Bond trading is becoming more and more popular. To help customers have more information about the corporate bond sector, the Law Firm would like to mention the cases of buying back individual corporate bonds before maturity. For the best advice and support, please contact us.
First, let's learn about the issues surrounding corporate bonds.
1. What are corporate bonds?
Corporate bonds are securities issued by businesses in the form of debt and certificates. When you buy a bond from a business, you are their creditor. Therefore, when the maturity date comes, the business is obliged to pay both interest and principal as prescribed to bond investors.
2. Classification of corporate bonds
Currently there are 2 popular types of corporate bonds, specifically as follows:
Listed bonds: Are bonds registered and deposited at the Securities Depository Center. This type of bond is widely traded on concentrated stock exchanges (HNX and HSX). The trading process must comply with the regulations of the listed Stock Exchange.
OTC Bonds: Also known as over-the-counter bonds, and are traded on the OTC market. Transactions will be conducted between investors on a “willing buyer, willing seller” basis, and will not be bound by legal policies.
3. Cases of early redemption of individual corporate bonds
On September 16, 2022, the Government issued Decree 65/2022/ND-CP amending Decree 153/2020/ND-CP effective from September 16, 2022, regulating the offering and trading of individual corporate bonds in the domestic market and the offering of corporate bonds to the international market.
Accordingly, cases of early bond repurchase include:
– Early redemption according to agreement between the issuing enterprise and the bond owner.
– Compulsory buyback at investor's request when:
+ Enterprises that issue and trade corporate bonds in violation of the law on offering and trading corporate bonds according to the decision of competent authorities and such violation:
Unable to remedy or the remedy is not accepted by the number of bondholders representing 65% or more of the total outstanding bonds of the same type.
+ The issuing enterprise violates the bond issuance plan and the violation cannot be remedied or the remedial measures are not approved by the number of bondholders representing 65% or more of the total number of bonds of the same type in circulation.
+ Other cases are specifically stated in the bond issuance plan stipulated in Article 13 of Decree 153/2020/ND-CP (if any).
Above are the cases of buying back individual corporate bonds before maturity that you need to pay attention to. For the best advice and support, you can contact the Company.
