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CIRCULAR No. 68/2000/TT-BTC OF JULY 13, 2000 GUIDING IN DETAIL A NUMBER OF POINTS ON GOVERNMENT BOND ISSUANCE UNDERWRITING AND AGENCY
In furtherance of the Government's Decree NO.01/2000/ND-CP of January 13, 2000 promulgating the Regulation on the issuance of Government bonds, the Finance Ministry hereby guides in detail a number of points on Government bond issuance underwriting and agency as follows:
Part I
GENERAL PROVISIONS
1. Regulation objects:
Subject to the regulation of this Circular are issuing agencies; issuance underwriting organizations, issuance agents and organizations involved in the Government bond issuance underwriting and agency activities.
2. Government bonds shall be issued by mode of underwriting or agency, and in form of certificates or book entries.
3. The Finance Ministry shall approve plans for Government bond issuance by mode of underwriting or agency, and decide each specific issuance at the Central State Treasury's proposals.
4. The State Treasury is assigned to coordinate with the relevant branches in organizing the issuance of Government bonds in forms of underwriting and agency.
5. Interpretation of terms:
In this Circular, the following terms shall be understood as follows:
5.1. Issuance underwriting means the issuance underwriting organizations help the Finance Ministry fill in the procedures before the issuance of Government bonds into the market, undertake to buy Government bonds for re-sale or buy the Government bond volume not yet distributed.
5.2. Issuance agency means organizations licensed to act as bond issuance agents reach agreement with the Finance Ministry to undertake the sale of Government bonds. Where the bonds are not sold out, the issuance agency organizations may return theremaining bonds to the Finance Ministry.
5.3. Issuance underwriting organizations, issuance agency organizations are securities companies, financial companies and banking organizations operating under the Law on Credit Institutions and recognized by the Finance Ministry as members taking part in the Government bond issuance underwriting or agency.
5.4. Issuance underwriting conglomerate is agroup of two or more issuance underwriting organizations jointly taking part in the Government bond issuance underwriting on the basis of contracts between them.
5.5. Principal issuance underwriting organization is the organization representing interests and obligations of an issuance underwriting conglomerate in the Government bond issuance underwriting activities with the Finance Ministry.
5.6. Co-principal issuance underwriters are principal issuance underwriting organizations jointly representing the interests and obligations of an issuance underwriting conglomerate in the Government bond issuance underwriting activities with the Finance Ministry.
5.7. Co-underwriters are issuance underwriting organizations in an issuance underwriting conglomerate that have equal interests and obligations in the Government bonds issuance underwriting activities with the Finance Ministry.
Part II
SPECIFIC PROVISIONS
I. CONDITIONS FOR TAKING PART IN THE GOVERNMENT BOND ISSUANCE UNDERWRITING AND A GENCY
1. Subjects mentioned at Point a. Clause 3 and Clause 4, Article 18 of the Regulation on the issuance of Government bonds, promulgated together with the Government's Decree No.OI/2000/ND-CP of January 13, 2000, that wish to take part in the Government bond issuance underwriting and/or agency shall have to meet the following conditions:
I.I. Having the legal person status, being established under the current law of Vietnam;
1.2. Having a legal capital of 22 billion Vietnam dong or more;
1.3. Having Vietnam dong accounts opened at banks;
1.4. Having conducted profitable business for the latest two consecutive years (except for newly established organizations);
1.5. Having filed written requests for recognition as members taking part in the Government bond issuance underwriting or agency (made according to the set form) to the Central State Treasury.
2. Basing itself on the written requests and the prescribed conditions, the Central State Treasury shall announce the recognition of members taking part in the Government bond underwriting or agency or nullify the previous recognition of certain members taking part in the Government bond issuance underwriting or agency if such members are no longer qualified therefor.
3. Securities companies having licenses foil securities issuance underwriting operations granted by the State Securities Commission shall be automatically recognized as members taking part in the Government bond issuance underwriting.
II. THE GOVERNMENT BOND ISSUANCE UNDERWRITING
1. The Government bond issuance underwriting structure:
Basing itself on the practical situation, the Central State Treasury decides upon the Government bond issuance structure as follows:
1.1. A sole issuance underwriting organization.
1.2. An issuance underwriting conglomerate having one or several co-principal issuance underwriting organizations. I
2. Selling prices of Government bonds by mode of issuance underwriting:
2.1. Sale of bonds by mode of discount:
a/ Bond selling price shall be determined according to the following formula: MG G = ---- (1 + Ls)"
In which:
G: Bond selling price
MG: Bond par value
Ls: Bond interest rate (%/year)
n: Bond term (years)
b/ When they become mature, bonds shall be settled in value equal to their par value.
2.2. Sale of bonds by mode of par-value equivalence:
a/ For bonds with their principals and interests settled in lump-sum upon their maturity:
- Selling price of bonds shall be equal to 100% of their par value.
- The money amounts for settling bonds upon their maturity shall be calculated according to the following formula:
T = MG x (1 + Ls)"
In which:
T: Total amount (principal and interest) to be settled
MG: Bond par value
Ls: Bond interest rate (%/year)
n: Bond term (years)
b/ For bonds with their interest paid periodically:
- The bond selling price shall be equal to 100% of their par value.
- Periodically paid interest amount shall be calculated according to the following formula: Ls L = MG x ---- k
In which:
L: Periodically paid interest amount
MG: Bond par value
Ls: Bond interest rate (%/year)
k: Interest payment times in a year
- When their bonds become mature, the bond owners shall have the bonds' principals paid equal to the bonds' par value and interest amount of the last payment time.
3. The Government bond issuance underwriting procedures:
3.1. Notification of projected content of a Government bond issuance:
At least 30 days before the bond issuance date, the Central State Treasury shall send notices on "projected content of the Government bond issuance" (made according to the set form) to issuance underwriting organizations to serve as basis for probing the investors' capabilities to buy the Government bonds.
3.2. Request for Government bond issuance underwriting
At least 20 days before the bond issuance date, basing themselves on the results of the probe of the investors' capabilities to buy the Government bonds buying capability, the issuance underwriting organizations shall file their written requests for Government bond issuance underwriting (made according to the set form) to the Central State Treasury.
Basing itself on such bond issuance underwriting requests, the Central State Treasury shall decide the underwriting structure and select bond issuance underwriting organizations for the coming bond issuance.
3.3. Negotiation and agreement on terms and conditions of a Government bond issuance:
The Central State Treasury shall send invitation(s) to the sole issuance underwriting organization, the principal issuance underwriting organization or the co-principal issuance underwriting organizations to come for negotiation on the terms and conditions of a Government bond issuance, including:
a/ Volume of bonds to be issued;
b/ Terms;
c/ Interest rates:
d/ Form (certificates or book entries);
e/ Bond selling prices (by mode of discount or par-value equivalence)
f/ Issuance date;
g/ Maturity date;
h/ Mode of settlement of principals and interests;
i/ Issuance underwriting charge;
j/ Other relevant matters.
3.4. Signing of Government bond issuance underwriting contracts:
After reaching agreement on the terms and conditions of the issuance, depending on the underwriting structure, the signing of a "Government bond issuance underwriting contract" (made according to the set form) between the Central State Treasury and issuance underwriting organizations shall be effected as follows:
a/ For case of issuance under the structure of the sole issuance underwriting organization:
The Central State Treasury shall sign a "Government bond issuance underwriting contract" with the sole issuance underwriting organization.
b/ For case of issuance under the structure of issuance underwriting conglomerates:
The Central State Treasury shall sign a "Government bond issuance underwriting contract" with the principal issuance underwriting organization or with each co-principal issuance underwriting organization. On the basis of the "Government bond issuance underwriting contract" signed with the Central State Treasury, the principal issuance underwriting organization or the co-principal issuance underwriting organizations shall sign underwriting contracts with the co- issuance underwriting organizations. Depending on each issuance's requirements, the Central State Treasury may sign with all issuance underwriting organizations only one "Government bond issuance underwriting contract".
3.5. Announcement of the official content of a Government bond issuance:
At least 10 days before the bond issuance date, basing itself on the "Government bond issuance underwriting contract" already signed with the issuance underwriting organizations, the Central State Treasury shall publicize the "Government bond issuance announcement" (made according to the set form) on the mass media.
3.6. Government bonds subscription:
Upon the Central State Treasury's Government bond issuance announcement, the oranizations taking part in the issuance underwriting shall organize the investors' subscription to the Government bonds in form of "Government bond subscription tickets" (made according to the set form), which shall serve as basis for the distribution and delivery of bonds between the Central State Treasury, the issuance underwriting organizations and the investors.
3.7. Deposits for underwritten bonds
a/ In order to ensure the transfer of money paid for underwritten bonds to the Central State Treasury, the issuance underwriting organizations shall have to make a deposit at least equal to 5% of the underwritten bonds' money.
b/ The depositing by the underwriting organizations must be made before the issuance date.
The Central State Treasury shall open deposit accounts at the State Bank to record the deposit amounts of the underwriting organizations.
c/ Deposit amounts shall not enjoy interests within the depositing duration and shall be cleared against the underwritten bonds' money amount transferred to the Central State Treasury by each underwriting organization.
3.8. Transfer of underwritten bonds' money
a/ On the bond issuance date, the issuance underwriting organizations shall have to transfer money into the Central State Treasury's accounts opened at the State Bank as payment for bonds they have underwritten for the Finance Ministry.
b/ In cases where the issuance underwriting organizations delay transferring money to the CentralState Treasury, they shall be fined for delayed payment. The fine amounts for delayed payment shall be deducted from the issuance underwriting organizations' accounts opened at banks and determined according to the following formula:
M x Ls x 150% x n
P = ------------------------
365
In which:P: Fine amount for delayed payment
M: Amounts of delayed payment to the Central
State Treasury
Ls: Bond interest rate (%/year)
n: Number of delayed payment days
c/ If past 5 days after the issuance date, an issuance underwriting organization still fails to pay in full the underwritten bonds' money amounts, the Central State Treasury shall cancel the issuance of the unpaid bond volume, while such issuance underwriting organization shall be fined with an amount equal to 5% of the money amount unpaid to the Central State Treasury.
3.9. Delivery of Government bonds:
a/ Bonds, when newly issued, shall be in form of book entries. Basing itself on the list and bond purchase money amounts of investors sent by the issuance underwriting organizations, the Central State Treasury shall deliver bond ownership certificates to such issuance underwriting organizations. At the investors' requests, the issuance underwriting organizations shall hand over the said list and bond ownership certificates to the custody organizations (member securities companies and commercial banks granted custody, operation licenses by the State Securities Commission) for re-custody at the Securities Trading Center and/or the Stock Exchange according to the State SecuritiesCommission's regulations.
b/ In cases where investors wish to receive bond certificates, the custody organizations shall have to notify the Securities Trading Center or the Stock Exchange thereof, so that the latter shall carry out the procedures for reducing book entries of Government bonds, and at the same time report such to the Central State Treasury for delivery of bond certificates to the Securities Trading Center and/or the Stock Exchange for subsequent hand-over to the investors.
4. Settlement of mature bonds:
4.1. For non-custodial bonds:
The settlement of bond principals and interests shall be effected at the State Treasury or the Government bond settlement agents. One day before the date prescribed for principal and/or interest settlement, the Finance Ministry (or the provincial/municipal Finance and Pricing Services or the Development Assistance Fund) shall fill in the procedures for transferring capital to the State Treasury or the settlement agents for making payments to the bond owners.
4.2. For custodial bonds:
The settlement of bond principals and interests shall be effected at the bond custody organizations. One day before the bond principal and interest settlement deadline, the Finance Ministry (or the provincial/municipal Finance and Pricing Services or the Development Assistance Fund) shall fill in the procedures for transferring capital to the Securities Trading Center and/or the Stock Exchange, which shall then supply such to the custody organizations for direct payment to the bond owners.
5. Payment of charges:
5.1. The bond issuance underwriting charge:
a/ The Central State Treasury shall come to an agreement with the issuance underwriting
organizations on the issuance underwriting charge level, which, however, shall not exceed 0.20% of the money amount of the underwritten bonds. In case of necessity, the Central State Bank shall organize a bidding to determine Government bond issuance underwriting organization(s) and charge.
b/ Within 10 days after the bond issuance date, the State Budget Department, the provincial/municipal Finance and Pricing Services and the Development Assistance Fund shall transfer money to the State Treasury for payment of charges to the Government bond issuance underwriting organizations.
5.2. The Government bond settlement agency charge:
The Finance Ministry shall pay the government bond settlement agency charges, which are equal to 0.1% of the total amount of actually paid bond principals and interests, to the settlement agents.
6. Responsibilities of issuance underwriting organizations:
6.1. To organize the sale offers and distribution of Government bonds they have underwritten to the investors, and buy the bond volume not yet distributed;
6.2. To manage books and carry out the procedures for bond registration, custody and listing at the Securities Trading Center and the Stock Exchange for the investors;.
6.3. Upon the conclusion of each issuance batch, the issuance underwriting organizations shall have to report to the Central State Treasury the bond distribution result, including: the bond volume held by the investors and the bond volume held by the issuance underwriting organizations.
III. GOVERNMENT BOND ISSUANCE AGENTS
1. The issuance duration and selling price of Government bonds by mode of agency:
I.I. The bond issuance duration shall be specifically prescribed by the Finance Ministry for each issuance batch. Bonds of the same issuance batch shall have the same issuance date and maturity date.
1.2. The bond selling price shall be determined according to provisions at Item 1.2.b. Point I, Part II of Finance Ministry's Circular No.58/2000/TT-BTC of June 16, 2000 guiding the implementation of a number of points the Government's Decree NO.OI/
2000/ND-CP of January 13, 2000 promulgating the Regulation on the issuance of Government bonds.
2. The procedures applicable to the government bond issuance agency:
2.1. Notification of contents of a Government bond issuance batch:
Basing itself on the Finance Ministry's decision to issue government bonds, the Central State Treasury shall send "Government bond issuance notices" (made according to the set form) to the Government bond issuance agents.
2.2. Government bond issuance agency contracts The Central State Treasury shall sign a
"Government bond issuance agency contract" (made according to the set form) with each issuance agent at least one day before the first day of a Government bond issuance batch.
2.3. Bond delivery:
a/ The Central State Treasury shall deliver to the issuance agents the volumes of certificates or bond ownership certificates corresponding to the bond volumes which such issuance agents undertake to sell right after the date of signing the government bond
issuance agency contracts.
b/ Within the bond issuance duration, the issuance agents shall have to preserve bond certificates and bond ownership certificates. Upon the conclusion of each issuance batch, the issuance agents shall organize the inventory of unused bond certificates and bond ownership certificates and return them to the Central State Treasury. In cases where the issuance agents lose or misplace bond certificates and bond ownership certificates, they shall have to indemnify the Central State Treasury for the lost or misplaced bonds upon their maturity' with amounts just equal to their principals plus (+) their interests.
2.4. Transfer of bond sale proceeds
a/ The transfer of bond sale proceeds shall be carried out once every 5 days. At the end of the 5th day, basing themselves on bond sale sheets (made according to the set form), the issuance agents shall transfer the whole proceeds from the sale of bonds in the past 5 days to the Central State Treasury.
b/ In cases where issuance agents delay transferring bond sale proceeds to the Central State Treasury, they shall be fined for delayed payment. The delayed payment fines shall be deducted from such issuance agents' accounts opened at banks and shall be determined according to the following formula:
M x Ls x 150% x n
P = -----------------
365
In which:P: Fine amount for delayed payment
M: Amounts of delayed payment to the Finance Ministry'
Ls: Bond interest rate (%/year)
n: Number of delayed payment days
3. Settlement of mature bonds:
The settlement of bonds issued by the mode of issuance agency' shall be conducted as for bonds issued by mode of issuance underwriting stipulated at Point 4, Section II, Part II of this Circular.
4. Payment of charges:
4.1. The Government bond issuance agency charge:
a/ The Central State Treasury shall come to an agreement with the issuance agents on the issuance charge level, which, however, shall not exceed 0.10% of proceeds from the bond sale to investors.
b/ Within 10 days from the conclusion of each bond issuance batch, the State Budget Department, the provincial/municipal Finance and Pricing Services and the Development Assistance Fund shall transfer money to the State Treasury for payment of bond issuance
agency charge to the agents.
4.2. The Government bond settlement agency charge:
The Finance Ministry shall pay to the settlement agents the Government bond settlement agency charge equal to 0.1% of the total amount of actually settled bond principals and interests.
Part III
ORGANIZATION OF IMPLEMENTATION
1. This Circular takes effect after its signing.
2. The Government bond listing, registration, custody and trading at the central securities, trading market shall be conducted under the State Securities Commission's guidance.
3. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the Peoples Committees of the provinces and centrally-run cities shall have to coordinate with the Finance Ministry in implementing this Circular.
4. The General Director of the State Treasury and the heads of the concerned units under the Finance Ministry shall have to guide and organize the implementation of the provisions of this Circular.
For the Finance Minister
Vice Minister
VU VAN NINH |
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