The Ministry of Finance proposes regulations to improve the legal framework for privately-placed corporate bonds

Accordingly, these adjustments proposed by the Ministry of Finance are set within the context of implementing the Law on Enterprises, the amended Law on Securities, while also concretizing the policy of developing a safe, transparent, and sustainable capital market that gradually reduces the burden of medium- and long-term capital on the banking system.

While Decree 153/2020/NĐ-CP and its amending decrees primarily structured their regulations in a sequential manner - from issuance conditions, procedures, and documentation to registration, depository, trading, settlement, and information disclosure - the draft Decree has been “redesigned” to align more closely with the classifications set out in the law. Instead of grouping all issuers together, Chapter II of the draft Decree is reorganized into separate sections for enterprises that are not public companies, securities companies, or fund management companies; and a separate section for public companies, securities companies, and fund management companies. Accompanying these sections are provisions relating to the registration, depository, trading, and settlement of bonds. This structural approach enables enterprises and regulatory authorities to look up and apply the rules more easily, while ensuring clearer delineation of responsibilities and authority for each actor throughout the issuance process and market supervision.

Building on this new structure, one of the key issues attracting public attention is the policy direction of tightening the categories of investors allowed to participate in the privately-placed corporate bond market, particularly individual investors. The draft Decree thoroughly reflects the amendments in the Law on Securities by clearly distinguishing between institutional professional securities investors and individual professional securities investors. For enterprises that are not public companies, whether issuing plain bonds, convertible bonds, or bonds with warrants, if the private placement is made to individual professional securities investors, the bonds must be credit-rated and must also be backed by collateral or fully guaranteed for principal and interest payments. This serves as an important legal “safeguard” aimed at raising product quality standards, enhancing transparency, and better protecting individual investors - the group most vulnerable to risks when the market experiences volatility.

For public companies, securities companies, and fund management companies, the draft Decree adopts a differentiated approach. In the case of private placements of convertible bonds, the eligible purchasers are aligned with those permitted to buy shares in private offerings - namely strategic investors and professional securities investors (both institutional and individual) - and no credit rating or collateral requirement is imposed. However, for plain bonds and bonds with warrants issued privately to individual investors, the draft still requires a credit rating and collateral or a payment guarantee. Thus, instead of applying uniform rules across the board, the new regulations move toward a “tailored” approach for each type of bond and each category of enterprise, while consistently maintaining stricter requirements whenever individual investors are involved.

Alongside raising standards for bond products, the draft Decree also revises the mechanism requiring investors to acknowledge their understanding of investment risks. If previously, all professional securities investors, including organizations and individuals, were required to sign a statement affirming that they had been fully informed, understood the terms and conditions of the bonds, and would bear full responsibility for their investment decisions, now, based on practical review and recommendations from the Vietnam Bond Market Association, the Ministry of Finance now proposes that only individual professional investors be required to sign such acknowledgements. This “focusing” of the requirement reflects a clear policy direction: strengthening protection for the more vulnerable group of investors while avoiding unnecessary formalities for institutional investors, who already possess established systems and professional risk-management procedures.

On the side of issuing enterprises and intermediary organizations, the draft Decree continues to adopt the issuance methods currently in practice, such as auctions, underwriting, issuance agency, or direct sales (for credit institutions), while further standardizing the bond issuance advisory process. Advisory service providers are required to assist enterprises in preparing complete, accurate, and compliant documentation, while also bearing clear responsibility as a “filter” during the issuance process. Together with enhanced information disclosure requirements and a centralized registration, depository, trading, and settlement mechanism, these adjustments aim to address the issues of mass issuance, incomplete information, and the failure to accurately reflect the risk profile of each enterprise’s bonds.

Overall, the amendments demonstrate the regulators’ efforts not only to “patch up” the issues arising from recent market instability but also to establish a new legal order for the private corporate bond market: the sub‑legal document is more systematically organized, issuers and investors are clearly classified, requirements for credit ratings and collateral are elevated, and the responsibilities of issuing enterprises and intermediary organizations are more specifically defined. Once the new Decree is promulgated and implemented in coordination with the Law on Enterprises and the amended Law on Securities, the privately-placed corporate bond channel is expected to become an important pillar supplementing medium- and long-term capital for the economy, helping to strengthen investor confidence, ensure financial safety, and support macroeconomic stability.