Tightened credit conditions and increasing demand for medium and long-term capital mobilization, privately placed corporate bonds have emerged as a critical source of funding for enterprises to expand production, restructure capital, or implement large-scale investment projects. However, a private placement of bonds is not merely a financial transaction, but a legally complex process governed by various legal instruments imposing strict conditions, procedural requirements, and information disclosure obligations.
Against this backdrop, professional law firms play a pivotal role—not only in ensuring regulatory compliance but also in advising on optimal issuance structures, mitigating legal risks, and safeguarding the interests of the issuer throughout the offering process. This article provides an overview of the role of law firms in private placements of corporate bonds from both regulatory and practical perspectives.
Regulatory framework governing private placements
The legal framework regulating private placements of corporate bonds in Vietnam is primarily based on the Law on Enterprises 2020, the Law on Securities 2019, Decree No. 153/2020/ND-CP (on private placement and trading of corporate bonds in the domestic and international markets), and Decree No. 65/2022/ND-CP which amends and supplements Decree 153 to tighten issuance conditions. Additional guidance is provided by the State Securities Commission (SSC), the Vietnam Stock Exchange (VNX), the Ministry of Finance, and, for transactions involving foreign currency, the State Bank of Vietnam.
Under these regulations, only eligible issuers—i.e., those meeting prescribed requirements on charter capital, operating history, financial performance, permitted use of proceeds, and investor qualifications—are permitted to conduct private placements. Issuers are also required to fully comply with pre-offering, ongoing, and post-offering disclosure obligations. Non-compliance may result in severe administrative sanctions, including forced redemption, reimbursement to bondholders, or even criminal prosecution in cases involving fraudulent conduct.
Comprehensive role of law firms in private placements
Legal due diligence and issuer eligibility assessment
Law firms are responsible for conducting legal due diligence to assess the issuer’s eligibility for a private placement. This typically includes:
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Verifying the issuer’s charter capital, business lines, and actual operational timeline;
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Reviewing audited financial statements and profitability records;
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Assessing the status of the issuer’s compliance with periodic disclosure obligations;
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Confirming that the intended use of proceeds complies with regulatory requirements;
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Checking compliance with investor eligibility thresholds (i.e., fewer than 100 professional investors).
This process helps the issuer determine whether it qualifies to proceed with a private placement and identify any issues that require rectification before launching the offering.
Structuring legally compliant and commercially viable bond terms
Experienced law firms advise on structuring the bond issuance in a manner that aligns with the issuer’s financing objectives while ensuring legal compliance. This may include: (1) Determining the appropriate tenor in line with cash flow projections; (2) Advising on coupon structure, payment frequency, and any convertibility features; (3) Structuring collateral or guarantee arrangements (if applicable); (4) Drafting special terms and conditions such as early redemption rights, put/call options, or interest rate step-ups based on market events, etc.
Issuers understand that if the bond structure is not properly structured, it may make bonds difficult to attract investors, or there is a potential risk of violating regulations, causing serious damage to businesses in the process of raising capital from this channel.
Drafting and reviewing issuance documentation
The private placement dossier must be prepared in strict compliance with applicable laws. Typical documentation includes:
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The bond issuance plan, approved by the General Meeting of Shareholders or Board of Directors;
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Pre-offering disclosure materials;
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The bond terms and conditions and associated contracts (e.g., legal advisory, underwriting, security agreements);
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Agreements with relevant third-party service providers (e.g., depository agents, auditors);
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Investor undertakings and post-offering disclosure commitments.
Law firms are responsible for drafting and/or reviewing all documentation to ensure consistency with legal requirements and to reduce exposure to regulatory and transactional risks.
Post-offering support and ongoing compliance
After completion of the placement, issuers are subject to ongoing disclosure and reporting obligations. Law firms with the roles and responsibilities of consultants may have to: (i) Draft information disclosure notices to the Stock Exchange; (ii) Guiding the periodic report form to be sent to the Securities Commission; (iii) Advising on how to handle abnormal events; violating commitments, postponing interest payments, changing capital use plans, etc.; (v) Work with the management agency in case of inspection, examination or request for dossier
This role of law firms has become increasingly critical in light of the Government’s heightened post-offering supervision, particularly by regulatory authorities such as the State Securities Commission, aiming to prevent the recurrence of market incidents involving issuers like Tan Hoang Minh, Van Thinh Phat, and several others during the peak of private placement activities in the bond market.
Representation in disputes
In the event of disputes with bondholders, trustee banks, or guarantors, law firms act as legal representatives to safeguard the interests of the issuer—ranging from negotiating and mediating with relevant parties, to drafting notices and explanatory materials submitted to investors and regulators, and, where necessary, representing clients in court or arbitral proceedings. At this stage, the role of legal counsel is critical in advising on appropriate legal strategies to protect the issuer’s reputation and minimize potential legal and financial exposure.
In practice, most successful private placements in Vietnam involve the participation of one or more reputable law firms. Several leading capital markets law firms have regularly provided legal advisory services for major bond transactions across sectors such as real estate, energy, manufacturing, and technology.
Beyond legal advisory functions, law firms also serve as trusted intermediaries between issuers and key stakeholders, including trustee banks, auditors, securities companies, and regulatory authorities. Their transparency, professionalism, and established reputation help reinforce investor confidence and significantly enhance the issuer’s ability to raise capital successfully.
As Vietnam’s private placement market enters a “post-adjustment” phase—marked by elevated standards for transparency and regulatory compliance—the role of law firms is no longer limited to legal support. Instead, they are strategic partners, guiding businesses in anticipating legal risks, maintaining compliance, and ensuring the integrity and effectiveness of the bond issuance process under increasingly stringent regulatory oversight.
Selecting a law firm that is reputable, experienced, commercially minded, and adaptable to market dynamics is a key determinant not only of the success of a given offering, but also of the issuer’s long-term financial stability and sustainable development.
Lawyer Nguyen Nhat Duong
HM&P Law Firm
