Debate on debt ceiling when issuing individual corporate bonds

Delegate Ha Sy Dong ( Quang Tri ) commented that the conditions for enterprises to issue private bonds is a controversial issue. Photo: VIET CHUNG

Expanding the scope of business establishment and management

Regarding amendments and supplements to the subjects allowed to establish, participate in management, operation, and work at enterprises, Deputy Nguyen Thi Thu Dung (Thai Binh) proposed expanding the scope, allowing vocationaltraining institutions to also establish enterprises to commercialize research results.

Delegate Tran Thi Nhi Ha ( Hanoi ). Photo: VIET CHUNG

Sharing the same view, Deputy Tran Thi Nhi Ha (Hanoi) highly appreciated the fact that the draft amendment has expanded the rights of officials at public higher education institutions in contributing capital, managing and operating enterprises to commercialize research results, but noted that the draft Law on Science, Technology and Innovation (also presented at this session) has broader provisions, including officials at all public science and technology organizations, creating a lack of consistency in the legal system.

“It should also be noted that not all public higher education institutions are science and technology organizations and vice versa,” Deputy Tran Thi Nhi Ha emphasized and recommended that this draft law expand the scope in accordance with the draft Law on Science, Technology and Innovation.

Agreeing with expanding the scope of entities that can establish, manage, and operate enterprises, Deputy Pham Van Hoa (Dong Thap) proposed adding stricter regulations to avoid the situation where officials benefit from their own enterprises.

Regulations on declaration of beneficial ownership are not yet feasible.

Regarding the regulations on declaration and storage of information on beneficial owners, Deputy Pham Van Hoa suggested that there should be a distinction between large-scale enterprises and small enterprises, not creating unnecessary pressure on small enterprises. The regulation requiring enterprises to keep information on beneficial owners for 5 years after dissolution or bankruptcy is considered by the Deputy to be unfeasible. According to him, this responsibility should be assigned to the state management agency for enterprise registration.

Delegate Pham Van Hoa (Dong Thap). Photo: VIET CHUNG

According to Deputy Ha Sy Dong (Quang Tri), the criteria for determining beneficial owners are not clear, although the 2022 Law on Anti-Money Laundering also has the concept of beneficial owners and also assigns the Government to provide detailed regulations. The Government also has Decree 19/2023/ND-CP on this issue, applicable to transactions of credit institutions. The Deputy said that when consulting with credit institutions, he learned that credit institutions still rely on self-declaration by customers and account holders and do not have any measures for verification.

"If providing information about beneficial owners to banks is already difficult to comply with, if we now regulate this when businesses provide information to state agencies, it will be even more difficult," said Deputy Ha Sy Dong.

He suggested that, for now, clear cases (such as direct or indirect ownership of 25% or more of capital) must be declared. Failure to declare will result in a fine. Cases where the criteria are qualitative (such as “individuals with controlling rights”) also have regulations requiring declaration, but for now, no fines will be imposed if the enterprise does not declare fully. Later, when state agencies have more complete regulations on the concept of beneficial owners, then regulations on penalties for incomplete declaration will be issued.

Issuing individual bonds: should be assigned to the Government for specific regulations

Regarding the conditions for enterprises to issue private bonds, the draft adds a provision that "debt balance must not exceed 5 times the owner's equity", Deputy Ha Sy Dong (Quang Tri) commented that this is an issue that has caused a lot of controversy when amending the Securities Law in the Law amending 9 laws in the financial sector, as well as in the process of drafting the Decree on private bond issuance.

“In the Law amending 9 laws in the financial sector, the Government is only assigned to provide detailed regulations, not rigid regulations. In my opinion, this is a reasonable solution, because the issue of how much this debt ratio is depends a lot on other legal regulations governing the issuance of individual bonds,” said Deputy Ha Sy Dong. “If other regulations on issuance conditions and buyer conditions are strict, there may be no need to limit the debt ratio or a higher limit,” he said.

Having a different opinion, Deputy Bui Thi Quynh Tho (Ha Tinh) suggested that the regulation of the "ceiling" of debt payable compared to equity in the draft law is necessary, but through analysis, the Deputy said that the level of 3-4 times is appropriate.

Leaning towards Mr. Ha Sy Dong's point of view, Deputy Nguyen Truong Giang (Dak Nong) analyzed that the issuance of individual bonds by enterprises is subject to strict regulations of securities law. To maximize the effectiveness of this capital mobilization channel, the Deputy said that it is not necessary to include this content in the draft.

MR. PHUONG

Source: https://www.sggp.org.vn/tranh-luan-ve-tran-no-phai-tra-khi-phat-hanh-trai-phieu-doanh-nghiep-rieng-le-post796009.html