Circular 28/2015/TT-BTC on Vietnam Valuation Standards No. 05, 06 and 07

CIRCULAR

On Vietnam Valuation Standards No. 05, 06 and 07

Pursuant to the Law on Price No. 11/2012/QH13 dated June 20, 2012;

Pursuant to the Government’s Decree No. 89/2013/ND-CP dated August 06, 2013, detailing a number of articles of the Price Law regarding valuation;

Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 23, 2013, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of the Director of the Department of Price Management;

The Minister of Finance hereby promulgates the Circular on on Vietnam Valuation Standards No. 05, 06 and 07.

Article 1. To promulgate together with this Circular 3 (three) Vietnam Valuation Standards with codes and titles as follows:

- Vietnam Valuation Standard No. 05 - Valuation procedure;

- Vietnam Valuation Standard No. 06 - Valuation result report, valuation certificate and valuation dossier;

- Vietnam Valuation Standard No. 07 - Asset classification.

Article 2. Effect

1. This Circular takes effect on April 20, 2015.

2. Vietnam Valuation Standards including Standard No. 04 - Asset valuation result report, dossier and certificate issued together with the Minister of Finance's Decision No. 24/2005/QD-BTC dated April 18, 2005, promulgating 3 Vietnam Valuation Standards; Standard No. 05 - Asset valuation procedure issued together with the Minister of Finance's Decision No. 77/2005/QD-BTC dated November 01, 2005, promulgating 3 Vietnam Valuation Standards (2^nd edition); Standard No. 12 - Asset classification issued together with the Minister of Finance's Decision No. 129/2008/QD-BTC dated December 31, 2008, promulgating 6 Valuation Standards (3^rd edition), shall cease to be effective from the effective date of this Circular.

Article 3. Organization of implementation

1. The Department of Price Management shall assume the prime responsibility for, and coordinate with relevant agencies in, directing, guiding and examining the implementation of regulations provided in Valuation Standards to this Circular and other relevant legal documents.

2. Any difficulties arising in the course of implementation should be reported to the Ministry of Finance for appropriate instruction, amendment and supplementation./.

VIETNAM VALUATION STANDARD SYSTEM

VIETNAM VALUATION STANDARD NO. 05

Valuation procedure

(Code: TDGVN 05)

(Attached to the Ministry of Finance's Circular No. 28/2015/TT-BTC dated March 06, 2015)

I. GENERAL PROVISIONS

1. Scope of regulation: This Standard prescribes and guides the implementation of the valuation procedure in accordance with law provisions.

2. Subjects of application: The practicing valuers (hereinafter collectively referred to as valuers), valuation enterprises, other organizations and individuals conducting valuation operations in accordance with the Law on Price and other relevant legal provisions.

3. Valuation clients and the third parties using the valuation result (if any) under the signed valuation contracts must have necessary knowledge about regulations in these Standards in order to cooperate with valuation enterprises in the course of valuation. 

II. STANDARD CONTENTS

1. Valuation procedure includes following steps:

Step 1. Generally determining assets to be valued, and determining market or non-market values which shall be used as the basis for the valuation.

Step 2. Formulating the valuation plan.

Step 3. Conducting actual survey and information collection.

Step 4. Analyzing information.

Step 5. Determining value of assets to be valued.

Step 6. Formulating the valuation result reports, valuation certificates, and delivering these reports and certificates to clients and concerned parties.

2. Generally determining assets to be valued, and determining market or non-market values which shall be used as the basis for the valuation, including:

a) Determining basic legal, economic, technical characteristics of assets to be valued, which affect the value of such assets at the valuation time. Any restriction in the determination of these characteristics must be clearly stated in the valuation result report and valuation certificate.

b) Determining entities using the valuation result: Entities using the valuation result are valuation clients and the third parties that use the valuation result (if any) under the signed valuation contract.

c) Determining the valuation purpose and valuation time.

The valuation purpose and time shall be determined according to the written request for valuation of the competent agencies, valuation clients or the valuation contracts. The valuation purpose and time must be clearly stated in the valuation contract, valuation result report and valuation certificate.

The valuer needs to discuss with clients to determine the valuation purpose and time in accordance with the use of valuation certificate.

d) Determining the basis of valuation.

Pursuant to the valuation purpose and legal, economic, technical and market characteristics of assets to be valued, the valuer shall determine whether the basis of valuation is the market or non-market value of these assets.

In the valuation result report, the valuer must analyze information and data attached to the above-mentioned bases, and base on Vietnam Valuation Standard No. 02 regarding the market value which is used as the basis for valuation and Vietnam Valuation Standard No. 03 regarding non-market value which is used as the basis for the valuation in order to clearly determine whether the basis of valuation is the market or non-market value of assets to be valued.

e) Determining suppositions and special suppositions

The valuer may make suppositions about restricted or unclear information that can affect the value of assets to be valued in case no measure is taken to deal with such restrictions. Restrictions related to information include those on the legal dossiers of assets to be valued, characteristics of such assets or restrictions on other information that may affect the estimation of the value of such assets.

For example: When evaluating a land parcel of a factory, if the valuer collects information that this land plot is likely to be polluted but there is no reasonable ground for reaching a conclusion that this land plot is really polluted, and the expense for determination of the pollution level is very high and unnecessary in comparison with the valuation context and scope, he/she may suppose that this land plot is unpolluted. Or, when valuating an enterprise’s trade name, the valuer may suppose that such enterprise shall continue to operate for a long-term period though this long-term operation is not quite sure.

The special supposition is the one on the asset status that is different from the actual status of assets at the valuation time. However, this supposition must be made in conformity with the purpose of valuation as requested by clients. For example, a building under construction is valued on the special supposition that it will have been completed at the valuation time; or an enterprise has been suspended its operations by the valuation time but clients insist that such enterprise must be valued in case it is still operating at the valuation time.

Suppositions and special suppositions must be logical and in conformity with the valuation purpose. Special suppositions must be notified and approved by valuation clients and must be in accordance with relevant laws.

In the course of valuation, if the valuer finds that the supposition is illogical or supported by insufficient grounds or it should be made in the form of a special supposition, he/she must review and discuss it immediately with the at-law representative of the valuation enterprise (or authorized person in charge of valuation) and clients, and propose the appropriate solution. If the valuation is conducted on the basis of a special supposition which make it become infeasible, this special supposition should be eliminated.

Suppositions or special supposition should be clearly explained in the valuation result report in accordance with Vietnam Valuation Standard No. 06 - Valuation result report, valuation certificate and valuation dossier.

3. Formulating the valuation plan, including:

a) The formulation of valuation plan aims to clearly specify the work scope, content and progress of each work content as well as the progress of the entire valuation.

b) The content of the valuation plan includes:

- Determining targets, requirements, scop and contents of work.

- Determining valuation methods or approaches.

-Determining data necessary for the valuation, market-related documents that need to be collected, assets to be valued or comparable assets.

- Identifying and developing material sources, ensuring that such sources are reliable and proven, inspection of dossiers and materials about assets to be valued. 

- Making the implementation schedule, determining the procedures for collecting and analyzing data, the permitted deadline for each valuation step.

- Determining the organization of implementation and resource distribution, such as making plans on assignment of valuers and officers assisting the fulfillment of clients’ valuation requirements, ensuring that the procedure for valuation quality control of enterprises must be followed.

- Determining work contents requiring hired consultant experts (if any).

4. Conducting actual survey and information collection

Information sources that shall be collected for the valuation procedure includes: information provided by clients; information from the actual survey; information from asset trading activities on the market (for example, the actual trading price, offer price, bid price, trading conditions, trading volume, trading time and location); information publicized on local or central mass media and means of media of competent state management agencies; information given in documents showing the legality of rights of the owner, economic and technical characteristics of assets, and the master plans for socio- economic development in regions or areas relating to assets.

The valuer shall verify information in order to ensure that such information is accurate and reliable before analyzing and applying valuation approaches and methods. Regarding information provided by clients whose dossier or content is incomplete, insufficient or skeptical, the valuer must promptly request clients to make it sufficient or have it verified or clarified.

The valuer must directly involve in the survey and sign on the record of survey of the current status of assets and collect data of the assets to be valued and other comparable assets (in case of using comparable assets). Full-view and detailed photos of assets are required.

For specific assets, the valuer must identify factors influencing the value of such assets and collect information concerning these factors in accordance with the selected valuation approaches or methods.

For example, information to be collected about several groups of assets includes:

- For machinery and equipment: Surveying and collecting information about economic and technical criteria and characteristics, and characteristics of technology line, manufacturer, origin, brand name, manufacturing year, the year of putting into operation, capacity, scale, size, material, depreciation level and other characteristics that can affect the value of assets to be valued and comparable assets (if any). In addition, the valuer must collect more information about the asset consumption and distribution on the market (widespread or monopoly distribution or other forms).

- For real estate: Surveying and collecting data about the real estate's actual location, comparing with the location of other real estate at the same area, describing legal characteristics of such real estate; land area and architectural structures attached to such land; geometric features; architectural types and building materials; completion date and the date of putting into operation, lifetime, repair and maintenance status; infrastructural facilities (water supply and drainage, telecommunication, electricity, road, parking lot and other elements); landscape and surrounding environment; use purpose at the valuation time; data about economy, society, environment, master plan and other elements influencing the value of real estate, characteristics of real estate market serving the distinguishing of the area where to-be-valued assets are located and the adjacent areas; information about natural, socio-economic elements influencing the use purpose of assets (geology, cadastral map, master plan, administrative boundary, infrastructure and others elements).

- For enterprises: Surveying and collecting data about the business lines, rank (if any), capital-contributing members, managerial capability, relationship between this enterprise with clients and suppliers; revenues and expenses; current status of assets, total value of assets owned by the enterprise at the valuation time; economic, political, scientific and technological environment, competitors, state management mechanism applicable to the enterprise; other information influencing the value of the enterprise.

- For financial assets: Surveying and collecting information about market, revenues earned from financial assets, rights and interests obtained from the possession of assets, and asset liquidity. For each type of financial asset, the valuer shall collect data about evaluation indicators applicable to each type of specific financial asset as well as other characteristics influencing the value of financial asset.

In addition, the valuer must collect information relating to the legal characteristic of assets; relevant information about expenses, sale price, interest rate, tax policy and income, trading conditions of assets to be valued or comparable assets (if any); information about supply - demand, entities participating in the market, preference and behavior of potential buyers - sellers, inflation and price index of specific asset groups (if any).

5. Analyzing information

Analyzing information means the process of analyzing information relating to the assets to be valued and comparable assets, in order to assess the impact of elements on the final evaluation result. To be specific:

a) Analyzing information about the characteristic (legal, economic and technical characteristics) of assets.

b) Analyzing information about the market of the assets to be valued: supply-demand; change to policy and law; scientific and technological development and other factors.

c) Analyzing the highest and best use of assets.

The valuer shall analyze the best use of assets to ensure that such assets will be used in a legal and reasonable manner in order to meet permitted technical and financial conditions and generate the highest value for such assets.

The highest and best use of assets to be valued (on a stand-alone basis) may be different from the highest and best use of such assets as part of a group. In such case, it is recommended to consider the contribution to the overall value of such assets. The highest and best use of assets may be different from their current use. The valuer must analyze and make a presentation about possibilities of using assets in conformity with the legal, natural and financial factors in order to determine the highest and best use of assets. The valuer must evaluate the use of assets on the following specific aspects:

- Regarding the legal requirement for the use of assets, restrictions under the terms and conditions of a contract or law provisions. For example:

+ A long-term lease contract may affect the highest and best use of an asset due to the fact that the use of such asset in the remaining term of the lease contract may be restricted.

+ Government’s regulations on development, construction, maintenance, inspection, environment and social impact on the use of an asset also causes a significant impact on the determination of the use purpose of an asset.

Regarding real estate, the legal factors affecting the highest and best use of an asset may be regulations on construction and planning zoning (usually reflected in most of decisions on the highest and best use), construction laws or regulations imposing restrictions on construction of a land plot or the land parcel for the highest and best use by imposing restrictions which can cause the construction cost soar.

- Material and technical relevance to the use of assets: The highest and best use of assets shall be subject to consideration of material and technical factors such as size, design, natural impacts and other material or technical factors. The highest and best use of several assets may occur when they are combined with some of other specific assets. In this case, the valuers must determine the feasibility and possibility of combining these assets with some specific assets in order to make a decision on the highest and best use of such assets.

- Financial feasibility: After meeting the first two criteria, the valuer must analyze more criteria to determine the capability of generating income or profits equal to or greater than the necessary monetary sum to meet the expenses for operations, use, fulfillment of financial obligations and capital recovery. All plans on using assets with the aim of generating the positive income shall be considered feasible in terms of the financial aspect.

For the purpose of determining the financial feasibility, the valuer must estimate the total income that may be earned from each potential use purpose. Blank accounts, loss or operating expense and other necessary costs incurred from the potential use purpose shall be deducted from the revenue to achieve the net operating income. In case the revenue generated from the use of assets meets the profit ratio on investment and produce the prospective income, such use proves its financial feasibility.

However, among the uses that have proved the financial feasibility, the use purpose that can generate the highest amount of revenues in conformity with the profit ratio of that industry shall be considered the highest and best use. 6. Determining value of assets to be valued

The valuer shall, based on valuation approaches provided in Vietnam Valuation Standards issued by the Ministry of Finance, analyze and select the valuation methods in compliance with the valuation purpose, the underlying value of assets, availability of information and data to apply valuation methods in accordance with relevant laws (if any).

The valuer shall apply 2 valuation methods or more to an asset to compare the valuation results and give accurate conclusions about the valuation results, unless otherwise prescribed by specialized laws. When applying different valuation methods, the valuer must evaluate and specify the main valuation method, and methods applied for the examination or comparison, thereby analyzing and calculating to reach the final valuation result conclusion.

In case where the comparison method is used but there are only 2 (two) comparable assets, the valuation result obtained from the comparison method shall only be used to compare with the valuation result obtained from applying other valuation methods.

The valuer may use 1 (one) valuation method in the following cases:

- Applying the comparison method in case where there are many data from transactions (at least 3 transactions) of comparable assets on the market that is carried out near the valuation time.

- Information necessary for applying 2 (two) valuation methods or more and sufficient grounds proving the failure to deal with the restrictions on information are insufficient.

7. Formulating the valuation result reports, valuation certificates, and delivering these reports and certificates to clients and concerned parties.

- The valuation result reports, valuation certificates shall be made according to the Vietnam Valuation Standard No. 06 - Valuation result report, valuation certificate and valuation dossier.

- Determining the effective date of the valuation certificate: The date on which the valuation certificate is issued shall be its effective date.

- Determining of the validity duration of the valuation result:

The validity duration of the valuation result shall be determined based on the legal, economic and technical characteristic of the assets to be valued; any change to the legislation and market concerning such assets and the valuation purpose but not exceeding 6 (six) months from the effective date of the validation certificate.

- The valuation result report and valuation certificate, after being signed for issuance by the valuation enterprise or its branch in accordance with legal provisions, shall be delivered to clients and the third parties for use of the valuation result (if any) according to the signed valuation contract./.

VIETNAM VALUATION STANDARD SYSTEM

VIETNAM VALUATION STANDARD NO. 06

Valuation result report, valuation certificate and valuation dossier

(Code: TDGVN 06)

(Attached to the Circular No. 28/2015/TT-BTC dated 3/6/2015 of the Ministry of Finance)

I. GENERAL PROVISIONS

1. Scope of regulation: This Standard prescribes the content and format of the valuation result report, valuation certificate and valuation dossier for asset valuation operations in accordance with law provisions.

2. Subjects of application: The practicing valuers (hereinafter collectively referred to as valuers), valuation enterprises, other organizations and individuals conducting valuation operations in accordance with the Law on Price and other relevant legal provisions.

II. STANDARD CONTENTS

1. Valuation result report

The valuation result report (hereinafter referred to as the Report) must show accurate, descriptive and evidence-based information to explain the price level of the asset to be valued. Such information must be presented in a scientific and logical order, and describe the characteristics of assets and factors influencing the asset value. The Report must contain an argument and analysis for data collected on the market that formulate the valuation result. The Report is an integral part of the valuation certificate.

The detailed content of the Report may change depending on the valuation entity, purpose and valuation requirement and clients’ request. However, a Report must comprise the following basic contents:

a) Information about the valuation enterprise or branch entitled to issue the valuation certificate.

Name and address of the enterprise, its trading offices (if any). Name and address of branches of the enterprise issuing the Report and valuation certificate.

b) Basis information about the valuation:

- Information about the asset valuation client, valuation contract number and/or valuation request.

- Name of the asset to be valued

- The valuation date.

- The valuation purpose.

- Information sources used in the valuation procedure and the extent of examination and appraisal of such information sources.

- Legal grounds for the valuation: Legal normative documents about valuation, Vietnam Valuation Standard applied in a valuation, other legal normative documents issued by central or local competent state agencies concerning the valuation, legal papers relating to the assets to be valued.

c) General information about the market, information about the transaction market of to-be-valued asset group (category).

d) Information about the assets to be valued, including relevant detailed description and analysis such as name and category of the asset; legal, economic and technical characteristics of that asset.

Information about characteristics of several assets to be valued provided in Appendix No. 01; materials showing the legal and technical characteristics of several assets to be valued provided Appendix No. 02 to this Standard.

dd) The basis of asset value: The valuer must give the sufficient grounds and arguments to determine whether the basis of the asset valuation shall be market or non-market value. Each asset to be valued in a valuation shall only have one basis of valuation which is either market or non-market value.

e) Suppositions and special suppositions

The valuer must specify suppositions, special suppositions which shall be used for the valuation, used as a basis for making suppositions as well as the influence of these suppositions over the valuation result.

g) Applying valuation approaches and methods:

The valuer must clarify the selected valuation approach and method, and grounds for choosing such approach and method.

When applying valuation approaches and methods, the valuer must provide argument, ground, analysis, evidence, data, worksheet and other factors for any modifications or calculation for the whole valuation procedure in the Report. Sources of data and information used in the valuation report must be clearly cited.

h) The valuation results

i) The validity duration of the valuation result

k) Exclusion and limitation clauses:

- The valuer shall consider the valuation contract or written request for valuation, asset type, and the characteristics of the valuation in order to provide the appropriate exclusion and limitation clauses.

- Exclusion and limitation clauses shall include obligatory requirements for scope of work, work extent and other limitations. For example: Unclear legal status of the asset, restrictions on data and information to be collected, etc.

- The valuer must evaluate the influence of limitations; at the same time, take measures (if any) to deal with such limitations in the valuation procedure.

- The valuer must specify personal rights and benefits (if any) relating to the assets to be valued, interest-related conflicts that may arise in the valuation.

l) Information and signature of the valuer and at-law representative of the valuation enterprise or the authorized representative in charge of valuation (if any) of the valuation enterprise that makes the valuation result reports:

- Name, card number and signature of the valuer assigned to be in charge of conducting the valuation in conformity with his/her practicing registration at the valuation enterprise.

- Full name, card number and signature of the at-law representative of the valuation enterprise or the authorized representative in charge of valuation operations (if any) of the valuation enterprise, and the seal of the valuation enterprise, in case of issuing the Report at the valuation enterprise. Full name, card number and signature of the head of the branch of the valuation enterprise and the seal of the branch of the valuation enterprise, in case of issuing the Report at the branch of the valuation enterprise that is eligible for issuing the valuation certificate according to the valuation enterprise’s authorization.

m) Appendices, including:

- List of documents and information related to the valuation.

- Documents showing the legal, and economic-technical characteristics of the assets to be valued.

- The result of the actual survey of assets to be valued.

- Other contents relating to the valuation (if any).

In addition, the valuer must cite the information sources, information, data used in the Report.

The Report form is provided in Appendices 03 and 04 to this Standard.

2. Valuation certificate

The valuation certificate includes the following main information:

- The number of the valuation contract and/or written request for the valuation.

- Information about the valuation clients.

- Significant information about the asset to be valued (name, category, legal and economic-technical characteristics).

- The valuation purposes.

- The valuation date.

- Legal grounds.

- Basis of asset valuation.

- Suppositions and special suppositions.

- Valuation approach and method.

- Exclusion and limitation clauses of the valuation result.

- The final valuation results.

- Full name, card number and signature of the valuer assigned to be in charge of conducting valuation in the Report.

- Full name, card number and signature of the at-law representative of the valuation enterprise or the authorized representative in charge of valuation (if any) of the valuation enterprise, and the seal of the valuation enterprise, in case of issuing the valuation certificate at the valuation enterprise. Full name, card number and signature of the head of the branch of the valuation enterprise and the seal of the branch of the valuation enterprise that is eligible for issuing the valuation certificate according to the valuation enterprise’s authorization.

- The validity duration of the valuation result.

- Appendices (if any).

The valuation certificate sent to clients includes the valuation result report. The valuation certificate form is provided in Appendix 05 to this Standard.

3. Valuation dossier

 a) The valuer shall compile the valuation dossier to prove that the valuation process has conformed to Vietnam Valuation Standards and relevant law on price.

The valuation dossier shall be used in accordance with the laws on price and storage. The use of the valuation dossier must ensure the confidentiality in accordance with law provisions.

b) The valuation dossier consists of information and materials necessary for the valuation of assets to generate the final valuation result. Documents included in the valuation dossier must be classified and arranged in order and expressed on paper, film or other information-bearing articles according to current laws. The composition of valuation dossier may be different, depending on the valuation purpose and type of assets to be valued.

c) Storage of valuation dossier

The valuation dossier must be archived on paper and in an electronic data from the date of issuing the valuation certificate at the valuation enterprise or the branch of the valuation enterprise that is eligible for issuing the valuation certificate. Depending on the form of storage, the valuation dossier must include all of basic information and materials as follows:

* The valuation dossier archived on paper must have:

- Name and serial number of the dossier, compilation and storage date.

- Basic information and contact address of valuation clients.

- Basic information about the valuer and all of the valuation enterprise’s officers who are assigned to participate in the valuation.

- An original or duplicate of the valuation contract and contract liquidation record (if any), or an original of the written request for valuation.

- Information and documents about legal, economic, technical characteristics of the asset, or enterprise to be valued and comparable assets (if any).

- The report of the expert who is hired to give his/her expert advice (if any).

In case of asking advisory experts on the design capacity, utility and function of equipment, machinery and technology line, the valuation report must clarify the purpose, time and conclusion of these advisory experts.

- The survey record enclosing the judgment and signature of the valuer actually carrying out the survey activities. The survey record must specify the purpose, time and name of the participants in the actual survey, the result gained from the actual survey and difference (if any) between the field survey and the legal dossier, the reason for such difference.

- All of collected information and documents, including on-site photo, and other materials or information necessary for generating the valuation result.

- Documents about the valuer's analysis and assessment of relevant issues relating to the valuation.

- An original valuation result report and its appendices.

- An original valuation certificate and its appendices.

* The valuation dossier that is electronically stored must comprise:

- Name and serial number of the dossier, compilation and storage date.

- Basic information of the valuer taking the prime responsibility and other officers participating in the valuation.

- The basic content in the valuation result report, valuation certificate, attached appendices and worksheet (if any).

- Relevant information sources.

d) The minimum term of storage is 10 (ten) years for the paper valuation dossier and permanent for the electronic valuation dossier. The valuation enterprise must take measures to maintain the confidentiality, safety, integrity, accessibility and restorability of the valuation dossier within the valid storage term.

For the valuation dossier of which the valid storage term has expired, it will be destroyed in accordance with law provisions./.

APPENDIX 01

INFORMATION ABOUT CHARACTERISTICS OF SEVERAL ASSETS TO BE VALUED

(Attached to the Vietnam Valuation Standard No. 06)

For each valuation method, the valuer may choose information to be collected in order to ensure the accuracy of the valuation result. Specific information to be collected shall comply with the Vietnam valuation standard system promulgated by the Ministry of Finance. Several specific information about several assets to be valued includes:

1. The legal, and economic-technical characteristics of assets to be valued shall be shown through the following information:

a) Regarding real estate:

- Geographical and administrative location.

- Regarding residential land: land plot number, cadastral number, land area, street grade, and land group.

- Regarding agricultural and forestry land: land plot number, cadastral number, land area, land group, weather condition, geographical characteristic, traffic, irrigation and water drainage infrastructure. 

- Regarding architectural structures built on the land (house, road, bridge): house type, grade, rank, construction area and use area (m²), house quality (the remaining usable percentage and lifetime), use purpose, house structure, built-in room quantity, usable room area, electricity, water supply and drainage system, the date of putting into operation, repair and maintenance status; type and rank of road and bridge.

- The real estate location in comparison with the nearest centers, natural conditions and surrounding areas, land plot shape, distance between such location and public traffic system, restaurants, schools, parks, hospitals and main roads.

- Planning and zoning characteristics of the land parcel, house and architectural structures built on that land parcel.

- Checking whether the real estate is used properly according to the permitted use purpose under the zoning or planning master plan and is likely to generate the optimal value.

- Economic benefits achieved from the real estate (in case it is leased, lease price, term and contract, monthly income gained from production and business activities).

b) Regarding machinery, equipment, technology line, vehicles, materials and goods:

- Capacity of machinery and equipment.

- Characteristic of technology line.

- Technical norms or material and commodity quality.

- Manufacturing year, factory name, manufacturing country and brand name.

- Basic technical signs such as serial code, ship number, registration number and other technical signs.

- Year of putting into operation.

- Amortization rate at the valuation time.

2. The legal characteristics of several assets shall be shown through the following information:

a) Regarding real estate: the valuer shall check information about the grant of certificate of land use rights and ownership of houses and other land-attached assets; information about asset origin (house, land, etc.); information about asset purchase, sale, transfer, inheritance, gift of the asset; information about disputes over the real estate (if any).

b) Regarding machinery, equipment, technology line, vehicles, materials and goods:

- The legal ownership of assets is proved by sale and purchase, lease invoices or other legal documents.

- Assets of unknown origin.

APPENDIX 02

DOCUMENTS PROVING THE LEGAL AND TECHNICAL CHARATERISTICS OF ASSETS TO BE VALUED

(Attached to the Vietnam Valuation Standard No. 06)

Information about the legal and economic-technical characteristics of the asset to be valued shall be shown through the following documents:

1. For real estate:

- An extract of the detailed zoning map of the region (if any).

- A certificate of land use rights and ownership of houses and other land-attached assets (if any).

- One of certificates proving the real estate origin (in case the Certificate of land use rights and ownership of houses and other land-attached assets has not yet been granted), including:

+ A decision on land allocation, lease or change of residential land use purpose granted by the competent state agency.

+ A decision on allocating house, land issued by the head of the agency or unit.

+ A house purchase contract of the organization with legal status that is allocated land for developing commercial houses by competent agencies.

+ Residential land-related papers issued by the competent agencies of the old regime.

In case the real estate owner has the above-mentioned documents but these bear another name other than the user's name, proof documents must be attached. For example: Documents proving the house sale and purchase, inheritance, division and gift of that real estate.

- House construction permit, construction design drawing, diagram and other drawings (copy).

- Details of the master plans of the local functional agencies or urban planning office (copy).

- Real estate sale, purchase or lease contracts (copy).

- Full-view photo of the real estate.

- Other materials proving the legal characteristic of the real estate.

2. For other materials, machinery, equipment and commodities:

- Contract on sale and purchase of materials, machinery, equipment and commodities.

- Invoices of sale and purchase of materials, machinery, equipment and commodities; other documents showing the legal and economic-technical characteristics of such materials, machinery, equipment and commodities.

- Catalog, principal economic-technical parameters of materials, machinery, equipment and commodities.

- Other documents showing the legal and economic-technical characteristics of assets.

APPENDIX 03

VALUATION RESULT REPORT FORM APPLICABLE TO VALUATION ENTERPRISES

(Attached to the Vietnam Valuation Standard No. 06)

VALUATION RESULT REPORT

(Attached to the valuation certificate No. …………..dated…………….)

1. Information about the valuation enterprise

Name, address of headquarter and trading office (if any).

2. Basic information about the valuation

- Information about the asset valuation client, valuation contract number and/or valuation request.

- Name of the asset to be valued

- The valuation date.

- The valuation purposes.

- Information sources used in the valuation procedure and the extent of examination and appraisal of such information sources.

- Legal grounds for the valuation.

3. General information about the market, information about the transaction market of to-be-valued asset group (category)

The following information may be included:

- General information about the market

- Current state and prospect of supply and demand of to-be-valued asset group (category).

- Analysis of replacement or competitive assets.

- Information about socio-economic factors and other factors that may influence the asset value.

- Other related information.

4. Information about the to-be-valued asset

Detailed information about the asset to be valued shall be presented on the basis of the result of the actual survey, information collection and analysis in accordance with Appendix No. 1 to this Standard.

5. Basis of asset valuation

6. Suppositions and special suppositions (if any)

7. Valuation approach and method

a) Valuation approach and method

- Specifying the basis for selecting the valuation approach and method.

- In case of applying different valuation methods, specifying the principal valuation method, the valuation method applied for examination or comparison, thereby analyzing and calculating in order to reach the final valuation result.

-In case of applying only one valuation method, the reason must be clearly specified.

b) Determining value of assets to be valued

- Showing arguments, analysis, evidence, data, worksheet, etc. for any modification or calculation in the whole valuation process in order to value the asset to be valued, on the basis of the selected valuation approach and method. Sources of used data and information must be clearly cited.

- The valuation results.

8. Validity duration of the valuation result

9. Exclusion and limitation clauses

10. Appendices

- List of valuation-related documents and information.

- Documents showing the legal and technical characteristic of the asset to be valued (detailed in Appendix No. 2 to this Standard).

- The result of the actual survey of assets to be valued.

- Other contents relating to the valuation (if any).

The valuation result report is made into ……Vietnamese originals (in case the Report is written in 2 languages or more) enclosing the valuation certificate No. .................dated.................issued at <the valuation enterprise/valuation enterprise’s branch>...

APPENDIX 04

VALUATION RESULT REPORT FORM APPLICABLE TO VALUATION ENTERPRISES’ BRANCHES

(Attached to the Vietnam Valuation Standard No. 06)

VALUATION RESULT REPORT

(Attached to the valuation certificate No. …………..dated…………….)

1. Information about the valuation enterprise's branch

- Name of the enterprise in charge of the operations of the branch, headquarter and trading office (if any).

- The branch’s name, address of the headquarter and trading office (if any).

2. Basic information about the valuation

- Information about the asset valuation client, valuation contract number and/or valuation request.

- Name of the asset to be valued

- The valuation date.

- The valuation purposes.

- Information sources used in the valuation procedure and the extent of examination and appraisal of such information sources.

- Legal grounds for the valuation.

3. General information about the market, information about the transaction market of to-be-valued asset group (category)

The following information may be included:

- General information about the market

- Current state and prospect of supply and demand of to-be-valued asset group (category).

- Analysis of replacement or competitive assets.

- Information about socio-economic factors and other factors that may influence the asset value.

- Other related information.

4. Information about the to-be-valued asset

Detailed information about the asset to be valued shall be presented on the basis of the result of the actual survey, information collection and analysis in accordance with Appendix No. 1 to this Standard.

5. Basis of asset valuation

6. Suppositions and special suppositions (if any)

7. Valuation approach and method

a) Valuation approach and method

- Specifying the basis for selecting the valuation approach and method.

- In case of applying different valuation methods, specifying the principal valuation method, the valuation method applied for examination or comparison, thereby analyzing and calculating in order to reach the final valuation result.

-In case of applying only one valuation method, the reason must be clearly specified.

b) Determining value of assets to be valued

- Showing arguments, analysis, evidence, data, worksheet, etc. for any modification or calculation in the whole valuation process in order to value the asset to be valued, on the basis of the selected valuation approach and method. Sources of used data and information must be clearly cited.

- The valuation results.

8. Validity duration of the valuation result

9. Exclusion and limitation clauses

10. Appendices

- List of valuation-related documents and information.

- Documents showing the legal and technical characteristic of the asset to be valued (detailed in Appendix No. 2 to this Standard).

- The result of the actual survey of assets to be valued.

- Other contents relating to the valuation (if any).

The valuation result report is made into ……Vietnamese originals (in case the Report is written in 2 languages or more) enclosing the valuation certificate No. .................dated.................issued at <the valuation enterprise/valuation enterprise’s branch>...

APPENDIX 05

VALUATION CERTIFICATE FORM

(Attached to the Vietnam Valuation Standard No. 06)

VALUATION CERTIFICATE

To: ……..<The valuation client and the third party using the valuation result (if any) under the contractual terms and conditions that have been signed>

Pursuant to the valuation contract No. ……dated ………..signed between <the valuation enterprise/valuation enterprise's branch that is eligible for issuing the valuation certificate> and/or written request for valuation No……..dated………sent by <the valuation client>;

Pursuant to the valuation result report No. ……dated ………..of <the valuation enterprise/valuation enterprise’s branch that is eligible for issuing the valuation certificate>;

Other grounds (if any),

<The valuation enterprise/valuation enterprise's branch that is eligible for issuing the valuation certificate> issues the valuation certificate No……dated………with the following contents:

1. Valuation client

- Name of the agency/organization/individual (full name in Vietnamese): …………….

- Address of headquarter: …………………………………………………..

- Telephone number: ……………………… Fax number: .....................................

- Head/at-law representative: ……….<Full name, ID card number and issuance date>………

2. Information about the to-be-valued asset

Name, category and legal and technical characteristics of the asset to be valued.

3. Valuation date

4. Valuation purpose

5. Legal grounds

Specifying legal normative documents, valuation standards concerning the valuation issued by the central or local competent state agencies.

6. Basis of asset valuation

Applying only one type of the asset value basis (market or non-market) for one asset type.

7. Suppositions and special suppositions (if any)

8. Valuation approach and method

Specifying the valuation approach and method, and basis of such selection.

9. Valuation result

10. Exclusion and limitation clauses of the valuation result

11. Validity duration of the valuation result

12. Enclosed documents        

- Valuation result reports

- Appendices (if any).

The valuation certificate is made into .........Vietnamese originals (in case the valuation certificate is made into 02 languages or more) at <the valuation enterprise/valuation enterprise branch that is eligible for issuing the valuation certificate>… <The valuation enterprise/valuation enterprise branch that is eligible for issuing the valuation certificate> shall keep ……… copy(ies); the valuation client shall keep ..... copy(ies); the third party (if mentioned in the relevant valuation contract that has been signed) shall keep ........ copy(ies). All copies shall have the same legal value.

Duplicating the valuation certificate without the written consent sent by <the valuation enterprise/valuation enterprise branch that is eligible for issuing the valuation certificate> shall be considered a violation against laws.

*: Applicable to the branch issuing the valuation certificate

VIETNAM VALUATION STANDARD SYSTEM

VIETNAM VALUATION STANDARD NO. 07

Classification of assets

(Code: TDGVN 07)

(Attached to the Circular No. 28/2015/TT-BTC dated 3/6/2015 of the Ministry of Finance)

I. GENERAL PROVISIONS

1. This Standard provides regulations on asset classification and guidance on implementing the asset classification in the valuation procedure.

2. Subjects of application: The practicing valuers (hereinafter collectively referred to as valuers), valuation enterprises, other organizations and individuals conducting valuation operations in accordance with the Law on Price and other relevant legal provisions.

II. STANDARD CONTENTS

1. Assets to be valued must be legal assets, unless otherwise prescribed by law. In case the dossiers or documents proving the legality of these assets are lost, damaged by fire or hostility or any force majeure events, the valuation shall be carried out based on the latest declaration, commitment or confirmation of the client (or the asset owner), or the list of assets in the latest balance sheet of the enterprise.

2. Assets may be classified in the following manners:

- In case of classifying according to the assets’ mobility, there are movable and immovable assets;

- In case of classifying according to the assets’ materiality and interest-bearing form, there are tangible, intangible and financial assets.

In the course of valuation, the valuer must take into account the legality of the assets which is the right to the asset.

The classification of assets for the purpose of asset valuation shall be based on the Civil Code, Land Law, Law on the Real Estate Trading, Housing Law and other current legal normative documents issued by competent agencies in accordance with the regional or international practice on asset classification.

In the course of valuation, valuers and valuation enterprises shall base on relevant legal normative documents and specialized laws in order to choose the appropriate criteria and method to classify assets in accordance with the valuation purposes and requirements.

3. Immovable and movable assets

a) Immovable asset means a kind of asset that cannot move.

Immovable asset is physically attached to a specific space, location and unable to be moved away, including:

- Land;

- Construction works attached to the land, including assets attached to such construction works;

- Other land-attached assets;

- Other assets as prescribed by laws.

The legality of an immovable asset shall be recognized as follows:

- Regarding land: Based on the certificate of the land use rights or other papers on land use rights that are eligible for the State to grant the certificate of land use rights in accordance with the land law.

- Regarding construction works:

+ House ownership certificate;

+ Or one of the lawful documents about the ownership of house and construction works in accordance with the housing law, such as construction permit; house inheritance documents accredited by the law; the legally effective judgment or decision on house ownership, issued by the Court or competent agencies.

Details of the asset classification is provided in Appendix to this Standard.

b) Movable assets

Movable asset means any asset other than immovable asset. Movable asset is not physically attached to a specific space, location and is able to move. For example, machinery, equipment, transport and technology line.

The identification of the legality of movable asset shall be based on dossiers, materials, documents, invoices, import documents and other bases.

4. Tangible, intangible and financial assets

a) Tangible asset means any asset with physical form that is possessed by the asset owner for this/her own purpose.

- Assets with a physical form, including land, house, other works, machinery, equipment, vehicles, manufacturing equipment and transmission devices.

- Tangible assets have the following characteristics:

+ Physicality;

+ Be possessed by the asset owner;

+ Exchangeability;

+ Ability to bear material or spiritual value.

b) Intangible asset means the asset without a physical form that is likely to create economic rights and benefits.

- Intangible asset is subject to the asset valuation when it fully satisfies the following conditions:

+ Having no physical form. However, a number of intangible assets are able to contain in or expressed in the form of a physical object whose value is not considerable compared with intangible assets;

+ Being recognizable and supported by visible evidence for its existence, for example, contract, protection title, certificate, computer software, list of clients and other documents;

+ Being able to generate profits for the asset owner;

+ The value of the intangible asset may be measured.

- Intangible assets include the following main categories:

+ Intellectual asset;

+ Intellectual property right in accordance with the law on intellectual property, for example, copyright, industrial property right, etc.;

+ Right to offer economic benefits to parties as specified in the civil contract in accordance with law provisions, for example, right to exploit mineral, trading right and transferable emission right;

+ Non-contractual relationships that offer economic benefits to parties, relationships with clients, suppliers or other legal entities, for example, list of clients, database;

+ Other intangible assets.

c) Financial assets include:

- Cash;

- Other units’ equity instruments. In which, the equity instrument is the contract that demonstrates the remaining benefits in terms of asset of a unit after excluding all of financial obligations of such unit.

- Contractual rights to:

+ Receive cash or other financial assets from other units;

+ Exchange financial assets or financial liabilities with other units in accordance with the conditions that may bring benefits to the units;

- Contracts that is likely or may be paid by using the unit’s equity instrument.

Financial assets may include government bonds, treasury bonds, corporate bonds, other kinds of bond, bills of exchange, promissory notes, treasury bills, certificates of deposit, loans and receivables, common stocks, preferred stocks, option contracts and other valuable papers.

5. Asset right

Asset right means the right that can be measured in monetary sums in accordance with law provisions. The asset right consists of the intellectual property right and other asset-related rights.

Asset right is a legal term, including all rights and interests relating to the ownership right or use right that the owner or user of such assets can exercise in a legal manner.

The asset right is a group of powers given to the asset owner in accordance with law provisions. Each power is separable from the ownership right and exchangeable in a civil transaction. The right to own an asset consists of the right to possess, use and decide such asset.

In case the same power is granted to different assets, income gained from an asset must be different. The more powers the right holder is granted, the higher income generated from such asset and the higher asset value the right holder may gain.

The asset owner shall be entitled to rights attached to such asset as well as income gained from such asset in accordance with law provisions.

The valuer must analyze all legal characteristics of the asset, and grasp relevant law provisions in order to properly and sufficiently determine the asset right to achieve the accurate valuation result.

6. Enterprises

a) Enterprise means an economic organization that has its own name, assets, permanent headquarter and is registered in accordance with law provisions in order to conduct business activities.

The classification of an enterprise's assets shall serve the selection and application of valuation methods in order to determine the enterprise value.

b) Classifying an enterprise’s assets

An enterprise’s assets shall be classified according to different methods such as their mobility, materiality, and value bearing form or other classification methods in accordance with law provisions. In terms of mobility, the classification of an enterprise’s assets shall comply with Point 3 of this Standard. In respect of the materiality and interest-bearing form, the classification of an enterprise’s assets shall comply with Point 4 of this Standard.

The valuer shall base on legal regulations and reality (enterprise type, managerial characteristics and business lines, etc.) to classify an enterprise’s assets in an appropriate manner.

The valuer may refer the asset classification in the business accounting system, and add more assets (if any) owned by the enterprise that influence the total value of that enterprise but fail to satisfy criteria for being recorded in the business accounting system.

In the course of valuation, the valuer shall base on the applicable valuation approach and method to select a single or combined criterion (criteria) for the enterprise valuation.

d) The enterprise’s legal characteristics shall be based on the following documents: Business Registration Certificate, Enterprise Registration Certificate, Investment Registration Certificate or other relevant documents as prescribed by law./.