Decree No. 151/2013/ND-CP dated November 1, 2013 of the Government on the functions, tasks and operation mechanism of the State Capital Investment Corporation

THE GOVERNMENT

Decree No. 151/2013/ND-CP of November 1, 2013, on the functions, tasks and operation mechanism of the State Capital Investment Corporation

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the November 29, 2005 Law on Enterprises;

Pursuant to the November 29, 2005 Law on Investment;

Pursuant to the June 29, 2006 Law on Securities and the November 24, 2010 Law Amending and Supplementing a Number of Articles of the Law on Securities;

Pursuant to the Government’s Decree No. 99/2012/ND-CP of November 15, 2012, on assignment of duties and decentralization of powers to exercise the rights and perform the responsibilities and obligations of the state owner toward state enterprises and state capital invested in enterprises;

At the proposal of the Minister of Finance,

The Government promulgates the Decree on the functions, tasks and operation mechanism of the State Capital Investment Corporation.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation and subjects of application

This Decree defines the functions, tasks and operation mechanism of the State Capital Investment Corporation (below referred to as the Corporation).

The Corporation is an enterprise established under decision of the Prime Minister; has its charter capital invested by the State and is assigned to manage state capital in enterprises transferred from ministries, ministerial-level agencies and People’s Committees of provinces and centrally run cities (provincial-level People’s Committees).

The organization and operation of the Corporation comply with this Decree, its charter and relevant laws.

Article 2.Form of organization of operation of the Corporation

The Corporation operates as a single-member limited liability company with 100% of charter capital held by the State.

Article 3.Interpretation of terms

1. In this Decree the terms below are construed as follows:

a/ Unit of the Corporation means a dependent-cost accounting unit within the organizational structure of the Corporation;

b/ Subsidiary of the Corporation means a company which is established and has over 50% of its charter capital held by the Corporation (excluding enterprises received under Clause 1, Article 7 of this Decree);

c/ Associated company of the Corporation means a company with capital contributed by the Corporation, which is other than companies defined at Point b, Clause 1 of this Article (including also received enterprises);

d/ Representative means a person appointed or authorized by the Corporation to represent part or the whole of state capital contributed by the Corporation to an enterprise, who has several or all of the rights and obligations of shareholders, capital contributors or joint-venture parties of the enterprise;

dd/ Sale of state capital means the sale by the Corporation of some or all of its shares or contributed capital in an enterprise received and invested by the Corporation.

2. Other terms in this Decree have the meanings as interpreted in the Civil Code, the Law on Enterprises and other legal documents. “Law” means Vietnamese law.

Article 4.Functions and tasks of the Corporation

1. To receive the rights of the state owner representative in enterprises as prescribed in Clause 1, Article 7 of this Decree.

2. To exercise the rights and perform the obligations of the owner toward enterprises and capital amounts received and directly invested by the Corporation.

3. To continue with the reorganization and equitization of, or sale of state-invested capital in, transferred enterprises under current regulations.

4. To invest capital in groups, corporations or parent companies operating in the sectors or business lines where the State holds the controlling right.

5. To invest capital in projects as designated by the Government or the Prime Minister.

6. To invest capital in accordance with law in sectors, fields and projects that will bring about economic benefits.

7. To provide investment consultancy, financial consultancy, equitization consultancy, corporate governance consultancy, enterprise ownership transformation consultancy, enterprise merger and acquisition and consultancy and other enterprise support services in accordance with law.

8. To perform tasks related to the enterprise reorganization and development support fund as prescribed by law.

9. Other tasks as decided by the Prime Minister.

Article 5.Organizational structure of the Corporation

The organizational structure and managerial and executive apparatus of the Corporation comply with law.

The Members’ Council of the Corporation consists of 7 members. The Chairperson and members of the Members’ Council may work on a full-time or part-time basis.

Article 6.Rights and obligations of the Corporation

1. To manage, effectively use, preserve and develop state-invested capital and state capital in enterprises assigned to the Corporation for management.

2. To report to the Ministry of Finance for appraisal and submission to the Prime Minister for approval overall schemes on the reorganization and renovation of single-member limited liability companies with 100% state capital assigned to it for management.

3. To report to the Ministry of Finance for appraisal and submission to the Prime Minister for approval production and business strategies and plans and five-year development investment plans.

4. To select and decide on fields and forms of investment and capital investment on market principles, ensuring effectiveness, profitability and lawfulness.

In case of performing capital investment tasks for socio-political purposes assigned by the Government or the Prime Minister, the Corporation shall organize monitoring to clearly determine results of performance of these tasks for reporting to the Prime Minister for consideration and handling.

5. To contribute capital and assets to joint ventures or partnerships with domestic and foreign investors in the forms of purchasing part or the whole of other companies, forming new enterprises, signing business cooperation contracts and other lawful forms.

6. To take the initiative in deciding on investment of additional capital and sale of capital of enterprises received from ministries, ministerial-level agencies or provincial-level People’s Committees in accordance with current laws; to take the initiative in selecting forms of sale of capital received by the Corporation or invested by it in enterprises under this Decree and its charter; to reach agreement on re-purchase of shares and capital contributions already sold to investors in order to ensure the rights and interests of the State.

7. To be entrusted investment capital sources of the State and organizations and individuals at home and abroad.

8. To establish and contribute capital to establishing subsidiaries or associated companies (including also fund management companies and investment funds).

9. To decide on the establishment of branches, representative offices and attached units at home and abroad after obtaining approval of competent authorities.

10. To appoint, authorize and assess the performance of representatives; to relieve from duty, commend and reward, and discipline representatives; to decide on remuneration levels, bonuses and other benefits for representatives in enterprises which are assigned to the Corporation for management.

11. To assign representatives to decide on contents prescribed in this Decree.

12. To participate in selecting representatives for capital amounts in enterprises with capital to be transferred to the Corporation.

13. To exercise other rights and perform other obligations as prescribed by law.

Chapter II

MANAGEMENT AND INVESTMENT OF STATE CAPITAL

Section 1

RECEIPT OF THE RIGHTS OF THE STATE OWNER REPRESENTATIVE IN ENTERPRISES

Article 7.Receipt of the rights of the state owner representative by the Corporation

1. The Corporation shall receive the rights of the state owner representative in the following types of enterprises (excluding enterprises mainly providing public-utility products and services, enterprises directly serving national defense and security, and cases in which enterprises are assigned by the Prime Minister to other agencies):

a/ Single-member state limited liability companies transformed from independent state companies, or newly established and attached to ministries, ministerial-level agencies or provincial-level People’s Committees;

b/ Limited liability companies with two or more members transformed from independent companies with 100% state capital, or newly established and attached to ministries, ministerial-level agencies or provincial-level People’s Committees;

c/ Joint-venture companies with state-contributed capital for which ministries, ministerial-level agencies or provincial-level People’s Committees act as owner representatives;

d/ Joint-stock companies transformed from independent companies with 100% state capital, or newly established and attached to ministries, ministerial-level agencies or provincial-level People’s Committees;

dd/ For economic groups, corporations and other cases, the transfer of the rights of the state owner representative to the Corporation complies with decisions of the Prime Minister.

2. The Corporation shall fully reflect the value of state-contributed capital in enterprises it has received according to the value of capital determined in the written records of the handover of the rights of the state owner representative between the parties.

3. Ministries, ministerial-level agencies or provincial-level People’s Committees shall transfer the rights of the state owner representative in enterprises defined in Clause 1 of this Article to the Corporation immediately after these enterprises are completely equitized, or transformed into limited liability companies.

4. The Ministry of Finance shall guide the transfer of the rights of the state owner representative in enterprises to the Corporation.

Article 8.Valuation of received capital amounts

1. The Corporation shall, or hire licensed valuation organizations to, valuate received state capital at market prices as the basis for the management, supervision, and assessment of the effectiveness of management of, capital by the Corporation, and payment of achievement-based bonuses under this Decree.

2. Received state capital must be valuated as follows:

a/ For listed enterprises that have successful trading prices for reference, it is the average price during the period of three months at most preceding the date of receipt;

b/ For other enterprises, it is the value of equity reflected on the financial statement made at the time closest to the time of receipt.

3. State capital transferred to the Corporation must be valued within 30 working days from the date of capital receipt by the Corporation. For state capital received by the Corporation before this Decree takes effect, the Corporation shall value it within 90 working days after this Decree takes effect, with the time of valuation being the effective date of this Decree.

4. Expenses related to the valuation of state capital may be accounted as business expenses of the Corporation.

Section 2

MANAGEMENT OF STATE CAPITAL AFTER RECEIPT

Article 9.Making of dossiers and classification of enterprises after receipt

1. After receiving the rights of the state owner representatives for state-contributed capital in enterprises, the Corporation shall compile dossiers for these enterprises, and classify enterprises into groups as the basis for application of appropriate measures to manage state capital invested in each enterprise.

2. The Members’ Council of the Corporation shall issue criteria for and methods of classification of enterprises with state capital transferred to the Corporation, for exercising the representative’s rights.

Article 10.Analysis and assessment of, and making of plans on restructuring state capital in, enterprises

1. The Corporation shall analyze and assess the situation of enterprises it has received, so as to work out plans and measures for restructuring, and raising the governance effectiveness of, each enterprise.

2. The Corporation shall base itself on classification results, plans and measures for restructuring each enterprise to implement these measures to raise the operational effectiveness and sell part of state capital in enterprises which the State does not need to hold, on the principles laid down in this Decree.

Article 11.Management of state capital invested in enterprises

The Corporation shall directly manage state capital or manage it through the system of representatives under the Regulation on management of state capital invested in enterprises and the Regulation on representatives issued by its Members’ Council.

Section 3

SALE OF STATE CAPITAL

Article 12.Principles of sale of state capital

1. Complying with the criteria and classification list of state enterprises decided by the Prime Minister and capital sale plans issued by the Members’ Council.

2. Preserving and developing the value of state capital assigned to the Corporation.

3. Ensuring publicity, transparency and lawfulness, and facilitating the development of enterprises.

4. Determining reserve prices for the sale of state capital which fully reflect the actual value of state capital in enterprises, including also the value of the rights to use land allocated under law.

Article 13.Forms of sale of state capital

The Corporation shall apply the forms of sale of state capital as prescribed by current laws and its charter, including:

1. Modes of transaction on the stock exchanges.

2. Public auction.

3. Competitive offering.

4. Sale upon agreement as prescribed at Point dd, Clause 4, Article 14 of this Decree.

5. Other forms of sale as prescribed by law.

Article 14.Mechanism of sale of state capital

The Corporation shall apply the mechanism of sale of state capital as prescribed by current regulations of the State and its charter, specifically:

1. Sale of the Corporation’s capital in enterprises for which it has received the state owner’s rights aims to further equitize, or reduce state capital in, enterprises which the State does not need to own. It is not sale of capital of founding shareholders and does not have to comply with regulations on public offering of securities.

2. The Corporation may auction the whole lot of shares after it is so approved by its Members’ Council to assure success when it is necessary to sell all capital in an enterprise.

3. The Corporation may give incentives to consultancy, brokering and securities companies for their achievements and effectiveness recorded in the sale of its capital.

4. For unlisted enterprises, the Corporation shall sell their capital under current regulations of the State and the following provisions:

a/ It may publicly auction part of the shares it intends to sell, and sell the remainder (no more than 70% of the shares to be sold) according to agreements with employees or to strategic shareholders at a price not lower than the lowest successful bid;

b/ If the auction fails, the Corporation may decide to adjust the reserve price for another auction. The reserve price may be reduced for no more than three times with an interval not exceeding 2 months between two auctions. The maximum reduction is 10% of the reserve price of the previous auction.

In special cases in which the value of the company is abnormally affected such as there is a decision of a competent agency on land use rights or the enterprise faces major business risks, the Corporation may take the initiative in re-determining the reserve price to fully reflect all changing factors in the value of shares.

c/ For enterprises operating at a loss which have been put up for public auction but have no one offering a bid higher than or equal to their par value, the Corporation may reduce their reserve price to be lower than their par value in order to retrieve as much as possible the capital invested by the State in these enterprises;

d/ For auctioning shares with a total value calculated according to their par value lower than VND 10 billion, or shares of enterprises operating at a loss which have a value of VND 10 billion or more calculated according to their par value, this may be conducted through securities companies or by the Corporation itself;

dd/ The form of sale upon agreement may be applied in the following cases:

- Sale upon agreement in case of unsuccessful auction or successful auction of only part of state capital at a price not lower than the reserve price;

- Sale upon agreement of shares of successful bidders who abandon their deposits, at a price not lower than the lowest successful bid;

- Sale upon agreement in case the purchaser is a state-owned single-member limited liability company on the principle of capital preservation according to plans approved by the Ministry of Finance;

- Agreement on the swapping of shares and contributed capital owned by the Corporation in enterprises according to plans approved by the Ministry of Finance;

- Sale upon agreement as directed by the Prime Minister;

- Other cases as prescribed by law.

Article 15.Competence to decide on sale of state capital

1. The Corporation may take the initiative in selling state capital in enterprises which the State does not need to hold under the Prime Minister’s Decision on classification of enterprises and the list of enterprises which the State does not need to hold.

2. For the sale of state capital in enterprises on the list of those in which the State holds controlling shares:

a/ The Corporation may consider and decide on the sale that still ensures the percentage of shares more than 50% of charter capital of enterprises;

b/ The Corporation shall report to the Ministry of Finance for submission to the Prime Minister for consideration and decision on the sale that fails to ensure the percentage of shares more than 50% of charter capital of enterprises.

3. Pursuant to current laws and this Decree, the Members’ Council of the Corporation shall issue the Regulation on sale of state capital in enterprises managed by the Corporation.

Section 4

INVESTMENT OF CAPITAL OF THE CORPORATION

Article 16.Principles of capital investment

1. The Corporation may take the initiative in using business capital sources for investment in projects, fields and sectors, ensuring the following principles:

a/ Complying with current laws;

b/ Conforming with development strategies, master plans and plans of the Corporation already approved by competent authorities;

c/ Ensuring effective investment;

d/ Conforming with the capital-balancing capacity of the Corporation.

2. For important infrastructure works and projects in which the State should support investment, the Corporation may participate in the capacity as financial investor and raise domestic and foreign capital for their implementation.

3. The level of investment capital in the fields specified in Clause 4, Article 17 of this Decree must not exceed 30% of total investment according to annual plans.

Article 17.Investment fields and forms

1. Investment in projects, groups, corporations, or parent companies operating in the key economic sectors in which the State needs to hold the controlling right.

2. Investment in the key fields according to the tasks assigned by the Government and Prime Minister with capital sources provided by the Government or balanced by the Corporation itself.

The Corporation shall separately monitor designated investments for socio-political purposes.

3. Supplementary investment in enterprises with capital of the Corporation.

4. Investment of capital in projects, sectors and fields that will bring about economic benefits:

a/ Contribution of capital to establishment of new enterprises, joint ventures, associated undertakings, purchase of part of assets or the whole of other enterprises;

b/ Purchase or sale of shares, bonds and other financial instruments;

c/ Joint investment with or investment entrusted to financial institutions and investment funds;

d/ Offshore direct or indirect investment;

dd/ Other forms of investment as prescribed by law.

Article 18.Competence to decide on investment

1. The Corporation may decide on investment in group-A and group-B projects on the basis of the list annually approved by the Ministry of Finance.

2. The Corporation may take the initiative in deciding on investment in projects other than those specified in Clause 1 of this Article in accordance with law, while ensuring resources for implementing group-A and group-B projects already approved by the Ministry of Finance.

3. The Corporation may not invest in or contribute capital to other enterprises in which its managers or executive officers are spouses, parents, children or siblings of the members of the Members’ Council, controllers, members of the Board of Directors and chief accountants of these enterprises.

Article 19.Withdrawal of investment capital

The Corporation may take the initiative in transferring or selling its contributed capital in enterprises or projects on the principles of effectiveness, preservation and development of invested capital and lawfulness.

Particularly for investments designated by the Government or the Prime Minister, the Corporation may withdraw them only after obtaining approval from the Government or the Prime Minister.

Section 5

EXERCISE OF THE RIGHTS AND PERFORMANCE OF THE RESPONSIBILITIES AND OBLIGATIONS OF THE STATE OWNER TOWARD ENTERPRISES BEING SINGLE-MEMBER LIMITED LIABILITY COMPANIES IN WHICH THE CORPORATION HOLDS 100% CHARTER CAPITAL

Article 20.Rights and responsibilities of the Corporation

1. To decide on establishment, objectives, tasks and business lines, reorganization, ownership transformation, dissolution and bankruptcy claim; and contribution of capital to other enterprises.

2. To approve, amend and supplement their charters.

3. To decide on charter capital investment, adjustment and transfer of part or the whole of charter capital.

4. To decide on the organizational structures of company management, appoint, re-appoint, relieve from duty, approve the resignation of, sign or terminate contracts with, commend, reward, and discipline chairpersons and members of the Members’ Councils or company presidents, controllers and directors general (directors) of the companies.

5. To decide on production and business strategies and plans, and development investment plans.

6. To approve in principle investments, purchase and sale of assets, borrowing and lending contracts.

7. To issue regulations on the financial regime, profit distribution, setting up and use of various funds, and approve annual financial statements.

8. To issue regulations on the recruitment, wages and bonuses; to decide on salaries of chairpersons and members of the Members’ Councils or company presidents, controllers and directors general (directors) of the companies.

9. To decide on solutions for market development, marketing and technology; to issue regulations on the mechanism of task assignment and participation in the provision and assurance of public-utility and essential products and services of the economy.

10. To supervise, examine and inspect the observance of law; to assess the achievement of objectives and assigned tasks, results of operation and effectiveness of production and business; to manage, use, preserve and develop capital of the companies. To assess the performance of chairpersons and members of the Members’ Councils or company presidents, controllers, directors general (directors), deputy directors general (deputy directors) and chief accountants of the companies.

11. Other rights as prescribed by law.

Article 21.Obligations of the Corporation

1. To invest sufficient charter capital for the companies.

2. To observe the company charters.

3. To take responsibility for debts and other asset liabilities of the companies within the limits of charter capital of the companies, to determine and separate assets of the owner from those of the companies.

4. To observe law when approving in principle investments, purchase and sale of assets and borrowing and lending contracts of the companies.

5. To guarantee the companies’ right to do lawful business.

6. To perform other obligations as prescribed by law.

Section 6

EXERCISE OF THE RIGHTS AND PERFORMANCE OF THE OBLIGATIONS OF THE OWNER OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES

Article 22.Rights and obligations of the Corporation toward enterprises in which the Corporation holds over 50% of charter capital

1. To decide on the contribution of capital and transfer of state capital invested in the enterprise; to exercise the rights of shareholders or capital contributors in accordance with law and the enterprise’s charter; to take responsibility for debts and other asset liabilities of the company within the limits of capital contributed by the Corporation to the enterprise.

2. To appoint representatives to exercise the rights of shareholders or capital contributors; to relieve from duty, commend and reward, or discipline representatives; to decide on bonuses, allowances and other benefits of representatives; to assess the performance of representatives.

3. To request representatives to perform assigned tasks under Clause 4 of this Article, unless otherwise provided by the enterprise’s charter; to make regular or irregular reports on the investment, finance and effectiveness of state capital use, and business results of the enterprise.

4. The Corporation shall give written opinions for representatives to vote on the following issues related to the enterprise:

a/ Objectives, tasks and business lines, reorganization, dissolution and bankruptcy claim of the enterprise;

b/ The charter and its amendments and supplements;

c/ Increase or decrease of charter capital; time and methods of raising capital; types of shares and total number of shares of each type eligible for offering; re-purchase of over 10% of total number of sold shares of each type;

d/ Nomination for election, proposal on relief from duty, removal from office, commendation and reward, or handling of violations of members of the Members’ Council, chairperson of the Board of Directors, chairperson of the Members’ Council, and members of the Control Board. Nomination for appointment, proposal on relief from duty, signing or termination of contracts with the director general (director) of the enterprise. Remuneration, bonus and other benefits of the members of the Board of Directors, members of the Members’ Council, members of the Control Board, director general (director) of the enterprise; number of members of the Members’ Council, members of the Control Board, and deputy directors general (deputy directors) of the enterprise;

dd/ Production and business strategies and plans and five-year and annual development investment plans of the enterprise; annual lists of group-A and group-B investment projects;

e/ In-principle approval of capital contribution, holding, increase or decrease of investment capital in other enterprises in accordance with the charter of the enterprise, establishment, reorganization and dissolution of branches, representative offices and other dependent cost-accounting units; receipt of enterprises that voluntarily join the enterprise as subsidiary or associated companies;

g/ In-principle approval of purchase and sale of assets and borrowing or lending contracts with a value equal to or more than 50% of charter capital of the enterprise or a lower percentage determined in the enterprise’s charter; in-principle approval of the enterprise’s borrowing of foreign loans;

h/ Financial statements, profit distribution, setting up and use of funds, and annual dividends;

i/ The regime of recruitment; the regime of remuneration, salary and bonus of the enterprise.

5. To request representatives to make reports for regular supervision and examination and inspection of the observance of law according to regulations; the management, use, preservation and development of state capital in the enterprise; implementation of strategies and plans; assessment of the achievement of objectives and assigned tasks, results of operation, and effectiveness of production and business.

Article 23.Rights and obligations of the Corporation toward enterprises of which the Corporation holds no more than 50% of charter capital

1. To decide on the contribution of capital and transfer of state capital invested by the Corporation in the enterprise; to exercise the rights of shareholders or capital contributors in accordance with law and the enterprise’s charter; to take responsibility for debts and other asset liabilities of the enterprise within the limits of capital contributed by the Corporation to the enterprise.

2. To appoint representatives to exercise the rights of shareholders or capital contributors; to relieve from duty, commend, reward or discipline representatives in the enterprise; to decide on bonuses, allowances and other benefits of representatives; to assess the performance of representatives.

3. To request representatives to perform assigned tasks under Clause 4 of this Article, unless otherwise provided by the enterprise’s charter; to make regular or irregular reports on the investment, finance and effectiveness of state capital use, and business results of the enterprise.

4. The Corporation shall give written opinions for representatives to vote on the following issues related to the enterprise:

a/ Objectives, tasks and business lines, reorganization, dissolution and bankruptcy claims of the enterprise;

b/ The charter and its amendments and supplements;

c/ Increase or decrease of charter capital; time and methods of raising capital; types of shares and total number of shares of each type eligible for offering; redemption of over 10% of total number of sold shares of each type;

d/ Nomination for election, proposal on relief from duty, removal from office, commendation and reward, or handling of violations of members of the Members’ Council, chairperson of the Board of Directors, chairperson of the Members’ Council, and members of the Control Board. Nomination for appointment, proposal on relief from duty, signing or termination of contracts with the director general (director) of the enterprise. Remuneration, bonus and other benefits of the members of the Board of Directors, members of the Members’ Council, members of the Control Board, director general (director) of the enterprise; number of members of the Members’ Council, members of the Control Board, deputy directors general (deputy directors) of the enterprise;

dd/ Production and business strategies and plans and five-year and annual development investment plans of the enterprise;

e/ In-principle approval of establishment of subsidiary companies; establishment, reorganization and dissolution of branches and representative offices;

g/ In-principle approval of investment, purchase and sale of assets and borrowing or lending contracts with a value equal to or more than 50% of the total value of assets written in the latest financial statement of the enterprise, or a lower percentage determined in the enterprise’s charter;

h/ Annual financial statements, profit distribution, setting up and use of funds, and annual dividends.

5. To request representatives to make reports for regular supervision and examination and assessment of the effectiveness of the use of the Corporation’s capital in the enterprise.

Section 7

REPRESENTATIVES OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES

Article 24.Mode of management of state capital invested in enterprises

1. The Corporation shall directly manage state capital in enterprises or manage it through the system of representatives in accordance with current laws, its charter and the Regulation on representatives issued by its Members’ Council.

2. Forms of appointment or authorization of representatives:

a/  The Corporation shall appoint or authorize representatives through issuing decisions on authorization of representatives for the Corporation’s capital in enterprises;

b/ For cases in which the Corporation neither appoints nor authorizes capital representatives, it shall directly exercise the rights and perform the obligations of shareholders, capital contributors or joint-venture parties in enterprises in accordance with the Law on Enterprises;

c/ Other forms of authorization according to the Corporation’s Regulation on representatives.

Article 25.Standards and conditions on representatives of state capital invested in other enterprises

Representatives of the Corporation’s capital invested in other enterprises must fully satisfy the standards and conditions prescribed by law and the Corporation’s charter and Regulation on representatives.

Article 26.Rights and obligations of representatives

Representatives shall exercise the rights and perform the obligations as prescribed by law and the Corporation’s Regulation on representatives.

A representative who fails to properly exercise the rights and perform the obligations as directed by the Corporation, thus causing losses and damage to the Corporation, shall be handled for his/her violations, have his/her authorization terminated, and pay compensations to the Corporation in accordance with law.

Article 27.Policies toward representatives after sale of all state capital in enterprises

1. For representatives who are officials of the Corporation, the Corporation shall apply labor regimes as prescribed by the labor law and its regulations.

2. For representatives who are officials of enterprises, the Corporation shall notify the termination of their capital representation to the enterprises for the latter to apply labor regimes as prescribed by the labor law and their regulations.

3. For representatives who are officials appointed by ministries, sectors or provincial-level People’s Committees to work on a part-time basis in enterprises before transfer, the Corporation shall coordinate with these ministries, sectors or provincial-level People’s Committees in arranging and applying the labor regimes as prescribed by the labor law and the enterprises’ regulations.

Article 28.Pilot mechanism of raising responsibility of representatives of the Corporation

The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Home Affairs and the Ministry of Labor, War Invalids and Social Affairs in, working out and reporting to the Prime Minister for decision the pilot mechanism of performance of the state owner rights in enterprises with large state capital which the Corporation intends to hold for a longer term, on the following principles:

- The Corporation shall directly appoint, authorize, or relieve from duty representatives in the enterprises; pay salaries and bonuses to them based on their performance of assigned tasks.

- Clearly defining the responsibilities and interests of representatives in the performance of tasks assigned by the Corporation.

- The Corporation may form salary and bonus funds for representatives from their incomes in the enterprises according to the pilot mechanism stated in this Article, and from deductions from dividends and distributed profits from the state capital received by the Corporation. The specific deduction from dividends and distributed profits comply with regulations of the Ministry of Finance.

The above salary and bonus fund shall be used to pay salaries, bonuses and other benefits to representatives in enterprises according to regulations.

Chapter III

FINANCE OF THE CORPORATION

Article 29.Working capital of the Corporation

1. Equity capital includes:

a/ Capital directly allocated by the State in cash or asset;

b/ Capital received according to the book value from the companies specified in Article 7 of this Decree;

c/ Differences resulting from asset revaluation, and exchange rate differences as prescribed by law;

d/ Development investment funds set up from the after-tax profits of the Corporation;

dd/ Other sources of capital originated from the state budget.

2. Capital raised through issuance of bonds, borrowing of loans, receipt of joint-venture and partnership capital and other lawful sources.

3. Other capital entrusted by the State and organizations and individuals at home and abroad in accordance with law.

4. Other capital as prescribed by law.

Article 30.Turnover

1. Distributed profits and dividends, proceeds from the sale of enterprises and assets, proceeds from the sale of shares and contributed capital directly invested by the Corporation.

2. Distributed profits and dividends from received capital.

3. Proceeds from the sale of state capital in received enterprises, including also deposits the Corporation does not have to return to investors.

4. Revenues from financial activities, services and other revenues as prescribed by law.

Article 31.Expenses

1. Expenses for capital investment activities directly carried out by the Corporation in accordance with current law.

2. Expenses for management of received capital (including expenses for determining state capital at the time of receipt), expenses for sale of received capital;

3. Value of original capital in enterprises of which capital is sold by the Corporation.

4. Setting aside of provisions as prescribed by law, including provisions for received capital, made like long-term financial investments.

5. Remuneration, bonus and other payments to representatives other than those specified in Article 28 of this Decree.

6. Other expenses as prescribed by law.

Article 32.Wages, remuneration and payments of salary nature for employees in the Corporation

1. The salary mechanism and fund for the Corporation’s employees comply with current law.

2.  The salary unit price shall be determined and kept unchanged for every three years.

3. The Members’ Council of the Corporation shall elaborate regulations on management of salaries, bonuses and expenses of salary nature in the Corporation in accordance with law. The Corporation may take the initiative in using its salary funds for development of high-quality human resources.

Article 33.Profit

Profit realized in a year is the business result of the Corporation, including profit from main business activities and from other activities. Profit of the Corporation is determined to be the difference between total turnover and total expenses as prescribed by current law and this Decree.

Article 34.Profit distribution

1. Profit of the Corporation, after offsetting the previous year’s loss according to the Law on Enterprise Income Tax, making deductions for the science and technology development fund as prescribed by law, and paying enterprise income tax, must be distributed as follows:

a/ Paying interests to capital contributors according to contracts (if any);

b/ Offsetting losses of previous years for which the time limit for clearing against before-enterprise income tax has expired;

c/ Remaining profit, after subtracting the amounts mentioned at Points a and b, Clause 1 of this Article, must be distributed as follows:

- Making deductions for the bonus fund for managers of the Corporation, and for the reward and welfare fund according to regulations.

- Making deductions for the bonus fund for capital sale achievements, which are equal to 10% of the difference between proceeds from the sale of received capital in the year and the price re-determined under Article 8 of this Decree, sale expenses and enterprise income tax, which must not exceed three months’ paid salaries.

- Transferring all remaining profit to the development investment fund.

2. The Members’ Council shall consider and approve annual financial statements and decide on plan on use of after-tax profits of the Corporation.

Article 35.Management of the reward fund for capital sale achievements

The bonus fund for capital sale achievements set up under this Decree may be used to grant incentive bonuses to leaders, experts and employees of the Corporation based on achievements made in the management and sale of state capital; and bonuses to other individuals and collectives that have contributed to the achievements made by the Corporation. Specific bonus levels shall be decided by the Director General according to the Members’ Council-adopted regulation on the use of the bonus fund for capital sale achievements.

Article 36.Accounting regime, accounting reports, financial statements, statistics reports, audit and financial publicity

1. The Corporation shall implement the regimes of accounting, accounting reports, financial statements, statistics reports, audit and financial publicity as prescribed by this Decree, the Accounting Law and relevant regulations.

2. The consolidated statement of the Corporation does not cover companies received under Clause 1, Article 7 of this Decree.

3. The Corporation shall implement the financial mechanism prescribed in this Decree from January 1, 2013.

Chapter IV

MANAGEMENT OF OPERATION OF THE CORPORATION

Article 37.Rights and responsibilities of the state owner toward the Corporation

1. The Government shall promulgate and amend the charter of the Corporation.

2. The Prime Minister shall:

a/ Decide on the establishment, objectives, tasks and business lines; re-organization, ownership transformation and bankruptcy claim. Approve schemes on establishment of subsidiary companies with 100% state capital. Approve in principle the establishment, reorganization and dissolution of branches and representative offices and other dependent cost-accounting units;

b/ Decide on charter capital upon establishment or adjustment of charter capital in the course of operation;

c/ Decide on the appointment, re-appointment, relief from duty, resignation, commendation, or disciplining of the Chairperson of the Members’ Council and Director General of the Corporation;

d/ Approve production and business strategies and plans and five-year development investment plans.

3. The Ministry of Finance shall:

a/ Propose the Prime Minister for decision the establishment, objectives, tasks and business lines; reorganization, ownership transformation and bankruptcy claim, Approve schemes on establishment of subsidiary companies with 100% state capital. Approve in principle the establishment, reorganization and dissolution of branches and representative offices and other dependent cost-accounting units;

b/ Submit to the Prime Minister for promulgation the charter and its amendments and supplements;

c/ Propose the Prime Minister to decide on the charter capital level and adjustment;

d/ Propose the Prime Minister to decide on the appointment, re-appointment, relief from duty, resignation, commendation and reward, or disciplining of the Chairperson of the Members’ Council and Director General of the Corporation;

dd/ Propose the Prime Minister to decide on production and business strategies and plans and five-year development investment plans;

e/ Decide on the appointment, re-appointment, relief from duty, resignation, commendation or disciplining of members of the Members’ Council, and controllers, and payment of salaries to controllers;

g/ Approve annual lists of group-A and group-B projects and notify them to the Ministry of Planning and Investment for summarization and supervision;

h/ Approve in principle the change of the Corporation’s ownership rates in enterprises on the list of those in which the State must hold controlling shares; receipt of enterprises voluntarily joining the Corporation as subsidiary or associated companies;

i/ Approve in principle the borrowing or lending of capital, purchase or sale of assets with a value equal to or more than 50% of charter capital, or a lower percentage stated in the charter of the Corporation; approve in principle the Corporation’s borrowing of foreign loans;

k/ Decide on salaries of the Chairperson and members of the Members’ Council, Director General and controllers, and annual salary funds of the Members’ Council;

l/ Permit the Members’ Council to approve financial statements, distribute profits, and set up and use funds;

m/ Propose the Prime Minister to decide on the overall scheme on arrangement and renewal of the Corporation;

n/ Supervise, examine, and inspect the observance of law; management, use, preservation and development of capital; implementation of strategies and plans; implementation of the regimes of recruitment, salaries and bonuses by the Corporation. Assess the implementation of objectives, tasks and business lines as assigned, and results of operation and effectiveness of production and business of the Corporation. Assess the performance of the Chairperson and members of the Members’ Council, controllers, Director General, Deputy Directors General and chief accountant in the management and execution of the Corporation.

4. The Members’ Council of the Corporation shall:

a/ Decide on production and business strategies and plans and five-year development investment plans of the Corporation after the proposal is approved by competent authorities;

b/ Decide on annual production and business plans and development investment plans of the Corporation, and send the decisions to the Ministry of Finance and the Ministry of Planning and Investment for summarization and monitoring;

c/ Propose competent authorities to appoint, re-appoint, relieve from duty, approve resignation, commend, reward or discipline members of the Members’ Council;

d/ Decide on the appointment, reappointment, relief from duty, resignation, signing or termination of contracts, commendation and reward, or disciplining of Deputy Directors General and chief accountant of the Corporation;

dd/ Propose competent authorities to adjust charter capital; amend and supplement the charter of the Corporation; reorganize, transform ownership, dissolve or claim for bankruptcy of, the Corporation;

e/ Decide on the contribution, holding, increase or decrease of capital of the Corporation in enterprises; for contents specified at Point h, Clause 3 of this Article, the Members; Council shall decide on them after its proposal is approved in principle by the Ministry of Finance;

g/ Appoint representatives of the Corporation’s contributed capital in other enterprises; give written opinions for these representatives to vote on the contents specified in this Decree;

h/ Decide or authorize the Director General to decide on investment projects, borrowing or lending contracts, or purchase or sale of assets within its competence stated in the Corporation’s charter and prescribed by law;

i/ Propose the Ministry of Finance to approve in principle the borrowing of foreign loans;

k/ Decide on the establishment, reorganization or dissolution of branches, representative offices and other dependent cost-accounting units after its proposal is approved by competent authorities;

l/ Issue regulations on internal management of the Corporation. Approve financial statements, profit distribution and setting up and use of various funds after obtaining approval of competent authorities;

m/ Decide on salaries for holders of titles appointed by the Members’ Council;

n/ Decide on solutions for market development, marketing and technology of the Corporation;

o/ Rights and responsibilities of the Members’ Councils of the Corporation toward subsidiary companies with 100% charter capital invested by the Corporation:

- Decide on the establishment, objectives, tasks, business lines, reorganization, ownership transformation, dissolution and bankruptcy claim after obtaining approval of competent authorities;

- Approve, amend and supplement their charters;

- Decide on charter capital upon establishment and adjustment of charter capital in the course of operation of the companies;

- Decide on the appointment, re-appointment, relief from duty, resignation, commendation or disciplining of members of the Members’ Councils or company presidents, directors general (directors) and controllers;

- Approve production and business strategies and plans and five-year development investment plans;

- Approve in principle the borrowing or lending of capital, purchase or sale of assets with a value equal to or more than 50% of charter capital, or a lower percentage stated in the company charter;

- Approve financial statements, distribute profits, and set up and use funds;

p/ Arrange and renew the Corporation after the overall scheme thereon is approved by competent authorities;

q/ Manage and run the Corporation to observe law and comply with decisions of the owner; manage, use, preserve and develop capital effectively; promptly report to the owner on the operation of the enterprise at a loss, its failure to ensure solvency or achieve the objectives or fulfill the tasks assigned by the owner, or other wrongdoings and violations.

Article 38.Relationships between the Corporation and ministries, branches and localities

1. Related ministries and sectors shall perform the state management of the Corporation according to their specialized state management functions in conformity with law.

2.  Provincial-level People’s Committees shall perform the state management of the Corporation in its observance of administrative management regulations in their localities in accordance with law.

3. Ministries, sectors and provincial-level People’s Committees shall:

a/ Provide information on the implementation of plans on arrangement and transformation of enterprises subject to transfer to the Corporation;

b/ Direct the arrangement of enterprises under their management; transfer the state owner representative’s rights in enterprises after arrangement to the Corporation;

c/ Coordinate with the Corporation in:

- Resolving problems of transferred enterprises;

- Giving opinions to the Corporation on the sale of state capital in enterprises providing public-utility products or services, which it has received, and enterprises assigned to manage land of agricultural or forest farms;

- Arranging and applying entitlement regimes to representatives they have appointed after the Corporation sells all state capital in enterprises.

d/ Direct related provincial-level departments and sectors to coordinate with the Corporation in selling state capital in enterprises.

4. The Corporation shall:

a/ Take the initiative in coordinating with ministries, sectors and provincial-level People’s Committees in:

- Resolving problems for enterprises it has received;

- Reaching agreement with provincial-level People’s Committees on the sale of state capital in enterprises providing public-utility products or services, which it has received, and enterprises assigned to manage land of agricultural or forest farms;

- Coordinating with ministries, sectors and provincial-level People’s Committees in implementing entitlement regimes to capital representatives.

b/ Periodically provide ministries, sectors and provincial-level People’s Committees with information on:

- Production and business activities of enterprises;

- Changes related to state capital representatives being officials of ministries and sectors or provincial-level departments and local sectors currently working on a part-time basis in enterprises;

- Cases of sale of all state capital in enterprises;

- Other relevant information.

Chapter V

IMPLEMENTATION PROVISIONS

Article 39.Effect and organization of implementation

This Decree takes effect on December 20, 2013.

In case the provisions of Decisions No. 151/2005/QD-TTg and 152/2005/QD-TTg of June 20, 2005, are contrary to the provisions of this Decree, the provisions of this Decree prevail.

Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and the Members’ Council of the Corporation shall implement this Decree.

The Members’ Council of the Corporation should report any problems arising in the course of implementation to the Ministry of Finance for study and summarization and submission to the Government for amendment and supplementation.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG