In response to the recent scandals of private issuance of corporate bonds, the Government has introduced several major changes to Decree 153/2020 on private issuance of corporate bonds in Vietnam. In particular, Decree 65/2022 amending Decree 153/2020 was issued in September 2022 and took effect immediately. We discuss below the key changes introduced by Decree 65/2022 which apply mostly to private domestic issuance of corporate bonds.

· Use of proceeds. Issuance of bonds to finance working capital or internal capital restructuring is no longer permitted. Issuance of bonds to refinance existing debt is still permitted. A bond issuer must now report how it uses the proceeds from bond issuance every six months. And the report must be verified by a qualified auditing company. When issuing a new bond, the bond issuer must also disclose how it uses the proceeds from earlier issuance in the issuance documents or the bond issuance plan.

· Voting of bond holders. Decree 65/2022 expressly allows bond holders holding 65% or more of the outstanding bond to have the right to (1) approve changes to bond terms and conditions; (2) approve the issuer’s remedial plan if the issuer breaches the bond issuance plan or the law; and (3) change of the bond holders’ representative. Decree 65/2022 requires the minimum voting threshold of a bondholder meeting is 65% of the outstanding bond.

Under Decree 155/2020, from January 2021, registration of security interests over listed shares in Vietnam will be made at the Vietnam Securities Depositor Center (VSD) instead of the National Registration Agency of Secured Transaction (NRAST). Following the issuance of the Decree 155/2022, the Ministry of Finance (MOF) and VSD have issued detailed regulations on registration of security interests over listed shares. The detailed guidance has streamlined the registration and enforcement of security interests over listed shares. For example, the VSD is now able to transfer the listed shares without consent of the securing party as long as the security agreement clearly provides that the lender can take over or sell the secured shares without consent of the securing party. This is different from the previous procedures which requires written consent of the securing party in the transfer dossiers.

However, the regulations on taking security over listed shares do not appear to address the following issues properly:

· Security over associated rights: The regulations on taking security over listed shares (such shares, secured shares) do not clearly cover taking security over rights attached to listed shares (e.g., rights to receive dividend, rights to subscribe for new shares, or rights to vote). Technically, unless such rights are considered as “securities” under securities regulations, the regulations on taking security over listed shares may not apply to security interests created over such rights.