Decree No.109/2008/ND-CP dated October 10, 2009 of the Government on sale or assignment of enterprises with 100% state capital

DECREE

ON SALE OR ASSIGNMENT OF ENTERPRISES WITH 100% STATE CAPITAL

THE GOVERNMENT

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

Pursuant to the November 26, 2003 State Enterprise Law;

Pursuant to the November 29, 2005 Enterprise Law;

At the proposal of the Minister of Planning and Investment,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree provides for the sale or assignment of enterprises with 100% state capital and independent cost-accounting member companies, and the sale of dependent units of enterprises with 100% state capital and independent cost-accountins member companies.

Article 2.- Subjects of and conditions for application

1. Enterprises with 100% state capital and independent cost-accounting member companies may be sold, regardless of their state capital amounts, in the following cases:

a/ They are subject to sale approved by the Prime Minister in the general scheme on reorganization of enterprises with 100% state capital;

b/ They are subject to equitization in the general scheme on reorganization of enterprises with 100% state capital but cannot be equitized.

2. The sale of dependent units of enterprises with 100% state capital applies to dependent cost- accounting units of state corporations, parent companies, enterprises with 100% state capital or independent cost-accounting member companies in the following cases:

a/ They are subject to sale of enterprise divisions as approved by the Prime Minister in the general scheme on reorganization of enterprises with 100% state capital and such sale does not affect the operation of other enterprise divisions and their capability to fulfill their debt payment obligation:

b/They are subject to equitization of enterprise divisions in the general scheme on reorganization of enterprises with 100% state capital but cannot be equitized.

3. The assignment of an enterprise with 100% state capital or an independent cost-accounting member company (below referred to as enterprise assignment) mav be conducted when the following conditions are satisfied:

a/ Its total book asset value is under VND 15 billion;

b/ It has no land advantage;

c/ It is subject to enterprise assignment in the general scheme on reorganization of enterprises with 100% state capital approved by the Prime Minister, or had been put for sale but could not be sold.

Article 3.- Interpretation of terms

In this Decree, the terms and phrases below shall be construed as follows:

1. "Enterprise sale," which covers the sale of the whole or a division of an enterprise with 100% state capital or an independent cost-accounting member company specified in Clause 1, or the sale of a dependent unit specified in Clause 2, Article 2 of this Decree, means the transfer of ownership, with collection of sale proceeds, of the whole or a division of the enterprise to another collective, individual or legal entity.

2. "Enterprise assignment" means the transfer of Ownership, without collection of a sum of money, of an enterprise with 100% state capital or an independent cost-accounting member company to the labor collective in the enterprise with clear definition of ownership of each individual laborer.

3. "Enterprise with 100% state capital" means an independent state company or a one-member limited liability company with 100% state capital and under a ministry, ministerial-level agency, government-attached agency (below collectively referred to as ministry) or People's Committee of a province or centrally run city (below collectively referred to as provincial-level People's Committee) as its owner's representative.

4. "Independent cost-accounting member company" means an independent cost-accounting member company or one-member limited liability company owned by a state corporation, a parent company in a state corporation or economic group or a parent company in the parent company-affiliate company model.

5. "Parent company" means a parent company in a state corporation or economic group or parent company in the parent company-affiliate company model.

6. “Enterprise or enterprise division purchaser" means the labor collective in an enterprise, a legal entity, a group of persons or an individual that purchases an enterprise or a division of an enterprise.

7. "Enterprise assignee" means the labor collective in an enterprise which is assigned the enterprise.

8. "Enterprise or enterprise division assignor or seller" means an agency or organization acting as the enterprise owner's representative.

9. "Sale by direct mode" means a mode of negotiation, agreement and conclusion of a contract directly between the seller and the purchaser of an enterprise or enterprise division in case only one organization or the labor collective in the enterprise or a group of persons or an individual registers for the purchase (below referred to as purchase registrant).

10. "Sale by mode of auction" means a mode of selecting an enterprise or enterprise division purchaser in case there are two or more purchase registrants to otter competitive bids at a public auction.

11. "Labor collective in an enterprise" means the collective of laborers currently on the list of regular employees of an enterprise who voluntarily implement a resolution of the General Meeting of employees of the enterprise or enterprise division on acceptance of the enterprise or enterprise division assignment or purchase at the effective time of the decision approving a scheme on labor arrangement. The labor collective in an enterprise is represented by the enterprise's Trade Union Executive Committee or Provisional Trade Union Executive Committee or a person elected as its representative by the General Meeting of the enterprise's employees for acceptance of the enterprise or enterprise division assignment or purchase.

12. "Renewal Board at an enterprise" means an organization set up at an enterprise to conduct the enterprise sale or assignment under a decision of the concerned ministry, provincial-level People's Committee, state corporation or parent company.

13. "Enterprise Renewal and Development Board" means an organization set up under a decision of the concerned ministry, provincial-level People's Committee, stale corporation, parent company in an economic group or corporation established by the Prime Minister to perform the tasks and exercise the powers specified in this Decree in the course of enterprise or enterprise division sale or assignment.

14. "Enterprise which cannot be equitized" means an enterprises which, according to the general scheme on reorganization of enterprises with 100% state capital approved by the Prime Minister, is on the list of those to be equitized. but. after the application of all equitizing measures provided for by law. could not be equitized or fails to satisfy the conditions on equitization.

15. "Enterprise without land advantage" means an enterprise which:

a/ has land use rights to a land area of under 200 m2:

b/ has the transfers price of its land use rights or the lease rate of its land on the market under normal conditions not higher by 20% than the price or rate set by the provincial-level People's Committee. If it is impossible to determine the transfer price or lease rate, the transfer price or lease rate of a land lot with similar location and conditions may be referred to.

Article 4.- Subjects entitled to purchase or be assigned an enterprise

1. Subjects entitled to purchase a, enterprise include:

a/The labor collective in the enterprise;

b/ Individual laborers in the enterprise;

c/ Enterprises with 100% state capital and enterprises of all economic sectors including foreign-invested enterprises in Vietnam, other than intermediary financial institutions providing enterprise price appraisal or auction consultancy:

d/ Vietnamese citizens who have the full civil act capacity, except those who are not allowed to establish and manage enterprises defined at Points b. c, d, e. f and g. Cause 2. and Point b. Clause 4. .Article 13 of the Enterprise Law. members of the

Enterprise Renewal and Development Board, individuals of intermediary financial institutions providing enterprise price appraisal or auction consultancy:

e/ Economic or financial institutions established under foreign laws and conducting business activities overseas or in Vietnam and foreigners, except intermediary economic or financial institutions and individuals of these institutions providing enterprise price appraisal or auction consultancy.

2. Foreign-invested enterprises specified at Point c and entities specified at Point e, Clause 1 of this Article that are specified by law as foreign investors may join other Vietnamese enterprises and citizens in purchasing part of enterprises at a ratio not exceeding that provided in Vietnam's international commitments on business-rights of foreign investors in specified domains or sectors. Foreign investors may purchase whole enterprises operating in other domains or sectors.

3. Entitled to be assigned an enterprise is the labor collective in the enterprise satisfying the conditions specified in Article 2! of this Decree.

Article 5.- Principles for enterprise sale or assignment

1. The purchaser or assignee of an enterprise may not resell the enterprise within the period stated in the contract.

2. Upon sale or assignment of an enterprise, its assets shall be calculated in value. The value of an enterprise to be sold shall be calculated at actual market prices. The value of an enterprise

to be assignee shall be calculated according to its audited book value.

3. The priority order for selection of the mode of enterprise sale:

a/Auction with inheritance of debts;

b/ Auction without inheritance of debts;

c/ Sale under direct agreement with inheritance of debts;

d/ Sale under direct agreement without bequeathal of debts.

The labor collective in an enterprise is given priority to purchase the enterprise if they offer a bid equal to other purchasers' bids in the last auction call.

4. To publicize the enterprise sale or assignment under Articles 15 and 23 of this Decree.

5. Enterprise purchases shall be paid in Vietnam dong. Foreign investors wishing to purchase enterprises shall open deposit accounts at payment service providers operating in the Vietnamese territory and effect the payment for enterprise purchases via these accounts.

6. Actual, reasonable and necessary expenses for the enterprise sale or assignment may be deducted from state capital in enterprises or proceeds from enterprise sale. Deficit shall be made up for with supports from the Enterprise Reorganization Support Fund. The Ministry of Finance shall guide enterprise sale or assignment expense items and levels.

Article 6.- Assurance by the State

The State recognizes and protects the property ownership and use rights, other lawful rights and interests of enterprise purchasers or assignees: lawful rights and interests of laborers and related parties under law.

Chapter II

ENTERPRISE SALE

Article 7.- Rights and obligations of enterprise or enterprise division purchasers

1. Purchase registrants:

a/ may survey the actual state of enterprises they wish to purchase; study dossiers, financial statements, asset lists and certificates of ownership of or rights to use assets and land, and contracts related to these enterprises;

b/ shall keep confidential information collected from the survey of the actual state and examination of documents of enterprises; may not disclose or use such information to the detriment of enterprises or enterprise divisions.

2. Enterprise purchasers:

a/ may select the legal status of enterprises after purchase; continue renting land or receiving land assigned with collection of land use levy under the land law;

b/ may inherit lawful rights and interests and obligations of state enterprises stated in enterprise sale and purchase contracts and other signed contracts:

c/ shall pay for enterprise purchase under signed contracts.

Article 8.- Order of enterprise or enterprise division sale

1. Preparations for the sale of an enterprise include notification of the sale and preparation of legal dossiers and papers of the enterprise.

2. Elaboration and approval of an enterprise sale plan cover inventory, crosschecking and classification of assets and debts; elaboration of financial statements and plans on handling of assets, finance and debts; working out of plans on labor arrangement: valuation of the enterprise; elaboration of sale plans, the minimum sale price and sale mode, estimated expenses for organization of the sale; approval of plans on sale or handling of assets, finance, debts and labor. In case estimated proceeds from the enterprise sale are not enough to cover sale expenses (in case purchasers inherit debts) or not enough to cover expenses and pay debts (in case purchasers do not inherit debts) enterprise sale shall be shifted to enterprise assignment, dissolution or bankruptcy.

3. Handling of assets, finance, debts and labor.

4. Organization of the enterprise sale.

5. Approval of the sale result: elaboration of financial statements of the enterprise at the time of enterprise handover to the purchaser; conclusion of the contract; payment; handover of assets, documents and relevant dossiers to the purchaser: notification of completion of the enterprise sale.

6. Business registration for the enterprise after sale.

Article 9.- Notification of enterprise sale Based on the general scheme on reorganization

of enterprises with 100% state capital approved by the Prime Minister, agencies or organizations that have decided on sale of enterprises shall notify these enterprises of their sale.

Article 10.- Handling of assets and finance upon enterprise sale

1. Assets and cash balances of reward and welfare funds, expenses for uncompleted construction works, financial provisions, losses or profits shall be handled according to the provisions of Chapter II of the Government's Decree No. 109/2007/ND-CP of June 26, 2007, on transformation of enterprises with 100% state capital into joint-stock companies (below referred to as Decree No. 109/2007/ND-CP).

2. Differences in inventoried assets:

a/ For redundant assets, if the causes of redundancy and their owners cannot be identified, enterprises may account their actual value as an increase in their state capital;

b/ For deficient, lost or damaged assets, enterprises shall clearly identify causes of deficit or loss, responsibilities of collectives and individuals and claim compensations under law. Difference between compensations paid by related individuals and collectives or insurance organizations (if any) and the actual loss value shall be offset by the financial provision fund. Any deficit after offsetting shall be accounted into business results. If enterprises still suffer from a loss, they may account it as a decrease in their state capital.

Article 11.- Handling of debts and valuation of enterprises

1. Enterprises which are sold or have their divisions sold shall compare, certify and recover receivable debts which are due before the sale: mobilize various sources to pay due debts or reach agreement with creditors on the settlement of these debts before the sale.

2. Other receivable debts and payable debts shall, depending on whether enterprise sale and purchase involves or does not involve debt inheritance, be handled on the following principles:

a/ In case purchasers are committed to debt inheritance, they shall pay payable debts and recover receivable debts under their commitments. Commitments to inherit receivable and receivable debts must be stated in enterprise sale and purchase contracts and notified in writing to creditors, debtors and related parties;

b/ In case purchasers are not committed to debt inheritance, sold enterprises shall handle these debts under the State's current regulations on handling of outstanding debts, In case there remain some debts not yet completely handled under the State's current regulations on handling of outstanding debts, these debts shall be handled under Clause 2. Article 5 of Decree No. 109/2007/ ND-CP at the time of decision on disclosure of the enterprise value.

3. For amounts already paid in advance to goods suppliers or service providers, such as house and land rents, goods purchase payments or remunerations, comparison must be made between these amounts and supply or provision contracts and actual quantities of supplied goods or provided services before accounting these amounts into the value of enterprises.

4. The valuation and adjustment of the value of enterprises shall adhere to the principles specified in Chapter III of Decree No. 109/2007/ND-CP. The Enterprise Renewal and Development Board shall inspect the observance of legal provisions on enterprise valuation, and propose competent agencies and organizations to decide on the value of enterprises. In case results of enterprise fail to ensure valuation state regulations, agencies or organizations competent to decide on sale of enterprises may refuse to pay evaluation consultancy service charges. If causing damage to the State and enterprises, evaluation consultancy organizations shall pay compensations.

5. Enterprises which cannot be equitized and should be sold may inherit results of their valuation approved by competent agencies in the course of equitization.

Article 12.- Determination of sale prices of enterprises

1. The reserve price for sale of an enterprise shall be determined on the following principles:

a/ It must not be lower than the total of the value of the suite capital in the enterprise already determined under Clause 4, Article 11 of this Decree and the value of land use rights (if any) calculated at the price announced by the provincial-level People's Committee in case the purchaser inherits debts.

b/ It must not be lower than the total of the value of the enterprise already determined under Clause 4, Article 11 of this Decree and the value of land use rights (if any) calculated at the price announced by the provincial-level Peoples

Committee in case the purchaser does not inherit debts.

2. Sale prices of enterprises:

Sale prices shall be decided based on the sale mode (auction or direct sale), payment mode (lump sum or installments), offered purchase prices and the number of laborers continuing to be employed by purchasers but must not be lower than reserve prices specified in Clause 1 of this Article.

Article 13.- Organization of sale of enterprises by the mode of auction

1. In case the sale of an enterprise attracts two or more purchase registrants, the enterprise shall be sold by either of the following modes of auction:

a/ Auction with inheritance of all remaining laborers, which is applicable to cases in which some laborers have been handled under the labor law and policies for laborers redundant due to reorganization of state companies;

b/ Auction without inheritance of laborers, which is applicable to cases in which all laborers have been handled or plans on handling of all laborers have been approved under the labor law and policies for laborers redundant due to reorganization of state companies.

2. The Enterprise Renewal and Development Board has the following powers and tasks in directing and supervising auctions:

a/ To elaborate and submit a Regulation on auction to agencies or organizations which have made enterprise sale decisions for approval;

b/ To select enterprise valuation consultancy or auction-holding organizations and propose agencies or organizations which have made enterprise sale decisions to decide on the conclusion of contracts to hire these organizations;

c/To propose agencies or organizations which have made enterprise sale decisions to decide on the auction mode and notify the reserve price;

d/ To supervise auctions.

3. Valuation of enterprises:

a/ Within 60 days after enterprise sale decisions are issued, renewal boards at enterprises shall complete jobs specified in Clauses 1,2,3,4 and 5, Article 18 of this Decree and send results to the Enterprise Renewal and Development Board;

b/ Within 30 days after receiving results specified at Point a of this Clause, the Enterprise Renewal and Development Board shall organize the valuation of enterprises on the principles specified in Clause 4, Article 11 of this Decree;

c/ Based on results of enterprise valuation, the Enterprise Renewal and Development Board shall propose competent agencies or organizations to notify reserve prices.

4. Selection of organizations to hold auctions:

An enterprise with a total asset value of under VND 30 billion after re-valuation may be publicly auctioned at an intermediary financial institution. In case no intermediary financial institution undertakes to hold the auction of the enterprise, the auction may be hold at the enterprise.

Other enterprises shall be publicly auctioned at the Stock Exchange or the Securities Trading Center.

5. Within five working days after an agency

or organization competent to decide on the enterprise sale notifies the reserve price, the organization holding the auction of the enterprise shall publicize at the enterprise and on a printed or online newspaper for three consecutive issues at least 45 days before the date of auction the following information:

a/ Name, address and business lines of the to-be-auctioned enterprise;

b/ Basic information on assets, labor, finance and land, including the remaining land lease duration (if the enterprise is leasing land);

c/ Reserve price;

d/ Deposit level;

e/ Sale conditions;

f/ Time and place of receipt of auction invitation dossiers;

g/ Time and place of filing of applications for enterprise purchase registration and payment of deposits;

h/ Time and place of organization of the auction.

6. An auction invitation dossier comprises information specified in Clause 5 of this Article, an application form for enterprise purchase registration, and auction rules.

7. An enterprise purchaser shall file an application for enterprise purchase registration and pay a deposit to the auction-holding organization under the following regulations:

a/ An application for enterprise purchase registration shall be filed and the deposit paid at least 5 working days before the date of auction;

b/ An application for enterprise purchase registration must clearly state the minimum bid for enterprise purchase which must not be lower than the reserve price;

c/ The deposit is equal to 10% of the reserve price;

d/ When filing an application for enterprise purchase registration, the applicant shall produce his/her identity card (for Vietnamese individuals) or passport (for foreigners), its letter of introduction (for organizations) and sign a commitment to observing the auction rules;

Upon receiving registration applications and deposits, the auction-holding organization shall issue to applicants certificates of registration application filing and receipts of deposit payment. The auction-holding organization shall keep confidential bids offered by enterprise purchase registrants.

e/ Within the time limit for receiving enterprise purchase registration applications, purchase registrants may withdraw their applications and get their deposits immediately refunded.

8. An auction may be conducted when at least two valid applications for enterprise purchase registration are filed with payment of deposits. In case only one valid application for enterprise purchase registration is accepted, the seller can apply the direct sale mode specified in Article 14 of this Decree.

In case there is no valid application for enterprise purchase registration, the enterprise auction-holding organization shall report such to the Enterprise Renewal and Development Board for reduction of the reserve price which, however, must not be lower than the price specified in

Clause 1, Article 12 of this Decree, or application of other methods of transformation.

9. An auction shall be conducted as follows:

a/The enterprise auction-holding organization shall appoint a competent representative to conduct the auction and invite a notary public to witness the auction;

The making of bids and the code of conduct in the auction comply with the auction rules.

b/The enterprise auction-holding organization shall decide to select either of the two forms of auction, bid-callout auction and sealed-bid auction, for the enterprise auction;

c/ In a bid-callout auction, each auction participant calls out his/her bid(s). After each auction participant offers a bid, the auctioneer shall clearly and accurately voice the highest bid three times with an interval of thirty seconds. The auction shall be conducted until no auction participant is willing to bid further, at which point the highest bidder is the auction winner and entided to purchase the enterprise;

d/ A direct sealed-bid auction shall be conducted continuously through rounds. The auctioneer shall announce the highest bid among sealed bids of prospective purchasers. The announced highest bid in a round will be the starting price of the next round until no auction participant is willing to bid further, at which point the highest bidder is the auction winner and entitled to purchase the enterprise;

e/ In case the auction winner refuses to sign the auction minutes or signs the auction minutes but refuses to sign the enterprise sale and purchase contract, the auction-holding organization shall select the second highest bidder as the next auction winner provided that the bid offered by this bidder is not lower than the starting price of the last bidding round and notify such to the selected bidder. If the next auction winner refuses to purchase the enterprise, the auction-holding organization shall issue a document to cancel the auction result and report such to the seller for organization of another auction at another time.

10. Auction minutes:

a/At the end of an auction, the auction-holding organization shall make and send an auction minutes to the Enterprise Renewal and Development Board. The auction minutes must be signed by the auctioneer, the witness and the purchaser;

b/ If an auction fails, the auction-holding organization shall make a minutes of unsuccessful auction. The minutes must be signed by the auctioneer and the witness.

Article 14.- Organization of sale of enterprises by the direct method

1. In case only one valid application for enterprise purchase registration is accepted, the agency or organization competent to decide on enterprise sale can apply the mode of sale under direct agreement.

2. The Enterprise Renewal and Development Board and the enterprise director shall negotiate with the purchaser on the sale price and labor employment plan and reach agreement on the terms of the sale and purchase contract. The total asset value of the enterprise (in case of enterprise purchase without inheritance of debts) or total value of state capital in the enterprise (in case of enterprise purchase with inheritance of debts) which is determined under Clause 4. Article 11 of this Decree, serves as a basis for reaching agreement on the enterprise sale price with the purchaser.

The Enterprise Renewal and Development Board shall send a dossier and a minutes to the agency or organization competent to decide on the enterprise sale.

Article 15.- Approval of sale results, conclusion of contracts, handover, payment, notification of completion of enterprise sale

1. Within five working days after receiving a request of the Enterprise Renewal and Development Board, the head of the agency or organization competent to decide on the enterprise sale shall consider and approve the enterprise sale result.

2. Within two working days after enterprise sale result is approved, the auction-holding organization shall refund deposits to qualified auction participants that have not won the auction. The deposit of the auction winner shall be deducted from the enterprise purchase payment. Deposits will not be refunded to auction participants that violate the auction rules and to the auction winner that refuses to sign the contract under regulations. Non-refundable deposits shall be accounted as an increase in enterprise sale proceeds and managed and used under Article 16 of this Decree.

3. Within 10 days after the decision approving the enterprise sale result is issued, representatives of the seller and the purchaser shall conclude the enterprise sale and purchase contract, which contains the following principal details:

a/ Name, address and account number of the sold enterprise;

b/ Name, address and account number (if any) of the enterprise purchaser:

c/ Sale price of the enterprise;

d/ Commitments of the enterprise seller and purchaser;

e/ Modes of asset transfer and payment for enterprise purchase, time limit for enterprise-handover;

V Settlement of arising problems and contract disputes.

Enclosed with the contract is a list of assets and debts (if any) agreed upon by the purchaser and the seller.

4. The enterprise purchaser shall pay for the purchase within the time limit specified in the sale and purchase contract which must not exceed one year from the date of conclusion of the sale and purchase contract. The first installment must be paid within one month and equal to at least 70% of the sale price.

After the purchaser has paid at least 70% of the sale price and has sufficient assets as a mortgage or guarantee for the remainder under law, the Enterprise Renewal and Development Board shall organize the handover of the enterprise to the purchaser. The enterprise seller shall continue managing the enterprise until the handover. If causing any loss of assets, the seller shall pay compensation under law.

5. Within 15 days after signing the handover record, the agency or organization competent to decide on the enterprise sale shall publicly notify the following details of the enterprise sale:

a/ Name and address of the sold enterprise;

b/ Name and address of the purchaser;

c/ Sale price and mode and payment time limit;

d/ Responsibilities of the enterprise seller and purchaser and concerned agencies to solve existing problems and arising matters.

The notification of an enterprise sale shall be published on the mass media and sent to the following agencies: Enterprise Finance Office; Tax Department; Business Registration Office; Planning and Investment Service; Labor, War Invalids and Social Affairs Service of the province or centrally run city where the sold enterprise is headquartered and the Enterprise Renewal and Development Steering Committee.

Article 16.- Management and use of enterprise sale proceeds

Enterprise sale proceeds, after subtracting the land use right value (if any) to be remitted to the state budget, shall be used for the following purposes: payment of enterprise sale expenses; payment of debts not inherited by the purchaser, settlement of policies for laborers after the enterprise sale. The remainder shall be remitted to:

1. The enterprise reorganization support fund of the corporation or parent company, in case of sale of an independent cost-accounting member company or a division of an enterprise affiliated to the corporation or parent company.

2. The enterprise with 100% state capital or the independent cost-accounting member company, in case of sale of a division of the enterprise with 100% state capital or the independent cost-accounting member company.

3. The enterprise reorganization support fund at the Stale Capital Investment Corporation, in case of sale of an enterprise with 100% state capital.

Article 17.- Principles for handling of laborers and managerial personnel

1. Benefits for laborers:

a/ Laborers who are eligible for social insurance benefits will enjoy them under the labor law;

b/ Laborers who are transferred to the new enterprise may enter into labor contracts with that enterprise and enjoy benefits under regulations;

c/ Laborers whose labor contracts are terminated may enjoy benefits and policies under the labor law or policies for laborers redundant due to reorganization of state companies;

d/ The director, deputy directors and chief accountant of the sold enterprise may be considered on a case-by-case basis by the agency or organization competent to decide on the enterprise sale for assignment of new jobs or handling under the Government's payroll streamlining policy.

2. Responsibilities of the seller and the purchaser:

a/The director of the sold enterprise shall:

- Coordinate with the social insurance agency in paying social insurance benefits to eligible laborers under current regulations;

- Pay benefits to laborers whose labor contracts are terminated under the labor law or policies for laborers redundant due to reorganization of state companies;

- Carry out procedures for the social insurance agency to issue insurance books under regulations to laborers continuing to be employed by the new enterprise and transfer the list and dossiers of these laborers to the new enterprise.

b/ The enterprise purchaser shall receive and employ the number of laborers stated in the enterprise sale and purchase contract; inherit obligations toward these laborers and implement policies for them under law.

Article 18.- Responsibilities of enterprises which are wholly or partially sold

Upon receiving a notice of its sale, an enterprise shall organize the performance of the following jobs:

1. Preparing sufficient legal dossiers and papers, unliquidated contracts, certificates of ownership of or rights to use its assets and land.

2. Inventorying and determining the number of its or its to-be-sold division's existing assets, assessing the actual state of assets and classifying them into those to be further used and those to be liquidated, transferred or sold.

3. Comparing and classifying receivable and payable debts; drawing up a list of creditors and payable debts, and a list of debtors and receivable debts divided into recoverable debts and irrecoverable debts, and proposing measures to handle them.

4. Making a financial statement for the latest quarter; working out a plan on handling of assets, finance and debts on the principles specified in Articles 10 and 11 of this Decree.

5. Elaborating a plan on rearrangement of its existing laborers with the following contents:

a/ A list of all its laborers at the time of notification of the reserve price for enterprise sale, dividing them into those who are currently working and salaried and pay or do not pay social insurance premiums; those who have given up their jobs but are on its list of laborers who pay or do not pay social insurance premiums:

b/ Estimated number of laborers which the purchaser shall further employ and estimated number of laborers to be handled under the labor law or policies for laborers redundant due to reorganization of state companies.

6. Creating conditions for registered purchasers to examine and get access to documents specified in Clause 1, Article 7 of this Decree.

7. Handling assets, finance, debts and laborers • under the approved plan and under the enterprise

sale and purchase contract.

8. Entering into contracts for hiring of valuation consultants and an enterprise auction-holding organization.

9. Making a financial statement at the time of its handover to the purchaser and handling financial matters arising from the time of enterprise valuation to the time of handover.

10. Handing over assets, books and relevant dossiers to the purchaser as agreed upon in the enterprise sale and purchase contract.

Article 19.- Business registration

After accepting the enterprise handover, the purchaser shall make business registration according to the form in which the enterprise will operate under law.

The business registration dossier must be enclosed with the enterprise purchase and sale contract and the handover record.

Article 20.- Inspection and monitoring of fulfillment of contractual commitments

Enterprise sale deciders shall monitor and inspect the fulfillment of commitments made in enterprise sale and purchase contracts; handle or request competent state agencies to handle cases of breach of contractual commitments under law.

Chapter III

ASSIGNMENT OF ENTERPRISES TO THEIR LABOR COLLECTIVES

Article 21.- Conditions on labor collectives to be assigned their enterprises

The labor collective in an enterprise may be considered for assignment of the enterprise when fully satisfying the following conditions:

1. They voluntarily register to accept the enterprise assignment.

2. They pledge to maintain and develop production and business, ensure minimum jobs for three years or more from the date of acceptance of the enterprise, and fully pay insurance premiums for laborers who continue working in the enterprise under law.

3. They inherit debts and property obligations of the enterprise after these debts and obligations are handled under this Decree; and inherit rights and obligations towards laborers as provided for in the labor law.

4. They may not sell, lease or dissolve the enterprise at their own will within a minimum period of three years after the assignment, except when the enterprise goes bankrupt.

Article 22.- Principles for handling of assets, finance and debts upon enterprise assignment

1. The Renewal Board at the enterprise shall inventory and determine the quantity and actual conditions of all assets; long-term and short-term investments; assets which are rented, borrowed, kept or sold for others, consigned, appropriated, leased or lent; compare and classify debts; draw up a list of creditors and payable debts and a list of debtors and receivable debts divided into recoverable debts and irrecoverable debts; classify assets, handle assets and debts.

2. Principles for asset handling:

a/ For assets contributed or received as joint-venture capital; assets rented from outside or financially leased; assets borrowed, kept for others or other assets not belonging to the enterprise: the enterprise assignor and assignee and the asset owners shall negotiate on inheritance or liquidation of previously signed contracts or signing of new contracts;

b/ For appropriated assets, the enterprise shall identify their owners for returning them or entering into contracts to rent or borrow them. In case asset owners are unidentifiable, the enterprise shall account the actual value of these assets as an increase in its state capital;

c/ Assets being welfare facilities, including creches, kindergartens, infirmaries and other welfare assets formed from reward or welfare funds, shall be transferred to the new enterprise for management and use in service of the labor collective in the enterprise. Residential houses of employees, including those invested with state budget allocations, shall be transferred to the local house and land management agency for management or sale to current users under current regulations;

d/ Assets used in production and business which are invested with reward or welfare funds of the enterprise shall be transferred to the enterprise for further use in production and business;

el Cash balances of reward and welfare funds shall be divided to laborers currently working in the enterprise according to the number of working years at the enterprise before the enterprise assignment.

3. Principles for debt handling:

a/ Tax debts, other remittances into the state budget and debts borrowed by the enterprise from state-run commercial banks or the Development Bank of Vietnam, which cannot be fully paid though the enterprise has mobilized all capital sources, shall be handled under the Finance Ministry's guidance;

b/ Social insurance premium debts payable by the enterprise and social insurance premiums of laborers which were already collected by the enterprise shall, before the enterprise assignment, be paid from the value of its suite capital amount. In case no state capital amount is left, payment supports will be provided from the enterprise reorganization support fund under the Finance Ministry's guidance;

c/ The enterprise assignee shall take over receivable and payable debts of the enterprise after they are handled.

4. The remaining asset value, after payment of necessary expenses for enterprise assignment, shall be fully transferred to the labor collective in the enterprise as its owner.

5. In case the director, deputy directors and chief accountant of an enterprise do not take part in the enterprise handover acceptance, they may be considered on a case-by-case basis by the authority that has decided on enterprise assignment to be arranged to other jobs or handled under the Government's payroll streamlining policy.

Article 23.- Order of and procedures for enterprise assignment

1. Based on the approved general scheme on reorganization of enterprises with 100 % state capital, the agency or organization having decided on the assignment of an enterprise shall notify the assignment to the enterprise and publicize the enterprise assignment on the mass media.

2. The Trade Union Executive Committee or the Provisional Trade Union Executive Committee shall join the enterprise director in organizing a General Meeting of Employees to vote by majority on the voluntary acceptance of the enterprise assignment; elaborating and adopting plans on the acceptance of the enterprise assignment, including a production and business plan and a plan on labor rearrangement; complying with the conditions on the acceptance of the enterprise assignment, including the commitment to employ all laborers in the enterprise (excluding those who voluntarily terminate their labor contracts); nominating representatives to carry out procedures for acceptance of the enterprise assignment. For enterprises without trade unions, the Renewal Board at the enterprise shall coordinate with the enterprise director in organizing a General Meeting of Employees.

3. The Renewal Board at an enterprise shall classify assets; determine and classify debts; make financial statements; and estimate expenses for organizing the enterprise assignment. Based on figures on accounting books and results of inventory, classification and handling of assets, finance and debts on the principles for handling assets, finance and debts specified in Article 22 of this Decree, the enterprise director and the Renewal Board at the enterprise shall work out a plan on determination of the value of the enterprise to be assigned to the labor collective. In case estimated expenses for organizing the assignment of an enterprise are higher than the value of the remaining state capital amount in the enterprise, the enterprise shall be subjected to dissolution or bankruptcy instead of assignment.

4. The Trade Union Executive Committee of the enterprise or the Provisional Trade Union Executive Committee or a person elected by the

General Meeting of Employees as their representative shall list and classify laborers and compile their dossiers; and work out a production and business plan and the commitments to accept the enterprise assignment.

5. The representative of the labor collective shall send to the Enterprise Renewal and Development Board a dossier of application for acceptance of enterprise assignment, which comprises:

a/An application for acceptance of enterprise assignment;

b/ A production and business plan;

c/ A plan on employment and retraining of laborers;

d/ Projected form of organization of the new enterprise;

e/ Commitments of the labor collective.

6. The competent authority shall approve the dossier of application for acceptance of enterprise assignment and issue a decision to assign the enterprise to the labor collective. This decision shall be sent to the following agencies: Enterprise Finance Office; Tax Department; Business Registration Office; Planning and Investment Service; Labor, War Invalids and Social Affairs Service; and Statistics Office of the province or centrally run city where the enterprise is headquartered; and the Enterprise Renewal and Development Steering Committee.

7. To organize the conclusion of the contract for enterprise assignment and acceptance between a representative of the labor collective and a person authorized by the minister or the president of the provinciai-level People's Committee: the director general of the state corporation or the parent company. This contract shall be notified to the enterprise and published on a printed or online newspaper for three consecutive issues and contains the following principal details:

a/Name and address of the enterprise assigned to the labor collective;

b/Full name and address of the representative of the labor collective;

c/ Value of the assigned enterprise, and mode of assignment and acceptance;

d/ Commitments of the labor collective at the enterprise;

e/ Rights and obligations of the labor collective accepting the enterprise assignment.

Enclosed with the contract are a list of assigned assets already valued and a list of laborers in the collective receiving the assigned enterprise.

8. The Enterprise Renewal and Development Board shall join the enterprise director in organizing the enterprise handover according to the approved plan to the labor collective represented by the Trade Union president or by a person elected by the General Meeting of Employees to receive and manage the enterprise, to the witness of representatives of the agency or organization having decided on the enterprise assignment and the enterprise finance office.

9. After accepting the assignment, the labor collective's representative shall organize a General Meeting of Shareholders or Cooperative Members, and make business registration for the enterprise in the form of joint-stock company, limited liability company or cooperative as selected by the labor collective under the business registration law. The business registration dossier must comprise the enterprise assignment decision, the assignment and acceptance contract and the written record of handover of the enterprise to the labor collective.

10. Within 30 days after being granted a business registration certificate, the enterprise's representative shall publicize the enterprise assignment and change in the legal form of the enterprise on the mass media under law.

Article 24.- Ownership of enterprises after assignment

The whole remaining asset value of the enterprise, after being handled under Article 22 of this Decree, shall come under the ownership of the labor collective and divided into shares or contributed capital portions to be assigned to each laborer participating in the acceptance of the enterprise assignment.

Each laborer participating in the acceptance of the enterprise assignment may be given the right to own a part of the remaining asset value in Shares or contributed capital portions corresponding to the number of years working in the state sector; enjoy dividends and profits; may bequeath but may not transfer his/her assigned shares or capital portion within three years after the acceptance of the enterprise assignment.

Article 25.- Rights and obligations of the enterprise assignee

1. To make business registration in the selected legal form.

2. To use assigned assets, organize production and business, and distribute incomes according to the organization and operation charter of the enterprise.

3. To inherit lawful rights and interests of the former enterprise as agreed upon in the enterprise assignment and acceptance contract; inherit contracts on land rent, power and water supply of the former enterprise under law. The enterprise may choose to continue die current form of land rent or shift to land allocation under the land law.

4. To be provided with financial assistance from the Enterprise Reorganization Support Fund for organizing the retraining of laborers in order to employ them under the guidance of the Ministry of Finance.

5. To be responsible for fulfilling the commitments in the enterprise assignment and acceptance contract and obligations towards the State under law.

Chapter IV

POLICIES FOR ENTERPRISES AND THEIR PURCHASERS OR ASSIGNEES

Article 26.- Policies for sold or assigned enterprises

Policies for enterprises assigned to their labor collectives and enterprises sold to collectives, individuals or legal entities comply with Article 50 of Decree No. 109/2007/ND-CP.

Article 27.- Policies for purchasers that pay for the purchase in lump sums

If enterprise or enterprise division purchasers make lump-sum payments right after the purchase they are entitled to a maximum reduction equal to 5% of the land use right value-exclusive sale price but not exceeding the existing owner capital amounts in the purchased enterprises or enterprise divisions.

Article 28.- Policies for labor collectives purchasing enterprises

In case the labor collective in an enterprise win the enterprise auction or are the only registered purchaser, they are entitled to a reduction equal to 15% of the land use right value-exclusive sale price but not exceeding the existing owner capital amounts in the purchased enterprises or enterprise divisions

Chapter V

ORGANIZATION OF ENTERPRISE SALE OR ASSIGNMENT

Article 29.- Competence to decide on enterprise sale or assignment

Based on the approved general scheme on reorganization of enterprises with 100% state capital and the conditions specified in Article 2 of this Decree:

1. The Prime Minister shall authorize boards of directors of state corporations or parent companies established under his decisions to decide on assignment of independent cost-accounting member companies; sale of independent cost-accounting member companies, dependent cost-accounting member units of corporations, parent companies, dependent divisions of independent cost-accounting member companies having an asset value exceeding 50% of the total residual asset value stated in their financial statements publicized in the latest quarter.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies or presidents of provincial-level People's Committees shall:

a/ Decide on the sale or assignment of enterprises established under their decisions, including independent cost-accounting member enterprises, dependent cost-accounting member units of suite corporations or one-member limited liability companies which have not yet transferred the right to represent their owner to the State Capital Investment Corporation;

b/ Decide on the sale of divisions of enterprises established under their decisions and having not transferred the right to represent their owner to the State Capital Investment Corporation, on the condition that the residual asset value of these enterprise divisions exceed 30% of the total residual asset value stated in financial statements of enterprises publicized in the latest quarter (for enterprises without boards of directors) or exceed 50% of the total residual asset value stated in financial statements of enterprises publicized in the latest quarter (for enterprises with boards of directors).

3. Boards of directors of state corporations or parent companies shall decide or empower or authorize directors general to decide on the sale of enterprise divisions, of which the residual asset value does not exceed 50% of the total residual asset value stated in financial statements of enterprises publicized in the latest quarter.

4. Directors of companies without boards of directors shall decide on the sale of enterprise divisions, of which the residual asset value does not exceed 30% of the total residual asset value stated in financial statements of enterprises publicized in the latest quarter.

Article 30.- Responsibility to organize enterprise sale or assignment

1. The Enterprise Renewal and Development Board shall assist ministers, presidents of provincial-level People's Committees and boards of directors of state corporations or parent companies in organizing enterprise sale or assignment.

Depending on the characteristics of business lines, mode of assignment or sale of enterprises and financial status of these enterprises, the Enterprise Renewal and Development Board shall invite representatives of banks, enterprises, laborers in enterprises and concerned agencies to participate in enterprise sale or assignment.

2. Ministers, presidents of provincial-level People's Committees, and boards of directors of state corporations or parent companies shall decide on setting up Renewal Boards at enterprises to perform the tasks specified in this Decree.

3. In case enterprises fail to implement sale or assignment plans approved by competent authorities under this Decree, their directors shall be disciplined and heads of agencies or organizations having decided on their sale shall bear joint responsibility under the Law on State Enterprises.

Article 31.- Tasks of the Enterprise Renewal and Development Board in organizing enterprise sale or assignment

1. In case of sale of an enterprise:

a/To elaborate an enterprise sale plan; to notify the enterprise sale to all laborers in the enterprise and on the mass media:

b/ To direct and supervise the renewal board at the enterprise in determining the actual conditions, properties and technical utilities of assets, comparing debts and drawing up lists of creditors and debtors of enterprises, receivable and payable debts; and working out plans on settlement of financial and labor matters of the enterprise;

c/ To supervise the valuation consultancy organization in valuating the enterprise and determining the reserve price to be reported to the agency or organization having decided on the enterprise sale for approval;

d/ To supervise the holding of the enterprise auction; to organize the direct sale and propose a sale price (for direct sale) or propose the enterprise seller to approve the enterprise auction result;

e/ To draft an enterprise sale contract and report it to the concerned minister, president of provincial-level People's Committee or board of directors of the state corporation or parent company for decision;

f/ To guide, inspect and supervise the renewal board at the enterprise in recovering assets of the enterprise and returning assets rented borrowed or kept for others by the enterprise; recovering receivable debts and paying payable debts of the enterprise; handing over assets, books and relevant dossiers to the purchaser as agreed upon in the enterprise sale contract:

g/ To urge payment and security for payment within the set time limit; to manage mortgage dossiers and carry out procedures for public sale when the purchaser breaches payment commitments;

h/ To solve within its competence problems arising from the enterprise sale.

2. In case of assignment of an enterprise:

a/ To work out an enterprise assignment plan; to notify the enterprise assignment to all laborers in the enterprise and on the mass media;

b/ To assess the value of the enterprise, determine the actual conditions, properties and technical utilities of assets, inspect the comparison of debts and drawing up of lists of creditors and debtors of enterprises, receivable and payable debts; to work out plans on settlement of financial and labor matters of the enterprise;

c/ To draft an enterprise assignment contract and report it to the concerned minister, president of provincial-level People's Committee or board of directors of the state corporation or parent company;

d/ To guide, inspect and supervise the renewal board at the enterprise in recovering assets of the enterprise and returning assets rented, borrowed or kept for others by the enterprise; recovering receivable debts and paying payable debts of the enterprise; handing over assets, books and relevant dossiers to the enterprise assignee as agreed upon in the enterprise assignment contract;

e/ To solve according to its competence problems arising from the enterprise assignment.

Article 32.- Responsibility of the Enterprise Renewal and Development Board

The Enterprise Renewal and Development Board shall be held responsible for results of performance of jobs assigned to it before enterprise sale or assignment deciders and law.

Article 33.- Competence to approve enterprise sale or assignment plans

At the request of the Enterprise Renewal and Development Board, ministers, presidents of provincial-level People's Committees, boards of directors of state corporations or parent companies shall decide to approve enterprise sale plans and prices or enterprise assignment plans.

Article 34.- Competence to conclude enterprise sale or assignment contracts

1. Ministers or persons authorized by ministers shall conclude contracts for sale or assignment of enterprises with 100% state capital for which their ministries act as the owner's representatives.

2. Presidents of provincial-level People's Committees or persons authorized by presidents of provincial-level People's Committees shall conclude contracts for sale or assignment of enterprises with 100% state capital for which their provincial-level People's Committees act as the owner's representatives.

3. Directors general of state corporations or parent companies shall conclude contracts for sale or assignment of member enterprises of their state corporations or parent companies.

Article 35.- Responsibility to organize and oversee the performance of enterprise sale or assignment contracts

Persons concluding enterprise sale or assignment contracts shall:

1. Organize the performance of these contracts.

2. Organize the oversight, supervision and inspection of the contract performance and solve arising problems.

3. All problems arising in the course of performance of these contracts shall be jointly solved by contracting parties. Any unsolved disputes shall be brought to a people's court under law.

Article 36.- Handling of cases in which there is no registered enterprise purchaser or assignee

For enterprises for which there is no registered purchaser or assignee under this Decree, competent agencies or organizations shall carry out procedures for dissolving them. In case enterprises go bankrupt, enterprise directors shall apply for opening of bankruptcy procedures at a people's court under law.

Article 37.- Complaints, denunciations and handling of violations

The lodging of complaints and denunciations and handling of violations related to the enterprise sale or assignment comply with this Decree and Articles 52 and 53 of Decree No. 109/2007/ND-CP.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 38.- Effect

1. This Decree takes effect 15 days after its publication in "CONG BAO."

2. To annul the Government's Decree No. 80/ 2005/ND-CP of June 22,2005, on assignment, sale, business contracting and lease of state companies.

3. Enterprises currently performing business contracts or lease contracts which will expire after July 1, 2010, shall reach agreement to liquidate the contracts and apply modes of reorganization under law before July 1, 2010.

Article 39.- Responsibilities to implement and organize the implementation

1. The Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Labor, War Invalids and Social Affairs, the Ministry of Natural Resources and Environment, and the State Bank of Vietnam shall coordinate with concerned agencies in guiding the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial/municipal People's Committees, boards of directors of state corporations or parent companies-economic groups shall implement this Decree.

The Minister of Planning and Investment shall oversee the implementation of this Decree.