examination and supervision of enterprises providing audit services. In case of detecting serious violations, it is required to urgently transfer to the police agency for serious handling.
Warn of risks, rush to fill legal loopholes
Minister of Finance Ho Duc Phuc emphasized that, through the mass media, the Ministry of Finance has regularly warned about risks in the market and made recommendations for each participant in the market. TPDN school.
Accordingly, investors need to understand that they are professional securities investors in accordance with the law, fully assess the risks when investing in corporate bonds. invitations from service providers when they have not learned carefully about the financial situation of the issuer and the terms and conditions of the bonds.
Investors should also note that the fact that credit institutions and securities companies distribute corporate bonds does not mean that these organizations guarantee the safety of bond purchases. In the event that buying bonds through investment contracts has no legal basis in accordance with the law on bond issuance, the investor will not be the bond owner and will not have any interest in the bond issuance. with bonds according to the commitments of the issuer.
Investors should also pay special attention that current regulations only allow professional securities investors to buy and trade corporate bonds individually.
Accordingly, any fraudulent behavior to become a professional securities investor not only exposes investors to many risks and losses when buying bonds (possibly losing the entire investment money) but also acts of fraud. violate the law. State management agencies will carry out inspection to strictly handle acts that circumvent these provisions of the law.
For enterprises that mobilize corporate bonds in large volumes, with high interest rates exceeding their financial capacity, it is very risky that when production and business activities face difficulties, enterprises will not be able to pay principal and interest. bonds under bond commitments.
Issuing enterprises should note that violating regulations on information disclosure, using capital for improper purposes as announced, in addition to being handled for violations according to regulations, may be prosecuted for criminal liability if causing damage. for investors.
For service providers, it is necessary to absolutely comply with the law in providing complete, transparent and accurate information to investors, ensuring advice for issuers to comply with the provisions of the law. ; identify the right professional investors to buy bonds. Service providers (securities companies, commercial banks) soliciting and distributing corporate bonds to investors who are not professional securities investors or using other forms of circumvention of the law also will be severely punished.
After 1 year of implementing new regulations on corporate bond issuance in the Law on Securities, the Law on Enterprises and guiding decrees, in the face of the market situation, new risks still arise, the legal regulations need to continue to be adjusted. to match reality, overcome and eliminate new risks. The Ministry of Finance has evaluated, reviewed and developed a draft Decree amending and supplementing Decree No. 153/2020/ND-CP in the direction of increasing publicity, transparency, and minimizing risks to the goal of sustainable corporate bond market development. At the same time, it is recommended that the Government and the National Assembly continue to amend the Law on Securities and the Law on Enterprises in the coming time.
Some proposed policies include: Narrowing regulations on the purpose of bond issuance to limit the transfer of capital around, causing lack of transparency and difficulties for investors when assessing the risks of bonds and issuers; specific guidance on issuance conditions and offering documents, including requirements on financial adequacy ratio when issuing bonds, organization representing bond owners; specifying the types of bonds that individual investors can buy and trade in order to orient individual investors to buy corporate bonds with more safety, publicity and transparency; supplementing regulations to speed up the establishment of a separate corporate bond trading market at the Stock Exchange for professional securities investors and supplementing regulations on the responsibilities of service providers. services to streamline service delivery organizations and improve the quality of service delivery.
The draft Decree has been widely consulted through the Government Portal, the Portal of the Ministry of Finance, opinions of relevant ministries and branches, written comments and direct dialogue with members. market member. Currently, the draft Decree is being finalized to send to the Ministry of Justice for appraisal and submission to the Government for promulgation.
In the coming time, Mr. Ho Duc Phuc affirmed that the Ministry of Finance will continue to strengthen the management, supervision, inspection and inspection of activities related to the issuance and provision of services on corporate bonds of companies. Securities, issuers and service providers to detect and strictly handle violations, enhance market transparency to ensure corporate bond market becomes an important capital mobilization channel. effective for enterprises.
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