A representative of the Ministry of Finance (MOF) on April 5 told VietNamNet that the violations in the stock market and corporate bond market were unfortunate, but that management agencies are determined to make the markets transparent and healthy.

The violations are uncommon and individuals must take responsibility before the law for their behavior. MOF is ready to cooperate with relevant agencies to strictly punish violators.

MOF said that heavy sanctions on violations should be imposed so that the stock market is transparent and serves as an important capital mobilization channel for socio-economic development.

MOF said it often checks, amends and supplements regulations on state management over the financial market, including the stock market.

“The cases show that some enterprises provided wrong financial reports, while independent auditing firms did not fulfill their tasks, which led to wrong information about enterprises, thus affecting investors’ benefits,” he said.

VietNamNet found that the companies belonging to the Tan Hoang Minh Group that conducted nine bond issuance campaigns were not public companies. They therefore did not have to ask for permission from the State Securities Commission to issue bonds. After the bond issuance was implemented, the enterprises had to report to HNX.

This was a legal loophole for enterprises to exploit. Sources told VietNamNet that the Minister of Finance asked to amend Decrees 153 and 155 to fix this loophole.

Since 2021, MOF has given warnings about risks that investors face when buying corporate bonds.

On September 1, 2021, Minister of Finance Ho Duc Phoc said that inspection and supervision of the corporate bond market must be strengthened. 

While admitting the positive impact of bond issuance, MOF warned that private offerings pose high risks to investors and may threaten the national financial system.

Phoc asked SSC, the Finance and Banking Department and Vietnam Stock Exchange (VNX) to strengthen supervision over bond issuance activities. 

SSC has the responsibility of cooperating with the Finance and Banking Department and relevant agencies to enhance inspection and supervision over bond issuance, especially issuance from small and newly set up businesses operating in risky business fields that have unclear business results. 

If they discover signs of fraud and appropriation of investors’ assets, the agencies must transfer the cases to the police for handling in accordance with the law.

On September 10, 2021, SSC sent a dispatch to securities companies, reminding them about compliance with Decree 153/2020 on bond private offerings in the domestic market and offerings in the international market.

SSC had previously discovered offering, distribution and ownership transfer activities that had not complied with the law.

In order to be sure that the corporate bond market can develop in a safe and sustainable way, and to prevent risks, SSC asked securities companies to strictly observe Decree 153 dated December 31, 2020.

In December 2021, amid the hot development of the corporate bond market, MOF conducted a  assessment of the market to draft the decree to amend and supplement some articles in Decree 153 on bond private offerings.

According to the Finance and Banking Department, under  current regulations, enterprises mobilize capital through private offerings on the principle of “self-borrowing, self-paying and self-responsibility”, and the State management agencies do not issue issuance permits.

There are many enterprises which have small scale but issue bonds in large quantities and high interest rates. Many enterprises issue bonds with no mortgaged assets or low-quality assets.

With high risks, bond private offerings are expected to be reserved only for professional securities investors, i.e., investors who can analyze risks, have financial capability, and accept high risks.

Luong Bang