In December 2022, the Prime Minister decided to establish VSDC by converting Vietnam Securities Depository Center (VSD) being a Government agency under the State Securities Commission (SSC) into a single limited liability company under the Enterprise Law 2020. The Minister of Finance will act as representative of the State capital in VSDC.

The conversion of VSD into VSDC could have the following legal implications:

• As an enterprise, VSDC can now be exposed to civil claims by its users if VSDC breaches its rules or contracts signed with securities companies, listed companies or other users. VSDC could also be subject to non-contractual claims by securities investors. As a Government agency, VSD is only exposed to administrative claims by its users which are more limited than civil claims.

Amidst the turmoil in Vietnamese bond market, which has not showed any sight of improvement, the Government continues to change the legal framework around Vietnamese corporate bonds. The latest regulations are the regulations by the Vietnam Security Depository Corporation (VSDC) on registration, depository, settlement and implement of rights for private corporate bond (VSD Private Bond Regulations). In light of the new VSD Private Bond Regulations and the difficulties for current bond holders to enforce their rights under the terms and conditions of bonds issued earlier (standard terms), it is high time that the terms and conditions of private corporate bonds to be drafted differently to give better protection to bond holders. We discuss below some of the improvements which could be included in the terms and conditions of a new private corporate bond:

·         Individual vs collective rights: under standard terms, most of the rights of bondholders are exercised collectively through the meeting of bondholders and/or the various agents (e.g., bondholders representative, security agents, or registration agents). While collective exercise of rights may be convenient for the issuer, collective exercise of rights could make it difficult for individual or small bondholders to protect their rights since they depend on decision of the meeting of bondholders and actions of the relevant agents. Therefore, we think that except for some mandatory rights, the terms of private corporate bond should allow a bondholder to exercise its right individually as much as possible. Under Decree 153/2020, change to the bond terms, approval of remedial plan regarding a breach by the bond issuer, or change to the bondholders’ representative require approval by the bondholders holding at least 65% of the outstanding bonds.