Law on state enterprises, No. 39-L/CTN

LAW

ON STATE ENTERPRISES

With a view to promoting the leading role of the State-owned economy in the multi-sector commodity economy in the market mechanism, under State management and along the socialist orientation; ensuring the lawful rights and interests of the State enterprises; strengthening State management with regard to the enterprises; promoting the effective operation of the State enterprises in their strict implementation of the objectives assigned them by the State;
Pursuant to Articles 19 and 84 of the 1992 Constitution of the Socialist Republic of Vietnam;
This Law makes provisions on the State enterprises.

Chapter I

GENERAL PROVISIONS

Article 1.- The State enterprise is an economic organization which is capitalized, set up, organized and managed by the State, and carries out business or public utility operations aimed at achieving the socio-economic objectives assigned by the State. The State enterprise has the legal person status, civilian rights and obligations, takes responsibility for all its activities in business operation within the limit of the capital placed under its management.

The State enterprise has a name, its own seal and its head-office established in Vietnam.

Article 2.- This Law applies to all State enterprises which are organized in the forms of an independent enterprise, a corporation, a member enterprise of a corporation, and which manage the funds invested by the State in the enterprise.

Article 3.- For the purpose of this Law, the following terms shall be understood as follows:

1. "State fund assigned to the enterprise for management and use" is the fund allocated by the budget, or originating from the budget, and the fund accumulated by the State enterprise itself.

2. "Independent State enterprise" is a State enterprise that is not part of the organizational structure of any other enterprise.

3. "Business State enterprise" is a State enterprise that operates with profit as main objective.

4. "Public service State enterprise" is a State enterprise that manufactures and provides public services pursuant to State policies, or directly involved in the discharge of defense or security tasks.

5. " State predominant shares" are the following categories of shares :

a/ The State owns more than 50% (fifty per cent) of the total shares of the enterprise.

b/ The State shares are at least twice as much as those held by the biggest shareholder in the enterprise.

6. "State special shares" are State shares the enterprises where the State has no predominant shares, but has the right to decide some important issues of the enterprise as mutually agreed upon in the statute of the enterprise.

Article 4.- The State enterprises shall operate under the present Law and other juridical provisions.

The State protects the lawful rights and interests of the State enterprises and ensures their equality before law.

The Government shall make concrete provisions for the enforcement of this Law with regard to public service State enterprises which operate in some especially important areas, or which directly serve the defense and security sectors.

Article 5.- The Communist Party organizations in State enterprises shall operate according to the Constitution, the law of the Socialist Republic of Vietnam, and the Party regulations.

Trade union organizations and other socio-political organizations in the State enterprises shall operate according to the Constitution and law.

Chapter II

RIGHTS AND OBLIGATIONS OF STATE ENTERPRISES

Section I. RIGHTS OF STATE ENTERPRISES

Article 6.-

1. The State enterprises have the right to management and use of fund, land, natural resources and other resources entrusted by the State as provided for by law, with the aim of achieving business or public service objectives assigned by the State.

2. The State enterprises engaged in business have the right to transfer, lease, rent and mortgage properties under their management, except important equipments and factories which are prescribed by the State, and which require authorization by the competent authorities, on the principle of preservation and development of such funds; for the land and natural resources under the management of the enterprises, law provisions shall apply.

3. The public service State enterprises have the right to transfer, lease,rent and mortgage, the properties under their management, if and when authorized by the competent State management agency.

Article 7.-

1. A business State enterprise has the right to organize its management and business as follows :

a/ To organize its managerial apparatus and its business operations in keeping with the State-assigned objectives and tasks;

b/ To renovate technology and equipment;

c/ To establish branches and representative offices at home and abroad under Government regulations;

d/ To voluntarily join in State corporations, except those of special importance whose membership is to be obtained through State prescriptions;

e/ To do business in such trades as conform with the State-assigned objectives and tasks; to expand the scope of its business in accordance with its own capacity and market needs; to engage in complementary trades with due authorization from the competent State agency.

f/ To select at its own discretion the market; have the right to import and export as prescribed by State regulations;

g/ To decide at its own discretion the buying and selling prices of the products and services, except those products and services of which the State is to decide the prices;

h/ To invest, enter in joint venture, cooperation and contribute equity shares in accordance with law;

i/ To establish and adopt labor quota, material, salary unit price per product unit in the framework of the quotas and unit price established by the State;

j/ To select, hire, appoint, use and train its personnel, and select the forms of payment of wages and bonuses, and have other rights of the employer in accordance with the Labor Code and other laws; have the right to decide the level of salary and bonus of the employees on the basis of the salary unit price per unit product or service cost, and the results of the enterprise's operation.

2. A public service State enterprise has the right to organize its management and business operation as follows:

a/ To exercise the rights prescribed at Points a, b, c, d, g, i and k under Item 1 of this Article;

b/ To use the resources assigned to organize additional businesses consistent with Government regulations, without affecting its main objective and task of providing public services already assigned by the State;

c/ To invest, enter in joint venture, cooperation, contribute equity shares in keeping with law, if and when authorized by the competent State management agency;

d/ To exercise the right of import and export as prescribed by State regulations.

Article 8.-

1. A business State enterprise has the following right to financial management:

a/ It may use the capital and the various funds of the enterprise to meet in time the needs of business operation, on the principle of preservation and restitution of capital;

b/ To mobilize capital on its own initiative to serve business operations, without modifying the form of ownership; to issue bonds as prescribed by law; to mortgage the right to land use together with properties under its management to Vietnamese banks in order to take loans for business purposes as prescribed by law;

c/ To use the depreciation fund of the enterprise; the Government shall provide for the rate of deduction from the depreciation fund, and its use and management.

d/ After fulfilling its obligations towards the State, the enterprise may raise a fund for investment development and other funds as prescribed, and distribute the remaining profit to the personnel in accordance with their individual contribution to the business achievement in the current year, and proportionally to the equity shares. The Government shall make detailed provisions on the system of distribution of after-tax profits mentioned in this Point;

e/ To benefit from the regimes of allowances, price subsidies and other State preferential regimes when the enterprise performs production duties or provides services for defense and security work, for control of natural disasters, or provides public services or products or services required by the State policies, of which it cannot fully cover the production or service costs.

f/ To benefit from the regime of preferential investment or reinvestment as prescribed by State regulations.

2. A public service State enterprise shall exercise the financial management rights stipulated in Points c, d, e and f under Item 1 of this Article and has the following rights :

a/ The right to receive State budgetary allocations yearly, or by specific orders placed by the State which are approved by the competent State agency, relevant to the tasks assigned by the State and pursuant to its plan.

b/ To exercise the right to raise funds and to call for joint venture capital, to mortgage the value of land use right together with the properties under the enterprise's management to Vietnamese banks, in order to take loans for public service operations as prescribed by law, if and when authorized by the competent State agency;

c/ The enterprise shall supply various products or services for which it is entitled to collect fees, and may use such fees as prescribed by the State to support the enterprise's operations.

Article 9.- A State enterprise has the right to reject and denounce all requests for supply of resources not prescribed by law from any individual, agency or organization, except voluntary contribution for humanitarian or public utility purposes.

Section II. OBLIGATIONS OF STATE ENTERPRISES

Article 10.-

1. A State enterprise has the duty to make use effectively, preserve and develop the capital invested into another(other) enterprise (if any); to receive and use effectively the assets, land and other resources assigned to it by the State.

2. A business State enterprise has the obligation to use various resources assigned by the State to achieve its business objectives and special tasks assigned by the State.

3. A public service State enterprise has the obligation to use capital, budgetary allocations and other resources assigned by the State to supply products or provide public services to different target groups, according to a scale of prices or fees prescribed by the State.

Article 11.- The State enterprise has the obligation to manage the following business and public service operations :

1. To register its business and to carry out the business as registered; to be responsible to the State for its activities, and to customers and law for the products it manufactures and the services it provides;

2. To work out its development strategy and production and business plans along the tasks assigned by the State and market needs. The development strategy of business and public service enterprises, and the yearly plan of public service enterprises must be subject to approval by competent State agencies;

3. To renovate and modernize technologies and the mode of management; to use incomes from the transfer and asignment of assets to reinvest, renovate equipment and technologies of the enterprise;

4. To discharge its obligations towards the laborers as prescribed by the Labor Code and ensure participation by the laborers in the management of the enterprise;

5. To comply with State regulations on preservation of resources, environmental protection and on defense and national security;

6. To apply the regime of statistical reporting and periodical reporting as prescribed by the State, and irregular reporting at the request of the representative of the owner; and take responsibility for the accuracy of the reports;

7. To submit to the control by the representative of the owner; to comply with the regulations on inspection by the financial agencies and the other competent State agencies as prescribed by law.

Article 12.-

1. The State enterprise has the obligation to comply with the regime and regulations on management of capital, assets, various funds, and on accountancy, cost-accounting, and also the audit and other regimes established by the State; take responsibility for the accuracy and lawfulness of the financial operations of the enterprise.

2. The State enterprise has the obligation to make public its yearly financial report and other information, with a view to allowing a correct objective assessment of the enterprise's operation. The Government shall issue concrete regulations on the regime of public reporting on the finance and other information of various types of State enterprises.

3. A business State enterprise shall discharge its fiscal obligations and other obligations to the State budget as prescribed by law.

4. A public service State enterprise has the following obligations:

a/ To remit to the budget all revenues coming from fees and others (if any);

b/ If a public service State enterprise also engages in business operations, it must organize a separate accounting, and discharge its fiscal obligations for its business operation as prescribed by law.

Chapter III

ESTABLISHMENT, REORGANIZATION, DISSOLUTION AND BANKRUPTCY OF A STATE ENTERPRISE

Section I. ESTABLISHMENT OF THE ENTERPRISE AND BUSINESS REGISTRATION

Article 13.- The establishment of a State enterprise is allowed in key and important sectors or areas likely to open the way and create conditions for other economic sectors to develop, promote the quick and sustainable development of the economy, regularize and guide the market economy along the socialist orientation.

The sectors and areas to be given priority at the time of the establishment of a new State enterpris in each period shall be decided by the Government.

Article 14.-

1. The Head of the foundering agency of a State enterprise is the person who proposes and organizes the filling of the procedure for the establishment of such an enterprise.

2. The proposing person must compile and submit a dossier to that effect to the person having the right to decide the establishment of such an enterprise. The dossier includes:

a/ A report proposing the establishment;

b/ The plan of establishment;

c/ The proposed level of the statutory capital;

d/ The draft statute of the enterprise;

e/ Request for land use by the enterprise.

Article 15.-

1. The Prime Minister decides the establishment or empowers the Minister of the controlling Ministry, or the President of the People's Committee of the province or city under the Central Government, to decide the establishment of State corporations, or independent State enterprises of a large size or of importance.

2. The Minister of the controlling Ministry, the President of the People's Committee of the province or city under the Central Government shall decide the establishment of State enterprises not defined in Item 1 of this Article, as assigned by the Government.

Article 16.-

1. Before deciding to establish a State enterprise, it is necessary to set up an Appraisal Committee to consider the conditions stipulated in Item 2 of this Article. The Government provides regulations for the establishment, composition and working regime of the Appraisal Committee, and for the appraisal order concerning the State enterprise.

2. The conditions to consider a decision on the establishment of a State enterprise include:

a/ A duly formed dossier as prescribed by Item 2 of Article 14 of this Law;

b/ The plan for its establishment must ensure its feasibility and effectiveness, and be in keeping with the strategy and planning for socio-economic development laid down by the State, and satisfies the requirements of technology and the State regulations on environmental protection as well as other provisions of law;

c/ The level of the statutory capital is compatible with the scope, branch, business line, area of operation, and is not inferior to the prescribed capital defined by the Government; availability of a certificate issued by a financial agency about the source and level of the allocated fund;

d/ The draft statute of the enterprise shall not vary with the provisions of this Law and other provisions of laws with regard to State enterprises;

e/ The availability of a confirmation of approval by the competent State agency related to the site of the head office, and the location of production and business operations.

3. On the basis of a written conclusion by the Appraisal Committee, the person having the right to decide the establishment of a State enterprise shall issue a decision to this effect; in the event of non-approval, a written reply must be issued not later than 30 (thirty) days after receipt of the duly formed dossier.

4. The appointment of the Chairman and of all members of the Board of Management (if any), the Director General or Deputy Director General must be made within no more than 30 (thirty) days after the decision to establish the enterprise is made.

Article 17.-

1. The enterprise shall register at the State Planning Committee of a province or city under the Central Government where the head office of the enterprise is located.

The dossier for business registration includes: the decision on the establishment, the business statute, the certificate of the right of use of the head office of the enterprise, the decision to appoint the Chairman and members of the Board of Management, the Director General or Director of the enterprise.

2. Within 60 (sixty) days after the decision to establish the enterprise is issued, the enterprise must make a business registration.

3. The State enterprise has a legal person status after obtaining the certificate of business registration.

Article 18.- Within 30 (thirty) days after obtaining the certificate of business registration, the enterprise must announce in 5 consecutive issues of a daily newspaper at the central or local level the following main points:

1. The name and main office of the enterprise, names and surnames of the Chairman and members of the Board of Management (if any), and the Director General or the Director;

2. The name of the Government body issuing the decision, and the date of issue of the decision to establish the enterprise, the date and number of the business registration;

3. The statutory capital;

4. The number of its bank account; numbers of telephone, telex and fax (if any);

5. Business area, business lines and activities;

6. Date of commencement of business and term of operation.

Article 19.-

1. If a State enterprise wants to set up a branch in another province or city under the Central Government, it must have an operational plan for the branch, and obtain a written authorization by the President of the People's Committee of the province or city under the Central Government where the branch is to be located.

The State enterprise branch is not a legal person; the State enterprise takes a civil responsibility for its branch.

2. If the State enterprise opens a representative office in another province or city under the Central Government, this office must register with the People's Committee of the province or city under the Central Government where it is located.

3. The establishment of a branch or a representative offcie of a State enterprise in a foreign country shall conform with government regulations.

Section II. REORGANIZATION, DISSOLUTION AND BANKRUPTCY OF A STATE ENTERPRISE

Article 20.-

1. The measures to reorganize an enterprise include: merger with another State enterprise, splitting the State enterprise, and other measures to change the operational objectives and organizational pattern of the enterprise.

2. The person who has proposed the establishment of a State enterprise, shall have to work out a draft plan for reorganization of the enterprise. The person who has decided the establishment of the State enterprise, has to set up an Appraisal Committee for the enterprise's reorganization plan, and to issue a decision on the reorganization of the enterprise.

3. The adoption of measures for reorganizing the important State enterprises which directly cater for defense, security and public service is at the discretion of the Prime Minister.

Article 21.- If the reorganization of State enterprises involves modifications of the business objective and lines or the statutory capital, the enterprise has to fill the procedures for renewing the registration, or complementary registration with the agency with authority in business registration.

Article 22.- A State enterprise is liable to dissolution in the following cases:

1. Expiry of term of operation mentioned in the decision on establishment with no application for extension;

2. The enterprise has been incurring prolonged losses, but has not yet become insolvent;

3. The enterprise has failed to fulfil the tasks assigned by the State after having taken the necessary measures;

4. To keep the enterprise operating further is unnecessary.

Article 23.-

1. The person who has decided the establishment of a State enterprise has the right to decide its dissolution.

2. The person who has decided the establishment of the enterprise, has to set up a Dissolution Committee. This Committee performs the function of consultant to the person who decided the establishment of the enterprise, regarding the decision on its dissolution, and on how to carry out the decision on its dissolution. The composition and working statute of the Dissolution Committee, the order and procedures for carrying out the decision on dissolution of the enterprise are prescribed by the Government.

3. All claims related to the dissolution of the State enterprise shall be settled as prescribed by law.

Article 24.- The handling of the bankruptcy of a State enterprise shall be carried out in accordance with the Law on Business Bankruptcy.

Chapter IV

STATE MANAGEMENT AND EXERCISE OF STATE OWNERSHIP OVER THE STATE ENTERPRISES

Section I. STATE MANAGEMENT OF STATE ENTERPRISES

Article 25.- The Government exercises unified State management of the State enterprises with the following authority:

1. To promulgate policies and mechanisms of management with regard to different types of enterprise, incentive policies, system of subsidies, price subsidies, and preferential treatment applicable to products and services for public benefits;

2. To decide measures to protect and support important State enterprises of the national economy;

3. To organize the drafting of the development plans and strategy of State enterprises, in the general planning and strategy of development of each sector and each region;

4. To organize the drafting of plans of training managers and executives of State enterprises;

5. To organize the control and inspection of the enforcement of State laws, policies and regimes at the enterprises;

Article 26.- The State managerial agencies perform their State management of State enterprises in accordance with law provisions and governmental devolution.

Section II. EXERCISE OF STATE OWNERSHIP TOWARD STATE ENTERPRISES

Article 27.-

1. The Government exercises uniformed State ownership toward the State enterprises. This includes the following rights:

a/ To decide on the establishment, merger, splitting, dissolution and transfer of ownership of the State enterprise;

b/ To decide on the objectives, tasks, development strategy and orientation for business development plan of the State enterprise;

c/ To promulgate model statute of operational organization of the State enterprise, and to approve the statute of the corporations and the important State enterprises;

d/ To decide on the allocation of initial investment and supplementary investment, delivery of fund to the enterprises, control and supervise the preservation and development of capital at State enterprises. To regulate the system of depreciation rates, the rate of profit allotment to different funds after taxation. To approve the plan for transfer lease/rent, lien or mortgage, of important equipments and workshops. To approve plans for mobilization of capital, and contribution of State capital and assets to the joint ventures with other owners. To effect a unified organization in carrying out the owner's duties and powers in regard to the investment capital of the State in the enterprises;

e/ To decide on the mode of management for each type of State enterprise; on the appointment, dismissal, commendation and reward, and disciplinary measures to be carried out in regard to key managerial posts in the State enterprises;

f/ To set criteria, norms, salary unit price in relation to products and services, as a basis for the State enterprise to pay salary to its personnel. To decide on the system of salary, bonus and allowance in regard to the members of the Board of Management, the Director General or Director of the State enterprise;

g/ To organize the control and supervision of the State enterprise in the realization of the objectives and the tasks assigned by the State; to supervise the business operations of the enterprise, the managerial work of the Board of Management, and the executive work of the Director General or Director.

2. The Government assigns or delegates the Ministries or People's Committees in the provinces or cities under the Central Government to exercise some of the State ownership rights in regard to State enterprises as stipulated in Item 1 of this Article; to define the responsibility of the Ministry of Finance in the management of the State capital and assets at the enterprise; to define on the relationship between the controlling Ministries, the People's Committees in the provinces or cities under the Central Government, and the Ministry of Finance, in exercising State ownership rights assigned or delegated by the Government in their relations with the State enterprises;

Chapter V

ORGANIZATION OF THE MANAGEMENT OF STATE ENTERPRISES

Article 28.-

1. The State corporation and major independent State company has the following managerial structure :

a/ Board of Management, Control Commission;

b/ The Director General or Director, and the assisting apparatus.

2. The State enterprises, that do not fall under the stipulations in Item 1 of this Article, shall have a director and an assisting apparatus. The form of organization of supervisory work at these enterprises is prescribed by the Government.

Section I. STATE ENTERPRISES WITH A BOARD OF MANAGEMENT

I. BOARD OF MANAGEMENT AND CONTROL COMMISSION

Article 29.- The Board of Management performs the function of managing the activities of the enterprise, and is responsible to the Government, or a State management body delegated by the Government, for the development of the enterprise in accordance with the objectives assigned by the State.

Article 30.- The Board of Management has the following tasks :

1. To receive capital, land, natural resources and other resources assigned to the enterprise by the State;

2. To submit to the Head of the State management agency which decides to establish the enterprise, for approval of the statute of the business, strategy, the overall planning and the long-term and 5-year development plans, except for the important enterprises where these questions shall be decided by the Prime Minister;

3. To submit to the Head of the State management agency assigned by the Government the draft plans on joint ventures, contribution of capital, and various investment projects of the enterprise;

4. To submit to the Prime Minister, or to his delegate, proposals in relation to the appointment, dismissal, commending/awarding, and discipline of the Director General or Director of the enterprise;

5. To submit to the Head of the State managerial agency empowered by the Government, proposals on the appointment, dismissal, commendation/award or discipline concening the Deputy Director General or Deputy Director, and the Chief Accountant of the enterprise at the request of the Director General or Director;

6. To submit to the Head of the competent State managerial agency for approval the yearly fiscal settlement of accounts of the enterprise;

7. To approve the draft plans for the utilization, preservation and development of capital, and for the utilization of after-tax profits proposed by the Director General or Director; to pass the yearly fiscal settlement of accounts of the member companies (if any); to publicize the financial reports as prescribed by the Government;

8. To decide on the draft plan for mobilization of capital for business operation without changing the form of ownership;

9. To approve the draft plan for managerial organization, business organization, the managerial staff, the plan for personnel training, and the statute of the component units (if any); to propose the establishment, splitting, merging and dissolution of component units (if any) as prescribed by law;

10. To appoint, dismiss, commend/award, and discipline the directors of the component units (if any) at the request of the Director General;

11. To control and supervise the Director General or Director, the component units (if any) in the utilization, preservation and development of capital; to discharge the obligations towards the State, to achieve the objectives assigned to the enterprise by the State, and to carry out other decisions of the Board of Management.

Article 31.-

1. The Board of Management comprises the Chairman, the Director General or Director, and a number of other members. Depending on the scope and type of enterprise, the Government shall decide on the number of members of the Board of Management.

The Board of Management comprises both full-time members and part-time members who also assume other responsibilities. The Chairman of the Board of Management is a full-time member of the Board.

The Chairman is responsible for organizing the discharge of duties and exercising the powers of the Board stipulated in Article 30 of this Law.

2. The Chairman and other members of the Board of Management shall be proposed by the person who has proposed the establishment of the enterprise to the Prime Minister or his delegate, for appointment, dismissal, commendation/award or discipline.

The term of a member of the Board of Management is 5 (five) years. The members of the Board may be re-appointed. The Chaiman of the Board must not cumulate the function of General Director or Director.

3. The Board of Management uses the apparatus and seal of the enterprise to perform their duties.

Article 32.- The members of the Board of Management shall have to meet the following criteria and conditions:

1. To have the Vietnamese citizenship and a permanent residence in Vietnam;

2. To be healthy, have good ethical qualities, be honest, integral and a high sense of law observance;

3. To be competent in business and business organization and management;

4. They shall not assume leadership responsibilities in the State apparatus;

5. The members of the Board of Management, the Director General, the Directors of enterprises which are declared bankrupt, shall comply with Article 50 of the Law on Business Bankruptcy;

6. The Chairman of the Board of Management, the Director General or Director are not allowed to establish or hold any managerial or executive post of a private company, limited company or stock company, and not allowed to have economic contractual relationship with any private company, limited company or stock company where managerial or executive posts are held by their spouse, parents, or sons or daughters.

The wife, husband, son, daughter, brother or sister of anyone holding one of the above-mentioned posts are not allowed to hold such offices as chief accountant, cashier in the same enterprise or in a member company (if any).

Article 33.- Working regime of the Board of Management:

1. The Board of management works according to the collective system; holds periodical meetings every quarter to consider and decide on matters related to its duties and powers. It may hold emergency meetings to handle urgent problems of the enterprise at the request of the Chairman of the Board, or by the Director General or the Director, or by more than 50% (fifty percent) of the Board members;

2. The Chairman, or any member of the Board of Management delegated by the Chairman, is to convene and chair the meeting;

3. A meeting of the Board of Management is considered as legal, if at least 2/3 (two thirds) of its members are present; a resolution or decision of the Board of Management is effective, if it has the vote of more than 50% (fifty per cent) of the Board members. Members of the Board of Management may make reservations in regard to their viewpoints;

4. The contents and conclusions of the meetings of the Board of Management must be recorded in minutes; the resolutions and decisions of the Board are binding for the enterprise;

5. The operational costs of the Board of Management including the salary and allowances, are accounted for in the management cost of the enterprise. The Director General or the Director has to ensure the necessary conditions and means for the work of the Board of Management.

Article 34.- Members on the full-time list of the Board of Management shall receive a base salary on the same scale of salary as State employees, and in conformity with the system of salary allowance in the State enterprise prescribed by the Government, and bonuses corresponding to the results of the enterprise operations. The members of the Board of Management that cumulate responsibilities, shall receive responsibility allowances as prescribed by the Government, and receive bonuses corresponding to the results of the enterprise operations.

Article 35.- The members of the Board of Management are jointly responsible to the person who has issued the decision on the appointments, and to law for the decisions adopted by the Board; in the event of breach of the enterprise statute, or issue of decisions above their competency, or abuse of power which cause losses to the enterprise and to the State, they must take responsibility for and pay material damage for the losses they have caused as prescribed by law.

Article 36.-

1. The Board of Management sets up a Control Commission to assist it in controlling and supervising the executive work of the Director General or Director, the enterprise apparatus and the component unit (if any) in financial operations, and assuring their compliance with the enterprise statute, the resolutions and decisions of the Board of Management, and with law.

2. The Control Commission performs the duties assigned by the Board of Management, report and is answerable to the Board of Management.

3. Operational costs, including salary and working conditions of the Control Commission, are covered by the enterprise.

II. THE DIRECTOR GENERAL OR DIRECTOR, AND THE ASSISTING APPARATUS

Article 37.- The Director General or Director is to be appointed or dismissed by decision of the Prime Minister or his delegate, at the request of the Board of Management.

The Director General or Director is the legal representative of the enterprise, and takes responsibility before the Board of Management, the person that issued the decision on his or her own appointment, and before law in respect to the management of enterprise operations. The Director General or Director holds the supreme managerial power in the enterprise.

The Deputy Director General or Deputy Director assists the Director General or the Director in the administration of the enterprise in accordance with the assignment of work and delegation of powers by the Director General or the Director, is held responsible to the Director General or the Director for the duties entrusted by the Director General or the Director, according to the assignment of work or delegation of powers.

The Chief Accountant assists the Director General or the Director of the enterprise in directing, organizing the accountancy and statistical work of the enterprise, and has the duties and powers as prescribed by law.

The office, and the technical and professional divisions (or sections) have the functions of counseling and assisting the Board of Management, the Director General or the Director in the managerial and executive work.

Article 38.- The Director General or Director of the enterprise has the following duties and powers:

1. Together with the Chairman of the Board of Management, sign the receipt of capital, land, natural resources and other resources for management and use, in conformity with the objectives and tasks assigned to the enterprise by the State; assign the resources received from the State to the component units (if any);

2. To use, preserve and develop capital, in accordance with the plan approved by the Board of Management;

3. To work out the development strategy, the long-term and yearly plans of the enterprise, investment projects, joint venture plans, the plan for organization, the plan for management work of the enterprise, the plan for personnel training, the plan for business coordination with the component units (if any) to submit to the Board of Management.

4. To work out and submit to the Board of Management for approval, the technical and economic norms and criteria, and salary unit price in conformity with State prescription;

5. To make proposals concerning the appointment, dismissal, commendation/award and discipline involving the Deputy Director General or Deputy Director, the Chief Accountant of the enterprise, and the Directors of the component units (if any);

6. To decide the buying and selling prices of products and services in conformity with State prescriptions;

7. To inspect the performances of the component units (if any) with regard to the norms, criteria and unit price prescribed within the enterprise;

8. To appoint, dismiss, commend/award and discipline the Deputy Director, Chief Accountant of the component unit (if any) at the request of the Director of the component unit, and the chiefs and deputy chiefs of the technical and professional divisions or sections, and equivalent posts in the enterprise;

9. To organize the administration of the enterprise operations, with the aim of carrying out the resolutions and decisions of the Board of Management;

10. To report to the Board of Management and the competent State agency the results of business operations of the enterprise;

11. To submit to the control and supervision of the Board of Management, the Control Commission, the competent State agencies, in the discharge of his/her functions and duties prescribed in this Law. In case the view of the Director General or the Director varies with the resolutions and decisions of the Board of Management, the Director General or the Director has the right to make reservations of his/her views, and ask the competent State body to settle it; pending a decision of the competent State agency on the decision, he/she has to comply with the resolutions and decisions of the Board of Management;

12. He/she may take the necessary measures in emergency cases, and must immediately report to the Board of Management and the competent State agencies.

Section II. STATE ENTERPRISE WITHOUT BOARD OF MANAGEMENT

Article 39.-

1. The Director is to be appointed, dismissed, commended/awarded or disciplined by the person having decided on the establishment of the enterprise. The Director is the legal representative of the enterprise, and is responsible before the person having appointed him or her, and before law for the administration of the business operations of the enterprise. The Director has the supreme managerial power in the enterprise.

2. The Director must meet the criteria and conditions stipulated in Article 32 of this Law.

3. The Director has its base salary set in the same salary scale as State employees, and receives a salary and bonuses in accordance with the system of salary and bonus allowance in the State enterprise established by the Government, linked with the results of the enterprise operations.

4. The Deputy Director assists the Director in administering the enterprise in conformity with the assignment of work and delegation of powers, and is responsible to the Director for the duties entrusted him or her according to the assignment of work or delegation of powers.

5. The Chief Accountant assists the Director of the enterprise in directing and organizing the accountancy and statistical work of the enterprise, and is responsible to the Director for the duties entrusted by the latter according to the assignment of work or delegation of powers as prescribed by law.

6. The office and specialized or professional sections shall act as consultants and assistants to the Director in managing and directing the work at the enterprise.

Article 40.- The Director discharges his duties and powers stipulated in Items 6 and 8, Article 38 of this Law, in addition the following duties and powers:

1. To receive capital, land, natural resources and other resources assigned by the State for management and use, in accordance with the objectives and duties assigned to the enterprise by the State; to use, preserve and develop the capital;

2. To work out the development strategy, long-term and yearly plans of the enterprise, the plans for investment, the plan for joint venture, and the plan for managerial organization of the enterprise, and submit them to the competent State management agency;

3. To organize the administration of the enterprise operations;

4. To publicize all the technical-economic norms, product criteria, salary unit price in conformity with State regulations;

5. To propose, for approval by the person having decided on the establishment of the enterprise, the appointment, dismissal, commendation/award and discipline of the Deputy Director and the Chief Accountant;

6. To report to the competent State agencies the results of the enterprise business activities;

7. To submit to the control and supervision by the supervisory organization asigned by the Government and the competent State agencies, in the discharge of its functions and duties as provided for by this Law.

Section III. THE COLLECTIVE OF LABORERS IN THE STATE ENTERPRISE

Article 41.- The Congress of the workers and public employees is a direct form for the laborers in a State enterprise to take part in the management of the enterprise. The Congress exercises the following rights:

1. To take part in the discussion of questions related to the elaboration of a collective labor accord to be negotiated and signed by the representative of the laborers with the Director General or the Director of the enterprise;

2. To discuss and adopt the regime of use of the funds directly related to the interests of the laborers in the enterprise;

3. To discuss and make suggestions concerning the planning and plans, assessment of the results of production and business management, suggest measures for protection of labor, improvement of working conditions, of material and cultural life, sanitation, training and re-training of the laborers of the enterprise;

4. To present candidates for the Board of Management and the Control Commission.

Article 42.- The Vietnam General Confederation of Labor shall provide guidance on the organization and operation of the Congress of the workers and public employees in the State enterprise.

Chapter VI

STATE CORPORATIONS

Article 43.-

1. A State corporation is established and operates on the basis of the association of many member units having close relations of interests in economy, technology, supply, consumption, information, training, research, marketing, operating in one or a number of main specialized technical-economic sectors, with the aim of strengthening the business capacity of the member units, and discharging the tasks of the socio-economic development strategy in each period.

2. The State Corporation is a business organization having the legal person status, its seal, assets and centralized funds as prescribed by the Government. It is assigned funds, natural resources, land and other resources by the State for management, and has the responsibility to preserve and develop the capital, to use effectively the resources assigned, to exercise the rights, and discharge the obligations of a State enterprise as provided for in Chapter II of this Law.

3. Depending on the importance of its size and location, the State Corporation may have or not have a financial company as a member company.

Article 44.-

1. The State Corporation may have the following types of member company:

a/ Independent cost-accounting unit;

b/ Dependent cost-accounting unit;

c/ Public service unit.

2. The member unit of a State corporation has its seal, is allowed to open its bank account according to the cost-accounting mode of a State corporation. The independent cost-accounting member unit has a separate statute passed by the Board of Management of the corporation, consistent with the provisions of this Law and the Statute of the State Corporations.

3. The financial and cost-accounting system of the State corporation shall be defined by the Government.

Article 45.- The independent cost-accounting member unit of a corporation has the rights and obligations stipulated in Chapter II this Law, excerpt the rights and obligations stipulated in Point A, Item 1, Article 7, and Item 1, Article 10, and is bound in interests and obligations to the State corporation as follows:

1. To receive, preserve and develop the capital, use in an effective way the resources assigned by the corporation; to carry out the decisions of the corporation concerning the readjustment of capital and other resources consistent with the duties of the enterprise in the corporation;

2. To take the initiative in business on the basis of the common business coordination plan of the corporation.

3. To contribute to the centralized funds of the corporation as prescribed by the Statute of the State Corporations;

4. To be delegated by the corporation to sign and implement economic contracts with customers at home and abroad, by delegation of the corporation;

5. To be assigned by the corporation to organize the implementation of development projects under the plan of the corporation, on the basis of using the resources assigned by the corporation;

6. To propose the corporation to consider and decide, or be delegated by the corporation to decide, the establishment, reorganization, dissolution, merger of the directly affiliate units, and decide the management apparatuses of such units.

Article 46.- The cost-accounting units dependent on the State corporation may sign economic contracts in accordance with the devolution of the corporation , may take the initiative in business and financial activities, in organization and personnel matters, in accordance with the devolution or delegation of powers by the corporation.

Article 47.- The public service unit carries out the system of revenue-expenditure balance, may generate income through providing services, enter into contract concerning scientific research and training with units inside or outside the corporation.

Activities of the public service units are carried out under the statute approved by the Board of Management of the corporation.

Article 48.- On the basis of the stipulations on the establishment, reorganization and dissolution of State enterprises stipulated in Chapter III of this Law, the Government shall provide for the establishment, reorganization and dissolution of the corporation and its member enterprises.

Chapter VII

MANAGEMENT OF STATE-OWNED SHARE OF CAPITAL IN THE STATE ENTERPRISES

Section I. MANAGEMENT OF STATE-OWNED SHARE OF CAPITAL IN OTHER ENTERPRISES

Article 49.- The Board of Management, or the Director (in the enterprises which have no Board of Management) who receive capital from the State to contribute to other enterprises, have the following rights and obligations :

1. To work out projects for capital contribution, and submit it to the Head of State agency consistent with the devolution of powers by the Government;

2. To appoint, dismiss, commend/award, discipline the person directly managing the State-owned share of capital in the enterprises;

3. To supervise and control the use of the State-owned share of capital, be responsible for the effective use, preservation and development of the State-owned share of capital; collect the profits from the capital share contributed to various enterprises.

Article 50.- The rights and obligations of the person directly managing the State-owned share of capital in the enterprises :

1. To take part in the management and administration apparatus in the enterprise as prescribed by the statute of the enterprise;

2. To follow up and supervise the business operations of the enterprise having a State-owned share of capital;

3. To observe the regime of reporting and taking responsibility before the Board of Management, or the Director (in the enterprises having no Board of Management), concerning the State-owned share of capital in the enterprises.

Section II. MANAGEMENT OF STATE-OWNED PREDOMINANT SHARE AND SPECIAL SHARE

Article 51.- The Government exercises the ownership right over the predominant share and special share of the State in a number of important enterprises with the aim of guiding the enterprises along the State orientation. The Government shall decide in which enterprises the State needs to have a predominant or a special share.

Article 52.-

1. The enterprise with a State predominant share, and the enterprise with a State special share are established, organized and registered in accordance with current legislation.

2. The handling of the following important issues needs to have the concurrence of the representative of the owner of the predominant or special share of the State, in conformity with the agreement reached in the statute of the enterprise;

a/ To decide on the strategy, the 5-year and yearly plans of the enterprise;

b/ To invest in joint venture, modify the form of organization of the enterprise;

c/ To appoint the key managerial offices of the enterprise.

Article 53.- The representative of the owner of State predominant or special share has the following rights and obligations :

1. To appoint, dismiss, commend/award, discipline the person directly managing the State predominant or special share in the enterprise;

2. To yearly assign duties, and approve the orientation, objectives, measures for using the right of the State predominant or special share, to the person directly managing the predominant or special share in the enterprise;

3. To follow up and supervise the use the State predominant or special share; to request the person directly managing shares in the enterprise to report on the use of this share, take responsibility for the use of the State share, in order to make the enterprise serve the State objectives.

Article 54.- The person directly managing the State predominant or special share in the enterprise exercises the rights and discharges the obligations stipulated in Items 1 and 2, Article 50 of this Law, and carries out the following stipulations :

1. To work out the orientation and measures, and submit them to the representative of the owner of State predominant or special share, for the use of the State share in setting orientations for the various enterprises to serve the State objectives;

2. To take part in deciding the measures concerning management and administration to be adopted by the enterprise, for the use of the predominant or special share as approved by the representative of the owner of such share;

3. To observe the reporting regime, and is responsible to the representative of the owner of the State predominant share and special share.

Chapter VIII

HANDLING OF VIOLATIONS

Article 55.-

1. The State enterprise committing the following violations shall, depending on the extent of the violation, be suspended or subjected to administrative sanctions according to law :

a/ Failure to register its business, to engage in trades at variawce with the registration or not authorized by the competent State agency;

b/ Failure to carry out the duties and objectives assigned by the State;

c/ Serious violations of other provisions of this Law.

2. An economic organization operating under the signboard of a State enterprise but has obtained no decision on establishment shall be suspended and shall have its properties confiscated and remitted to the State budget.

Article 56.- An organization or individual who commits the following violations shall, depending on the extent of the violation, be disciplined, subjected to administrative sanctions, indemnification, or examined for penal liability as prescribed by law:

1. To establish a State enterprise at variance with the provisions of this Law;

2. Failing to carry out the right responsibilities and powers delegated by the owner of the enterprise;

3. Taking wrong decisions leading losses in assets to the enterprise;

4. To interfere in businesses coming under the jurisdiction of the enterprise; harass the enterprise, requiring the enterprise to supply the resources not prescribed by law;

5. To violate other provisions of this Law.

Chapter IX

IMPLEMENTATION PROVISIONS

Article 57.- This Law takes effect on the date of its promulgation.

All previous provisions contrary to this Law are now abrogated.

The State-owned enterprises established and making business registration in accordance with the existing Government stipulations prior to the day on which this Law takes effect, are not required to fulfill the procedures of establishment or make business registration as prescribed by this Law.

Article 58.- The Government shall make detailed provisions for the enforcement of this Law.

This Law was passed by the National Assembly of the Socialist Republic of Vietnam, Ninth Legislature, Seventh Session, on the 20th of April 1995.