CIRCULAR

PROVIDING FOR DOMESTIC ISSUANCE OF PROMISSORY NOTES, BILLS, DEPOSIT CERTIFICATES, AND BONDS BY CREDIT INSTITUTIONS, FOREIGN BANK BRANCHES

- Pursuant to the Law on State Bank of Vietnam No. 46/2010/QH12 dated 16 June 2010;

- Pursuant to the Law on Credit institutions No. 47/2010/QH12 dated 16 June 2010;

- Pursuant to the Law on Enterprises No. 60/2005/QH11 dated 29 November 2005;

- Pursuant to the Law on Securities No. 70/2006/QH11 dated 29 June 2006 and the Law on amendment of, supplement to several Articles of the Law on Securities No. 62/2010/QH12 dated 24 November 2010;

- Pursuant to the Ordinance on foreign exchanges No. 28/2005/PL-UBTVQH11 dated 13 December 2005;

- Pursuant to the Decree No. 90/2011/ND-CP dated 14 October 2011 of the Government on issuance of corporate bonds;

- Pursuant to the Decree No. 156/2013/ND-CP dated 11 November 2013 of the Government providing for the functions, duties, authorities and organizational structure of the State Bank of Vietnam (hereinafter shortly referred to as the State Bank);

- Upon proposal of the Director of Monetary Policies Department,

The Governor of the State Bank hereby issues the Circular providing for the domestic issuance of promissory notes, bills, deposit certificates, bonds by credit institutions, foreign bank branches.

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope

1. This Circular provides for the domestic issuance of promissory notes, bills, deposit certificates, bonds by credit institutions, foreign bank branches for fund mobilization within the territory of Vietnam.

2. The public offer of bonds, deposit, listing and trading of bonds by credit institutions, foreign bank branches in securities market shall be subject to this Circular and regulations on securities.

Article 2. Interpretation

In this Circular, following terms shall be construed as follows:

1. Promissory notes, bills, deposit certificates, bonds (hereinafter called valuable papers) shall be an evidence that confirms the debt repayment obligation between the issuing credit institution, foreign bank branch and the buyer of valuable paper in a certain period of time, interest payment conditions and other conditions.

2. Non-bearer valuable paper shall mean the valuable paper that is issued in the form of a certificate or book entry with name of the owner.

3. Bearer valuable paper means the valuable paper that is issued in the form of a certificate without name of the owner. Bearer valuable paper is subject to the ownership of the person who holds the valuable paper.

4. Term of valuable paper means the period of time commencing from the date of issue to the date of maturity. Short-term valuable papers shall have term of less than one year, long- term valuable paper shall have term of two years or more, bonds shall have term of one year or more.

5. Fixed interest rate shall be the interest rate that is unchanged and applied during the term of the valuable paper.

6. Periodically adjusted interest rate shall be the interest rate that is changed regularly according to the market and agreed by and between the credit institution, foreign bank branch and the buyer upon the issuance.

7. Interest prepayment shall be the sale of value papers at the price lower than their face value and the buyer shall be paid an amount equivalent to the face value of valuable papers at their maturity.

8. One-off payment of interest at maturity shall be the one-off payment of interest at maturity together with the principal amount.

9. Periodical payment of interest shall be the payment of interest basing on the coupon on the frequency as agreed by and between the credit institution, foreign bank branch and the buyer of valuable paper.

10. Term of bond conversion shall be the period from date when the issuer starts the conversion of bonds to time the bond conversion ends.

11. Fiscal year shall commence from 01 January and end on 31 December of calendar year.

Article 3. Subjects of application

1. Issuers of valuable papers as prescribed in Article 4 of this Circular.

2. Buyers of valuable papers as prescribed in Article 5 of this Circular.

3. Other entities, individuals relating to the issuance of valuable papers of credit institutions, foreign bank branches.

Article 4. Issuers of valuable papers

1. Commercial banks

2. Foreign bank branches operating in Vietnam

3. Finance companies and finance leasing companies that issue valuable papers for mobilizing funds from organizations.

4. Vietnam cooperative banks that issue valuable papers in line with their Establishment and Operation License.

Article 5. Buyers of valuable papers

1. Buyers of valuable papers shall be Vietnamese entities, individuals and foreign entities, individuals. Buyers of valuable papers that are initially issued by credit institutions, foreign bank branches in the primary market shall exclude credit institutions, foreign bank branches, credit institutions’ subsidiaries.

2. In case where a credit institution, foreign bank branch, credit institution’s subsidiary is an existing shareholder of the issuing credit institution, it shall be permitted to buy convertible bonds, warrant-linked bonds of such credit institution on the basis of complying with regulations on capital contribution, share purchase.

Article 6. Holding proportion of a foreign entity, foreign individual

Holding proportion of bonds listed in securities markets of foreign entities, foreign individuals shall be conformable to regulations of the State Bank and related legal documents from time to time.

Article 7. Form of issuance

1. Credit institutions, foreign bank branches shall issue valuable papers in the forms of non- bearer valuable papers, bearer valuable papers.

2. For the case where the buyer of valuable papers is a foreign entity, foreign individual, the credit institutions, foreign bank branches shall only permitted to issue valuable papers in the form of non-bearer valuable papers.

3. For the case of issuing valuable papers in the form of book entry, the issuing credit institutions, foreign bank branches shall grant the buyer of valuable paper with a certificate of valuable paper ownership.

Article 8. Details of valuable papers

1. Valuable papers must have following details:

a) Name of the issuer;

b) Name of valuable papers (promissory notes, bills, deposit certificates, bonds, convertible bonds, warrant-linked bonds);

c) Face value, term, date of issue, date of maturity;

d) Interest rate, method of interest payment, time of interest payment, place of valuable papers’ principal and interest payment;

e) Specifying bearer, non-bearer valuable papers;

g) For non-bearer valuable papers, it is required to clearly state the name of entity, number of establishment license or business registration license, address of the buyer (for an entity); name, number of ID card or passport, address of the buyer (for an individual);

h) For convertible bonds, it is required to specify the time limit of conversion, ratio of converting bonds into stocks;

i) For warrant-linked bonds, it is required to specify conditions for buying common stocks of the warrant holder, volume of stocks to be purchased of each warrant unit, rights and other responsibilities of the warrant holder;

k) Symbol, serial number of the issue;

l) The interest coupon enclosing with the valuable papers must have details relating to the valuable papers (serial number, face value), interest rate, amount to be received, period of interest receipt;

m) Signature of the legal representative of the issuing credit institutions, foreign bank branches or the legal authorized person and other signatures as determined by the credit institutions, foreign bank branches;

n) Other details relating to the valuable papers.

2. Valuable papers that are issued in the form of certificates must be designed and printed for the purpose of anti-counterfeit.

Article 9. Currency of issue and payment

Valuable papers shall be issued and paid in Vietnamese dong.

Article 10. Face value of valuable papers

1. Face value of valuable papers shall be one hundred thousand (100,000) dongs at the minimum. Any face value that is higher than the minimum one must be a multiple of the minimum face value.

2. Face value of valuable papers (excluding bonds) issued in the form of certificates may be ready-printed or up to agreement by and between the issuing credit institution, foreign bank branch and the buyer.

3. Face value of bonds issued in the form of certificates shall be ready-printed on the bonds.

4. Face value of valuable papers issued in the form of book entry shall be agreed by and between the issuing credit institution, foreign bank branch and the buyer.

Article 11. Interest rate

1. Interest rate of valuable papers shall be decided by the issuing credit institutions, foreign bank branches in correspondence with market interest rate and applicable regulations on interest rate of the State Bank from time to time on the basis of ensuring the business efficiency and operation safety for the credit institutions, foreign bank branches.

2. During the period of issuing valuable papers, credit institutions, foreign bank branches shall, on their own initiative, adjust interest rate of valuable papers in conformity with regulations on interest rate adjustment provided for by the State Bank from time to time.

Article 12. Date of issue and date of maturity of bonds

1. Bonds that are issued in the same batch and the same period shall be written the same date of issue and same date of maturity.

2. Date of issue and date of maturity for other valuable papers shall be fixed by the credit institutions, foreign bank branches.

Article 13. Method of issuing valuable papers

1. Credit institutions, foreign bank branches may issue valuable papers under the following methods: direct issue, underwriting, issuing agent, bidding.

2. The direct issue, underwriting, issuing agent and bidding for valuable papers issuance as mention above shall be conformable to provisions of laws.

3. Fee for underwriting, issuing agent, bidding for valuable papers shall be agreed by and between the issuing credit institutions, foreign bank branches and the underwriters, issuing agents, bidders of valuable papers.

Article 14. Participants in bidding, underwriting, issuing agents

1. Participants in valuable papers issuing agents shall include securities companies, credit institutions (except for finance lease companies), foreign bank branches that are licensed to supply issuing agent services in accordance with provisions of applicable laws.

2. Participants in bidding, underwriting for valuable papers issuance shall include securities companies and other institutions (except for credit institutions, foreign bank branches, credit institutions’ subsidiaries) that are licensed to supply bidding, underwriting services in accordance with provisions of applicable laws.

Article 15. Procedures of issuance and payment of valuable papers

Procedures of issuance and payment of the valuable papers shall be determined by the credit institutions, foreign bank branches in line with their management features and model and applicable regulations to ensure the security and accuracy of the issuance and payment of valuable papers.

Article 16. Payment of valuable papers and repurchase of bonds

1. Credit institutions, foreign bank branches shall pay the principal to the bond buyer upon the bond’s maturity.

2. Credit institutions, foreign bank branches shall pay the interest under the method of interest prepayment or one-off payment upon maturity or periodical interest payment.

3. Credit institutions, foreign bank branches shall make agreement on the payment of interests under the fixed or periodically adjusted interest rate.

4. The payment of valuable papers before their maturity shall be subject to the discretion of the credit institutions, foreign bank branches themselves on the basis of the request by the valuable papers buyer in line with the provisions on organization and operation to ensure the operation prudence of the credit institutions, foreign bank branches.

5. Credit institutions, foreign bank branches shall be permitted to repurchase bonds issued by themselves on the basis of the written approval from the State Bank to the application for bond issuance.

Article 17. Transfer of ownership to valuable papers and dealing with other risks

1. Ownership to valuable papers may be transferred in the forms of buying, selling, offering, giving, exchanging and inheriting in accordance with provisions of applicable laws. As for convertible bonds that are issued in private placements, warrants issued in conjunction with such bonds shall not be transferred within a minimum period of 01 year from the finishing date of issue, except for the case of transferring among professional securities investors.

2. Procedures of transferring valuable papers, dealing with risky cases (wrinkled up, torn off, lost and other risks) shall be stipulated by the credit institutions, foreign bank branches in compliance with the provisions of applicable laws, with their business features and conditions and ensuring the legal rights of valuable paper owners.

Article 18. Bonds swapping

Credit institutions, foreign bank branches shall swap bonds in accordance with regulations of the State Bank and applicable laws.

Chapter II

ISSUANCE OF VALUABLE PAPERS

Article 19. Issuance of promissory notes, bills, deposit certificates

Credit institutions, foreign bank branches shall, on their own initiative, organize the issuance of promissory notes, bills, deposit certificates upon observing prudential ratios as prescribed in Clause 1 Article 130 of the Law on credit institutions and guidance of the State Bank.

Article 20. Conditions for issuing bonds

Credit institutions, foreign bank branches shall be permitted to issue bonds (including convertible bonds, warrant-linked bonds) upon fully satisfying following conditions:

1. Complying with prudential ratios as prescribed in Clause 1 Article 130 of the Law on credit institutions and guidance of the State Bank.

2. Having operation period of 01 year at the minimum from the date of opening into operation.

3. The business result as stated in the audited financial statements of the year consecutively preceding the year of application and business result of the latest quarter must be profitable.

In case of issuing before 1^st April every year when the financial statements of the year preceding the year of application are unavailable, the following documents are required:

a) Audited financial statements of the year before the consecutively preceding year with profitable business result;

b) Financial statements of the year consecutively preceding the year of application with profitable business result, which are ratified by the Board of Directors or Board of Members for credit institutions; by General Director of Director for foreign bank branches.

4. Audited financial statements of the issuing credit institutions, foreign bank branches must be audit report with unqualified opinion.

5. For the case of issuing convertible bonds, warrant-linked bonds by credit institutions who are joint stock companies, in addition to conditions as stated in Clauses 1, 2, 3, 4 of this Article, following conditions are also required:

a) Plan on charter capital increase funded from the issuance of convertible bonds, warrant- linked bonds of the fiscal year that is adopted by the General Shareholders’ Meeting and approved by the State Bank;

b) Series of issuing convertible bonds for private placements of credit institutions must be six months apart;

c) In the event where the issuing credit institutions commit with the buyers of convertible bonds that bonds must be converted into stocks at maturity:

- Buyers of bonds must satisfy current regulations on limit of capital contribution, share purchase right from the time of issuing;

- The issuing credit institutions must satisfy conditions on selling shares to foreign investors in accordance with applicable regulations right from the time of issuing.

6. Approval of the State Bank is available.

Article 21. Plan on bond issuance

1. A plan on bond issuance shall have fundamental details as follows:

a) Business result of the year consecutively preceding the year of application and up to the latest quarter;

b) Issuing purpose and plan on the use of funds received from the issuance of bonds;

c) Total face value of the issue, name of bonds, currency of issuance, place of issue, form of issue, term, interest rate, method of interest payment, place of principal and interest payment, buyer of bonds, terms and conditions on the rights and obligations of credit institutions, foreign bank branches and buyers, other commitments for the bond buyers;

d) Method of issuing bonds; institutions participating in the underwriting, issuing agent (if any);

e) Sources for payment of bond principal and interest;

g) Method of payment of bond principal and interest;

h) For plan on issuance of convertible bonds, there must be details on conditions for, term of bond conversion, ratio of converting bonds into stocks, price of conversion, changing range of stock price and other commitments (if any);

i) For a plan on issuance of warrant-linked bonds, there must be details on conditions for buying common stocks of warrant holders, volume of stocks to be bought of each warrant unit, price and time of buying stocks;

k) The repurchase of bonds (if any) must clearly express the purpose of repurchase, total face value expected to repurchase, funds for repurchase, expected time of repurchase, other related information;

l) Other commitments for the bond buyers.

2. Plans on bond issuance shall be adopted by the Board of Directors, Board of Members of credit institutions or General Director (Director) of foreign bank branches. Plans on issuance of convertible bonds, warrant-linked bonds of credit institutions shall be adopted by the General Shareholders’ Meeting.

Article 22. Application file for bond issuance of the fiscal year

1. An Application for bond issuance of the fiscal year.

2. A plan on bond issuance of the fiscal year in accordance with provisions in Article 21 of this Circular.

3. Audited financial statements of the year consecutively preceding the year of issuance and financial statements of the latest quarter (certified copy). In the event where the audited financial statements of the year consecutively preceding the year of issuance are unavailable, the credit institutions, foreign bank branches shall submit their financial statements as stipulated in Clause 3 Article 20 of this Circular and provide a document committing to supplement their financial statements upon the audit result.

4. Plan on fund sources and use of funds of the fiscal year.

5. Charter and License for credit institutions that issue bonds at the first time, Establishment license for foreign bank branches that issue bonds at the first time (certified copies).

6. Plan on charter capital increase funded from the issuance of convertible bonds, warrant- linked bonds of the fiscal year that is adopted by the General Shareholders’ Meeting, which contain details as required by current regulations of the State Bank on change of charter capital level of credit institutions (for the case of issuing convertible bonds, warrant-linked bonds).

7. Other changes relating to the issuance of bonds (if any).

8. An Application for issuance of bonds signed by the legal representatives of the credit institutions, foreign bank branches. Legal representatives of credit institutions, foreign bank branches may authorize another person to sign and such letter of authorization shall be made in conformity with provisions of applicable laws.

Article 23. Procedures of approving an application for bond issuance

1. Credit institutions, foreign bank branches who issue bonds (including convertible bonds, warrant-linked bonds) shall send, directly or via post service, 01 set of application file for issuance of bonds of the fiscal year to the State Bank (Monetary Policy Department).

2. For the Application for issuance of bonds (excluding convertible bonds, warrant-lined bonds), within a period 30 working days from the receipt of full and eligible files, the State Bank shall provide its opinion in writing as to approving or disapproving the application for issuance of bonds for the fiscal year of credit institutions, foreign bank branches.

3. For the Application for issuance of convertible bonds, warrant-linked bonds, within a period of 45 working days since the receipt of full and eligible files, the State Bank shall provide its opinion in writing as to approving or disapproving the application for issuance of convertible bonds, warrant-linked bonds for the fiscal year of credit institutions.

Article 24. Limits applicable to buyers of convertible bonds, warrant-linked bonds

Upon the term of converting bonds into stocks or term of buying stocks, the buyers of convertible bonds, warrant-linked bonds shall be required to maintain the shareholding proportion in accordance with provisions of the Law on credit institutions and other applicable regulations.

Article 25. Organizing the issuance of valuable papers

1. Credit institutions, foreign bank branches shall take the initiative of organizing the issuance of promissory notes, bills, deposit certificates in accordance with provisions in Article 19 of this Circular.

2. Credit institutions, foreign bank branches shall organize the issuance of bonds within the scope of the issuance plan of the fiscal year as approved by the State Bank.

3. On 10^th of the first month of the Quarter consecutively following the reporting Quarter, credit institutions, foreign bank branches shall report their outcomes of issuing valuable papers, outcomes of bond repurchase in writing as per the form provided for in Appendix No. 01 and Appendix No. 02 attached to this Circular to the State Bank (Monetary Policy Department; Banking Inspection and Supervision Agency) and State Bank branches in provinces, cities under the central Government’s management where head offices of credit institutions, foreign bank branches are located.

4. In case where credit institutions, foreign bank branches are approved by the State Bank to issue bonds but do not organize the issuance, on 10^th January of the following year at the latest, the credit institutions, foreign bank branches shall report to the State Bank (Monetary Policy Department; Banking Inspection and Supervision Agency).

Chapter III

RESPONSIBILITIES OF CREDIT INSTITUTIONS, FOREIGN BANK BRANCHES, UNITS OF THE STATE BANK

Article 26. Credit institutions, foreign bank branches

1. To take responsibility for the issuance of valuable papers, management and use of funds from the issuance of valuable papers effectively and for the right purpose, ensuring the operation security in accordance with provisions of this Circular and applicable regulations.

2. To announce in public the information about the issuance of valuable papers; taking responsibility for the accuracy, truthfulness of the announced information.

3. To take responsibility for the accuracy, truthfulness and sufficiency of documents in the application file for bond issuance.

4. To make timely and full payment of principal and interest to the buyers of valuable papers.

5. For the cases of issuing convertible bonds, warrant-linked bonds to foreign investors, upon the term of converting into stocks or upon the term of buying stocks, credit institutions shall be required to satisfy conditions for selling shares to foreign investors as prescribed by current regulations.

Article 27. Units of the State Bank

1. Monetary Policy Department

a) To receive application files for issuance of bonds of the fiscal year, to receive reports on the outcomes of valuable papers issuance from credit institutions, foreign bank branches.

b) To send files of plan on charter capital increase funded from the issuance of convertible bonds, warrant-linked bonds to the Banking Inspection and Supervision Agency for submission to the Governor of the State Bank for consideration and decision.

c) To preside over and coordinate with related units in considering the applications for issuance of bonds of the fiscal year for submission to the Governor of the State Bank for consideration and decision.

2. Banking Inspection and Supervision Agency

a) To supply the Monetary Policy Department with:

- Assessment on the implementation of prudential ratios by credit institutions, foreign bank branches in accordance with provisions in Clause 1 Article 20 of this Circular.

- Business results as stated in the audited financial statements of the year consecutively preceding the year of application and business result up to the latest quarter of credit institutions, foreign bank branches.

- Assessment on the performance of credit institutions, foreign bank branches through the inspection, supervision process.

b) To make an examination and to submit to the Governor of the State Bank for approval or disapproval to the plan on charter capital increase funded from the issuance of convertible bonds, warrant-linked bonds and to notify the outcome to the Monetary Policy Department.

c) To work with Monetary Policy Department in examining and to provide specific opinion on approving or disapproving the application for bond issuance of credit institutions, foreign bank branches.

d) To inspect, supervise and handle within the scope of authority or recommend the Governor of the State Bank to handle any act of violating provisions of this Circular.

3. Foreign exchange control

To work with the Monetary Policy Department in examining and to provide specific opinion on approving or disapproving the application for bond issuance of credit institutions, foreign bank branches.

4. Finance – Accounting Department

To provide guidance on the accounting of valuable papers issuance operations of credit institutions, foreign bank branches.

5. Issue and Vault Department

To provide guidance to credit institutions, foreign bank branches on the sample design and printing of valuable papers for the purpose of anti-forgery upon request by the credit institutions, foreign bank branches.

6. State Bank branches in provinces, cities under the central Government’s management shall coordinate with the Monetary Policy Department to provide specific opinion about the issuance of convertible bonds, warrant-linked bonds of credit institutions whose head offices are located in the local area.

Article 28. Treating acts of violation

Organizations and individuals who violate provisions of this Circular shall, depending on the nature and seriousness of the violation, be treated in accordance with provisions of applicable laws.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 29. Effectiveness

1. This Circular shall come into effect from 14 February 2014.

2. This Circular shall replace following documents:

a) Decision No. 07/2008/QD-NHNN dated 24/3/2008 of the Governor of the State Bank on issuing the Regulation on domestic issuance of valuable papers by credit institutions;

b) Circular No. 16/2009/TT-NHNN dated 11/8/2009 of the Governor of the State Bank on the amendment of, supplement to several Articles of the Regulation on domestic issuance of valuable papers by credit institutions issued in conjunction with the Decision No. 07/2008/QD-NHNN dated 24/3/2008 of the Governor of the State Bank;

c) Article 5 of Circular No. 26/2011/TT-NHNN dated 31/8/2011 on implementing the scheme of administrative procedure simplification in monetary activity under the Resolution of the Government on the simplification of administrative procedures within the jurisdiction of the State Bank of Vietnam;

d) Official Letter No. 5647/NHNN-CSTT dated 29/5/2007 on issuance of valuable papers to overseas non-resident investors.

3. Credit institutions, foreign bank branches who already got permission from the State Bank to issue long term valuable papers before this Circular becomes effective shall continue implementing in accordance with the Decision of the State Bank. For the issuance of short term valuable papers that were organized to issue before this Circular becomes effective, credit institutions, foreign bank branches shall keep implementing until the ending of the issuance.

Article 30. Implementation

Director of State Bank’s Office, Director of Monetary Policy Department and Head of units of the State Bank, General Manager of State Bank branches in provinces, cities under the central Government’s management; Chairman of Board of Directors, Chairman of Board of Members, General Director (Director) of credit institutions, foreign bank branches shall be responsible for the implementation of this Circular.

APPENDIX 01

Reporting unit: ……

REPORT ON THE ISSUANCE OF VALUABLE PAPERS

Quarter… year….

Unit: VND billion

….., date ……..

1. Subjects of application: credit institutions, foreign bank branches issuing valuable papers in the reporting Quarter.

2. Report recipients: Monetary Policy Department; Banking Inspection and Supervision Agency – State Bank of Vietnam; State Bank branches in provinces, cities under the central Government’s management where head offices of credit institutions, foreign bank branches are located.

3. Deadline of sending report: On 10^th of the first month of the Quarter following the reporting Quarter at the latest.

4. Form of reporting: in writing.

Instructions for preparation of report:

- Highest interest rate of issuance shall be the highest interest rate of valuable papers already issued in the Quarter.

- Lowest interest rate of issuance shall be the lowest interest rate of valuable papers already issued in the Quarter.

- Column (9) = Column (2) + Column (3) – Column (8).

APPENDIX 02

Reporting unit: ………

REPORT ON REPURCHASE OF BONDS

Quarter … year

….., date ……..

1. Subjects of application: credit institutions, foreign bank branches issuing bonds in the reporting Quarter.

2. Report recipients: Monetary Policy Department; Banking Inspection and Supervision Agency – State Bank of Vietnam; State Bank branches in provinces, cities under the central Government’s management where head offices of credit institutions, foreign bank branches are located.

3. Deadline of sending report: On 10^th of the first month of the Quarter following the reporting Quarter at the latest.

4. Form of reporting: in writing.

Instructions for preparation of report:

- Total face value before repurchase shall be the total face value classified by each type of bonds before the time of repurchase.

- Total face value of repurchase shall be the total face value of bonds that are repurchased in the reporting quarter.

- Term of bonds shall be the term that is stated on the repurchased bonds.

- Remaining term of bonds shall be the period counting from the date of repurchase to the date of maturity.