Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government on transformation of enterprises with 100% state capital into joint-stock companies

THE GOVERNMENT

Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government on transformation of enterprises with 100% state capital into joint-stock companies

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

Pursuant to the November 29, 2005 Law on Enterprises; Pursuant to the June 29, 2006 Securities Law;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Objectives and requirements of the transformation of enterprises with 100% state capital into joint-stock companies (below referred to as equitization)

1. To transform enterprises in which the State does not need to hold 100% of their capital into ones with multiple owners; to mobilize capital of domestic and foreign investors to increase financial capacity, renew technology and renovate management modes with a view to increasing the effectiveness and competitiveness of the economy.

2. To harmonize the interests of the State, enterprises, investors and enterprise employees.

3. To ensure publicity and transparency on the market principle; to end the problem of closed equitization within enterprises; to link equitization with development of the capital and securities markets.

Article 2. Enterprises to be equitized

1. Single-member limited liability companies in which the State holds 100% of charter capital and which are parent companies of state economic groups or corporations (including state-owned commercial banks).

2. Single-member limited liability companies in which the State holds 100% of charter capital and which are enterprises of ministries, ministerial- level agencies, government-attached agencies or provincial-level People’s Committees.

3. Enterprises with 100% state capital which has not yet been transformed into single-member limited liability companies.

Article 3. Equitization conditions

1. Enterprises specified in Article 2 of this Decree may be equitized when fully meeting the following two conditions:

a/ They are other than those in which the State needs to hold 100% of charter capital. The list of enterprises in which the State holds 100% of charter capital is decided by the Prime Minister for each period;

b/ There remains some state capital after their financial issues are settled and they are revaluated.

2. If the actual value of an enterprise, after its financial issues are settled and it is revaluated under Chapters II and III of this Decree, is lower than its liabilities, the agency competent to decide on its equitization plan shall direct it in coordinating with the Vietnam Debt Trading Company and its creditors in working out an enterprise restructuring plan. In case such enterprise restructuring plan is infeasible and ineffective, other modes of transformation provided by law can be applied.

Article 4. Forms of equitization

1. Keeping unchanged existing state capital portions in enterprises, issuing additional stocks to increase their charter capital.

2. Selling part of existing state capital portions in enterprises or in combination with issuing additional stocks to increase their charter capital.

3. Selling all existing state capital portions in enterprises or in combination with issuing additional stocks to increase their charter capital.

Article 5. Methods of initial sale of shares

1. Initial sale of shares shall be conducted by public auction, issuance underwriting or direct agreement under Chapter IV of this Decree.

2. Depending on potential purchasers and conditions on initial purchase of shares, equitization-deciding agencies shall determine appropriate methods of share sale.

3. The Ministry of Finance shall guide in detail the initial sale of shares under this Decree.

Article 6. Share purchasers and conditions for purchasing shares

1. Domestic investors:

a/ Domestic investors include Vietnamese individuals and organizations established and operating under Vietnamese law (except those specified at Point a, Clause 2 of this Article).

b/ Domestic investors may purchase shares of equitized enterprises in unlimited quantity, except the cases specified in Clauses 4 and 5 of this Article.

2. Foreign investors:

a/ Foreign investors include foreign organizations and individuals defined in each period by the Prime Minister in the Regulation on contribution of capital to or purchase of shares of Vietnamese enterprises by foreign investors.

b/ Foreign investors may purchase shares of equitized enterprises under this Decree and relevant legal documents.

c/ Foreign investors wishing to purchase shares shall open deposit accounts at payment service-providing institutions in accordance with the Vietnamese law on foreign exchange.

3. Strategic investors:

a/ Strategic investors are domestic investors and foreign investors that have an adequate financial capability and written commitments made by their competent persons to being attached to enterprises in long-term interests and providing enterprises with post-equitization supports in transferring new technologies, training human resources, raising financial capability, managing enterprises, supplying raw materials and materials and developing product outlets.

b/ On the basis of the charter capital size, characteristics of business lines and development and expansion requirements of enterprises, enterprise equitization steering committees shall submit to competent agencies for decision equitization plans, the initial sale of shares to strategic investors and criteria for selection of strategic investors.

Particularly for large-sized enterprises with a state capital amount of over VND 500 billion each and conducting business operations in specific areas or sectors (such as insurance, banking, post and telecommunications, aviation, coal mining, petroleum exploitation and mining of other precious and rare minerals) and parent companies of state economic groups or corporations, which are required to select in advance their strategic investors, agencies competent to decide on their equitization plans shall report to the Prime Minister for decision criteria for selection of strategic investors, modes of sale and quantity of shares to be sold to these strategic investors.

c/ The number of strategic investors allowed to purchase shares of each equitized enterprise must not exceed 3. Strategic investors may not transfer their purchased shares within 5 years from the date the joint-stock company is granted the first-time business registration certificate under the Law on Enterprises. In special cases, if they wish to transfer their shares within this period, approval of the shareholders’ general meeting is required.

d/ In case strategic investors fail to fulfill their commitments or violate the prescribed transfer restriction, they shall pay compensations for all losses strictly under signed contracts and current laws.

e/ Prices of shares to be sold to strategic investors shall be determined on the following principles:

- In case shares are sold to strategic investors after a public auction is held, the sale price shall be directly agreed upon between the equitization steering committee and these strategic investors but must not be lower than the lowest successful bid at the public auction.

- In case of direct agreement or auction among qualified strategic investors that have registered for share purchase before a public auction is held, the sale price is that agreed upon by the parties (in case of agreement) or the successful bid (in case of auction) but must not be lower than the reserve price approved by the agency competent to decide on the equitization plan.

f/ Strategic investors shall immediately deposit 10% of the value of shares which they register to purchase at the reserve price approved by the agency competent to decide on the equitization plan. In case of waiving the right to purchase shares, they cannot receive back their deposits.

4. When an enterprise is concurrently equitized and listed on a stock exchange, the agency competent to approve the equitization plan shall determine in the plan on initial offering of shares the maximum and minimum quantities of shares which may be ordered for purchase with respect to the volume of shares on sale to the public so that the equitized enterprise is eligible for listing. The maximum and minimum quantities of shares which may be ordered for purchase set out in the plan on initial offering of shares must not discriminate against investors of all economic sectors.

5. Members of enterprise equitization steering committees (excluding those who are representatives of enterprises); intermediary financial institutions; affiliated companies and associated companies in the same group or corporation and parent company - affiliated company conglomerates; and individuals engaged in providing consultancy, valuation or audit or auctioning shares of equitized enterprises may not purchase these enterprises’ initially issued shares.

Article 7. Currency used in share purchase payment

Domestic and foreign investors shall purchase shares of equitized enterprises in Vietnam dong.

Article 8. Equitization expenses

Equitization expenses shall be subtracted from state capital portions in equitized enterprises or proceeds from enterprise equitization. The Ministry of Finance shall guide contents and levels of equitization expenses.

Article 9. Shares and stocks

1. Charter capital is divided into equities called shares. The par value of a share is ten thousand Vietnam dong (VND 10,000).

2. Stocks are certificates issued by joint-stock companies or book entries certifying the ownership of one or several shares of shareholders in these companies. Stocks may be registered or bearer ones which must fully contain the principal contents specified in Article 85 of the Law on Enterprises.

Article 10. Principles of takeover of rights and obligations by joint-stock companies formed from enterprises with 100% state capital

1. Equitized enterprises shall arrange and employ to the maximum the number of laborers working at the time of equitization decision and provide benefits under current regulations to redundant laborers.

Joint-stock companies are obliged to take over all responsibilities for laborers transferred from equitized enterprises; may select, arrange and employ laborers and coordinate with related agencies in providing benefits to laborers in accordance with law.

2. Equitized enterprises shall coordinate with related agencies in examining and handling financial matters in order to determine the value of state capital portions at the time of official transformation into joint- stock companies.

3. Joint-stock companies may use all assets and capital amounts already handed over to them for organizing production and business; take over all interests, obligations and liabilities from equitized enterprises and have other rights and obligations provided by law.

Obligations and responsibilities of equitized enterprises which are additionally identified after their final settlement and handover by competent agencies to joint-stock companies do not belong to these joint- stock companies. For retrospective liabilities of or fines for violations of law committed by enterprises with 100% state capital arising after the handover to joint-stock companies, individuals or collectives responsible for paying compensations or fines and subject to disciplining in accordance with law must be clearly identified.

Article 11. Publicity and transparency of information and listing on the securities market

1. Equitized enterprises shall make public and transparent information on themselves, their equitization plans and land and labor management and use in accordance with the Law on Enterprises and other laws.

2. Equitized enterprises whose financial status fully meets the listing conditions specified by the securities law shall work out plans and roadmaps for listing on a stock exchange in accordance with law.

Agencies competent to decide on equitization plans shall determine the equitization simultaneously with the listing on the securities market in these equitization plans and disclose them to investors before the initial offering of shares.

Article 12. Equitization consultancy

1. Equitized enterprises may hire a consultancy organization to conduct enterprise valuation, and elaborate plans on equitization and initial offering of shares.

2. Agencies competent to decide on equitization plans shall select equitization consultancy organizations in accordance with law and the guidance of the Ministry of Finance.

3. Expenses for hiring equitization consultants are accounted as equitization expenses.

Chapter II

FINANCIAL SETTLEMENT DURING EQUITIZATION

Article 13. Inventory and classification of assets and settlement of financial problems

1. After receiving a competent agency’s equitization decision, an enterprise shall inventory and classify assets, capital sources and funds it is currently managing and using at the time of enterprise valuation.

2. An equitized enterprise shall get its annual financial statements audited under state regulations. If the time of valuation does not coincide with the ending time of a fiscal year, the equitized enterprise shall make a financial statement up to the time of valuation.

3. Before conducting the enterprise valuation and the handover settlement at the time it is granted the first-time enterprise registration certificate for operating under the Law on Enterprises, an equitized enterprise shall request in writing the tax office directly managing it to examine and settle its amounts remittable into the state budget. Within 30 working days after receiving the written request of the enterprise, the tax office shall promptly conduct the examination and settlement. Past this time limit, if the tax office fails to conduct the examination and settlement, the equitized enterprise shall base itself on the declared data to conduct the handover settlement and enterprise valuation under regulations. After the enterprise is officially transformed into a joint-stock company, any losses arising due to the failure to conduct tax examination and settlement shall be handled under Clause 3, Article 52 of this Decree.

4. Based on results of inventory of assets, audit of annual financial statements and settlement of amounts remittable into the state budget, an equitized enterprise shall coordinate with related agencies in proactively settling according to their competence and law outstanding financial problems before its valuation.

If the settlement meets with difficulties or falls beyond its competence, the equitized enterprise shall promptly report such to competent agencies for consideration and settlement.

If the reported problems cannot be still settled, they must be clearly stated in the minutes of valuation of the equitized enterprise to serve as a ground for continued settlement during the period from the time of enterprise valuation to the time of official transformation into a joint-stock company.

Article 14. Handling of assets which are leased, borrowed, accepted as capital contributed to joint-venture or business association, assets which are no longer needed for use and assets formed with investments from reward and welfare funds

1. Assets which an equitized enterprise has leased, borrowed, accepted as capital contributed to joint-venture or business association and other assets not belonging to the enterprise shall not be included in the enterprise value for equitization. Before its transformation into a joint-stock company, the enterprise shall reach agreement with the owners of these assets so that the joint-stock company can take over or liquidate signed contracts.

2. Assets which are no long needed nor used by an equitized enterprise or await liquidation shall be disposed of (liquidated or sold) by the enterprise under current financial management regulations. Assets which have not yet been disposed of by the enterprise by the time of enterprise valuation, except those specified in Clause 3 of this Article, shall be considered and decided by the agency competent to decide on disclosure of the enterprise value to be excluded from the enterprise value and then handed over to the following agencies:

a/ The Vietnam Debt Trading Company for handling under law, for the enterprises specified in Article 2 of this Decree.

b/ Parent companies of state economic groups or state corporations, parent companies in parent company - affiliated company conglomerates for handling under regulations, for limited liability companies in which these enterprises hold 100% of charter capital.

3. Assets disallowed to be excluded from the enterprise value include:

a/ For houses, buildings and other architectures (including also underground works, internal roads, fencing walls, internal yards and grounds) which enterprises directly or indirectly use; machinery, equipment and vehicles newly invested and put into use within last five years or having a book residual value equal to 50% or more of their historical costs, enterprises shall further manage, monitor and definitely handle them under current financial management regulations up to the time of official transformation into joint-stock companies.

b/ For assets subject to destruction, including chemicals, hazardous substances, expired pesticides, etc., enterprises shall coordinate with functional agencies in destroying them under current financial management and environmental management regulations before conducting the first-time enterprise registration for operating under the Law on Enterprises. After identifying causes of and responsibilities for violations and paying compensations under current financial management regulations, losses may be offset by enterprises against their business results under regulations.

c/ For assets being uncompleted capital construction expenses of works delayed under decisions of competent authorities, equitized enterprises shall further take over, monitor and handle them under law. Particularly for project expenses rejected by competent authorities, not yet turned into tangible objects and irrecoverable, such as those for elaboration of pre- feasible plans, work survey and designing, enterprises shall identify causes and responsibilities for paying compensations under current financial management regulations, and offset losses against their business results under regulations.

4. Welfare facilities, including nurseries, kindergartens, infirmaries and other welfare assets invested with reward and welfare funds, shall be transferred to trade union organizations of joint-stock companies for management to serve employees of these joint-stock companies.

Houses of cadres, employees and workers built with enterprises’ welfare funds, including those built with state budget funds, shall be transferred to local housing and land administrations for management.

5. Assets formed with investments from reward and welfare funds of the equitized enterprise and used in its production and business activities shall be included in the enterprise value and further used by the joint-stock company in its production and business. A capital amount equivalent to the value of these assets shall be returned by the equitized enterprise to the reward and welfare funds for division to the enterprise’s employees working by the time of enterprise valuation according to the number of their working years in the enterprise.

6. For state-owned commercial banks, the inventory, valuation and classification of assets being capital in cash, assets used for financial leasing and debts (receivable and payable) must comply with specific guidance of the Ministry of Finance.

Article 15. Receivable debts

1. Equitized enterprises shall check and certify all their receivable debts (both due and undue), and concurrently recover debts which become due before the time of their valuation. By the time of enterprise valuation, any outstanding receivable debts shall be handled under the State’s current regulations on handling of outstanding debts. Receivable debts without sufficient legal dossiers evidencing that they are still owed by debtors or irrecoverable under regulations must not be excluded from the enterprise value, and enterprises shall identify their causes and handle them on the following principles:

a/ Identifying the compensation responsibility of collectives or individuals related to receivable debts owed by unidentified debtors, and handling remaining losses under the State’s current regulations on handling of outstanding debts.

b/ Completing dossiers and further monitoring for recovery debts which cannot be proven to be irrecoverable.

2. Equitized enterprises shall hand over debts which have not been accounted into their value (including also bad debts already handled with the reserve source within 5 years preceding the equitization) together with sufficient relevant dossiers and documents to the agencies specified in Clause 2, Article 14 of this Decree.

3. Amounts already prepaid to goods or service providers, such as house rents, land rents, goods purchase money amounts and remunerations, shall be verified against relevant contracts and volumes of provided goods or services before being included in the value of equitized enterprises.

Article 16. Payable debts

1. Debts payable to organizations and individuals:

Equitized enterprises shall check and certify all their receivable debts (both due and undue) before the time of their valuation. They shall mobilize lawful capital sources for paying debts which become due before the time of their valuation or reach written agreement with creditors on handling or converting them into contributed shares.

Payable debts due at the time of enterprise valuation shall be converted into contributed shares based on creditors’ successful auction bids or must not be lower than the lowest successful auction bid of a public auction (in case of sale under agreement). In case shares are sold to strategic investors before the public auction, debts shall be converted into contributed shares as agreed at a price which must not be lower than the reserve price approved by the agency competent to approve equitization plans.

2. Outstanding tax amounts and state budget remittances: Equitized enterprises shall pay taxes and amounts owed to the state budget before transformation. If an equitized enterprise has not yet fulfilled its tax payment obligation, the joint-stock company shall take over the whole of this obligation.

3. In the course of equitization, if an equitized loss-making enterprise meets difficulties in paying overdue loans borrowed from credit institutions (including also the Vietnam Development Bank), these debts shall be handled under the State’s current regulations on handling of outstanding debts.

Article 17. Reserves, losses or profits

1. Reserves for inventory price decreases, losses from financial investments, bad receivable debts, warranties for products, goods and construction or installation works; and exchange rate differences shall be used to offset losses under current regulations; any remaining amounts shall be included into the value of state capital portions in equitized enterprises.

2. Banking risk reserve funds and professional insurance operation reserve funds, after being used to offset losses under regulations, shall be left to equitized enterprises and accounted into the value of state capital portions in equitized enterprises.

3. The financial reserve fund shall be used to pay losses (if any) and offset asset losses and irrecoverable debts remaining after being compensated (if any) by responsible individuals. Any remaining amount shall be included into the value of state capital portions in equitized enterprises.

4. Profits shall be used to offset previous years’ losses (if any) under the Law on Enterprise Income Tax, losses in assets no longer needed for use or awaiting liquidation, asset price decreases and irrecoverable debts. Any remaining amount shall be allocated under current regulations before the enterprise valuation.

5. After losses are handled under the above provisions, if there are still some unpaid debts owed to credit institutions (including also the Vietnam Development Bank) by the time of enterprise valuation, equitized enterprises shall coordinate with related agencies in writing off outstanding loan interests under the State’s current regulations on handling of outstanding debts.

Article 18. Long-term investments in other enterprises, such as capital contributed to joint ventures or business association, contributed as shares, contributed for the establishment of limited liability companies, and other forms of long-term investment

1. When an equitized enterprise takes over long-term investment capital already invested in another enterprise, this capital amount shall be wholly included in the enterprise value for equitization on the principles set out in Article 33 of this Decree.

2. When an equitized enterprise does not take over long-term investments in other enterprises, it shall report them to the agency competent to decide on the equitization plan for handling as follows:

a/ Reaching agreement with capital contributors on transfer of its capital contribution to another wholly state-owned enterprise to act as a new partner.

b/ Selling its capital contribution to its partner(s) or other investors under law.

c/ Taking over long-term investments as part of its value under Clause 1 of this Article if, by the time of disclosure of its value, it is still unable to sell or transfer these investments to other partners.

d/ In case the value of capital invested in other enterprises is large and might cause a difficulty to the equitization if it is included in the enterprise value, the agency competent to decide on the equitization plan shall identify the causes and propose remedies to the Prime Minister for consideration and decision.

Article 19. Cash balances of reward and welfare funds

Cash balances of reward and welfare funds, after being used to pay amounts in excess of prescribed levels to employees, shall be divided to employees currently working in equitized enterprises at the time of enterprise valuation based on the number of years they have worked in these enterprises.

Article 20. Balance of the enterprise reorganization support fund in enterprises

The balance (if any) of the enterprise reorganization support fund in an equitized enterprise shall be accounted as state capital increase in the enterprise.

Article 21. Financial settlement at the time of official transformation of enterprises into joint-stock companies

1. Based on its value already decided by a competent agency, an equitized enterprise shall adjust its accounting book figures accordingly; preserve and hand over liabilities and assets excluded upon its valuation under Clause 2, Article 14, and Clause 2, Article 15 of this Decree; further settle financial problems in the period from the time of enterprise valuation to the time of official transformation into a joint-stock company, and make a financial statement at the time of official transformation.

At the time when the equitized enterprise is granted the first-time enterprise registration certificate, upon making a financial statement for handover from the enterprise with 100% state capital to the joint-stock company, the enterprise shall revaluate its securities investments (if any) already included in its value. The total value of securities investments, which might be higher or lower than that currently accounted in accounting books, may be accounted by the enterprise into its business results under law.

2. Within 30 working days after obtaining its first-time enterprise registration certificate, an equitized enterprise shall complete a financial statement at the time of enterprise registration, have this financial statement audited, request the tax office to examine its tax settlement, conduct the settlement to determine the value of the state capital portion at the time of official transformation into a joint-stock company and identify financial problems to be further settled.

3. The positive difference between the actual value of the state capital portion in an enterprise at the time of its officially transformation into a joint-stock company and the actual value of the state capital portion at the time of its valuation shall be handled as follows:

a/ It shall be remitted into the enterprise reorganization support fund at the parent company of the state economic group or corporation or the parent company in the parent company - affiliated company conglomerate, in case of equitization of single-member limited liability companies in which such parent company holds 100% of charter capital.

b/ It shall be remitted into the enterprise reorganization and development support fund, in case of equitization of the whole of single-member limited liability companies in which the State holds 100% of charter capital and which are enterprises of ministries, ministerial-level agencies, government- attached agencies or provincial-level People’s Committees; or of parent companies of state economic groups or corporations.

4. In case of a negative difference, the equitized enterprise shall report it to the agency competent to decide on the equitization plan for coordinating with related agencies in examining and identifying the cause and the responsibilities of related collectives and individuals, and handle it as follows:

a/ If it is due to an objective cause (natural disaster, enemy sabotage; state policy change, international market fluctuation or other force majeure circumstances), the equitized enterprise shall report it to the agency competent to decide on the equitization plan for consideration and decision on the use of the proceeds from the sale of shares to offset losses, after subtracting insurance indemnities (if any). If the proceeds from the sale of shares are not enough to offset losses, the agency competent to decide on the equitization plan shall consider and propose the Shareholders’ General Meeting to adjust the size and structure of the charter capital of the joint- stock company.

b/ If it is due to a subjective cause:

- If losses are caused by the incomplete settlement of financial problems under the State’s current regulations, the responsibilities of related agencies and individuals: the enterprise, consultancy organization, audit agency and agency competent to decide on the equitization plan, shall be clearly determined for material compensation payment;

- If capital and asset losses are caused by production and business administration and management, the enterprise’s managers shall pay compensations for all losses caused by their subjective faults under current regulations;

- If, for force majeure reasons, responsible persons are unable to pay compensations under competent agencies’ decisions, any remaining losses shall be handled as those attributable to an objective cause under Point a of this Clause.

Chapter III

VALUATION OF EQUITIZED ENTERPRISES

Section 1. ENTERPRISE VALUATION ORGANIZATIONS

Article 22. Enterprise valuation consultancy

1. An equitized enterprise having a total book asset value of VND 30 billion or more or a book value of the state capital portion of VND 10 billion or more shall hire an organization with the valuation function, such as domestic or foreign audit company, securities company, price appraisal enterprise (below referred to as a valuation consultancy organization) to provide enterprise valuation consultancy.

2. An equitized enterprise other than those specified in Clause 1 of this Article is not compulsory to hire a valuation consultancy organization to conduct its valuation. If not hiring a valuation consultancy organization, the enterprise shall determine its value by itself and report it to the agency competent to decide on the enterprise value.

3. The agency competent to decide on the equitization plan shall select a valuation consultancy organization to provide consultancy on the enterprise valuation. If two or more valuation consultancy organizations register to participate in providing valuation consultancy services, a bidding shall be organized to select an organization under current regulations.

4. The valuation consultancy organization may select appropriate enterprise valuation methods, ensuring the principles set out in this Decree, and shall complete the valuation on schedule and in accordance with its commitments in the signed contract. An equitized enterprise shall provide adequate and truthful information relevant to it to the valuation consultancy organization in the course of valuation.

The valuation consultancy organization shall take responsibility for enterprise valuation results. If the enterprise valuation results are incompliant with the State’s regulations, the agency competent to decide on the equitization plan may refuse to pay valuation service charges. If causing damage to the State, the valuation consultancy organization shall pay compensations and be removed from the list of organizations eligible for providing valuation consultancy.

5. A domestic or foreign valuation consultancy organization that registers to provide valuation consultancy services for equitized enterprises must fully meet the following criteria and conditions:

a/ Being an audit company, a securities company or a price appraisal enterprise with the valuation function satisfying the organization and operation conditions for each type of enterprise under the Vietnamese law.

b/ Having a professional process for enterprise valuation compliant with the Government’s current regulations on transformation of enterprises with 100% state capital into joint-stock companies.

c/ Having at least 5 years’ experience in any of the following fields: price appraisal, audit, accounting, financial consultancy, enterprise ownership transformation consultancy. For each year during the period of three 3 preceding the time of submission of a dossier for provision of enterprise valuation services, it must perform at least 30 contracts on service provision in the above-said fields.

d/ Having at least 3 price appraisers licensed by the Ministry of Finance.

e/ Satisfying the criteria on quantity and quality of its staff members working in the fields and sectors in which it is operating.

f/ Committing no violation of regulations concerning its business lines and sectors in 5 consecutive years preceding the year of registration.

The Ministry of Finance shall guide in detail Clause 5 of this Article.

Article 23. Methods of enterprise valuation

Methods of enterprise valuation include: asset method, discount cash flow method, and other methods.

The determined and disclosed value of an enterprise must not be lower than the value of the enterprise determined by the asset method provided in Section 2 of this Chapter.

Article 24. Disclosure of enterprise value

1. Based on the enterprise valuation dossier compiled by the valuation consultancy organization (or by the equitized enterprise itself), the enterprise equitization steering committee shall verify the process, procedures and compliance with the law on enterprise valuation, and submit its value to the agency competent to decide on the enterprise value for decision.

2. The agency competent to decide on the enterprise value shall consider, decide and disclose the enterprise value within 10 working days after receiving a complete dossier, except for the enterprises specified in Clause 1, Article 27 of this Decree.

Article 25. Use of enterprise valuation results

Enterprise valuation results disclosed by competent agencies serve as a basis for determining the charter capital amount, the structure of shares for initial offering, and the reserve price for share auction.

Article 26. Adjustment of enterprise value

1. An equitized enterprise may adjust its disclosed value in the following cases:

a/ There appear objective causes (natural disaster, enemy sabotage, state policy change or other force majeure circumstances) affecting the value of its assets.

b/ It is unable to organize the sale of its shares within 12 months from the time of enterprise valuation, except for particular cases decided by the Prime Minister.

2. The provisions of Clause 1 of this Article apply only to equitized enterprises that have not sold their shares.

3. The competent agency shall consider and decide on the adjustment and re-disclosure of the value of the equitized enterprise. The enterprise value adjustment decision serves as a basis for elaborating an equitization plan.

Article 27. State audit of equitized enterprises

1. Objects and scope of audit:

Based on enterprise valuation results for equitization determined by the consultancy organization and opinions of the agency competent to decide on the enterprise value, the State Audit shall audit these results and settle financial matters prior to the valuation, for large enterprises with a state capital portion of over VND 500 billion each operating specific fields or sectors (insurance, banking, post and telecommunications, aviation, coal mining, petroleum exploitation and mining of other precious and rare minerals); parent companies of state economic groups or corporations, and other enterprises, as requested by the Prime Minister.

2. Responsibilities of the State Audit and related agencies:

a/ After obtaining valuation consultancy results, the agency competent to decide on the enterprise value shall send a dossier enclosed with a written request for audit by the State Audit of these results and handling of financial matters before the official disclosure of the equitized enterprise value.

b/ Within 15 working days after receiving the request of the competent agency, the State Audit shall organize the audit of valuation consultancy results and handling of financial matters of the equitized enterprise. The time limit for completing and disclosing audit results is 60 working days after the audit commences. The State Audit shall take responsibility for audit results under law.

c/ The equitized enterprise and the valuation consultancy organization shall provide adequate dossiers and documents relevant to the determination of the enterprise value and handling of financial matters prior to the valuation at the request of the State Audit.

3. Processing of audit results:

Based on the State Audit’s audit results, the competent agency shall consider and decide to disclose the enterprise value and organize subsequent steps of the prescribed equitization process.

In case the agency competent to decide on the equitized enterprise value disagrees with audit results disclosed by the State Audit, it shall organize according to its competence an exchange of opinions for reaching agreement or report the disagreement to the Prime Minister for consideration and decision before the disclosure of the enterprise value.

Section 2. ENTERPRISE VALUATION BY THE ASSET METHOD

Article 28. Value of equitized enterprises by the asset method

1. The actual value of an equitized enterprise is the value of all existing assets of the enterprise at the time of equitization, taking into account its profitability which is acceptable to both share purchasers and sellers.

The actual value of the state capital portion in an equitized enterprise is the enterprise’s actual value after subtracting payable debts, the reward fund and welfare fund balances and the non-business budget balance (if any).

2. When equitizing the parent company of a state economic group or corporation or the parent company in a parent company - affiliated company conglomerate, the value of the state capital portion in the equitized company is the actual value of the state capital portion in this parent company.

3. For a financial institution or credit institution, when conducting its valuation by the asset method, financial statement audit results may be used for determining its assets in money and liabilities but its fixed assets, long-term investments, uncompleted work expenses related to compensations and ground clearance and leveling expenses, and land use right value must be inventoried and assessed under the State’s regulations.

Article 29. Amounts excluded from the enterprise value for equitization

1. The value of the assets specified in Clauses 1, 2 and 4, Article 14 of this Decree.

2. Receivable debts which are irrecoverable.

3. Long-term investments in other enterprises, specified at Points a and b, Clause 2, Article 18 of this Decree.

4. Persons competent to decide on the enterprise value shall consider and decide on the exclusion from the enterprise value for equitization of the amounts specified in Clauses 1, 2 and 3 of this Article, and take responsibility before law for their decision.

Article 30. Bases for determination of actual value of an enterprise

1. Figures in the enterprise’s accounting books at the time of enterprise valuation.

2. Documents on inventory, classification and quality assessment of the enterprise’s assets at the time of enterprise valuation.

3. Market prices of assets at the time of valuation.

4. Re-determined value of the use rights of allocated or leased land in case the enterprise has paid the land rent in lump sum for the whole rent term, and the value of the business advantages of the enterprise.

Article 31. Value of land use rights

1. For all land areas which an equitized enterprise is managing and using as grounds for building its working offices and transaction offices; building production and business establishments; land for agricultural production, forestry, aquaculture or salt making (including land allocated by the State with or without collection of land use levy), the equitized enterprise may make a land use plan and submit it to a competent agency for consideration and decision. Such land use plan must comply with regulations on rearrangement or handling of houses and land under the Prime Minister’s decisions and be sent to the local provincial-level

People’s Committee prior to the enterprise valuation. The enterprise may opt for the form of land lease or land allocation in accordance with the Land Law.

2. If an equitized enterprise chooses to be allocated land (including land areas allocated by the State to it for building houses for sale or lease for hotel business, trade and services; for building infrastructure for transfer or lease), it shall include the value of land use rights in its value under the following provisions:

a/ For equitized enterprises which are currently renting land and wish to be allocated land and pay land use levy, the land price used for determining the land use right value to be included in the equitized enterprise value is the land price set and announced by the provincial-level People’s Committee (in the locality in which the enterprise has the allocated land area) at the time of inclusion of the land price in the equitized enterprise value under the land law. If the land price are not match the market land use right transfer price in normal circumstances, the provincial-level People’s Committee shall base itself on the actual market transfer price of the rights to use land for similar purposes to re-determine a specific land price as appropriate.

b/ For equitized enterprises which have been allocated land and paid land use levy into the state budget or received transferred lawful land use rights (for also land areas already allocated to them for building houses for sale or leased to them for hotel business, trade or service provision; for building infrastructure facilities for transfer or lease), the land price shall be determined under Point a, Clause 2 of this Article.

Land areas allocated to an enterprise, including also land areas for production of public-utility products or provision of public-utility services or for public welfare purposes (parks, greeneries, urban environment, passenger car terminals, irrigation works, etc.), which are exempt from land use levy under the land law, may be excluded upon determining the land use right value to be included in the equitized enterprise value. Land areas used for public works with a safety protection corridor under the land law may also be considered and excluded under the Prime Minister’s decisions. Equitized enterprises shall manage and use these land areas under decisions of competent agencies in line with the land planning and the land law.

The Ministry of Natural Resources and Environment shall specifically guide the determination of land areas to be excluded from the enterprise value under this Article.

c/ The determined land use right value to be included in the enterprise value under Point a, Clause 2 of this Article shall be accounted as an amount remittable into the state budget. Equitized enterprises shall remit this amount into the state budget for being granted land use right certificates. The order and procedures for land allocation, payment of land use levy and grant of land use right certificates comply with the Land Law and guiding documents.

d/ The positive difference between the re-determined land use right value specified at Point b, Clause 2 of this Article and that recorded in accounting books (if any) shall be accounted as an increase in the state capital portion in an equitized enterprise.

In case the re-determined land use right value is lower than actual expenses for land use rights recorded in accounting books, the land price currently accounted by the enterprise shall be used.

In case an enterprise changes the use purpose of its allocated land, it shall additionally pay the difference between the land use right value before and after the use purpose change under the land law.

3. In case an equitized enterprise chooses to be leased land, it shall sign a land rent contract of a term prescribed by the land law and is not required to additionally calculate the value of the geographical location advantage upon the enterprise valuation under the following specific provisions:

a/ For leased land areas for which it pays annual land rent, it shall pay land rent under the current laws and shall not include land rent into its value.

b/ Enterprises that had paid land rents in lump sum for the whole land rent term before the effective date of the 2003 Land Law shall re-determine the value of land rents at the land rent rate at the time of equitization for the remaining land rent term for inclusion in their value. The positive difference arising due to the re-determination of the land rent value shall be accounted as an increase in the state capital portion in the equitized enterprise.

c/ Enterprises that have been allocated land and now choose to be leased land shall complete formalities for switching to land lease and send them to the equitization-deciding agency and the local house and land administration before their official transformation into joint-stock companies.

4. Provincial-level People’s Committees:

a/ Within 30 working days after receiving complete dossiers, they shall give their official opinions on land plots which enterprises will further use after the equitization and the land price to serve as a basis for the value determination under Point a, Clause 2 of this Article.

b/ In case the enterprise’s land use proposal is not in line with the local master plan and not for a proper land use purpose decided by a competent state agency in charge of rearrangement and handling of state-owned houses and land, the enterprise shall return the land to the State for use for other purposes and the provincial-level People’s Committee shall coordinate with the agency competent to decide on the equitization plan in handling such land under regulations.

c/ If provincial-level People’s Committees give no official opinions on the land price under Point a, Clause 2 of this Article after 30 working days from the receipt of complete dossiers, the agency competent to decide on the equitized enterprise value shall use the latest land price announced by provincial-level People’s Committees under the land law for calculating and determining the equitized enterprise value; and concurrently publicize in the equitization plan the temporary calculation of this land use right value.

Upon allocating land, provincial-level People’s Committees shall review and officially determine the obligation to pay land use levy for the allocated land at the price close to the actual market transfer price of rights to use land for similar purposes at the time of land allocation. Equitized enterprises shall remit into the state budget this levy amount (including also the difference between the officially determined amount and the temporarily calculated one, if any) in order to be granted land use right certificates or to sign land rent contracts under the current land law.

d/ They shall direct functional agencies in guiding equitized enterprises in adequately carrying out the procedures to apply for land use right certificates or sign land rent contracts under the current land law before their official transformation into joint-stock companies.

5. Enterprises that have completed their equitization or are undergoing equitization (their equitized value has been determined and disclosed by competent authorities) before the effective date of this Decree shall continue being allocated or leased land and calculate the land use right value under approved plans and are not required to make adjustments under Clauses 2 and 3 of this Article.

Article 32. Value of business advantages of enterprises

1. The value of business advantages of an equitized enterprise covers the value of its brand and its development potential.

2. The value of business advantages of an equitized enterprise shall be considered and decided by the agency competent to decide on the equitized enterprise value but must not be lower than the value of business advantages determined under the guidance of the Ministry of Finance.

Article 33. Valuation of long-term investment capital of equitized enterprises in other enterprises

1. The value of an equitized enterprise’s long-term investment capital in other enterprises shall be determined on the basis of:

a/ The ratio between the equitized enterprise’s investment capital in another enterprise and the charter capital of or total actually contributed capital amount in such enterprise.

b/ The value of the equity capital in another enterprise indicated in the audited financial statement. If no audited financial statement is available, the value of the equity capital indicated in the latest financial statement of the enterprise concerned is used for determination.

c/ For investment capital in a foreign currency, it shall be converted into Vietnam dong at the average exchange rate on the inter-bank foreign- currency market announced by the State Bank of Vietnam at the time of valuation.

d/ If the long-term investment capital value of an equitized enterprise in another enterprise is determined to be lower than the book value, it shall be determined according to the book value of the equitized enterprise.

2. The value of capital contributed by an equitized enterprise to a joint-stock company already listed on the securities market shall be determined on the basis of the closing price of its stocks traded on the securities market at the time closest to the time of enterprise valuation. For the value of capital contributed to a joint-stock company not yet listed or registered for trading on the securities market, the enterprise equitization steering committee shall consider and submit valuation results of the consultancy agency to the agency competent to decide on the enterprise value for decision.

3. In case an equitized enterprise has contributed to an affiliated company 100% of the latter’s capital, the enterprise value of such affiliated company shall be re-determined under Chapters II and III of this Decree

Section 3. ENTERPRISE VALUATION BY THE DISCOUNT CASH FLOW METHOD

Article 34. Value of equitized enterprises by the discount cash flow method

1. The actual value of the state capital portion in an enterprise shall be determined by the discount cash flow method based on the future profitability of the enterprise.

For an enterprise investing capital in another enterprise, profits brought about by such investment may also serve as a basis for its valuation.

2. The actual value of an enterprise consists of the actual value of the state capital portion, payable debts, cash balances of reward and welfare funds, and non-business fund balance (if any).

When an enterprise chooses the form of land allocation or land lease with lump-sum payment of land rent, the land use right value or land rent shall be additionally included in the enterprise value under Article 31 of this Decree.

Article 35. Bases for enterprise valuation by the discount cash flow method

1. The enterprise’s financial statements of the last 5 years preceding the time of enterprise valuation.

2. The enterprise’s production or business plan for between 3 and 5 years after the enterprise’s transformation into a joint-stock company.

3. The interest rates of five-year government bonds at the time closest to the time of enterprise valuation and the discount cash flow co-efficient of the valued enterprise.

Chapter IV

INITIAL SALE OF SHARES AND MANAGEMENT AND USE OF PROCEEDS FROM EQUITIZATION

Article 36. Determination of charter capital and structure of initial shares

1. Based on the disclosed value of the state capital portion in an equitized enterprise and the production or business plan for several years following the enterprise’s transformation into a joint-stock company, the agency competent to decide on the equitization plan shall decide on the size and structure of the enterprise’s charter capital:

a/ In case the actual value of the state capital portion in the enterprise is larger than the charter capital amount necessary for the enterprise’s operation and the enterprise’s dominant shares are not necessarily held by the State, the agency competent to decide and approve the equitization plan shall adjust the charter capital according to practical requirements. The difference between the actual value of the state capital portion in the enterprise and the determined charter capital shall be remitted into the fund specified in Clause 3, Article 21 of this Decree.

b/ In case of additional issuance of stocks, the charter capital shall be the actual value of the state capital portion in the enterprise plus the value of additionally issued shares calculated based on the stock par value.

2. Based on the determined charter capital, the agency competent to decide on and approve the equitization plan shall decide on the structure of initial shares, comprising:

a/ State-held shares based on the criteria for classification of state enterprises publicized by the Prime Minister for each period.

b/ Shares to be sold to strategic investors and other investors, which must be at least equal to 25% of charter capital, except the case specified at

Point b, Clause 3 of this Article. The quantity of shares to be sold to other investors must not be lower than 50% of the above quantity of shares.

For large enterprises with a state capital portion of over VND 500 billion operating in specific fields or sectors (insurance, banking, post and telecommunications, aviation, coal mining, petroleum exploitation or mining of other rare and precious minerals) and parent companies of state economic groups or corporations, the percentage of shares auctioned for sale to investors shall be considered and decided by the Prime Minister or agencies authorized by the Prime Minister on a case-by-case basis.

c/ Shares to be sold at preferential prices to trade union organizations in equitized enterprises:

Trade union organizations in equitized enterprises may use their funds in equitized enterprises (under Clause 2, Article 16 of the Law on Trade Union; other than mobilized capital or loans) to purchase preferred shares of a quantity not exceeding 3% of the charter capital. This quantity of shares shall be held by trade union organizations and are non-transferable.

In case grassroots trade union organizations in equitized enterprises are authorized by general meetings of these enterprises’ employees and workers to use reward and welfare funds to purchase and manage these shares on their behalf, these shares may be cleared against the quantity of preferred shares which employees are entitled to purchase specified in Clause 1, Article 48 of this Decree, and trade union organizations may transfer or redeem the purchased quantity of shares from the reward and welfare funds when employees so request.

Sale prices of preferred shares sold to trade union organizations in equitized enterprises are those of preferred shares sold to employees specified in Clause 1, Article 48 of this Decree.

d/ Shares shall be sold at preferential prices to employees of enterprises under Clauses 1 and 2, Article 48 of this Decree.

3. In case the quantity of shares sold at a preferential price to employees of enterprises (at the most preferential price) is higher than the projected remaining quantity of issued shares (after subtracting the quantity of state- held shares and the quantity of shares sold to investors and the trade union under Points a, b and c, Clause 2 of this Article), it shall be handled as follows:

a/ If the enterprise is the one in which the State does not necessarily hold dominant shares, the agency competent to decide on and approve the equitization plan shall consider and decide on reduction of the quantity of state-held shares in order to increase the quantity of shares sold at a preferential price to employees.

b/ If the enterprise is the one in which the State holds dominant shares, the agency competent to decide on and approve the equitization plan shall consider and decide on the adjustment of the charter capital size in order to rationally increase the quantity of shares sold at a preferential price to employees in the enterprise or reduce the quantity of shares to be sold to strategic and ordinary investors while assuring that the quantity of shares to be sold to strategic and ordinary investors be at least equal to 20% of the charter capital.

Article 37. Public auction method

1. The public auction method is applied in case of auction to the public regardless of institutional investors, individual investors, domestic investors and foreign investors.

2. Organization of public auction:

a/ Auction at an intermediary financial institution, if the quantity of shares on sale is valued at under VND 10 billion.

If no intermediary financial institution accepts to hold an auction, the enterprise equitization steering committee shall directly hold an auction at the enterprise.

b/ Auction at a stock exchange, if the quantity of shares on sale is valued at VND 10 billion or more;

If an equitized enterprise selling a quantity of shares valued at under VND 10 billion wishes to have it auctioned at a stock exchange, the agency competent to decide on the equitization plan shall decide on this issue.

c/ The agency competent to decide on and approve the equitization plan shall decide to select a stock exchange or hire an intermediary financial institution to conduct an auction.

3. At least 20 working days before the initial sale of shares, the enterprise equitization steering committee shall coordinate with a stock exchange or an intermediary financial institution in disclosing information at the enterprise, the auction venue and in the mass media under the Ministry of Finance’s guidance.

4. A sale price determined by the public auction method is the successful bid of each investor. By this method, an investor that wins the auction at a certain bid shall purchase shares at such price, which must not be lower than the reserve price.

Article 38. Issuance underwriting method

1. The issuance underwriting method is a method of share issuance secured by a commitment of an organization with the underwriting function to fully distributing the quantity of shares to be sold to the outside, which has been approved by a competent authority.

Issuance underwriting for foreign investors must be compliant with regulations on the right of foreign investors to purchase shares from or contribute capital to Vietnamese enterprises.

In case shares are not sold out, issuance underwriters shall purchase all remaining shares at guaranteed prices already agreed in the underwriting contracts which must not be lower than the reserve prices.

2. Obligations and rights of underwriters comply with the law on securities and securities market and stock issuance underwriting contracts signed between underwriters and competent representatives of equitized enterprises.

Article 39. Direct agreement method

1. The direct agreement method is a method of selling shares to investors according to results of negotiation between the equitization steering committee or an organization authorized by the committee and each investor.

2. A sale price determined by the agreement method is that directly negotiated with each investor and not lower than the reserve price (in case of sale under prior agreement to strategic investors) or not lower than the lowest successful bid (in case of handling of unsold shares of a public auction).

Article 40. Handling of quantities of unsold shares

1. Quantities of unsold shares include:

a/ Quantity of shares which investors that win a public auction refuse to purchase.

b/ Quantity of shares not registered by investors to purchase under approved public auction plans.

c/ Quantity of shares which employees and trade union organization in enterprises refuse to purchase under approved plans.

2. The equitization steering committee may further publicly offer for sale unsold shares to investors that have participated in the auction by the direct agreement method. Investors refusing to purchase shares cannot receive back deposits made for participating in the auction.

3. If some shares remain unsold after being publicly offered for sale by the agreement method, the equitization steering committee shall report such to the agency competent to decide on and approve the equitization plan to adjust the structure of the charter capital for transformation of an enterprise with 100% state capital into a joint-stock company before organizing the first shareholders’ general meeting.

The equitization steering committee and the representative of the state capital portion in an equitized enterprise shall include in the draft charter for adoption by the first shareholders’ general meeting the right to further sell the state capital portion in the joint-stock company after this company officially commences its operation under the Law on Enterprises according to the equitization plan adjusted by the agency competent to approve it.

Article 41. Time limit for completion of sale of shares

Within 3 months after the issuance of the decision approving the equitization plan, an enterprise shall complete the sale of shares (including sale of shares by issuance underwriting and direct agreement methods).

Article 42. Management and use of proceeds from equitization

1. For the sale of the state capital portion in enterprises:

a/ The proceeds from the equitization of an enterprise shall be used to cover equitization expenses and benefits payable to laborers left redundant as a result of equitization under the State’s regulations and decisions of competent agencies. The remainder shall be handled under Point c of this Clause.

b/ If the proceeds from the equitization of an enterprise is insufficient to pay benefits to redundant laborers, it shall be added with:

- The enterprise reorganization support fund of the parent company of the state economic group or corporation or the parent company in a parent company - affiliated company conglomerate in case of equitizing a single- member limited liability company in which such parent company holds 100% of charter capital;

- The enterprise reorganization and development support in case of equitizing a single-member limited liability company in which the State holds 100% of charter capital and which is an enterprise of a ministry, ministerial-level agency, government-attached agency, provincial-level People’s Committee or parent company of a state economic group or corporation.

c/ The remaining proceeds from the sale of state capital portion (including the difference in sale prices of shares), after paying expenses specified at Point a of this Clause, shall be remitted into the fund under Clause 3, Article 21 of this Decree.

2. In case of additional issuance of shares to increase charter capital:

a/ Part of the proceeds from equitization shall be left at the enterprise in proportion to the quantity of additionally issued shares calculated based on their par value; the surplus capital amount (difference between the proceeds from equitization and total par value of additionally issued shares) shall be used to cover equitization expenses and pay benefits to redundant laborers; any deficit shall be handled under Point b, Clause 1 of this Article.

b/ The remainder (if any) shall be left at the joint-stock company in proportion to the quantity of additionally issued shares in the charter capital structure. The rest shall be handled under Point c, Clause 1 of this Article.

3. In case of sale of state capital portion in combination with additional issuance of shares:

a/ Part of the proceeds from equitization shall be left at the enterprise in proportion to the quantity of additionally issued shares calculated based on their par value; the surplus capital amount shall be used to cover equitization expenses and pay benefits to redundant laborers; any deficit shall be handled under Point b, Clause 1 of this Article.

b/ The remainder (if any) shall be handled as follows:

- The value of state-held shares sold at the par value shall be paid to beneficiary units under Point c, Clause 1 of this Article;

- The rest (if any) shall be distributed under Point b, Clause 2 of this Article.

Article 43. Management and use of the enterprise reorganization and development support fund

1. To transform the central enterprise reorganization support fund into the enterprise reorganization and development support fund for:

a/ Assisting state-owned agricultural and forestry farms, enterprises with wholly state-owned capital of ministries, ministerial-level agencies, government-attached agencies and provincial-level People’s Committees and undergoing reorganization and ownership transformation to realize policies toward redundant laborers and handle financial matters in accordance with law;

b/ Providing support funds for parent companies of state economic groups or corporations or parent companies in parent company – affiliated company conglomerates that do not have sufficient sources for paying benefits to laborers redundant as a result of reorganization or ownership transformation of member units in accordance with law.

c/ Increasing the charter capital of parent companies of state economic groups or corporations and enterprises with wholly state-owned capital as decided by the Prime Minister at the proposal of the Ministry of Finance and in accordance with law.

d/ Additionally investing capital to maintain or increase the state capital portion in other enterprises; investing in important projects and other spending items as decided by the Prime Minister.

2. Enterprise reorganization support funds at parent companies of state economic groups or corporations and parent companies in parent company - affiliated company conglomerates shall be used for:

a/ Assisting member enterprises or attached enterprise sections undergoing reorganization and ownership transformation (including merger, consolidation, dissolution, bankruptcy, equitization, assignment, sale, transformation into single-member limited liability company or revenue- generating non-business unit, etc.) to realize policies toward redundant laborers and handle financial matters in accordance with law.

b/ Increasing the charter capital of parent companies of state economic groups or corporations and parent companies in parent company - affiliated company conglomerates as decided by competent authorities.

c/ Parent companies of state economic groups or corporations and parent companies in parent company - affiliated company conglomerates may invest the rest in enterprise development as decided by the Prime Minister after obtaining opinions of the Ministry of Finance.

3. The Prime Minister shall decide on the mechanism of management and use of the enterprise reorganization and development support fund; regulate the fund sources among parent companies of state economic groups or corporations and parent companies in parent company - affiliated company conglomerates at the proposal of the Ministry of Finance. The Ministry of Finance shall manage the enterprise reorganization and development support fund under the mechanism set by the Prime Minister.

4. The Ministry of Finance shall stipulate the mechanism of management and use of enterprise reorganization support funds at parent companies of state economic groups or corporations and parent companies in parent company – affiliated company conglomerates; supervise and monitor the management and use of revenues from the equitization for supporting the enterprise reorganization and development investment in accordance with law.

Within 45 days after the end of a fiscal year, parent companies of state economic groups or corporations and parent companies in parent company - affiliated company conglomerates shall send reports on settlement of the enterprise reorganization support fund to the Ministry of Finance. These reports must contain adequate and truthful figures on revenues and expenditures; receivable and payable debts and existing problems in the management of the fund, and be enclosed with the certification of the fund balance by a commercial bank at which the fund account is opened.

Failure of leaderships of parent companies of state economic groups or corporations and parent companies in parent company - affiliated company conglomerates (the members’ council and directorate) to fully and promptly report on the fund settlement shall be regarded as a failure to fulfill their duties and they shall bear responsibility under the current regulation on supervision and classification of enterprises.

5. An equitized enterprise shall open a separate account at a commercial bank for freezing the proceeds from the sale of shares.

Within 15 working days after the completion of the sale of shares, the equitization steering committee shall determine the money amount to be left at the enterprise (covering amounts payable to employees and equitization expenses under the approved equitization plan) and the amount remittable into the fund (after subtracting amounts allowed to be paid according to the approved cost estimate) for transfer from the frozen account to the enterprise and the fund under Clause 3, Article 21 of this Decree.

6. Within 15 working days after receiving a financial statement audited at the time of official transformation into a joint-stock company, the agency competent to decide on and approve the equitization plan shall assume the prime responsibility for, and coordinate with the financial agency in, examining and handling financial matters at the time of official transformation into a joint-stock company under Article 21 of this Decree.

Within 60 working days after the grant of first-time enterprise registration certificates, ministries, ministerial-level agencies, government-attached agencies, provincial-level People’s Committees, member councils of parent companies of state economic groups or corporations and parent companies with wholly state-owned capital shall direct and urge the further remittance of proceeds from the sale of shares into the fund under Clause 3, Article 21 of this Decree.

Past the time limit of 60 working days from the date of grant of first-time enterprise registration certificates, if equitized enterprises still fail to remit proceeds from the sale of shares into the fund under Clause 3, Article 21 of this Decree, they shall additionally bear interests calculated at the latest prime interest rate announced by the State Bank of Vietnam on the late remitted amount for the period of late remittance. Past 3 months after being granted first-time enterprise registration certificates, enterprises shall additionally bear interests calculated at the interest rate applicable to overdue loans on the late remitted amount for the period of late remittance. Equitized enterprises are not allowed to account such fines as reasonable expenses upon calculating enterprise income tax and shall use profits after enterprise income tax to cover them if compensations paid by members’ councils, boards of directors and other collectives and individuals responsible for the late remittance (if any) are not enough.

7. The agency competent to decide on and approve equitized plans shall direct equitization steering committees and equitized enterprises in fully and promptly reporting on the management and use of proceeds from the equitization to the Ministry of Finance for summarization and reporting to the Prime Minister.

Article 44. Charters of joint-stock companies

1. The charter of a joint-stock company shall be drafted by the enterprise in coordination with the equitization consultancy organization under the direction by the equitization steering committee and notified to investors before the sale of shares, containing the provision permitting the further sale of the state capital portion in the enterprise after the equitization under Clause 3, Article 40 of this Decree. The draft charter of a joint-stock company must not be against the Law on Enterprises and relevant laws.

2. The charter of a joint-stock company will be adopted by the first shareholders’ general meeting when it is voted for by at least 65% of total capital-contributing or share-purchasing investors attending the meeting.

Article 45. Shareholders’ general meeting and first-time enterprise registration

Within 30 working days after completing the sale of shares, an equitized enterprise shall organize the first shareholders’ general meeting for transforming the enterprise into a joint-stock company and make enterprise registration in accordance with law.

A dossier of enterprise registration must also contain the decision of the agency competent to decide on the equitization plan on transformation into a joint-stock company, the decision of a competent agency on appointment of the representative for the state capital portion in the joint-stock company (if any) and the joint-stock company’s charter with the signature of the joint-stock company’s at-law representative.

Article 46. Appointment of representatives for state capital portions in equitized enterprises

1. For equitized enterprises with state capital portions continued to be invested in joint-stock companies, agencies assigned to exercise the rights of the owner of state capital portions in enterprises shall appoint persons to act as representatives for capital portions in these enterprises.

2. A person appointed to act as a representative for the state capital portion in an equitized enterprise must fully meet the following criteria:

a/ Being a Vietnamese citizen permanently residing in Vietnam. Having good health, ethics and sense of law observance and being honest, upright and knowledgeable about law.

b/ Possessing a university degree, having been professionally trained in corporate finance or a business line of the enterprise with state investment capital, and being capable of conducting business operation and managing the enterprise.

c/ Not being banned from holding a post of corporate manager or executive as specified at Points e, f and g, Clause 2, Article 13 of the Law on Enterprises.

d/ Not being a person who has managed and administered an enterprise with 100% state capital which has suffered business losses and therefore lost the state capital portion.

e/ Other criteria not contrary to the company charter.

Chapter V

POLICIES TOWARD ENTERPRISES AND THEIR EMPLOYEES DURING EQUITIZATION

Article 47. Preferential policies toward equitized enterprises

1. To be exempt from the registration fee for transfer of assets under their management and use to joint-stock companies.

2. To be exempt from the fee for the grant of an enterprise registration certificate upon their transformation.

3. To be prioritized in inheriting the land use rights and legitimate interests provided by the land law.

4. To maintain and develop welfare funds in kind, such as cultural facilities, clubs, infirmaries, sanatoria and nurseries, to ensure welfare for employees of joint-stock companies.

Article 48. Preferential policies toward employees of equitized enterprises

1. Laborers named on the list of regular employees of an equitized enterprise at the time of disclosure of its value may purchase at most 100 shares per year of actually working in the state sector at the price equal to 60% of the lowest successful bid (in case of prior public auction) or 60% of the lowest successful sale price of shares sold to strategic investors (in case of prior sale to strategic investors).

2. Laborers named on the list of regular employees of an equitized enterprise at the time of disclosure of its value who are needed by the enterprise and have committed to working for the enterprise for at least 3 years (after the enterprise is granted the first-time enterprise registration certificate) may purchase more preferential shares under the following provisions:

a/ To purchase an addition of 200 shares for each year they commit to continuing to work in the enterprise, provided that the total number of additionally purchased shares does not exceed 2,000 per employee.

Particularly, employees who are highly professionally qualified experts working in an enterprise may additionally purchase 500 shares for each year they commit to continuing to work in their enterprise but the total number of additionally purchase shares must not exceed 5,000 per employee. Equitized enterprises shall base themselves on particularities of their sectors or business lines to elaborate and decide on criteria for identifying excellent experts who are highly professionally qualified and have these criteria adopted by their employees and workers’ general meetings before the equitization.

b/ The sale price of preferred shares to be additionally sold to employees under Point a, Clause 2 of this Article is the lowest successful bid (in case of prior public auction) or the lowest successful sale price of shares sold to strategic investors (in case of prior sale to strategic investors).

c/ Each employee may enjoy the right to additionally purchase preferred shares at the level specified at Point a, Clause 2 of this Article.

d/ Preferred shares employees may additionally purchase specified at Point a, Clause 2 of this Article shall be converted into ordinary shares upon the expiration of the committed time limit.

In case a joint-stock company undergoes a restructuring which leads to employees’ labor contract termination, resignation or lay-off under the Labor Code ahead of the committed time limit, additionally purchased shares shall be converted into ordinary shares. In case employees wish to resell their shares to the enterprise, the joint-stock company shall redeem these shares at prices close to market trading prices.

Employees who terminate their labor contracts ahead of the committed time limit shall resell all of their additionally purchased shares to the joint- stock company at prices close to market trading prices but not exceeding prices at which these shares were purchased at the time of equitization.

3. They may receive part of cash balances of reward and welfare funds (including also the value of assets used in production and business which have been invested with these funds) under Articles 14 and 19 of this Decree for purchasing shares.

4. They may continue participating in and enjoying benefits from social insurance, health insurance and other current regimes when working in joint-stock companies.

5. They may enjoy the retirement regime and other benefits under current regulations if fully meeting the specified conditions at the time of disclosure of the enterprise value.

6. If they are laid off or resign at the time of disclosure of the enterprise value, they will be paid a job loss or resignation allowance under law.

7. Employees of enterprises restructured under Clauses 2 and 3, and Point f, Clause 2, Article 49 of this Decree may enjoy the policies provided in Clauses 4, 5 and 6 of this Article; and are concurrently entitled to the policies provided in Clauses 1, 2 and 3 of this Article, depending on their enterprises’ specific conditions and restructuring plans approved by competent authorities.

Chapter VI

ORGANIZATION OF IMPLEMENTATION

Article 49. Powers and responsibilities in the organization of equitization

1. The Prime Minister:

a/ To approve equitization plans of enterprises specified in Article 2 of this Decree.

b/ To approve equitization plans of state economic groups and corporations and several enterprises operating in specific sectors (such as insurance, banking, telecommunications, aviation, coal mining, petroleum exploitation and exploitation of other rare and precious minerals); decide on agencies to act as ownership representatives for state capital portions in these enterprises.

c/ To authorize members’ councils of single-member limited liability companies, in which the State hold 100% charter capital and which are parent companies of special economic groups and corporations established under the Prime Minister’s decisions, to decide on disclosure of enterprise values or approval of equitization plans of their member enterprises. After making decisions, they shall report their decisions to the enterprise renewal and development steering committee and the Ministry of Finance for examination and supervision in order to assure their compliance with law.

2. Ministers, heads of ministerial-level agencies or government-attached agencies and provincial-level chairpersons of People’s Committees shall base themselves on plans on reorganization of enterprises with 100% state capital already approved by the Prime Minister:

a/ To set up enterprise equitization steering committees to assist them in equitization work under this Decree.

To set up an enterprise equitization steering committee to assist the Prime Minister in organizing the equitization of enterprises specified at Point b, Clause 1 of this Article.

b/ To instruct, supervise and monitor the process of equitization of units under their management regarding the contents specified in this Decree.

c/ To decide on disclosure of the enterprise value and submit to the Prime Minister for approval equitization plans of enterprises specified at Point b, Clause 1 of this Article.

d/ To decide on disclosure of the enterprise value and decide on equitization plans of these enterprises under their management, which are enclosed with the draft charters of joint-stock companies which have been elaborated in accordance with the Law on Enterprises and relevant laws.

e/ To take the initiative in applying other measures, such as enterprise assignment, sale, dissolution or bankruptcy, to enterprises which are on the list of to-be-equitized enterprises but fail to satisfy the specified conditions.

f/ To approve plans on restructuring and equitization of loss-making enterprises after reaching written agreement with the Vietnam Debt Trading Company and creditors of enterprises on enterprise restructuring plans under Clause 2, Article 3 of this Decree.

The time limit for approving plans on restructuring and equitization of loss-making enterprises under Clause 2, Article 3 of this Decree is 3 months after the disclosure of the enterprise value is decided.

g/ To coordinate with related agencies in approving financial settlement; equitization expense settlement; settlement of funds for supporting redundant laborers; and settlement of proceeds from equitization, and disclose the actual value of the state capital portion at the time joint-stock companies are granted first-time enterprise registration certificates;

h/ To settle problems, complaints and denunciations for equitized enterprises according to their competence under current laws.

i/ To propose to the Prime Minister for consideration and decision agencies to act as ownership representatives for state capital portions when equitizing single-member limited liability companies in which State holds 100% of charter capital and which are parent companies of state economic groups and corporations.

j/ For equitized enterprises with the ownership representative right of state capital portions to be transferred to the State Capital Investment Corporation, ministers, heads of ministerial-level agencies or government- attached agencies and chairpersons of provincial-level People’s Committees shall reach agreement with the State Capital Investment Corporation on the selection of representatives for state capital contributions to joint-stock companies and proceed with the handover of the ownership representative right of state capital portions in enterprises immediately after disclosing the actual value of the state capital portion at the time joint-stock companies are granted first-time enterprise registration certificates.

3. Members’ councils of single-member limited liability companies in which the State holds 100% of charter capital and which are parent companies of state economic groups and corporations specified at Point c, Clause 1 of this Article shall:

a/ Organize the implementation of equitization plans of enterprises in their groups or corporations according to the state enterprise reorganization scheme already approved by the Prime Minister.

b/ Set up enterprise equitization steering committees to assist them in equitization work under this Decree.

c/ Instruct, supervise and monitor the process of equitization of units under their management regarding the issues specified in this Decree.

d/ Direct member companies in handling financial matters under the provisions of Chapter II of this Decree, organize the valuation of enterprises, elaborate equitization plans and submit them to members’ councils for approval; implement the approved plans;

e/ Handle according to their competence financial problems of enterprises under their management.

f/ Decide on disclosure of enterprise values and approve equitization plans for member enterprises in their groups or corporations enclosed with the draft charters of joint-stock companies which are elaborated in accordance with relevant laws;

g/ Direct member units in coordinating with related agencies in making financial settlement; equitization expense settlement; settlement of funds for supporting redundant laborers; and settlement of proceeds from equitization, and disclose the actual value of the state capital portion at the time joint-stock companies are granted first-time enterprise registration certificates.

4. Powers, responsibilities and composition of enterprise equitization steering committees:

a/ An enterprise equitization steering committee has the following powers and responsibilities:

- To assist the agency competent to decide on equitization in directing and organizing the equitization of one or several enterprises under this Decree.

- To use a competent agency’s seal in performing its duties;

- To form a working team to carry out equitization work at enterprises;

- To report to the agency competent to decide on equitization for selection of the method of initial sale of shares;

- To direct the elaboration of the equitization plan and the first draft charter of the joint-stock company;

- To verify and submit to a competent agency for decision and disclosure the enterprise value and for decision and approval the equitization plan;

- To direct the equitized enterprise to cooperate with intermediary financial institutions in holding share auctions;

- To summarize and report to a competent agency on share auction results;

- To summarize and submit to a competent agency for decision adjustments to the equitization plan and for decision adjustments to the enterprise value after the enterprise is transformed into a joint-stock company;

- To examine, select, propose to and coordinate with competent agencies in appointing a representatives for the state capital portion in the equitized enterprise.

b/ The composition of enterprise equitization steering committees shall be decided by ministers, heads of ministerial-level agencies or government- attached agencies, chairpersons of provincial-level People’s Committees and members’ councils of parent companies of state economic groups or corporations or parent companies in parent company - affiliated company conglomerates.

For large enterprises with a state capital portion of over VND 500 billion each and operating in specific fields or sectors (insurance, banking, post and telecommunications, aviation, coal mining, petroleum exploitation and exploitation of other precious and rare minerals) and parent companies of state economic groups or corporations, enterprise equitization steering committees may have representatives of the Enterprise Renewal and Development Steering Committee and the Ministry of Finance as their members.

5. The trade union organization in an equitized enterprise shall coordinate with the enterprise equitization steering committee in:

a/ Conducting communication among and mobilization of cadres, employees and workers of the equitized enterprise to implement the State’s equitization policy.

b/ Participating in supervising the equitization process at the enterprise.

c/ Appointing representatives for the capital portion of the trade union to stand for election to the Board of Directors and the Control Board of the joint-stock company in accordance with law.

d/ Using funding sources of the trade union as provided by law to purchase preferred shares of the enterprise, participating in enterprise management in the capacity as shareholders and protecting the interests of employees of the enterprise in accordance with law.

Article 50. Reporting regime, supervision and monitoring

1. Ministers, heads of ministerial-level agencies or government-attached agencies, chairpersons of provincial-level People’s Committees and members’ councils of parent companies of economic groups or corporations shall promptly report to the Enterprise Renewal and Development Steering Committee and the Finance Ministry on equitization-related issues: results of settlement of financial problems, valuation results, decision on disclosure of the enterprise value and adjustment of the enterprise value, equitization plan, results of sale of shares, settlement of equitization expenses, settlement of the handover from enterprise with 100% state capital to joint-stock company, and violations of consultancy organizations in the process of equitization.

2. The Ministry of Finance shall inspect and supervise the observance of policies and laws on transformation of enterprises with 100% state capital into joint-stock companies under this Decree; and periodically review and report to the Prime Minister on the situation and results of enterprise equitization.

Article 51. Order of equitization

The equitization shall be carried out in the sequence of specific steps specified in the Appendix to this Decree, basically including:

1. Elaboration of an equitization plan

a/ Setting up an enterprise equitization steering committee and an assisting team.

b/ Preparing dossiers and documents.

c/ Organizing inventory, handling of financial matters and enterprise valuation.

d/ Deciding on and disclosing the enterprise value.

e/ Finalizing and submitting the equitization plan to a competent authority for approval.

2. Implementation of the equitization plan.

3. Completion of transformation of the enterprise with 100% state capital into a joint-stock company.

a/ Holding the first shareholders’ general meeting and making enterprise registration.

b/ Organizing the final settlement and handover between the enterprise with 100% state capital and the joint-stock company.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 52. Implementation provisions

1. This Decree takes effect on September 5, 2011, and replaces the Government’s Decree No. 109/2007/ND-CP of June 26, 2007, on transformation of enterprises with 100% state capital into joint-stock companies. All previous stipulations on equitization contrary to this Decree cease to be effective.

2. Enterprises which have obtained competent authorities’ decisions approving their equitization plans before the effective date of this Decree continue to implement the approved plans and the provisions of this Decree.

3. Regarding equitization-related problems which are detected through examination or inspection by state agencies after enterprises are officially transformed into joint-stock companies, all organizations and individuals that cause losses shall pay compensations under current regulations. Cases showing signs of crime shall be transferred to investigative agencies for handling.

4. Single-member limited liability companies of which the charter capital is wholly held by parent companies of state economic groups or corporations or parent companies in parent company - affiliated company conglomerates shall undergo equitization in accordance with this Decree.

5. Single-member limited liability companies of which the charter capital is wholly held by political organizations or socio-political organizations and which are established and operate under the Law on Enterprises may apply the provisions of this Decree to their transformation into joint-stock companies.

Article 53.

1. The Ministries of Finance; Labor, War Invalids and Social Affairs; Natural Resources and Environment; and Planning and Investment; the State Bank of Vietnam; the Vietnam Social Insurance; the State Audit and other related agencies shall, within the ambit of their respective functions and tasks, guide the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies or government-attached agencies, chairpersons of provincial-level People’s Committees, members’ councils of state economic groups and corporations established under decisions of the Prime Minister shall implement this Decree.-

APPENDIX

PROCESS OF TRANSFORMATION OF ENTERPRISES WITH 100% STATE CAPITAL INTO JOINT-STOCK COMPANIES
(To the Government’s Decree No. 59/2011/ND-CP of July 18, 2011)

The process of transformation of an enterprise with 100% state capital into a joint-stock company involves the following steps:

Step 1: Elaboration of an equitization plan

1. Setting up an enterprise equitization steering committee and an assisting team.

a/ Based on the equitization plan in the overall scheme on reorganization of enterprises with 100% state capital approved by the Prime Minister, the agency competent to decide on equitization shall decide to set up an enterprise equitization steering committee and a plan and roadmap for organizing the equitization.

b/ The head of the steering committee shall select and issue a decision to form an equitization assisting team within 5 working days after obtaining the committee establishment decision.

2. Preparing dossiers and documents.

The enterprise equitization steering committee shall direct the assisting team in coordinating with the enterprise in preparing relevant dossiers and documents, including:

- Legal dossiers on enterprise establishment.

- Legal dossiers on assets, capital source and debts of the enterprise.

- Financial statement and tax settlement report of the company by the time of enterprise valuation.

- Estimation of equitization expenses under regulations.

- Elaboration of plans on use of land currently managed by the enterprise in compliance with regulations on rearrangement and handling of houses and land as decided by the Prime Minister in each period.

- Drawing up of a list and plan on use of laborers managed by the enterprise.

- Selection of methods and forms of enterprise valuation, selection of time of enterprise valuation suitable to the enterprise’s conditions and guiding documents concerning equitization.

3. Organizing inventory and handling of financial matters and enterprise valuation.

The assisting team and enterprise shall coordinate with the consultancy organization (if any) in:

a/ Inventorying and classifying assets and making financial settlement and tax settlement, coordinating with related agencies in handling financial matters by the time of enterprise valuation.

b/ Sending the land use plan together with all related dossiers to the concerned provincial-level People’s Committee for its opinions on land plots which the enterprise will further use after the equitization and the land price to serve as a basis for enterprise valuation.

c/ Organizing the enterprise valuation.

The equitization steering committee shall select (or hold a bidding for selecting) a valuation organization and recommend it to the enterprise for signing a valuation contract or assign the assisting team or the enterprise to conduct the valuation itself under regulations. In case the consultancy organization has the valuation function, it may be hired to elaborate the equitization plan, valuate the enterprise and organize the sale of shares.

4. Deciding on and disclosing the enterprise value

The steering committee shall verify results of inventory and classification of assets and results of enterprise valuation, then report them to the agency competent to decide on disclosure of the enterprise value.

For enterprises subject to audit as specified in Clause 1, Article 27 of this Decree, the steering committee shall propose the agency competent to decide on the enterprise value to send documents and dossiers to request the state audit agency to audit results of valuation results and handle financial matters before officially disclosing the equitized enterprise value.

5. Finalizing and submitting an equitization plan to a competent authority for approval.

a/ Based on the decision on disclosure of the equitized enterprise value and the actual state of the enterprise, the steering committee shall consider and decide to hire a consultancy organization or assign the assisting team and the enterprise to elaborate an enterprise equitization plan, which must have the following principal contents:

- Actual state of the company at the time of enterprise valuation.

- Results of the enterprise valuation and matters which need to be further settled.

- Form of equitization and charter capital suitable to production and business operations of the joint-stock company.

- Charter capital structure, reserve price and method of issuance of stocks under regulations.

- Draft organization and operation charter of the joint-stock company under the Law on Enterprises and current legal documents.

- Labor rearrangement plan.

- Plan on production or business operations for subsequent 3-5 years.

- Land use plan approved by the competent authority.

b/ The equitization steering committee shall direct the assisting team and the enterprise to coordinate with the consultancy organization (if any) in disclosing the equitization plan and sending it to each section of the company for study before organizing an (extraordinary) employees and workers’ general meeting.

Following the employees and workers’ general meeting, the assisting team and the enterprise shall coordinate with the consultancy organization (if any) in finalizing the equitization plan and then submitting it to a competent authority for approval.

c/ The steering committee shall appraise the equitization plan and report it to a competent agency for approval.

For an enterprise of which the actual value is lower than its payable amounts specified in Clause 2, Article 3 of this Decree, the competent agency shall direct the steering committee and the enterprise to coordinate with the Vietnam Debt Trading Company and the enterprise’s creditors in elaborating a plan on enterprise restructuring. Based on the effectiveness and feasibility of the enterprise restructuring plan, the competent agency shall decide to approve this plan for transforming the enterprise into a joint-stock company.

Step 2: Organization of implementation of the equitization plan

a/ The equitization steering committee shall direct the enterprise in coordinating with intermediary consultancy organizations in organizing the sale of shares according to the approved equitization plan and this Decree.

b/ Based on results of the public auction or the sale of shares to strategic investors, the equitization steering committee shall direct the enterprise in selling preferred shares to employees and the trade union organization in the enterprise (if any) according to the approved plan.

c/ Based on summarized results of the sale of shares to subjects indicated in the equitization plan, the equitization steering committee shall direct the enterprise in remitting the proceeds from the equitization into the fund under regulations.

In case some shares remain unsold after the sale of shares to subjects indicated in the approved equitization plan, the equitization steering committee shall report such to the agency competent to decide on and approve the equitization plan for decision on adjustment of the quantity and structure of shares of the equitized enterprise.

d/ Equitization steering committees shall report to the competent agency for decision on appointment persons acting as representatives for capital portions in equitized enterprises with state capital to continue participating in joint-stock companies and to be responsible for exercising the rights and performing the obligations of representatives for state capital portions under law.

Step 3: Completion of the transformation of enterprises into joint-stock companies

1. Organizing the first shareholders’ general meeting and enterprise registration.

a/ The equitization steering committee shall direct the assisting team, representative for the state capital portion (if any) and enterprise in organizing the first shareholders’ general meeting to adopt the organization and operation charter and the production and business plan, elect the Board of Directors, the Control Board and the executive apparatus of the joint- stock company.

b/ Based on results of the first shareholders’ general meeting, the Board of Directors of the joint-stock company shall make enterprise registration under regulations.

2. Organizing the final settlement and handover between the enterprise and the joint-stock company.

a/ Within 30 working days after the grant of the first-time enterprise registration certificate, the equitization steering committee shall direct the assisting team and the enterprise in making a financial statement at the time the joint-stock company is granted the first-time enterprise registration certificate, settling taxes, auditing the financial statement, settling equitization expenses and reporting them to the equitization- deciding agency.

b/ Based on results of the re-determination of the value of the state capital portion at the time of enterprise registration by the competent agency, the equitization steering committee shall direct the assisting team and the enterprise in organizing the handover between the enterprise and the joint- stock company.

c/ To organize the public appearance of the joint-stock company and make announcements in the mass media as required.

In the course of implementation, the equitization-deciding agency, the equitization steering committee take several steps simultaneously in order to accelerate the enterprise equitization process.-