HCMC – Companies seeking to issue bonds via private placement must keep their total debt below five times their equity to minimize financial risks and safeguard investors.
With over 95% of the deputies present voting in favor, the National Assembly passed a law amending and supplementing a number of articles of the Enterprise Law on June 17 morning, part of its ongoing 9th sitting, according to the Vietnam News Agency.
The amended law, which takes effect on July 1, 2025, stipulates that those companies choosing private bond placement must meet the condition that their total liabilities, including the value of the planned bond issue, do not exceed five times their equity.
This regulation also applies to state-owned enterprises, real estate firms, credit institutions, insurance companies, securities companies, and fund management firms.
Finance Minister Nguyen Van Thang, speaking before the National Assembly vote, said the debt-to-equity ratio requirement for issuers of bonds via private placement is intended to reduce repayment risks for both businesses and investors.
The measure comes in response to recent violations that left some companies unable to repay their debts, forcing government intervention. The five-times debt-to-equity cap was formulated with input from ministries, regulatory bodies, and market stakeholders, and is consistent with current capital-raising regulations.
In addition, he said that the law has been revised to align with the Law on Cadres and Civil Servants, the Law on Public Employees, and legislation on science, technology, and innovation.
Accordingly, public employees are only allowed to establish, invest in, or manage businesses when permitted by relevant specialized laws.
