Decree No. 61/2013/ND-CP dated June 25, 2013 of the Government promulgating the Regulation on financial supervision, operational efficiency assessment and publicization of financial information of state-owned enterprises and state-invested enterprises

THE GOVERNMENT

Decree No. 61/2013/ND-CP of June 25, 2013, promulgating the Regulation on financial supervision, operational efficiency assessment and publicization of financial information of state-owned enterprises and state-invested enterprises

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

Pursuant to the November 29, 2005 Law on Enterprises;

Pursuant to November 27, 2009 Resolution No. 42/2009/QH12 of the National Assembly on raising the effectiveness and efficiency of implementation of policies and laws on the management and use of state capital and assets in state groups and corporations;

At the proposal of the Minister of Finance;

The Government promulgates the Decree promulgating the Regulation on financial supervision, operational efficiency assessment and publicization of financial information of state-owned enterprises and state-invested enterprises.

Article 1. To promulgate together with this Decree the Regulation on financial supervision, operational efficiency assessment and publicization of financial information of state-owned enterprises and state-invested enterprises.

Article 2. This Decree takes effect on August 15, 2013.

Article 3. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, chairpersons of Members’ Councils or company presidents, directors or directors general of state-owned enterprises; and Boards of Directors and directors general or directors of state-invested enterprises shall implement this Decree.

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG

Regulation on financial supervision, operational efficiency assessment and publicization of financial information of state-owned enterprises and state-invested enterprises

(Promulgated together with the Government’s Decree No. 61/2013/ND-CP of June 25, 2013)

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Regulation provides the financial supervision, operational efficiency assessment, and publicization of financial information applicable to state-owned enterprises and state-invested enterprises.

Article 2. Subjects of application

1. State-owned enterprises and state-invested enterprises, including:

a/ State-owned enterprises:

- Single-member limited liability companies - parent companies of economic groups, corporations, companies operating after the parent company-subsidiary company model (below referred to as parent companies) established by the Prime Minister, ministries, ministerial-level agencies or government-attached agencies (below referred to as line ministries), or provincial-level People’s Committees.

- Single-member limited liability companies (below referred to as independent single-member limited liability companies) established by line ministries or provincial-level People’s Committees.

- The State Capital Investment Corporation (SCIC).

b/ State-invested enterprises:

Joint-stock companies, limited liability companies with two or more members of which the invested capital is owned by line ministries or provincial-level People’s Committees.

2. Organizations and individuals authorized, decentralized or assigned by the Government or the Prime Minister to exercise the rights and perform the obligations of state capital owners; or authorized representatives of state capital portions invested in the enterprises defined in Clause 1 of this Article.

3. Finance state management agencies having the function and task of supervising corporate finance.

Article 3. Purposes of financial supervision, operational efficiency assessment and publicization of financial information

1. To accurately assess the actual state and operational efficiency of enterprises; to promptly help enterprises solve their problems, fulfill business targets and plans and utility tasks, raise their production and business efficiency and competitiveness.

2. To enhance the responsibility of enterprises for observing the laws on the management and use of state capital and assets.

3. To help the State, owners of capital invested in other enterprises, and state management agencies in charge of corporate finance in detecting weaknesses in enterprises’ production and business activities in order to give warnings and work out appropriate and timely remedies.

4. To publicize the financial status of state-owned enterprises and state-invested enterprises.

Article 4. Interpretation of terms

1. Financial supervision means monitoring, examining, inspecting and assessing financial issues of enterprises and their compliance with finance policies and laws.

2. Financial supervision report means a report which analyzes, assesses, and gives warnings about financial issues of each enterprise. This report is prepared by the supervisor.

3. Financial supervision result report is a report which summarizes results of the financial supervision of enterprises attached to line ministries and provincial-level People’s Committees. This report is prepared by the owner.

4. Assessment criteria means a system of criteria and standards used for determining operational efficiency and classifying enterprises in a comprehensive and objective manner.

5. Owner means an agency or organization authorized or decentralized to exercise the rights and perform the obligations of owners of state-owned single-member limited liability companies, or of owners of state capital portions in state-invested enterprises, including line ministries and provincial-level People’s Committees.

6. Finance state management agencies include the Ministry of Finance and provincial-level Finance Departments (below referred to as corporate finance management agencies).

7. Indirect supervision means monitoring and examining enterprises through their financial statements, statistics and other reports as prescribed by law and the owners.

8. Direct supervision means examination and inspection directly carried out at enterprises.

9. Prior supervision means scrutinizing and examining the feasibility of short-term and long-term plans, investment projects, capital-raising plans, and other projects and plans of enterprises.

10. Internal supervision means monitoring and examining the implementation of plans and projects of enterprises, and the owners’ observance of law throughout the implementation of the plans or projects.

11. Subsequent supervision means examining results of operation of enterprises based on periodic reports, the owners’ observance of law or the company charter.

12. Corporate managers are chairpersons and members of the Members’ Councils or company presidents, controllers, directors general, deputy directors general or deputy directors, chief accountants (excluding directors general or directors, deputy directors general or deputy directors and chief accountants who work under labor contracts).

13. Special financial supervision means a process of supervision of enterprises showing signs of financial unsafety that need to be monitored and addressed by competent authorities.

14. Authorized representative of state capital portion at an enterprise (below referred to as representative) is an individual authorized in writing by the owner to exercise the rights and perform the responsibilities and obligations of the owner at the enterprise.

15. State-owned enterprise means an enterprise of which 100% of charter capital is held by the State.

16. State-invested enterprise means an enterprise of which over 50% of charter capital is held by the State, and an enterprise of which no more than 50% of charter capital is held by the State.

Chapter II

FINANCIAL SUPERVISION AND OPERATIONAL EFFICIENCY ASSESSMENT OF STATE-OWNED ENTERPRISES

Section 1

FINANCIAL SUPERVISION

Article 5. Supervisors

1. Line ministries shall, in the capacity as owners, assume the prime responsibility for, and coordinate with the Ministry of Finance in, the financial supervision and production and business efficiency assessment of enterprises being parent companies and independent single-member limited liability companies established by line ministries or assigned to line ministries for management.

2. Provincial-level People’s Committees shall, in the capacity as owners, perform the financial supervision and production and business efficiency assessment of parent companies and independent single-member limited liability companies established by provincial-level People’s Committees.

3. Corporate finance management agencies:

a/ The Ministry of Finance shall coordinate with the owners in the financial supervision of parent companies and independent single-member limited liability companies established by line ministries or assigned to line ministries for management; summarize financial supervision result reports of line ministries, provincial-level People’s Committees, and the Members’ Councils of state economic groups and corporations; summarize and send annual reports to the Government on the production and business efficiency, performance of public tasks, and finance of state-owned enterprises.

b/ Provincial-level Finance Departments shall assist provincial-level People’s Committees in the financial supervision, production and business efficiency assessment, and summarizing financial supervision result reports of enterprises established by provincial-level People’s Committees.

Article 6. Supervision contents

1. Supervising the management and use of state capital and assets at an enterprise regarding:

a/ Asset investments in the enterprise (including the portfolio of investment projects and mobilized capital sources associated with these investment projects);

b/ Capital raising and use of raised capital; issuance of bonds and shares (if any);

c/ External investments, including domestic investment, offshore investment, investment in finance, banking, real estate and securities (if any); efficiency of external investments;

d/ The management of assets, receivables and payables; the solvency of the enterprise, the debt-to-equity ratio.

2. Supervising the preservation and development of capital in the enterprise.

3. Supervising business activities of the enterprise regarding:

a/ Production, sale and inventory of products; turnover from business and service provision; turnover from financial activities; other incomes;

b/ Business result, the ratio of return on equity (ROE) and ratio of return on assets (ROA);

c/ Analysis of cash flow;

d/ Fulfillment of obligations toward the state budget;

dd/ Distribution of profit, set-up and use of funds.

4. Supervising the implementation of policies toward employees in the enterprise, including policies on salaries and incomes of employees and enterprise managers.

5. The Ministry of Finance shall provide the forms for the supervision contents specified in Clauses 1, 2, and 3 of this Article.

The Ministry of Labor, War Invalids and Social Affairs shall provide the forms for the supervision contents in Clause 4 of this Article.

6. Enterprises engaged in finance, banking, insurance, lottery and securities shall comply with the financial supervision provisions of this Regulation and other laws on finance, banking, credit, insurance, lottery and securities. In case a specialized law contains provisions different from those of this Regulation, such specialized law prevails.

Article 7. Bases for financial supervision

Financial supervision of an enterprise must be carried out on the following bases:

1. Legal documents on corporate finance management.

2. The operation charter and regulations on financial management of the enterprise.

3. Annual and long-term (5-year) production and business and development investment plans, and criteria for operational efficiency assessment of the enterprise approved by competent authorities.

4. Audited annual financial statements approved by the Members’ Council; quarterly financial statements, periodic operation reports and irregular reports made at the request of the owner or state management agencies.

5. Results of inspections, examinations and audits carried out by functional agencies.

6. Other relevant information and documents as prescribed by law.

Article 8. Methods of financial supervision

The owners shall assume the prime responsibility for, and coordinate with corporate finance management agencies in, performing the financial supervision by combining direct supervision, indirect supervision, prior supervision, internal supervision and subsequent supervision, attaching special importance to prior supervision and internal supervision in order to promptly find the strengths and weaknesses in finance and financial management of enterprises and then make timely recommendations, instructions and warnings to enterprises.

Examinations and inspections may be conducted periodically or unexpectedly, and must comply with the law on inspection and examination of enterprises.

Article 9. Organization of supervision

1. The owner shall:

a/ Designate a unit in charge and assign other units within the owner’s organization to conduct financial supervision and operational efficiency assessment of attached enterprises;

b/ Determine supervision targets with regard to each enterprise in each period based on the guidance of the Ministry of Finance and the finance and business of enterprises;

c/ Use the forms mentioned in Clause 5, Article 6 of this Decree and the reporting period of each enterprise in order to serve the supervision and assessment of enterprises;

d/ Annually take the initiative in making plans on corporate finance supervision (including examination and inspection plans) and send them to the Ministry of Finance and the Government Inspectorate. Particularly, inspection plans must be conformable with annual inspection plans of the Government Inspectorate;

dd/ Conduct the supervision strictly, adequately and timely as planned. Promptly warn the enterprises when detecting bad signs in their finance or financial management. At the same time instruct the enterprises to take prompt measures to prevent and remedy their weaknesses.

The owner may hire independent providers of financial consultancy, accounting or audit services to examine the data and financial operations of the enterprises in order to have grounds for making assessment, remarks and conclusions. The costs of hiring consultancy services comply with the guidance of the Ministry of Finance;

e/ Based on the financial supervision results and regulations on corporate financial management, the owner shall assess the actual financial status of an enterprise as safe or unsafe. For an enterprise showing signs of unsafe finance, the owner shall apply the regime of special supervision and concurrently take remedies and measures for promptly dealing with relevant problems;

g/ Make and send biannual and annual financial supervision result reports to the Ministry of Finance. Supervision result reports must be enclosed with financial supervision reports of each enterprise. Biannual reports must be sent no later than August 31 of the reporting year; annual reports must be sent no later than May 31 of the subsequent year;

h/ Propose the Prime Minister to discipline leaders of enterprises established by the Prime Minister; discipline leaders of enterprises that fail to comply with the prescribed reporting regime, recommendations and instructions in supervision reports made by the owner and the Ministry of Finance, which have worsened the financial status and financial management of the enterprises.

2. The Ministry of Finance shall:

a/ Coordinate with line ministries in planning the supervision and supervising the enterprises attached to the line ministries; supervising enterprises that produce or trade in essential products and enterprises subject to special supervision. Directly supervise enterprises at the request of the Government or the Prime Minister;

b/ Report the management and use of state capital and assets, the production and business efficiency, and the finance of state-owned enterprise to the Government or the Prime Minister based on the financial supervision result reports made by the owners and the reports on supervision of corporate finance management (made by inspection agencies, state audit agencies or corporate finance management agencies). Biannual reports must be sent no later than September 30 of the reporting year; annual reports must be sent no later than July 31 of the subsequent year;

c/ Propose the Prime Minister to discipline the owners and leaders of enterprises established by the Prime Minister, and request the owners to discipline leaders of enterprises that fail to comply with the prescribed reporting regime, the recommendations and instruction in supervision reports made by the owners or the Ministry of Finance, which worsens the finance and financial management of the enterprise;

d/ Handle inconsistencies between the remarks, assessments, warnings and recommendations provided by the owners and those provided by the Ministry of Finance,

When supervising an enterprise, the owner and the Ministry of Finance should reach agreement on the remarks, assessments, warnings and recommendations provided for the enterprise. Request the Prime Minister to decide if the inconsistencies between the remarks, assessments, warnings and recommendations provided by the owner and those provided by the Ministry of Finance cannot be handled.

3. The enterprise shall:

a/ Promptly, sufficiently and accurately make and send reports according to the regulations of competent agencies and the owner to serve the financial supervision. Facilitate the direct supervision at the enterprise;

b/ When the owner and the corporate finance management agency issue warnings about the risks in the finance and financial management of the enterprise, promptly work out and take measures to prevent and remedy these risks in order to improve the finance and financial management of the enterprise;

c/ Promptly and fully follow the instructions and recommendations given by the owner and corporate finance management agency in supervision reports. When disagreeing to these instructions and recommendations, the enterprise may report its opinions to the agency that gives such instructions or recommendations. When the owner or the corporate finance management agency gives the final opinions, the enterprise shall comply with such opinions. Every quarter or at the request of the agency that gives instructions and recommendations, the enterprise shall send reports to this agency and the owner on the results of realization of the instructions and recommendations;

d/ Organize internal financial supervision. The Members’ Council (company president) shall conduct the supervision using the enterprise’s organizational apparatus. The enterprise shall report on the internal financial supervision results every quarter or at the request of the owner.

Section 2

SPECIAL FINANCIAL SUPERVISION

Article 10. Cases of special financial supervision

1. An enterprise must be placed under special supervision when, at the time of making an annual financial statement or through financial supervision or audit, its finance or production and business activities falls into one of the following cases:

a/ Its business suffers a loss and the enterprise has a ratio of debt to equity exceeding the prescribed safety limit;

b/ The enterprise suffers a loss equal to 30% or more of its equity, or an accrued loss exceeding 50% of its equity;

c/ The coefficient of ability to repay due debts is smaller than 0.5;

d/ The enterprise’s report does not reflect its actual finance, presenting false business results.

2. Enterprises engaged in banking, credit, insurance and securities must be placed under special financial supervision according to this Regulation and the laws on banking, credit, insurance and securities.

Article 11. Decisions on special financial supervision

1. When an enterprise is placed under special financial supervision, the owner shall issue a decision on special financial supervision of the enterprise. A decision on special financial supervision has the following details:

a/ Name of the enterprise under special supervision;

b/ Reasons for special supervision;

c/ Duration of special supervision.

2. The owner shall notify the decision on special supervision to the corporate finance management agency at the same level for coordinated implementation.

Article 12. Responsibilities of the Members’ Councils (company presidents), directors general or directors of enterprises under special supervision

1. To make a plan on restructuring the organization, business and finance, and submit it to the owner within 20 days from the date of issuance of the decision on special supervision.

2. To send to the owner and the corporate finance management agency monthly, quarterly and annual reports on:

a/ The production and value of major products, goods and/or services that are produced, sold or provided, and in stock in the period;

b/ Turnover from business activities, and other incomes;

c/ Expenses for business and other activities, expenses for wages, depreciation of fixed assets, loan interest, and management expenses;

d/ The realized profit and the ratio of realized profit to equity (for quarterly and annual reports);

dd/ The collection of receivables, capital raising and debt payment;

e/ The effectiveness of raising, management and use of investment capital; debts and solvency;

g/ The management and execution of the Members’ Council or the executive board of the enterprise.

3. The deadline for sending the reports in Clause 2 of this Article is before the 5^th of the subsequent month, for monthly reports; before the 15^th of the first month of the subsequent quarter, for quarterly reports, and before January 31 of the subsequent year for annual reports.

4. The Ministry of Finance shall provide forms for the reports in Clause 2 of this Article. Based on the report forms provided by the Ministry of Finance, the owner shall provide report forms for each enterprise under special supervision.

Article 13. Special supervision process

1. Approving the plan on restructuring the organization, business and finance of the enterprise within 15 working days after receiving the plan.

The owner may hire a consultant to assist in examining and evaluating the restructuring plan. The cost of consultancy must comply with the guidance of the Ministry of Finance.

2. Supervising the enterprise’s implementation of the approved plan.

3. Coordinating with the corporate finance management agency at the same level in analyzing and assessing business results, financial management, and production and business management of the enterprise in order to give instructions to the enterprise.

4. Where necessary, the owner may organize, or coordinate with the corporate finance management agency at the same level in organizing inspections and examinations of the enterprise in order to assess the truthfulness and accuracy of the reports of the enterprise; the business management of the executive board; the management of production, business, finance, and other resources of the enterprise. Examinations must be conducted based on the supervision requirements and accuracy of the reported data.

Examinations must comply with the law on inspection and examination. At the end of the examination, a report must be made on examined contents with recommendations aiming to raise the business efficiency of the enterprise.

5. Submitting a handling plan to the Prime Minister if the production and business results are not improved after the enterprise has fulfilled the requirements of the owner and the corporate finance management agency.

Article 14. Handling of enterprises under special supervision

1. When an enterprise under special supervision no longer has any of the grounds for special supervision specified in Clause 1, Article 10, and fully comply with the supervisory reporting regime prescribed in this Regulation for 2 consecutive years (from the day of issuance of the decision on special supervision), it must be removed from the list of enterprises under special supervision.

2. An enterprise that still suffers a loss after consecutive 2 years under special supervision shall undergo ownership transformation, dissolution or bankruptcy as prescribed.

3. The owner shall issue a decision to terminate special supervision and notify it to the corporate finance management agency at the same level.

Section 3

OPERATIONAL EFFICIENCY ASSESSMENT OF ENTERPRISES

Article 15. Grounds and criteria for enterprise assessment

1. Based on the financial supervision result and the financial management regulation, an enterprise and the owner shall assess the operational efficiency (below referred to as enterprise classification report).

2. Criteria for assessing operational efficiency of an enterprise and performance results of its managers.

a/ Criteria for assessing operational efficiency of an enterprise:

- Criterion 1. Turnover and other incomes;

- Criterion 2. Realized profit and ratio of realized profit to equity;

- Criterion 3. Overdue debts and capability to pay due debts;

- Criterion 4. Compliance with policies and laws on taxes and other payments to the budget, credit, banking, insurance, environmental protection, labor, wages, social security, financial statements, and reports to serve financial supervision;

- Criterion 5. Provision of public products and services.

b/ The criteria mentioned at Point a, Clause 2 of this Article are determined and calculated based on data from periodic financial statements and statistical reports according to current regulations.

When calculating criteria 1, 2, 4 and 5 at Point a, Clause 2 of this Article, the following influential factors must be considered and excluded:

- Objective and force majeure causes (such as natural disasters, epidemics and wars);

- Investment in production expansion according to approved plans, which affects the profit in the first two years from the year of commencement of the invested works;

- Price adjustment by the State (for products priced by the State) that affects the turnover of the enterprise, or the task of achieving socio-economic targets as instructed by the Government or the Prime Minister.

c/ The assessment of performance results of enterprise managers must apply the criteria prescribed by the Government and the following financial criteria:

- The level of achievement of the profit-to-equity ratio assigned by the State;

- The enterprise classification result.

Article 16. Principles of assessment and classification of enterprises and classification of performance results of enterprise managers

1. The assessment and classification of enterprises must adhere to the following principles:

a/ To be based on the comparison of the plans, targets and objectives assigned by the owner with implementation results. The targets and criteria for assessment and classification must be established in the first quarter of the planning year and must not be adjusted throughout the year;

b/ To be based on the business line, targets, tasks, and business characteristics (if any) of each enterprise;

c/ Enterprises are assessed and classified into Class A, Class B, and Class C.

The Ministry of Finance shall specify the application of enterprise assessment and classification criteria in this Clause.

2. Based on the enterprise assessment and classification criteria and principles, the owner shall determine the assessment and classification criteria that suit the business characteristics of each enterprise. These criteria must be determined in the first quarter of the planning year and may not be changed throughout the period of implementation.

3. Based on the assessment of performance results of enterprise managers provided for at Point c, Clause 2, Article 15 of this Regulation, the owner shall assess and classify enterprise managers at the levels: excellent performance, satisfactory performance, unsatisfactory performance, so as to apply the commendation and disciplining regime according to Articles 18 and 19 of this Regulation.

Article 17. Regime of reporting on enterprise assessment and classification

1. Annually, based on the criteria for enterprise classification in Article 15 of this Regulation and guiding documents issued by line ministries and the Ministry of Finance, enterprises shall assess and classify themselves, send reports on the assessment and classification to the agencies specified in Clause 2 of this Article for verification and announcement of enterprise classification.

2. Parent companies shall send classification reports to the owner and the Ministry of Finance; independent single-member limited liability companies established by line ministries or provincial-level People’s Committees shall send classification reports to the owner.

The enterprise classification report of a year must be sent before April 30 of the subsequent year.

3. Verification and announcement of enterprise classification

a/ Line ministries shall verify and announce the results of classification of parent companies established by line ministries or assigned to line ministries for management, and independent single-member limited liability companies established by line ministries.

The classification of parent companies must be consulted by the Ministry of Finance.

b/ Provincial-level People’s Committees shall verify and announce the results of classification of parent companies and independent single-member limited liability companies established by provincial-level People’s Committees.

The classification of parent companies must be consulted by the Ministry of Finance.

c/ Annually, line ministries and provincial-level People’s Committees shall report the results of enterprise classification of a year to the Ministry of Finance before May 31 of the subsequent year.

4. Enterprises directly serving national defense and security shall send reports on assessment and classification to the Ministry of National Defense and the Ministry of Public Security for verification and announcement of the enterprise classification. The results of enterprise classification must be sent to the Ministry of Finance by the deadlines specified in Clauses 2 and 3 of this Article.

5. Annually, the Ministry of Finance shall summarize and report the results of enterprise classifications of line ministries and provincial-level People’s Committees in the previous year to the Government before July 31.

Section 4

REGIME OF COMMENDATION AND DISCIPLINING

Article 18. Levels of reward for enterprise managers

1. Annually, based on the level of their performance, managers may be considered for rewards from the reward fund for enterprise managers as follows:

a/ A manager whose performance is assessed as excellent may receive 1.5 month’s salary;

b/ A manager whose performance is assessed as satisfactory may receive 1 month’s salary;

c/ A manager whose performance is assessed as unsatisfactory may not receive any reward.

2. The level of amounts deducted for and use of the reward fund for enterprise managers, and the competence to decide the level of reward for managers must comply with the regulations of the Government and the guidance of the Ministry of Finance.

Article 19. Handling of violations and disciplinary forms

1. For enterprise managers:

The owner shall apply disciplinary forms such as reprimand, caution, salary reduction, dismissal, or decide on salary levels and other benefits for enterprise managers who commit violations, as follows:

- When failing to submit or to fully submit reports on time according to regulations of competent agencies and the owner; making untruthful or incomplete reports; or failing to disclose financial information according to prescribed deadlines and contents, enterprise managers must be reprimanded or cautioned, depending on the severity of their violations.

- When failing to comply with or to fully comply with the instructions, recommendations and solutions of the owner and the corporate finance management agency, letting the enterprise operate at a loss, losing state capital, or letting the enterprise face financial difficulties, or letting the financial management of the enterprise inefficient, enterprise managers must have their salaries cut or be dismissed.

2. For owners (line ministries and provincial-level People’s Committees):

The heads of superior agencies shall apply disciplinary forms such as reprimand, caution, relief from office or dismissal in accordance with the Law on Civil Servants and the Law on Public Employees to the owners who:

a/ Fail to fully implement contents of financial supervision of the enterprises under their ownership;

b/ Fail to promptly take measures for redressing and handling enterprises’ violations of financial management or fail to report enterprises’ severe violations of financial safety to the superior agency and corporate finance management agency;

c/ Fail to submit reports on financial supervision of enterprises to the finance agency according to prescribed deadlines or contents;

d/ Fail to implement the instructions of the Government and the Prime Minister and recommendations of corporate finance management agencies and inspection, examination and audit agencies about the handling of violations and measures to enhance financial supervision of enterprises;

dd/ Make untruthful reports on the financial supervision of the enterprises under their ownership.

3. The Ministry of Finance is responsible to the Government for failing to promptly conduct supervision or issue warnings according to regulations for enterprises assigned by the Government or the Prime Minister to the Ministry of Finance for direct supervision, which leads to unsafe finance and loss of state capital and assets at these enterprises.

4. The Ministry of Home Affairs shall provide specific guidance on disciplinary forms and the process of considering disciplining against the violations in Clauses 2 and 3 of this Article.

Chapter III

FINANCIAL SUPERVISION AND OPERATIONAL EFFICIENCY ASSESSMENT OF ENTERPRISES OF WHICH OVER 50% OF CHARTER CAPITAL IS HELD BY THE STATE AND ENTERPRISES OF WHICH NO MORE THAN 50% OF CHARTER CAPITAL IS HELD BY THE STATE

Article 20. Supervisors

1. Line ministries shall supervise through their representatives joint-stock companies, limited liability companies with two or more members converted from parent companies, and independent single-member limited liability companies established by line ministries or assigned to line ministries for management.

2. Provincial-level People’s Committees shall supervise through their representatives enterprises converted from enterprises attached to provincial-level People’s Committees.

3. Corporate finance management agencies:

a/ Annually, the Ministry of Finance shall summarize financial supervision reports made by line ministries and provincial-level People’s Committees, then send to the Government a report on the production and business efficiency and performance of assigned public tasks of enterprises of which over 50% of charter capital is held by the State; and a report on the efficiency of state capital use at enterprises of which no more than 50% of charter capital is held by the State;

b/ Provincial-level Finance Departments shall assist provincial-level People’s Committees in summarizing reports on supervision of state-invested enterprises attached to provincial-level People’s Committees.

Article 21. Financial supervision contents

1. For enterprises of which over 50% of charter capital is held by the State:

a/ Supervising the finance, law observance, and business results of enterprises;

b/ Supervising the implementation of investment projects, production and business plans and investment plans of enterprises; the capital raising and foreign loans of enterprises;

c/ Supervising the management, use, preservation and development of capital of enterprises;

d/ Supervising the distribution of profits, receipt of distributed profits, and sharing of risks from contributed capital.

2. For enterprises of which no more than 50% of charter capital is held by the State:

a/ Supervising the management, use, preservation and development of capital of enterprises;

b/ Supervising the distribution of profits, collection of distributed profits, and sharing of risks from contributed capital.

3. The Ministry of Finance shall provide reporting forms and criteria mentioned in Clauses 1 and 2 of this Article.

Article 22. Supervision procedures

1. For enterprises of which over 50% of charter capital is held by the State: Regular supervision must be based on periodic reports made by the representatives. If necessary, the owner shall coordinate with the corporate finance management agency in inspecting the enterprises’ compliance with the laws on the management, use, preservation and development of capital in accordance with law and the company charters.

The owner of the state capital portion invested in an enterprise shall take final responsibility for enterprise supervision; the capital representative who is assigned by the owner to supervise the enterprise is only responsible for the tasks assigned by the owner.

2. For enterprises of which no more than 50% of charter capital is held by the State: The supervision and assessment of state capital use efficiency must be carried out regularly based on periodic reports made by the representatives.

Article 23. Reporting regime

1. For enterprises of which over 50% of charter capital is held by the State:

a/ Financial supervision reports

Every quarter and every year, the representative shall make a financial supervision report with the contents specified in Clause 1, Article 21 of this Regulation, and send it to the owner and the corporate finance management agency (the Ministry of Finance, for equitized enterprises, enterprises converted from state economic groups and corporations, equitized enterprises and enterprises converted from those attached to ministries; or provincial-level Finance Departments, for equitized enterprises and enterprises converted from those attached to provincial-level People’s Committees).

The quarterly financial supervision report must be sent by the 15^th of the first month of the subsequent quarter. The annual financial supervision report must be sent by January 31 of the subsequent year.

b/ Financial supervision result reports

- Based on the supervision reports made by their representatives, line ministries shall supervise the finance of joint-stock companies, limited liability companies converted from parent companies, and limited liability companies established by ministries or assigned to ministries for management. Line ministries shall summarize results of supervision of state-invested enterprises in their financial supervision result reports and send them to the Ministry of Finance according to regulations;

- Based on the supervision reports made by their representatives, provincial-level People’s Committees shall supervise the finance of converted enterprises and equitized enterprises attached to provincial-level People’s Committees, and assign the provincial-level Finance Departments to summarize and send the financial supervision results to the Ministry of Finance according to regulations;

- The Ministry of Finance shall summarize and report the supervision result reports sent by line ministries and provincial-level People’s Committees to the Government. The reports must specify the production and business efficiency and performance of public tasks of enterprises of which over 50% of charter capital is held by the State nationwide.

2. For enterprises of which no more than 50% of charter capital is held by the State:

a/ Financial supervision reports

Annually, the representative shall make a financial supervision report with the contents specified in Clause 2, Article 21, and send it to the owner. The report must be sent no later than January 31 of the subsequent year;

b/ Financial supervision result reports

Based on the supervision reports made by the representatives, the owners shall summarize and send financial supervision result reports to the Ministry of Finance. The Ministry of Finance shall summarize and send to the Government a report on state capital use efficiency at the enterprises nationwide.

Article 24. Assessment of operation results, production and business efficiency of state-invested enterprises

Annually, the owners shall assess the business efficiency of state-invested enterprises, especially those with over 50% of state capital, in order to consider continuing, expanding investment with state capital, or withdrawing investment in such enterprises. It is also the basis for assessing and rewarding the representatives and giving instructions and assignments to the representatives in the subsequent year.

Chapter IV

PUBLICIZATION OF FINANCIAL INFORMATION

Article 25. Subjects and scope of publicization of financial information

1. Enterprises:

a/ State-owned enterprises shall publicize financial information in accordance with this Regulation;

Enterprises engaged in finance, banking, insurance or lottery, stock exchanges and securities depositories shall publicize financial information in accordance with law and this Regulation;

b/ State-invested enterprises shall disclose financial information in accordance with law and their charters.

2. Owners of state capital portions invested in enterprises.

3. Corporate finance management agencies (the Ministry of Finance and provincial-level Finance Departments).

Article 26. Purposes and principles of publicization of financial information

1. Purposes:

a/ Ensuring the transparency, truthfulness and objectivity of the financial status of state-owned enterprises. Promptly discovering acts in violation of the regimes of financial management and accounting of enterprises;

b/ Exercising the powers and fulfilling the obligations of the state owners and employees in the supervision, inspection and implementation of regulations on democracy in state-owned enterprises; practicing thrift and combating wastefulness and corruption; raising the production and business efficiency, preserving and developing state capital;

c/ Serving as a basis for domestic and foreign investors to consider and decide on making investment in enterprises; for creditors to assess the solvency of enterprises.

2. Principles

a/ The basis for publicization of financial information is annual financial statements, management reports, and financial supervision reports made by enterprises; annual financial supervision reports made by the owners;

b/ The publicized contents of financial information must meet the requirements of each type of information recipients being state agencies, owners, investors, and the people;

c/ Enterprises and organizations that publicize financial information are responsible for the adequacy, timeliness and accuracy of financial information, and are obliged to answer inquiries of information recipients in accordance with law and this Regulation.

Article 27. Publicized contents of financial information

1. Enterprises:

a/ The finance, use efficiency and preservation of state capital at the enterprise;

b/ Production and business results of the enterprise;

c/ The set-up and use of funds of the enterprise;

d/ The contributions of the enterprise to the state budget;

dd/ Incomes and the average income of employees;

e/ The enterprise management;

g/ Wages, remuneration, bonuses and monthly incomes of the previous year of each enterprise manager.

2. Owners of state capital amounts invested in the enterprises:

a/ The enterprise’s financial status and classification;

b/ Some financial criteria of the enterprise: ratio of profit to equity, ratio of debt to equity, capacity to pay due debts.

3. Corporate finance management agency shall announce the summarized reports on the performance of state-owned enterprises and state-invested enterprises.

4. The Ministry of Finance shall provide the forms and financial criteria stated in this Article.

Article 28. Organizations publicizing information

1. For enterprises:

Enterprises shall publicize their finance, business results and management every 6 months and every year.

2. For owners and the Ministry of Finance:

a/ Annually, line ministries and provincial-level People’s Committees shall announce the results of enterprise assessment and classification and reports on financial supervision based on the assessment and classification of enterprises under their ownership.

Enterprises directly serving national defense and security shall comply with the regulations of the Ministry of National Defense and the Ministry of Public Security;

b/ Annually, the Ministry of Finance shall announce the management of state capital and assets at, and the production and business efficiency of, state-owned enterprises and state-invested enterprises according to the instructions of the Prime Minister regarding summarization reports on the financial status of enterprises and summarization reports on enterprise assessment and classification.

3. The Ministry of Finance shall guide the methods of publicizing financial information provided for in Clauses 1 and 2 of this Article.

Chapter V

IMPLEMENTATION PROVISIONS

Article 29. Organization of implementation

1. The Ministry of Finance shall assume the prime responsibility for, together with other ministries and sectors, guiding, organizing and examining the implementation of this Regulation; coordinate with the Ministry of Home Affairs in strengthening the system of state management of corporate finance in order to perform corporate financial supervision, support the owners in efficiently managing state capital and assets in enterprises in accordance with this Regulation.

2. The Ministry of Home Affairs shall assume the prime responsibility for, and coordinate with related ministries in, promulgating regulations on commendation and disciplining of enterprise managers, owners and corporate finance management agencies in the implementation of this Regulation.

3. The Ministry of Labor, War Invalids and Social Affairs shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, guiding the implementation of policies toward employees in enterprises.

4. Parent companies of groups, corporations and companies operating after the parent company-subsidiary model shall base themselves on this Regulation to formulate and implement regulations on supervision and assessment of operation results of single-member limited liability companies under the ownership of parent companies and companies invested by parent companies.

5. Political organizations and socio-political organizations shall supervise the enterprises under their management based on the corporate financial supervision mechanism prescribed in this Regulation.

6. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, chairpersons of the Members’ Councils, company presidents, directors general or directors of enterprises shall implement this Regulation.-

THE END