Luat Viet

:: Question :: Some enterprises have recently issued convertible bonds in the Stock Market. What is the convertible bond and conditions to issue convertible bonds ?

Answer:

According to Decree 52/2006/ND-CP on issuance of enterprise bonds ("Decree 52"), convertible bonds means a bond which may be converted into an ordinary share of the same issuing organization on terms stipulated in the plan for issuance. Convertible bonds may be secured or non-secured bonds.  

Bonds may be secured by the following forms: (a) Guarantee of payment by a financial or credit institution; (b) Guarantee by assets of the issuing organization; (c) Guarantee by assets of a third party.

The minimum par value of enterprise bonds shall be 100,000 Vietnamese dong. Other par values shall be multiples of 100,000 Vietnamese dong.

The time-limit for conversion of bonds shall be fixed by the issuing organization and publicly announced to investors upon issuance of bonds.

The enterprise issuing bonds shall make a decision on the bond interest rate for each issuing tranche. The bond interest rate may be set as a fixed rate for the whole term of the bonds or floated on the market. When bonds are issued with a floating interest rate, the issuing organization shall announce reference interest rates used as the basis for setting the interest rate payable to bondholders.

Interest on bonds shall be paid by the following methods: (a) Periodical payment of interest; (b) Payment of interest immediately on issuance; (c) One-off payment of interest together with principal upon maturity.

The bond conversion ratio shall be fixed by the issuing organization at the time of issuance. If at the time of bond conversion the share price fluctuation exceeds the range of fluctuation of share price announced at the time of issuance of the bonds, the enterprise owner shall have the right to make an appropriate adjustment to the bond conversion ratio.

Conditions to issue convertible bonds: (a) being a joint stock company; (b) operating for at least 01 year from the date on which the enterprise officially commenced operation; (c) having audited financial statements for the year immediately preceding the year of the issuance; (d) The production and business operation for the year immediately preceding the year of the issuance was profitable; (e) having a plan for issuance of bonds passed by the general meeting of shareholders.

• » Question :: I am a member of the Supervisory Commission (the Commission) of a public company which is unlisted and termed from 2007 to 2010. Until now, my term is still valid. In 2009, I was [not] invited to attend any meeting of the company’s Commission. Recently, I also did not attend the Commission’s meeting to produce the Commission’s Report for submission to the General Shareholder’s Meeting (the Meeting) year 2010 on April 9. I was informed that this Commission’s Report was built by the Commissions’ Director (the another member of the Commission also did not attend). I would like to ask you whether the operation of the Commission like that is legal or not? Is the Report mentioned above legal? What should I do to comply with the rights, duties and obligations of a Commission’s member? (01/06/2010)
• » Question :: I am a president of the Management Board (“the Board”) of a public company. As per regulations, the term of the Board, Supervisory Commission (“the Commission”) is five (5) years. Therefore, the first term of the Board, Commission is due on November 2010. However, in order to facilitate the voting of the Board, the Commission in the second term, the Board would like to submit the General Shareholder’s Meeting (“the Meeting”) with the latest on April 19, 2010 for renewal of the first term of the Board, the Commission until April 2011. So, the question is that is the renewal true or not? If the shareholders are not taken opinions directly at the Meeting, can the Board collect opinions indirectly from shareholders in writing? If the Meeting does not pass the renewal, how can the voting of the Board, the Commission be taken in compliance with laws? (31/05/2010)
• » Question :: Our company registers shares at the Securities Depository Central (SDC), but cannot deposit, of which my 10.000 shares. So, can I transfer directly 2.000 shares to my brother and compliment 2.000 shares to my wife? (03/05/2010)
• » Question :: We are a unlisted public company which issued convertible bond (two years term) nearly two years ago. In the coming time, the company will register to list shares in the Ho Chi Minh City Stock Exchange (HOSE). In order to shorten time, will the company be able to conduct this procedure along with converting bonds to shares? (28/04/2010)
• » Question :: In 2009, the price of listed shares of many companies increased continuously. Therefore, such companies were required to provide explanation for such increase. There are many companies used the same explaining contents for different explanation. Please kindly provide the regulations on content of the explanation on increase of price of shares? (21/03/2010)