When a company publicly issues corporate bonds, the accumulated bond balance shall not exceed 40% of the company's net assets. Corporate bonds are the manifestations of corporate bonds. Based on the issuance of corporate bonds, a legal relationship of creditor's rights and debts is formed between bondholders and issuers with the content of repaying principal and interest. Therefore, corporate bonds are debt certificates issued by companies to bondholders.
There are three ways to issue corporate bonds, namely, face value issue, premium issue and at discount. Assuming other conditions remain unchanged, when the coupon rate of a bond is higher than the bank deposit interest rate in the same period, it can be issued at a price exceeding the face value of the bond, which is called premium issuance. Premium means that enterprises will pay more interest in the future and get compensation in advance; If the coupon rate of a bond is lower than the bank deposit interest rate in the same period, it can be issued at a price lower than the face value of the bond, which is called discount. Discounting means that enterprises pay less interest in the future and compensate investors in advance. If the coupon rate of a bond is the same as the interest rate of bank deposits in the same period, it can be issued at face value, which is called face value issue. Premium or discount is the adjustment of interest expenses by bond issuing enterprises during the existence of bonds.
2. What are the legal procedures for issuing corporate bonds?
For issuers, issuing corporate bonds is a major social financing behavior to sell credit to social investors and increase liabilities. The company laws of almost all countries stipulate that the issuance of corporate bonds must be approved by the company's decision-making bodies, such as the board of directors and the general meeting of shareholders. The management of the company shall not decide to issue corporate bonds without authorization, and the funds raised shall not be used to repay bank loans. As far as government regulators are concerned, the issuance of corporate bonds involves great social credit, which has a great impact on stabilizing social and economic order and safeguarding investors' rights and interests. Therefore, the company law of almost all countries stipulates that the issuance of corporate bonds must be approved or recognized by the relevant government regulatory agencies, or registered with the government regulatory agencies, otherwise it is illegal. Therefore, "in accordance with legal procedures" mainly contains two meanings:
1. must be approved by the company's decision-making level, such as the board of directors and shareholders' meeting.
2. It must be approved by the government supervision department.
In the process of approving the issuance of corporate bonds, the government regulatory authorities also impose strict requirements on credit rating, financial audit, legal certification and information disclosure through relevant laws and regulations.
To sum up, there are certain conditions for companies to issue bonds. The bigger the company, the stricter the requirements. As an effective means of financing, the issuance of corporate bonds should be determined before the issuance, such as the amount, interest and mode of issuance. The maximum shall not exceed 40% of the company's net assets. The company can choose a premium or a discount.
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