IFS sought answers for bond dispute with ANZ

ANZ is a big name in the local banking landscape

The spat between ANZ and Interfood Shareholding Company (IFS),  which is to be judged by the Court of Appeal this week, involves a bond issue supposed to be offered by IFS via private placement with ANZ as the arranger of the proposed contract.

The Ho Chi Minh Stock Exchange-listed IFS argued that to underwrite a bond issuance, ANZ must be licenced by State Securities Commission (SSC), but the bank had not obtained such a licence.

In a document sent to the SSC on August 18, 2010, IFS sought SSC opinions in two matters. Firstly, had the Ministry of Finance (MoF) or SSC licenced the bond issuance underwriting service for ANZ?

If ANZ had not been licenced, did it have enough legal ability to sign the bond issuance advisory contract?

In response to IFS’ document, the SSC released Document 3047/UBCK-QLPH early last week to announce that “pursuant to the Securities Law, SSC is only authorised to licence securities trading organisations and commercial banks to underwrite a public offering of bonds.”

“Apart from the Securities Law’s regulations and Decree 52/2010/ND-CP on coporrate bond issuances, commercial banks which carry out bond issue underwriting need to meet the requirements of the Credit Institutions Law,” said the SSC document, adding that IFS should seek the central bank’s opinions.

While not directly answering IFS’ question whether ANZ had enough legal ability and conditions to carry out the supposed bond issuance, the SSC’s document implied that ANZ will not have to ask for an SSC licence.

However, SSC’s document faced a strong response from IFS. A firm representative told VIR that the SSC’s feedback document was not suitable to current legal regulations.

“We cannot find any articles of the Securities Law in 2006 which regulate that “the SSC is only authorised to licence securities trading organisations and commercial banks to underwrite a public offering of bonds,” said the IFS representative.

Following the SSC document, IFS sent another document on September 30, 2009 to the MoF, saying that SSC’s feedback document did not answer the key questions and proposing the MoF answer IFS’ questions. SSC is a body under the MoF.

“Which articles of the Securities Law and other related legal documents say that “the SSC is only authorised to licence securities trading organisations and commercial banks to underwrite a public offering of bonds? And in case the SSC did not grant such a licence, which MoF agency will licence ANZ to carry out the bond issue advisory contract under legal regulations,” said the IFS document.

Earlier, IFS filed an appeal following the Hanoi People’s court delivering a judgment in favour of ANZ.

The second key issue is whether ANZ had had a State Bank licence to provide bond issue advisory services when the contract was signed. IFS claimed ANZ obtained the State Bank’s licence in June, 2008. Meanwhile, the advisory contract was signed in December, 2007. “Therefore, this contract was void from the date of signing,” IFS stated.