Decree No. 91/2015/ND-CP dated October 13, 2015 on investment of state capital in enterprises and management and use of capital and assets at enterprises

DECREE

On investment of state capital in enterprises and management and use of capital and assets at enterprises[1]

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

Pursuant to the November 26, 2014 Law on the Management and Use of State Capital Invested in Production and Business at Enterprises;

Pursuant to the November 26, 2014 Law on Enterprises;

Pursuant to the November 26, 2014 Law on Investment;

Pursuant to the June 18, 2014 Law on Public Investment;

At the proposal of the Minister of Finance,

The Government promulgates the Decree on investment of state capital in enterprises and the management and use of capital and assets at enterprises.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Decree prescribes the investment of state capital in enterprises; financial management of state enterprises; and management of state capital invested in joint stock companies and limited liability companies with two or more members.

Article 2.Subjects of application

1. Owner-representing agencies.

2. State enterprises, including:

a/ Single-member limited liability companies with 100% charter capital held by the State, which are parent companies of state economic groups, parent companies of state corporations, or parent companies in parent company-subsidiary groups;

b/ Independent single-member limited liability companies with 100% charter capital held by the State.

3. Persons representing state capital amounts invested in joint stock companies or limited liability companies with two or more members (below referred to as state capital representatives).

4. Other agencies, organizations and individuals involved in the investment, management and use of capital and assets at state enterprises.

Article 3.Application of relevant laws

State enterprises operating in sectors or fields with financial peculiarities shall, in addition to complying with this Decree, abide by the Government’s specific regulations on such peculiarities. In case of disparities with the provisions of this Decree, the Government’s specific regulations on such peculiarities shall prevail.

Article 4.Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Owner-representing agencies include ministries, ministerial-level agencies and government-attached agencies (below referred to as line ministries); People’s Committees of provinces or centrally run cities (below referred to as provincial-level People’s Committees) or lawfully established organizations.

2. Finance agency of the same level means the Ministry of Finance, for state enterprises set up under decisions of the Prime Minister or line ministries or managed by the Prime Minister or line ministries under assignment; provincial-level Finance Departments, for state enterprises set up under decisions of provincial-level People’s Committees, or managed by provincial-level People’s Committees under assignment.

3. Government-guaranteed credit capital and state development investment credit capital shall be determined as state capital invested in state enterprises in case these loans have been paid by the State or converted into state capital allocated to enterprises under decisions of competent authorities.

4. Raised capital of a state enterprise means the capital borrowed by a state enterprise from credit institutions, other financial institutions and individuals at home and abroad; from the issuance of bonds and other lawful forms of capital raising to serve production and business activities.

5. State capital invested in other enterprises means the state capital invested in joint stock companies or limited liability companies with two or more members with the owner-representing agency acting as owner of the contributed capital amount.

6. Outside-invested capital of a state enterprise means the capital of a state enterprise invested in joint stock companies or limited liability companies or in other forms prescribed by law.

Chapter II

INVESTMENT OF STATE CAPITAL IN ENTERPRISES

Section 1

INVESTMENT OF STATE CAPITAL TO ESTABLISH STATE ENTERPRISES

Article 5.Scope of investment of state capital to establish state enterprises

1. State enterprises which provide essential public-utility products and services to ensure social welfare, including:

a/ Public postal services;

b/ Publishing (excluding printing and distribution of publications);

c/ Activities in agriculture and forestry as prescribed by law;

d/ Management and exploitation of inter-provincial and inter-district irrigation works;

dd/ Management, exploitation and operation of national and urban railway infrastructure facilities; flight safety assurance; maritime safety assurance;

e/ Other cases decided by the Prime Minister.

2. State enterprises operating to directly serve national defense or security under the Government’s regulations.

3. State enterprises operating in natural monopoly fields, including:

a/ National electricity transmission system; multi-purpose large-scale hydropower plants, nuclear power plants of specially important socio-economic significance in association with national defense and security;

b/ Money printing, coinage and gold bar production;

c/ Lottery;

d/ State enterprises functioning to deal in state capital, trade in and handle debts for restructuring and supporting the regulation and stabilization of the macro-economy;

dd/ Other cases as decided by the Prime Minister.

4. State enterprises applying high technologies, make great investment, and create momentum for fast development of other sectors and fields and the whole economy.

Article 6.Order and procedures for investment of state capital to establish state enterprises

1. The order and procedures for proposing investment of state capital to establish state enterprises:

a/ Within 30 days after a competent authority issues a decision on establishment of a state enterprise, the owner-representing agency shall compile a dossier of proposal for investment of state capital to establish a state enterprise and send it to the finance agency of the same level.

Such a dossier must comprise:

- A copy of the competent authority’s decision on establishment of a state enterprise, enclosed with the plan on establishment of the state enterprise made in accordance with the Government’s regulations on establishment, reorganization and dissolution of enterprises.

- Copies of documents explaining capital sources for investment to establish a state enterprise already approved by competent authorities (state budget, enterprise reorganization and development support fund, and other state capital sources).

b/ The finance agency of the same level:

Within 15 days after receiving the dossier of proposal for investment of state capital to establish a state enterprise, the finance agency of the same level shall appraise the dossier under regulations in order to carry out procedures for investment of state capital to establish state enterprises as prescribed in Clause 2 of this Article.

If the dossier fails to meet the prescribed requirements, within 7 days after receiving it, the finance agency shall send a written reply (clearly stating the reason) to the owner-representing agency.

2. Order and procedures for capital investment to establish state enterprises

a/ For a newly established state enterprise without construction investment projects to form fixed assets, the finance agency shall allocate capital to the state enterprise according to the charter capital written in its establishment decision already approved by a competent authority and to the plan for investment capital sources already incorporated in the state budget expenditure estimate approved and notified by a competent authority, or the investment capital source from the enterprise reorganization and development support fund already approved by the Prime Minister;

b/ For a newly established state enterprise to be handed over assets from a completed construction investment project, based on its establishment decision and final accounts of the completed work already approved by a competent authority under regulations, the project owner or the owner-representing agency shall hand over the assets, and determine the sources and amounts of state capital already invested in the handed-over work for completing the procedures for allocation of charter capital to the state enterprise;

If the final accounts of the completed work are yet to be approved by competent authorities, the project owner or the owner-representing agency shall base itself on the state capital amount stated in the estimate to assign the state enterprise to account it into its costs; after the final accounts of the completed work are approved, the state enterprise shall adjust the difference between the accounted and approved state capital amounts;

c/ For a state enterprise established to carry out construction investment projects to form fixed assets of state enterprises, it must comply with the order and procedures for capital allocation in accordance with current regulations on management and use of state budget investment capital sources in the allocation of state capital for payment in the course of carrying out these projects and making of final accounts of the invested state capital upon completion of the projects;

d/ Sources of state capital to establish enterprises prescribed at Points a, b and c of this Clause shall be regarded as charter capital invested by the State in state enterprises upon their establishment.

If the actual charter capital amount is lower than the charter capital amount registered upon its establishment, an enterprise shall adjust the charter capital stated in its enterprise registration certificate to equal the actually contributed capital amount as prescribed in the 2014 Law on Enterprises.

Section 2

ADDITION OF CHARTER CAPITAL FOR OPERATING STATE ENTERPRISES

Article 7.Scope of addition of charter capital for operating state enterprises

1. Addition of charter capital shall only be made in state enterprises defined in Article 5 of this Decree, which are operating and fall into one of the cases specified in Clause 2 of this Article.

2. State enterprises eligible for charter capital addition:

a/ State enterprises that are operating efficiently according to assessments based on the criteria prescribed in Article 8 of this Decree, with their current charter capital insufficient for conducting their major business line, which has been approved by a competent state agency;

b/ State enterprises that directly serve national defense or security with their current charter capital insufficient to ensure the performance of their state-assigned tasks.

Article 8.Criteria for assessment of operation efficiency of operating state enterprises

1. The criteria for assessment of the operation efficiency of state enterprises must comply with the Government’s regulations on financial supervision and assessment of operation efficiency of state enterprises.

2. State enterprises assessed as operating efficiently are those whose rankings in the three consecutive years preceding the year of expected charter capital addition are class B or higher class announced by competent authorities.

Article 9.Methods of determining charter capital for operating state enterprises

1. Bases and methods for charter capital determination:

a/ The charter capital of the state enterprise, which has been approved for adjustment, has been applied for at least 3 years from the date of issuance of the decision approving the charter capital amount;

b/ The state enterprise’s charter capital increase shall be determined  by source of capital: state budget, enterprise reorganization and development support fund, enterprise restructuring fund at the enterprise, or the development investment fund of the state enterprise stated in the investment projects to form assets serving production and business activities of the major business line and directly serving the major business line already approved or decided by competent authorities within at least 3 years following the year of charter capital adjustment, including investment projects already approved by competent authorities and being underway;

c/ For activities of producing and trading in products, goods and services, the charter capital adjustment shall be determined based on the enterprise’s production and business strategy and five-year plan already approved by competent authorities and included in the plan for additional investment from the state budget, enterprise reorganization support fund, enterprise reorganization and development support fund at the state enterprise, or development investment fund of the enterprise, within at least 3 years following the year of charter capital adjustment;

The charter capital increase must not exceed 30% of the positive difference between the projected turnover from product, goods and service production and trading in the third year and the turnover from product, goods and service production and trading stated in the enterprise’s audited financial statement of the year preceding the year of charter capital re-determination.

d/ The adjusted charter capital of a state enterprise shall be determined as follows:

The re-determined charter capital = the charter capital approved before the re-determination + The minimum charter capital increase in 3 years following the year of re-determination.

The minimum charter capital increase in 3 years following the year of re-determination = The approved investment capital amounts from investment projects stated at Point b, Clause 1, Article 9 of this Decree + The approved investment capital amounts from various sources prescribed at Point c, Clause 1, Article 9 of this Decree.

2. Order and procedures for approving charter capital adjustment

a/ A state enterprise eligible for charter capital addition defined in Article 7 of this Decree shall compile a dossier of proposal for charter capital adjustment and send it to the owner-representing agency for appraisal. Such a dossier must comprise:

- A copy of a competent authority’s decision approving the charter capital before the time of proposing the adjustment of charter capital;

- Documents explaining the method of determining the adjusted charter capital amount (enclosed with copies of the decisions approving construction investment projects related to the state enterprise’s major business line); capital sources for charter capital addition;

- A copy of the competent authority’s decision announcing the enterprise rankings in the last three years before proposing the charter capital adjustment.

b/ The owner-representing agency:

- Within 15 days after receiving the dossier of the state enterprise, the owner-representing agency shall examine and determine the charter capital amount as prescribed and send a written request (enclosed with the enterprise’s dossier) to the finance agency of the same level for consideration and written comment;

If the enterprise’s dossier fails to meet the prescribed requirements, the owner- representing agency shall request in writing the enterprise to supplement the dossier within 7 working days after receiving the request.

- Based on the written comments of the finance agency of the same level, the owner-representing agency shall complete the dossier and report to the Prime Minister for consideration and adjustment of the charter capital, if the enterprise has been set up under the Prime Minister’s decision or if the enterprise’s adjusted charter capital reaches the capital level of national important projects after the National Assembly decides on their investment policy;

- It shall decide on the re-determined charter capital amount and the deficit to be added, if the enterprise has been set up under the owner-representing agency’s decision or assigned to it for management.

c/ The finance agency of the same level:

- Within 15 days after receiving the written request of the owner-representing agency and dossier of the enterprise, the finance agency of the same level shall send written comments on the charter capital adjustment to the owner-representing agency, which shall complete the dossier and report to the Prime Minister for consideration and decision, or shall decide on the re-determined charter capital, if the enterprise has been set up under its decision or assigned to it for management;

- If the finance agency of the same level refuses to accept the dossier of proposal for charter capital adjustment, within 7 days after receiving the written request of the owner-representing agency, it shall send a written reply (clearly stating the reason) to the owner-representing agency and the enterprise.

Article 10.Order and procedures for compiling and approving dossiers of proposal for charter capital addition for operating state enterprises

1. State enterprises shall base themselves on the re-determined charter capital amounts and the capital deficit amounts to be added, which have been approved by competent authorities under Article 9 of this Decree, to compile dossiers of proposal for additional capital investment. The dossier addressed to the owner-representing agency must comprise:

a/ The enterprise’s written proposal for capital addition;

b/ A copy of the competent authority’s decision approving the charter capital;

c/ The report on assessment of the actual financial status and production and  business efficiency of the enterprise;

d/ The objectives and socio-economic benefits of the charter capital addition;

dd/ Documents explaining capital sources for charter capital addition already approved by competent authorities, including the state budget, enterprise reorganization and development support fund and development investment fund at the enterprise, or enterprise reorganization support fund at the enterprise.

2. The owner-representing agency:

a/ Within 15 days after receiving the enterprise’s dossier, the owner-representing agency shall examine the dossier as prescribed, appraise the contents of reports, assessments and explanations related to the capital addition in the dossier, and send a written request (enclosed with the dossier compiled according to Clause 1 of this Article) to the finance agency of the same level for coordinated appraisal and finalization of the plan before reporting it to the Prime Minister;

b/ If the enterprise’s dossier fails to meet the prescribed requirements, within 7 days after the receiving the dossier, the owner-representing agency shall request in writing the enterprise to supplement the dossier as prescribed.

3. The finance agency of the same level:

a/ Within 15 days after receiving the written request of the owner-representing agency and dossier of the enterprise, the finance agency of the same level shall send written comments on charter capital addition to the owner-representing agency for decision, or reporting to the Prime Minister for consideration and decision on the additional capital amount in the fiscal year for the enterprise according to his/her competence prescribed in Article 15 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

b/ If the finance agency of the same level refuses to accept the dossier of proposal for charter capital addition for the enterprise in the fiscal year, within 7 days after receiving the written request of the owner-representing agency, it shall send a written reply (clearly stating the reason) to the owner-representing agency and the enterprise.

4. For the plan on charter capital addition from the enterprise reorganization and development support fund or enterprise reorganization support fund at the enterprise, the owner-representing agency shall send a report (enclosed with the dossier of proposal for the charter capital addition for the enterprise) to the Ministry of Finance for appraisal and reporting to the Prime Minister for consideration and decision.

Article 11.Order and procedures for charter capital addition for operating state enterprises

1. The owner-representing agency shall send a written request (enclosed with the enterprise’s dossier already approved by competent authorities under Article 9 of this Decree) to the finance agency for allocation of additional charter capital to the enterprise.

2. The finance agency of the same level shall allocate additional charter capital to the enterprise from each specific capital source as follows:

a/ In case of allocation of capital from the state budget already included in the state budget expenditure estimate approved and notified by competent authorities (according to the state budget management decentralization), the finance agency shall allocate capital according to the order and procedures prescribed in the Law on the State Budget;

b/ In case of allocation of capital from the enterprise reorganization and development support fund, the Ministry of Finance shall base itself on the Prime Minister’s decision to allocate capital from the enterprise reorganization and development support fund to the enterprise.

3. An enterprise shall add its charter capital in the following cases:

a/ Using the development investment fund or enterprise reorganization support fund at the enterprise;

Based on the approved charter capital addition plan, the enterprise shall transfer the development investment fund or enterprise reorganization support fund at the enterprise to increase the owner’s investment capital at the enterprise;

b/ If the enterprise receives assets transferred from other places which originate from state budget investment or receives money under the State’s support policies (support for relocation, reorganization, land and house, investment in technical infrastructure of industrial parks) to implement investment projects on construction, upgrading and improvement of production and business establishments, it shall base itself on competent authorities’ decisions on transfer of assets and written records of asset handover or the settlement of the State’s support money to record an increase in state capital at the enterprise.

4. Enterprises shall adjust the charter capital amounts in their enterprise registration certificates to equal the actual capital amounts already invested by the owner in accordance with the 2014 Law on Enterprises.

Section 3

ADDITION OF STATE CAPITAL AT JOINT STOCK COMPANIES AND LIMITED LIABILITY COMPANIES WITH TWO OR MORE MEMBERS

Article 12.Scope of addition of state capital at joint stock companies and limited liability companies with two or more members

1. The State shall add capital to maintain its shareholding and capital contribution rates at joint stock companies or limited liability companies with two or more members in one of the cases prescribed in Article 16 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

2. Enterprises eligible for addition of state capital to maintain the State’s shareholding and capital contribution rates under Clause 1 of this Article are those operate in the following sectors and fields:

a/ Operation and maintenance of airports and airfields; operation of seaports;

b/ Management and maintenance of roads and inland waterways; maintenance of national railway infrastructure facilities;

c/ Supply of telecommunications infrastructure;

d/ Mining; extraction of petroleum and natural gas;

dd/ Petroleum and natural gas processing;

e/ Cigarette production;

g/ Preventive and curative medicine wholesale; food wholesale; gasoline and oil wholesale;

h/ Electricity distribution;

i/ Urban water drainage; environmental sanitation; urban lighting; urban clean water exploitation, production and supply;

k/ Baseline geological and meteorological surveys; prospection, exploration and survey of land, water and minerals and other natural resources;

l/ Production and storage of prototype plant and animal varieties and frozen semen; production of medical bio-product vaccines and veterinary vaccines;

m/ Production of basic chemicals, chemical fertilizers and pesticides;

n/ International shipping, railway transport and air transport;

o/ Activities in agriculture and forestry as prescribed law.

Article 13.Order and procedures for compiling dossiers of proposal for addition of state capital at joint stock companies and limited liability companies with two or more members

1. State capital representatives at joint stock companies or limited liability companies with two or more members shall compile dossiers of proposal for addition of state capital at their companies, and send them to the owner-representing agency for appraisal, and complete the dossiers for submission to the Prime Minister for consideration and decision before the state capital representatives participate in voting at the shareholders’ general assemblies or members’ conferences. Such a dossier must comprise:

a/ A copy of the enterprise registration certificate; the plan on charter capital increase of the enterprise;

b/ The plan on state capital addition as prescribed in Clause 1, Article 18 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

c/ A copy of the enterprise’s audited quarterly or annual financial statement nearest to the time of making the plan on state capital addition;

d/ Proposed capital sources for addition of state capital to maintain the State’s capital contribution rate in the company, including the state budget; enterprise reorganization and development support fund; and dividends and distributed profits (if any).

2. The owner-representing agency:

Within 15 days after receiving the dossier of the state capital representative, the owner-representing agency shall examine the dossier as prescribed and send its written request (enclosed with the dossier as prescribed in Clause 1 of this Article) to the finance agency of the same level for appraisal, before finalizing the plan for reporting to the Prime Minister for consideration and decision, or deciding on the addition of state capital to maintain the State’s capital contribution rate in the company according to its competence defined in Article 17 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

If the dossier fails to meet the prescribed requirements, within 7 working days after receiving the dossier, the owner-representing agency shall request in writing the representative to complete the dossier as prescribed.

3. The finance agency of the same level: Within 15 days after receiving the dossier and written request of the owner-representing agency, the finance agency of the same level shall give written comments on the addition of state capital to maintain the State’s shareholding or capital contribution rate in the enterprise.

4. If the plan on state capital addition at the joint stock company or limited liability company with two or more members requires the Prime Minister’s decision on the use of the enterprise reorganization and development support fund, the owner-representing agency shall send the plan (enclosed with the dossier of proposal for state capital addition) to the Ministry of Finance for appraisal and reporting it to the Prime Minister for consideration and decision.

Article 14.Order and procedures for allocation of additional state capital to joint stock companies and limited liability companies with two or more members

1. The owner-representing agency shall base itself on the capital amount and capital sources for addition of state capital at the joint stock company or limited liability company with two or more members, which have been approved by competent authorities (under Article 13 of this Decree), and request in writing the finance agency to carry out procedures for allocation of additional state capital to the company.

2. The finance agency of the same level shall, based on the capital contribution duration as notified by the joint stock company or limited liability company with two or more members and the written request of the owner-representing agency, allocate additional state capital to the company according to the approved investment capital amount:

a/ In case of addition of state capital from the state budget already stated in the state budget expenditure estimate approved and notified by competent authorities (according to the state budget management decentralization), the finance agency shall allocate capital from the state budget to the company according to the order and procedures prescribed by the Law on the State Budget;

b/ In case of allocation of additional state capital invested in the company from the enterprise reorganization and development support fund, based on the Prime Minister’s decision, the Ministry of Finance shall allocate capital from such fund to the company;

c/ In case of using dividends and distributed profits from the state capital amount for addition of state capital at the company, the company shall record a state capital increase after the resolution of the shareholders’ general assembly or members’ council is issued.

Section 4

INVESTMENT OF STATE CAPITAL TO PURCHASE PARTS OF ENTERPRISES OR WHOLE ENTERPRISES

Article 15.Scope of investment of state capital to purchase parts of enterprises or whole enterprises

1. The purchase of parts of enterprises or whole enterprises shall be carried out via the purchase of shares or contributed capital at the enterprises according to relevant regulations.

2. The State shall invest capital to purchase parts of an enterprise or a whole enterprise in another economic sector in the following cases:

a/ Carrying out economic restructuring through restructuring enterprises in certain sectors and fields with great socio-economic impacts under decisions of the Prime Minister;

b/ Enterprises directly serving national defense or security, including those operating in the sectors serving national defense industry and those operating in strategic areas and land border areas or on islands;

c/ Enterprises providing essential public-utility products and services for the society.

3. The cases where the State may invest capital to purchase parts of enterprises or whole enterprises prescribed in Clause 2 of this Article must conform with the approved socio-economic development strategies and master plans and sectoral development master plans as prescribed in the Government’s Decree No. 92/2006/ND-CP of September 7, 2006.

Article 16.Principles of investment of state capital to purchase parts of enterprises or whole enterprises

1. The investment of state capital to purchase parts of enterprises or whole enterprises shall be applied only to the cases prescribed in Article 15 of this Decree.

2. The plan on purchase of capital of another enterprise must ensure that the percentage of state capital invested in another enterprise is sufficient for the exercise of the right to decide on matters of such enterprise at the shareholders’ general assembly or members’ conference as prescribed in Clause 3, Article 60 and Clause 1, Article 144, of the 2014 Law on Enterprises.

3. The investment of state capital to purchase parts of enterprises or whole enterprises must have a plan decided or approved by a competent authority as prescribed in Article 20 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, ensuring the lawful rights and interests of owners that have made investments in other enterprises under current regulations.

Article 17.Order and procedures for compilation of dossiers of state capital investment to purchase parts of enterprises or whole enterprises

1. The owner-representing agency shall assume the prime responsibility for making a plan on state capital investment to purchase parts of an enterprise or a whole enterprise, and coordinate with the finance agency of the same level in appraising and finalizing the plan for reporting to the Prime Minister for consideration and decision, or for deciding on such investment according to its competence. The plan must contain the following contents:

a/ Assessment of the actual financial status and production and business results of the enterprise;

b/ Objectives, necessity, economic and social benefits of the state capital investment to purchase parts of the enterprise or the whole enterprise;

c/ Investment capital amount;

d/ Proposed investment capital sources, including capital from the state budget, enterprise reorganization and development support fund, and other lawful sources.

2. The finance agency of the same level:

a/ Within 15 days after receiving the written request and plan on state capital investment to purchase parts of an enterprise or a whole enterprise from the owner-representing agency, the finance agency of the same level shall appraise the contents of the plan and send its written comments on such state capital investment to the owner-representing agency;

b/ If the plan on state capital investment fails to meet the prescribed requirements, within 7 days after receiving the plan, the finance agency of the same level shall send its written reply (clearly stating the reason) to the owner-representing agency for further finalization of the plan.

3. If the plan on state capital investment proposes the Prime Minister’s decision on the use of the enterprise reorganization and development support fund for investment, the owner-representing agency shall send the plan to the Ministry of Finance for appraisal and reporting to the Prime Minister for consideration and decision.

Article 18.Order and procedures for allocation of capital to purchase parts of enterprises or whole enterprises

1. The owner-representing agency shall send a written request and the plan on investment to purchase parts of an enterprise or a whole enterprise, already approved by competent authorities as prescribed in Article 17 of this Decree, to the finance agency of the same level for carrying out the procedures for capital allocation for payment to the seller.

2. The finance agency of the same level:

a/ Based on a competent authority’s decision approving the capital amount and sources for purchasing parts of an enterprise or a whole enterprise, the finance agency shall allocate capital for payment to the seller;

b/ In case of allocation of capital for the purchase from the state budget already included in the state budget expenditure estimate approved and notified by competent authorities (according to the state budget management decentralization), the finance agency shall allocate the state budget capital according to the order and procedures prescribed by the State Budget Law;

c/ In case of allocation of capital for the purchase from the enterprise reorganization and development support fund, the Ministry of Finance shall allocate capital from such fund to the seller under regulations.

Chapter III

FINANCIAL MANAGEMENT OF STATE ENTERPRISES

Section 1

MANAGEMENT AND USE OF CAPITAL AND ASSETS AT STATE ENTERPRISES

Article 19.Charter capital of state enterprises

1. For a newly established state enterprise, the charter capital level shall be determined on the following principles:

a/ Based on the scale and designed capacity of the production and business line or sector of the enterprise;

b/ Conforming with the enterprise’s development investment strategy and plan and with its major business line approved by a competent authority in the enterprise establishment plan;

c/ Conforming with the enterprise’s production and business plan;

d/ The charter capital level must not be lower than the legal capital of the business line or production sector as prescribed by law.

2. For an operating state enterprise:

a/ The state enterprise shall comply with the principles prescribed in Clause 1 of this Article when increasing its charter capital;

b/ The method of determining the charter capital must comply with Article 9 of this Decree;

c/ The order and procedures for compilation of a dossier of proposal for charter capital addition and allocation of additional charter capital for the enterprise must comply with Articles 10 and 11 of this Decree.

Article 20.Capital raising by state enterprises

1. The capital raising by state enterprises must comply with Article 23 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

2. State enterprises may directly borrow foreign loans on the basis of self-borrowing and self-payment to foreign lenders strictly under the committed conditions in loan agreements. The conditions, order and procedures for considering and accepting foreign loans of enterprises must comply with the law on management of the borrowing and payment of non-government guaranteed foreign loans by enterprises. Enterprises’ foreign loans must be within the national annual foreign loan limit decided by the Prime Minister and shall be registered and certified by the State Bank of Vietnam under current regulations.

3. State enterprises shall use borrowed loans for proper purposes, take all risks by themselves and take responsibility before law in the course of raising, management, use and on-schedule payment of loans.

4. The total capital amount raised by a state enterprise for its production and business (including its subsidiaries’ loans guaranteed by the state enterprise as its parent company as prescribed in Clause 1, Article 189 of  the 2014 Law on Enterprises) must ensure that the payable debt must not be three times larger than the equity capital stated in the state enterprise’s quarterly or annual financial statement nearest to the time of capital raising according to its competence prescribed in Clause 3, Article 23 of the Law on Management and Use of State Capital Investment in Production and Business at Enterprises, of which:

a/ The equity capital stated in the accounting balance sheet in the quarterly or annual financial statement of the state enterprise must not include the item “Other funding sources and funds.”  The equity capital referred to in this Article shall be applied to the contents specified at Point a, Clause 1, Article 26, and Point a, Clause 2, Article 27, of this Decree;

b/ The payable debts written in the accounting balance sheet in the quarterly or annual financial statement of the state enterprise must not include the items “Reward and Welfare Funds,” “ Price Valorization Fund,” and “ Science and Technology Development Fund.”

5. A state enterprise may only provide guaranty for its subsidiaries to borrow capital from domestic credit institutions on the condition that the guaranteed subsidiaries have a healthy financial status and do not have overdue debts; the loan guaranty for implementation of an investment project shall be based on the appraisal of the efficiency of the investment project and the commitment to paying the guaranteed loan on schedule. The state enterprise shall supervise the use of loans for proper purposes and on-schedule payment of loans they have guaranteed.

Article 21.Outside investment by enterprises

1. State enterprises may use assets and capital under their management and use for outside investment, including offshore investment as prescribed in Articles 28 and 29 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

a/ The outside investment of a state enterprise must comply with law and conform with its major business line without affecting its production and business activities, and ensuring efficiency, preservation and development of the invested capital;

b/ A state enterprise may not contribute capital to, or invest in, real estate (except it is a state enterprise conducting the major business line involving various types of real estate as prescribed by the Law on Real Estate Business), must not contribute capital to, or buy shares of, banks, insurance companies, securities companies, risk investment funds, securities investment funds, and securities investment companies, except for special cases to be decided by the Prime Minister;

c/ If a state enterprise has contributed capital to, or invested in the fields referred to at Point b of this Clause other than the cases permitted for investment by the Prime Minister, it shall implement a restructuring plan and transfer all of the invested capital amount under regulations.

2. The owner-representing agency shall examine and supervise the management and use of capital for outside investment under regulations. If an enterprise has made outside investment in the fields referred to in Clause 1 of this Article but does not restructure the invested amounts, the owner-representing agency shall coordinate with the Ministry of Finance in reporting it to the Prime Minister for consideration and decision, and handle the Members’ Council or the company president under current regulations.

3. Enterprises may not use assets currently rented for operation, borrowed, kept for others or ordered processing or agency sale, or deposited, for outside investment.

4. The management of state enterprises’ capital invested in joint stock companies and limited liability companies with two or more members must comply with Section 2, Chapter III of this Decree.

Article 22.Capital preservation by state enterprises

1. State enterprises shall preserve and develop their state-invested capital. They shall report on all increases and decreases of their state-invested capital to their owner-representing agencies and finance agencies for monitoring and supervision.

2. State capital at enterprises shall be preserved with the following measures:

a/ Strictly observing the regulations on capital and asset management and use, profit distribution, other financial regulations, and accounting regulations;

b/ Buying property insurance as prescribed by law;

c/ Promptly handling the value of lost assets and unrecoverable debts, and deducting the following provisions:

- Provision for devaluation of stocks;

- Provision for bad debts;

- Provision for devaluation of financial investments;

- Provision for warranty of products, goods and construction and installation works.

d/ Other measures for preserving state capital at enterprises must comply with law.

3. Annually, an enterprise shall assess its capital preservation with the following methods:

a/ After deducting the prescribed reserves, if its business result sees no loss or a profit, the enterprise succeeds in capital preservation;

b/ If after deducting the prescribed reserves, its business result sees a loss (including accumulated loss), the enterprise fails to preserve its capital.

Article 23.Investment in, building and procurement of fixed assets of state enterprises

1. The investment in, building and procuremenet of fixed assets must comply with Article 24 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, of which:

a/ For fixed asset investment or procurement by the enterprises, the investment and construction process must strictly comply with the laws on construction and bidding and other relevant laws;

b/ For investment or procurement of fixed assets from the outside for use, the enterprises shall strictly comply with the law on bidding and other relevant laws;

c/ For investment, procurement and use of vehicles (cars) for leading managers and common business activities, the enterprises shall strictly comply with the norms of procurement and use, ensuring publicity, transparency, economy and efficiency as prescribed by the Prime Minister.

2. State enterprises operating in sectors subject to separate regulations on bidding, construction, procurement, management and use of specialized fixed assets, in addition to the provisions of this Decree, they shall also comply with relevant specialized laws.

Article 24.Renting of assets for operation

1. State enterprises may rent assets (including financial leasing) for their production and business activities, meeting their demands and ensuring their business efficiency.

2. The renting of assets and use of rented assets must strictly comply with the provisions of the Civil Code and other relevant laws.

Article 25.Management of use of fixed assets

1. State enterprises shall manage and use fixed assets in the course of their business activities under Article 25 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, for which:

a/ State enterprises shall draft, issue and implement the Regulation on management and use of fixed assets;

b/ Depending on the management requirements on each type of fixed asset and their regulations on management of fixed assets, state enterprises shall clearly define the coordination among sections and the responsibility of each section and concerned individual in monitoring, managing and using their fixed assets.

2. State enterprises may lease, pledge and mortgage fixed assets under Article 26 of this Decree.

Article 26.Lease, mortgage and pledge of fixed assets

1. State enterprises may lease, mortgage or pledge their fixed assets on the principles of efficiency and capital preservation and development in accordance with law, in which:

a/ The Members’ Council or company president shall decide on asset leasing contracts valued at under 50% of the equity capital stated in the enterprise’s quarterly or annual financial statement nearest to the time of asset lease decision with the residual value of leased assets not exceeding the capital level of group B- projects as prescribed by the Public Investment Law;

b/ The competence to decide on the use of enterprises’ assets for lease, mortgage or pledge to borrow capital must comply with Article 23 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

2. For state enterprises set up to carry out regular and stable production and supply of public-utility products directly serving national defense or security, when leasing, pledging or mortgaging assets directly used for these tasks, they shall obtain the approval of their owner-representing agencies.

3. The use of assets for lease, mortgage or pledge must comply with the provisions of the Civil Code and relevant laws.

Article 27.Liquidation and sale of fixed assets

1. State enterprises may sell or liquidate fixed assets which are damaged, technically obsolete, no longer used or unusable, to recover capital on the principles of publicity, transparency and capital preservation in accordance with current law.

2. The competence to decide on the liquidation and sale of fixed assets:

a/ The Members’ Council or company president may decide on plans for liquidation and sale of assets with their residual value representing under 50% of the equity capital stated in the balance sheet in the state enterprise’s quarterly or annual financial statement nearest to the time of asset liquidation or sale decision, which, however, must not exceed the capital level of group-B projects as prescribed by the Public Investment Law;

For liquidation or sale of fixed assets valued larger than the capital level decentralized to the Members’ Council or company president, the Members’ Council or company president shall report their plans to the owner-representing agency for decision.

b/ For state enterprises established mainly for production and supply of essential public-utility products and services for the society and economy, or for directly serving national defense or security, the sale of assets directly used for these tasks is subject to approval by the owner-representing agency;

c/ If a state enterprise cannot adequately recover the invested capital from the sale of its fixed assets, it shall explain clearly the reasons for insufficient recovery of capital to the owner-representing agency and finance agency of the same level before the sale of fixed assets, for supervision;

d/ Particularly for fixed assets which have been newly invested, procured and put to use for three years but fail to bring about economic benefits under the investment project approved by a competent authority and are no longer needed by the enterprise while the sale of such assets cannot fully recover the invested capital, thus making the enterprise unable to repay its debts under loan agreements or contracts, the responsibilities of concerned persons shall be clarified and reported to the owner-representing agency for handling these persons in accordance with law;

dd/ The sale of fixed assets in some special sectors (cigarette production, ship building, aircraft building) must, in addition to complying with the provisions of this Decree, observe the provisions of relevant specialized laws.

3. Methods of liquidation and sale of fixed assets:

a/ State enterprises shall sell their fixed assets through bidding via a licensed  property auctioning organization or by themselves according to the law- prescribed property auctioning order and procedures. In case of selling fixed assets with the residual book value of under VND 100 million, the general directors or directors shall decide to select the method of auction or agreement, but at prices not lower than the market prices. If the fixed assets are not traded on the market, the enterprises may hire a licensed price appraisal organization to determine their prices for use as the basis for sale of the assets by the above-said methods;

b/ The sale of land-attached fixed assets must comply with the land law.

4. Order and procedures for liquidation and sale:

a/ The chairperson of the Members’ Council or company president shall decide on the establishment of a council for liquidation or sale of fixed assets at his/her state enterprise. Such council shall be composed of the general director or director, chief accountant, heads of concerned sections; a representative of the trade union committee at the enterprise and a number of specialists knowledgeable about the technical properties of the fixed assets (if necessary). The fixed asset liquidation or sale council shall be tasked:

- To determine the actual technical conditions and residual value of the assets to be liquidated or sold;

- To identify the causes and responsibilities of concerned collectives and individuals, for newly invested fixed assets that fail to bring about economic benefits and shall be sold without fully recovering the invested capital, or for assets which have not yet been fully depreciated but have been irreparably damaged and shall be liquidated or sold, and report them to the owner-representing agency for handling under regulations;

- To value or hire a licensed price appraisal organization to determine the recoverable value of the fixed assets to be liquidated or sold;

- To hold auctions or hire a property auctioning organization to hold auctions in accordance with relevant laws;

- The property liquidation or sale council shall terminate its operation upon the completion of the liquidation or sale of fixed assets of the enterprise.

b/ In case a state enterprise, when implementing a construction investment project approved by a competent authority, has to dismantle or destroy the old fixed assets, the liquidation and accounting of such old fixed assets shall be carried out  similarly as in the case of liquidation of fixed assets prescribed in this Article.

Section 2

MANAGEMENT OF STATE ENTERPRISES’ CAPITAL AT JOINT STOCK COMPANIES AND LIMITED LIABILITY COMPANIES

Article 28.Management of state enterprises’ capital in their subsidiaries being one-member limited liability companies where the enterprises hold 100% charter capital and management of state enterprises’ contributed capital at joint stock companies and limited liability companies with two or more members

1. State enterprises shall perform the financial management of their subsidiaries where they hold 100% charter capital and manage their contributed capital at joint stock companies and limited liability companies with two or more members in accordance with Article 30 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, for which:

a/ State enterprises shall issue the financial regulations of their subsidiaries, specifying the deduction of various funds from after-tax profits, the collection of remaining after-tax profits after the deduction of various funds at the subsidiaries and collection of differences between the equity capital and the subsidiaries’ charter capital for the state enterprises;

b/ The revenues from after-tax profits and the differences between the equity capital and subsidiaries’ charter capital for the state enterprises are revenues from the enterprises’ financial activities;

c/ In case a state enterprise receives shares of a joint stock company in which the state enterprise has contributed its capital, but does not have to pay for such shares  as the joint stock company uses the stock capital surplus, funds from the equity capital or pays dividends by shares to increase its charter capital, the enterprise shall open accounting books for monitoring, recording and reflection of the quantity of received shares on its financial statements under the current accounting regulations applicable to enterprises.

2. The appointment of, and criteria for, representatives of state enterprises’ capital at joint stock companies and limited liability companies with two or more members must comply with Articles 46 and 47 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

Article 29.Transfer of outside-invested capital of state enterprises

1. The transfer of state enterprises’ outside-invested capital amounts must comply with Article 31 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises and the methods of transfer (including the transfer of the right to purchase shares and to contribute capital to joint stock companies or limited liability companies with two or more members) must comply with Clauses 3, 4 and 5 of Article 38 of this Decree.

2. If the transfer price is close to the market price (already appraised by a price appraisal organization under the law on price appraisal) but the value expected to be recovered from the transfer is still lower than the book value and the enterprise has deducted the prescribed provisions, it shall be handled as follows:

a/ If the deducted provision is equal or larger than the difference between the value expected to be recovered and the book value, the Members’ Council or the company president shall decide on the transfer in order to recover the outside-invested capital amount;

b/ If the deducted provision is still smaller than the difference between the book value and the value expected to be recovered, the Members’ Council or the company president shall report it to the owner-representing agency for consideration and decision before carrying out the transfer.

3. The proceeds from the transfer of outside-invested capital amounts (shares, contributed capital and transfer of the right to buy shares and to contribute capital) after subtracting the value of the enterprise’s invested capital, transfer expenses and taxes paid under regulations, shall be included in the enterprise’s income from financial activities.

4. For government debentures and bonds invested by state enterprises for earning interests, the transfer thereof must comply with the issuance regulations or plans of the issuers. If a state enterprise transfers such bonds prematurely, the transfer price must ensure capital preservation. The transfer of bonds already registered for depository, listed and traded on the securities market must comply with the law on securities.

Section 3

REVENUES, EXPENSES AND DISTRIBUTION OF PROFITS OF STATE ENTERPRISES

Article 30.Management of revenues, other incomes and expenses of enterprises

1. The Members’ Councils or company presidents, general directors or directors of state enterprises shall take responsibility before the owner-representing agencies and law for the strict management and assurance of the righteousness, truthfulness and lawfulness of revenues and other incomes from, and expenses for, their enterprises’ production and business activities.

2. Every revenue, other income and expense arising in production and business activities of enterprises shall be accompanied by documents as required by law and reflected in the accounting books of enterprises under current enterprise accounting regulations.

3. Revenues and other incomes from and expenses for production and business activities of enterprises shall be determined in Vietnam dong; for revenues and expenses made in foreign currencies, they shall be converted into Vietnam dong under current regulations.

4. Enterprises shall correctly and fully calculate expenses for production and business activities and pay all expenses by themselves from their revenues, and take responsibility for their business results.

5. The determination of revenues, incomes and expenses for determination of tax obligations and other financial obligations of enterprises must comply with provisions of law on taxes and relevant provisions of law.

Article 31.Profit distribution

The profits of state enterprises, after offsetting the previous years’ losses as prescribed by the Law on Enterprise Income Tax, making deductions for the science and technology development fund under regulations, and paying enterprise income tax, shall be distributed in the following order:

1. Dividing to capital contributing partners under the signed economic contracts (if any).

2. Offsetting the previous years’ losses which are no longer eligible for being offset from before-tax profits.

3. The remaining profit, after subtracting the amounts specified in Clauses 1 and 2 of this Article, shall be distributed in the following order:

a/ Making deductions for special funds under the Prime Minister’s decisions (if any);

b/ Making the maximum deduction of 30% for the enterprise’s development investment fund;

c/ Making deductions for reward and welfare funds for employees in the enterprise:

- Grade-A enterprises may deduct three months’ paid wage for two reward and welfare funds;

- Grade-B enterprises may deduct 1.5 months’ paid wage for two reward and welfare funds;

- Grade-C enterprises may deduct one month’s paid wage for two reward and welfare funds;

- Non-graded enterprises may not make any deduction for two reward and welfare funds.

d/ Deductions for the bonus fund for enterprise managers and supervisors:

- Grade-A enterprises may deduct 1.5 months’ paid wages of their managers and supervisors;

- Grade-B enterprises may deduct one month’s paid wages of their managers and supervisors;

- Grade-C enterprises or non-graded enterprises may not make deductions for the bonus fund for their managers and supervisors.

dd/ If the remaining profit, after making deductions for the development investment fund under Point b of this Clause, is insufficient for making deductions for the reward and welfare funds and bonus fund for enterprise managers and supervisor at the prescribed level, an enterprise may reduce the profit amount deducted for the development investment fund for addition to the reward and welfare funds and bonus fund for its managers and supervisors to reach the prescribed level, but the maximum reduction  must not exceed the deduction for the development investment fund in the fiscal year;

e/ The remaining profit, after making deductions for the funds specified at Points a, b, c and d of this Clause, shall be paid to the state budget.

Article 32.Management and use of funds

1. State enterprises’ funds shall be used for proper purposes and subjects.

a/ State enterprises shall draft and issue a regulation on use management of funds as prescribed by law for internal application. The regulation must ensure democracy and transparency, with comments from their trade union committees, and shall be made public in the enterprises before implementation;

b/ In the fiscal year, state enterprises shall make temporary deductions for various funds on the basis of their production and business profits and after paying enterprise income tax as prescribed, for using these funds for prescribed purposes.

2. The development investment fund shall be used for implementing enterprise development investment projects and adding to the enterprises’ charter capital.

3. The reward fund shall be used for:

a/ Year-end rewards, regular rewards, extraordinary rewards, rewards under the law on emulation and commendation for employees in the enterprise (including enterprise managers working under labor contracts). The reward fund shall not be used for rewards to state-appointed managers and supervisors (except for rewards under the law on emulation and commendation);

b/ Rewards for outside individuals and units that have greatly contributed to business and management activities of the enterprise;

c/ Reward levels shall be decided by the general directors or directors as prescribed in the enterprise’s Regulation on Use Management of Funds.

4. The welfare fund shall be used for:

a/ Investment in construction or repair of welfare facilities of the enterprise;

b/ Spending on welfare activities of employees in the enterprise, including managers and supervisors working under labor contracts and state-appointed ones;

c/ Partial investment in the construction of common welfare facilities for use within the sector or common use by other units under contracts;

d/ Provision of extraordinary difficulty allowances for employees, including those who retire on pension or prematurely retire due to poor health, fall into difficult plights with nobody to rely on, or use for social charity purposes;

dd/ The funding levels shall be decided by the general director or director of the enterprise as prescribed in its Regulation on Management and Use of Funds.

5. The bonus fund for enterprise managers and supervisors shall be used for:

a/ Annual rewards, office term-end rewards for presidents and members of the Members’ Council, company president, general director or director, deputy general directors or deputy directors, supervisors and chief accountants;

b/ The annual reward and office term-end reward levels shall be decided by the owner representative based on the criteria for assessment of enterprise managers and supervisors and business efficiency of the enterprise, and at the proposal of the chairperson of the Members’ Council or company president;

c/ If the chairperson and members of the Members’ Council, company president, general director or director, deputy general directors or deputy directors, supervisors and chief accountants are commended under the law on emulation and commendation, the enterprise shall use its reward fund to reward these persons at the levels prescribed by the law on emulation and commendation for each form of emulation and commendation.

Section 4

FINANCIAL PLAN, ACCOUNTING, STATISTICS,
AUDIT AND REPORTING

Article 33.Financial plan

1. Based on their strategic orientations and production and business development master plans already approved by the owner-representing agencies, state enterprises shall make long-term production and business plans and financial plans in conformity with their orientational plans already decided by the owner-representing agencies.

2. Annually, based on their long-term production and business plans, capacity and market demands, state enterprises shall make their production and business plans for the following year and submitted them to their Members’ Councils or company presidents for decision.

3. Based on their production and business plans decided by their Members’ Councils or company presidents, enterprises shall assess the production and business situation of the reporting year and make financial plans for the following year, and send them to the owner-representing agencies and finance agencies before July 31 every year.

4. The owner-representing agencies shall assume the prime responsibility for, and coordinate with the finance agencies of the same level in, scrutinizing the financial plans made by the enterprises and give their official comments in writing for the enterprises to finalize their financial plans. The finalized financial plans shall become official serving as the basis for the owner-representing agencies and the finance agencies of the same level to supervise and evaluate the management and business administration of the enterprises.

Article 34.Accounting, statistics and audit

State enterprises shall conduct accounting and statistical activities under current regulations; make and record initial documents and update accounting books, ensuring full, prompt, truthful, accurate and objective reflection of their economic and financial activities. Their annual financial statements shall be audited before submission to state agencies and disclosure.

Article 35.Financial statements and statistical and other reports

1. At the end of an accounting period (quarter or year), state enterprises shall make, present and send financial statements and statistical reports to state agencies and disclose their finance under current regulations. The Members’ Councils or company presidents shall take responsibility for the accuracy and truthfulness of financial statements and statistical reports, and for financial publicity.

2. In addition to periodical financial statements and statistical reports made and sent under the above provisions, enterprises shall make and send irregular reports when so requested by the owner-representing agencies and state agencies; if provided with government-guaranteed domestic and foreign loans, they shall make and send reports under current regulations on management of government- guaranteed debts.

Chapter IV

MANAGEMENT OF STATE CAPITAL INVESTED IN JOINT STOCK COMPANIES AND LIMITED LIABILITY COMPANIES WITH TWO OR MORE MEMBERS

Article 36.Owner-representing agencies for state capital invested in joint stock companies and limited liability companies with two or more members

1. Owner-representing agencies shall manage state capital invested in joint stock companies and limited liability companies with two or more members through state capital representatives.

2. The rights and responsibilities of owner-representing agencies must comply with Article 43 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

Article 37.Representatives of state capital invested in joint stock companies and limited liability companies with two or more members

1. State capital representatives shall be selected and appointed in writing by owner-representing agencies to exercise the rights and perform the responsibilities of representatives of the state owner over state capital invested in joint stock companies and limited liability companies with two or more members.

2. The criteria for state capital representatives and the appointment thereof must comply with Articles 46 and 47 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

3. The rights, responsibilities, wages, remunerations, bonuses and other benefits of state capital representatives must comply with Articles 48 and 50 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

Article 38.Transfer of state capital invested in joint stock companies and limited liability companies with two or more members

1. Principles of state capital transfer:

a/ The transfer of state capital must have a plan approved by a competent authority and comply with the enterprise classification criteria decided by the Prime Minister, which falls outside the sectors or fields eligible for state capital addition to maintain the State’s shareholding and capital contribution rates under Article 12 of this Decree;

b/ The principles of market, publicity, transparency and optimum state capital preservation shall be ensured, minimizing loss in case of transfer of capital under par value;

c/ The determination of the reserve price of state capital before holding a public auction or reaching agreement shall be carried out through a price appraisal organization as prescribed by the law on price appraisal, ensuring full calculation of the practical value of state capital in the enterprise, including the value created by the rights to use the allocated land or the lawful acquisition of land use rights under the land law, and the value of intellectual property rights (if any) of the enterprise under law at the time of capital transfer;

d/ The transfer of state capital related to land use rights must comply with the land law;

dd/ The owner-representing agency shall select and sign a contract with a price appraisal organization to determine the reserve price of the to-be-transferred state capital, and hire consultants to prepare a plan on capital transfer under regulations. The owner-representing agency shall decide on and take responsibility before law for expense levels for price appraisal and consultancy on making of capital transfer plans, which shall be subtracted from the proceedings from the state capital transfer.

2. Competence to decide on state capital transfer:

a/ The Prime Minister shall decide on the transfer of state capital at joint stock companies or limited liability companies with two or more members, which have been converted from state enterprises set up under the Prime Minister’s decisions;

b/ The owner-representing agency shall decide on the transfer of state capital at joint stock companies and limited liability companies with two or more members, which have been converted from state enterprises set up under their decisions or assigned to them for management, after obtaining comments of the Ministry of Finance and the Ministry of Planning and Investment.

3. Methods of transferring state capital at limited liability companies with two or more members:

a/ If the Prime Minister or the owner-representing agency requests a limited liability company with two or more members to buy the contributed capital, a sale agreement shall be made under Article 52 of the 2014 Law on Enterprises. The selling price shall be agreed under Point c, Clause 1 of this Article;

b/ If the Prime Minister or the owner-representing agency transfers the contributed capital to other members or to organizations or individuals other than members of the company, such transfer must comply with Article 53 of the 2014 Law on Enterprises, in which:

- In case of transfer to other company members, the transfer price shall be discussed with the other members. The sale price shall be agreed based on the price appraisal result of a price appraisal organization as prescribed at Point c, Clause 1 of this Article;

- In case of transfer to organizations or individuals other than company members, a public auction or direct agreement may be held or reached under Clause 4 of this Article.

4. Methods of transferring state capital at joint stock companies:

a/ For a joint stock company already listed on the securities market or registered for trading on the Upcom, the capital transfer (share transfer) shall be carried out by the method (order match or agreement) prescribed by the law on securities. If the transfer is effected by agreement, the agreed price must be within the range of transaction prices of the security on the transfer date;

b/ For a joint stock company neither listed nor registered for trading on the Upcom, the capital transfer shall be made by the following methods:

- Public auction; if the public auction fails, the competitive offering may be carried out in the form of block sale of shares through auction. The transfer of capital valued at VND 10 billion or over shall be carried out on the Stock Exchange. The transfer of capital valued at under VND 10 billion may be auctioned by a hired intermediate financial institution, at the enterprise itself, or on the Stock Exchange;

- Direct agreement between the owner-representing agency and investors, if the block sale of shares through auction fails (only one investor registers to buy shares or is permitted in writing by the Prime Minister);

- Upon capital transfer by direct agreement, the person competent to decide on the capital transfer may not decide on the transfer to an enterprise in which his/her spouse, father, adoptive father, mother, adoptive mother, offspring, in-law child, adopted child, blood brother or sister, in-law brother or sister is a manager, nor decide on the transfer to individuals with the above-mentioned ties.

5. If state capital has been already invested in an enterprise which falls outside sectors or fields in which the State needs to invest additional capital according to the state enterprise classification criteria and list of enterprises promulgated by the Prime Minister, the owner-representing agency shall consider and decide on the transfer of the right to buy additionally issued shares (if the enterprise is a joint stock company) or the right to contribute capital (if the enterprise is a limited liability company with two or more members) to other organizations and individuals.

The transfer of the right to buy shares or the right to contribute capital shall be carried out through public auction. The reserve price shall be determined by a price appraisal organization under the law on price appraisal. If the time for shareholders or capital-contributing members to exercise the right to buy shares or to contribute capital under the issuance plan of the enterprise is too short for organizing auctions for the transfer, the owner representative shall consider and decide on the transfer price and method of transfer by direct agreement as prescribed, ensuring efficiency.

The person competent to decide on the transfer of the right to buy shares or contribute capital may not decide on the transfer to an enterprise in which his/her spouse, blood father, adoptive father, blood mother, adoptive mother, offspring, in-law child, adopted child, blood brother or sister, in-law brother or sister is a manager, nor decide on the transfer to individuals with the above-mentioned ties.

6. The Prime Minister shall prescribe the conditions, order and procedures for block sale of shares through auction.

Article 39.Collection of money from capital transfer, profits and dividends at joint stock companies and limited liability companies with two or more members

1. Collection of money from the transfer of state capital at joint stock companies and limited liability companies with two or more members:

a/ Money collected from the transfer of state capital, the transfer of the rights to buy additionally issued shares (for joint stock companies) and the rights to contribute capital (for limited liability companies with two or more members) to other organizations or individuals (investors), after subtracting reasonable expenses related to the transfer, shall be paid to the enterprise reorganization and development support fund;

b/ The owner-representing agency (or a functional agency authorized or tasked in writing by the owner-representing agency) shall supply adequate information for investors to pay money to the enterprise reorganization and development support fund (including beneficiary, address, bank account, time of payment, and payment of auction-winning money);

c/ Time limits for payment to the enterprise reorganization and development support fund:

- In case of transferring capital at a joint stock company already listed on the securities market or registered for trading on the Upcom, the time limit for payment to the enterprise reorganization and development support fund by the investor must conform to the method of transaction to transfer shares as prescribed by the securities law;

- In case of transferring state capital at a joint stock company neither listed on the securities market nor registered for trading on the Upcom; transferring state capital at a limited liability company with two or more members; transferring the right to buy additionally issued shares or the right to contribute capital through public auction, competitive offering or agreement, the time limit for payment to the enterprise reorganization and development support fund is 15 days after the result of successful auction or competitive offering is announced or the transfer agreement is concluded.

If the investor fails to make the payment or make late payment, it shall be sanctioned and coerced to make the payment in accordance with the Regulations on Management and Use of the Enterprise Reorganization and Development Support Fund promulgated by the Prime Minister.

d/ The owner-representing agency shall examine and supervise the money payment to the enterprise reorganization and development support fund under regulations.

2. Collection of profits and dividends from state capital invested in joint stock companies or limited liability companies with two or more members:

a/ Within 15 days after receiving the notice of distributed profit and dividends of the joint stock company or limited liability company with two or more members, the state capital representative shall request the company to pay the distributed profit and dividends to the state budget.

If the state capital representative fails to request the company to pay the distributed profit and dividends to the state budget under regulations, the owner-representing agency shall consider dismissing the state capital representative; if causing any loss, such representative shall pay compensation therefor;

b/ Within 30 days after receiving the request of the state capital representative, the  joint stock company or limited liability company with two or more members shall pay the money to the state budget.

A joint stock company or limited liability company with two or more members that fails to make the payment or make late payment shall be sanctioned for violation and coerced to make the payment under the tax law’s provisions applicable to non-payment or late payment of taxes.

Chapter V

ORGANIZATION OF IMPLEMENTATION

Article 40.Transitional provisions

1. If their charters or financial regulations were promulgated by competent authorities before July 1, 2015, state enterprises may continue implementing them through December 31, 2015.

2. Projects on investment of state capital in enterprises which were approved or decided by competent authorities before December 8, 2014, may continue to be implemented.

3. Activities of managing and using capital and assets at state enterprises and managing state capital at joint stock companies and limited liability companies with two or more members, which arose before July 1, 2015, shall be handled under current regulations through December 31, 2015.

4. Activities of investing state capital in enterprises, managing and using capital and assets at state enterprises, and managing and using capital and assets at joint stock companies and limited liability companies with two or more members, which arise on July 1, 2015, and after, shall be handled under the provisions of this Decree.

Article 41.Effect

This Decree takes effect on December 1, 2015, and replaces the Government’s Decree No. 71/2013/ND-CP of July 11, 2013, on investment of state capital in enterprises and financial management applicable to enterprises with 100% charter capital held by the State; Decree No. 09/2009/ND-CP of February 5, 2009, promulgating the Regulation on financial management of state enterprises and management of state capital invested in other enterprises; and the provisions of Decree No. 25/2010/ND-CP of March 19, 2010, regarding financial management of single-member limited liability companies with the State acting as the owner.

Article 43.Responsibility for implementation and organization of implementation

1. Competence to promulgate financial regulations for state enterprises:

a/ The Government shall promulgate financial regulations applicable to state enterprises being parent companies of economic groups or state corporations set up under the Prime Minister’s decisions;

b/ The owner-representing agencies shall promulgate financial regulations applicable to parent companies and state corporations set up under their own decisions or assigned to them for management, after consulting the Ministry of Finance; and promulgate financial regulations applicable to other state enterprises set up under their own decisions or assigned to them for management.

2. The Ministry of Finance shall promulgate regulations on depreciation of fixed assets of enterprises; handling of asset inventories, deductions for provisions; handling of foreign exchange differences; financial plan contents of enterprises; and accounting and financial reporting,

3. The Minister of Finance shall guide, inspect and supervise the implementation of this Decree.

4. Political organizations and socio-political organizations may apply the provisions of this Decree to organizing the financial management of enterprises in which they are owners.

5. Parent companies of state economic groups, parent companies of state corporations, and parent companies of the parent company-subsidiary groups shall:

a/ Prepare and issue financial management regulations applicable to their subsidiaries being single-member limited liability companies in which the parent companies hold 100% charter capital;

b/ Financial management regulations issued by parent companies in pursuance to this Decree must conform with the 2014 Law on Enterprises and other relevant laws.

6. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and state enterprises and state capital representatives shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG