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THE GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence – Freedom – Happiness
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No. 187/2004/ND-CP
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Hanoi,
November 16th, 2004
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DECREE
ON CONVERSION
OF STATE OWNED COMPANIES INTO SHAREHOLDING COMPANIES
THE
GOVERNMENT
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1. The objectives of and requirements for conversion of State owned companies into shareholding companies (hereinafter referred to as equitization) shall be:
1. To convert those State owned companies in which it is not necessary for the State to continue to hold one hundred (100)
per cent of charter capital into shareholding companies with many owners; to mobilize capital from both
domestic and foreign individuals,
economic organizations and social
organizations for the purpose of increasing financial capacity and renovating technology and
management methods in order
to raise the efficiency
and competitiveness of the economy.
2. To ensure harmony between the interests of the State, the enterprise, the investor and employees of the enterprise.
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Article 2. Applicable subjects
1. This Decree
shall apply to State owned
companies not in the category of those in which it is necessary for the State to hold one hundred (100) per cent of charter capital,
which shall undergo equitization, comprising:
State corporations (including State commercial banks and
State finance institutions); independent State owned companies; enterprises which are members of corporations,
which maintain an independent cost accounting system and for which the
State made the decision on
investment and establishment;
and dependently accounting affiliates of State corporations
(hereinafter all referred to as enterprises undergoing equitization).
The Prime Minister of the Government shall make decisions from time to time on the list of State owned companies in which it is necessary for the State to hold one hundred (100) per cent of charter capital.
2. Equitization
of the State owned companies prescribed in clause 1 of this article may be carried out when they still have State capital (excluding the value of land use rights) after deducting the value of assets not required to be used, assets awaiting
liquidation, losses caused by [annual] losses, reduction
in the value of assets,
bad debts and equitization expenses.
3. Equitization
of dependently accounting affiliates
of State corporations prescribed in clause 1 of this article may only be carried out when:
(a) The dependently accounting affiliate of an enterprise satisfies all conditions for maintaining an
independent cost accounting system;
(b) It does not cause difficulties or have adverse consequences on the production and business results of the enterprise
or the remaining part of the
enterprise.
Article 3. Forms of equitization
of State owned companies
1. Maintaining the existing State owned capital in an enterprise and issuing shares in order to mobilize additional
capital applicable to enterprises
to be equitized which
have a requirement to increase charter
capital. The level of additional
capital to be mobilized shall depend on the scale of the company undergoing equitization
and its capital requirements. The structure
of charter capital
in a company undergoing equitization shall be
set out in the equitization plan.
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3. Selling the whole part of the existing
State owned capital
in an enterprise, or combining the sale of
the whole part of the existing State owned capital
in the enterprise with issuing shares in order to
mobilize additional capital.
Article 4. Who may purchase shares and conditions for purchasing
1. Economic
organizations and social organizations operating pursuant to the law
of Vietnam and individuals being Vietnamese residing in Vietnam (hereinafter
all referred to as domestic investors) shall have
the right to purchase an unlimited number
of shares in an equitized enterprise.
2. Enterprises with foreign owned capital and foreign
individuals lawfully operating in Vietnam and Vietnamese residing overseas
(hereinafter all referred to as foreign
investors) shall have the right to purchase shares in an
equitized enterprise
in accordance with the law of Vietnam.
Foreign investors wishing to purchase shares in an equitized enterprise must open an account at an
organization providing payment services which is currently operating in the territory
of Vietnam, and must
comply with the law of Vietnam.
All activities of purchasing and selling shares, receiving and
using dividends and other income from investments in the purchase of shares must be conducted via that account.
Article 5. Both domestic
investors and foreign investors must purchase
shares in an equitized
enterprise in Vietnamese dong.
Article 6. Equitization
expenses
The expenses of conducting
equitization shall be deducted
from the existing State owned
capital in the enterprise undergoing equitization. The contents and level of equitization expenses shall be implemented in accordance with guidelines
issued by the Ministry of Finance.
Article 7. Shareholding, shares
and founding shareholders
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2. A share means a certificate issued by a shareholding company confirming
the ownership of one or a
number of shares of a shareholder who contributes capital to the company.
Shares may be named or bearer
shares but must contain
all of the basic items stipulated in article 59 of the Law on Enterprises.
The Ministry of Finance
shall provide guidelines on unified sample forms for shares in order for enterprises
to print and manage them in accordance with regulations.
3. Founding shareholders of an equitized enterprise means shareholders who satisfy all of the following
conditions:
(a) They participate in approving the first charter
of the shareholding company;
(b) They together hold at least twenty (20) per cent of the number of ordinary shares which are
freely transferable;
(c) They comply with the provisions of the charter of the company on ownership of a minimum number of shares.
The general meeting of shareholders shall decide the minimum number of
shares which each
founding shareholder must
own, and the minimum
number of founding
shareholders, and these items shall be
provided for in the charter
of the company.
Article 8. Principles for inheritance of rights and obligations by a shareholding company after conversion
from a State owned company
1. Equitized enterprises shall be responsible for restructure, for employing
the maximum number of employees as at the time of equitization, and for resolving regimes for employees in accordance with current
regulations.
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2. A shareholding company shall be entitled, on its own initiative, to use the whole of the assets and capital funds which have been equitized in order to
organize production and business; and
shall inherit all interests, obligations
and liabilities of the State
owned company prior to equitization, and shall have other rights and obligations in accordance with law.
Chapter II
DEALING WITH FINANCES ON
EQUITIZATION
Article 9. Responsibilities of enterprises
undergoing equitization
to deal with existing financial
issues
An enterprise
undergoing equitization shall be responsible, on its own initiative, to co-ordinate
with the relevant agencies to deal in accordance with authority and in accordance with regulations with existing financial issues prior to valuing the enterprise to be equitized and throughout the equitization process. In cases of difficulties or in cases outside authority, the enterprise undergoing equitization must report to the competent
agency for the latter's
consideration and resolution.
Article 10. Dealing with leased or borrowed assets, assets received as joint venture capital
contribution, joint
assets, assets not required to be used and investments funded by the reward and welfare funds
1. Assets which an enterprise leases, borrows or receives as joint venture capital contribution, and joint assets and other assets which do not belong to the enterprise shall not be included in the value of
the enterprise to be equitized.
Prior to conversion to a shareholding company, an enterprise must
liquidate contracts or agreements
with owners of assets in order for the equitized company to inherit
the previously-signed contracts or sign new ones.
2. With respect
to assets of an enterprise which are
not required to be used, idle stock
and assets awaiting liquidation, the enterprise shall liquidate, transfer or sell them, or report to the competent
agency to transfer them to another unit in accordance with current regulations.
If these assets have not
been dealt with by the time of valuation of the enterprise, they shall not be included in the value
of the enterprise. During the equitization process the enterprise shall continue to deal with these assets, and if these assets have still not been dealt with by the time of the decision announcing the
valuation of the enterprise then they shall be transferred to a company specializing in the purchase and sale of debts and idle stock for such company to realize in accordance with
law.
3. With respect to assets belonging to welfare buildings such as kindergartens, nurseries, dispensaries and other welfare assets from investments funded by the reward
and welfare funds, they shall be
transferred to the shareholding
company for management
and use for the benefit of the labour collective
of the enterprise.
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4. With respect to assets of the enterprise being investments funded by the reward and welfare funds and which
the shareholding company
continues to use for production
and business, they shall be
included in the value of the enterprise undergoing equitization and converted
into shareholding to be divided
amongst employees of the enterprise at the time of equitization in accordance with the actual
period of work of each person at the enterprise.
Article 11. Debts receivable
1. An enterprise
undergoing equitization shall be responsible to review,
confirm and recover debts which are due and receivable prior to equitization.
If, by the time of valuation of the enterprise, there are
still arrears of bad debts, they shall be dealt
with in accordance with current regulations of the State on dealing with arrears of bad debts.
2. By the time of the decision announcing the valuation of the enterprise,
the enterprise undergoing equitization shall be responsible to transfer all irrecoverable debts which have been excluded from
the valuation of the enterprise (together with files on the debts and other relevant data) to a company specializing
in the purchase and sale
of debts and idle stock from enterprises in order for such company to realize in accordance with law.
3. With respect to items paid in advance to suppliers of goods and services such as rent for housing or land, purchase price of goods and wages, these items must be reviewed and included in the value of
the enterprise.
Article 12. Debts payable
1. An enterprise must mobilize
funds to pay debts
which mature prior to conducting equitization, or it must
agree with creditors
on the method of dealing with the debts or on the conversion
thereof into shareholding
capital contribution.
The conversion of debts into shareholding capital
contribution shall be determined on the results of a
share auction, or the enterprise and
a creditor shall reach agreement in order to fix a
price for participating in
an auction.
2. If during the equitization process the enterprise is in difficulty regarding ability to pay overdue debts
because business incurred losses,
the debts shall be dealt
with in accordance with current regulations of the State on dealing with arrears of bad debts.
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1. Reserves for reduction of price of goods in stock, for bad debts, for reduction of value of securities, and for exchange rate differences
shall be accounted for in the business results
of the enterprise.
2. The enterprise undergoing equitization shall use reserves
for retrenchment allowances
to pay to employees who are retrenched during the equitization process, and if not so paid then such reserves shall be
accounted for in the business results
of the enterprise.
3. Reserves for risks
and professional reserves within the banking and insurance systems or of financial organizations shall be transferred to the shareholding company to continue to manage.
4. The balance in financial reserves to cover losses (if any) and in financial reserves to cover damage
to assets and irrecoverable debts shall be included in the value of the portion of State owned capital
in the enterprise
undergoing equitization.
5. The balance in reserves of profits generated in order to cover previous years' losses (if any) and in reserves to cover losses being assets not required to be used, assets awaiting liquidation, reduction in the value of assets, and debts which the enterprise does not have the ability to collect shall be
distributed in accordance with current regulations prior to valuation of the enterprise
to be equitized.
6. The enterprise undergoing equitization shall use financial reserves and pre-tax profits to cover losses calculated
up until the time of equitization and conversion of the enterprise into
a shareholding company. If the enterprise lacks [such reserves] then it shall take measures to write off its debts to the State budget, bank debts and
debts
to the Development Assistance Fund
in accordance with current
regulations of the State on
dealing with arrears of bad debts.
If after applying
all the above measures an enterprise still suffers
a loss, the enterprise shall deduct the loss from the portion of State
owned capital.
Article 14. Long-term investment
capital in other enterprises such as
joint venture capital contribution, associated
ventures, shareholding capital contribution, capital
contribution to establishment of limited
liability companies and
other forms of long-term investment
1. If the enterprise undergoing equitization
inherited long-term investment capital which a State owned
company invested in other enterprises, then the whole of such capital shall be included in the value
of the enterprise undergoing equitization in accordance with the principles stipulated in article 20 of
this Decree.
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(a) Reach agreement
on sale of the investment capital to another partner/entity
or to other investors;
(b) Transfer them
to another enterprise to act as partner/entity.
Article 15. Cash balance in
reward funds and welfare funds
Any cash balance in reward funds and welfare
funds shall be distributed to the current
workforce in the enterprise for the purpose of purchase of shares.
Employees shall not be required to pay income tax on
such item of income.
Chapter III
VALUATION OF AN
ENTERPRISE TO BE EQUITIZED
Section 1. METHODS OF
VALUATION OF AN ENTERPRISE
Article 16. When any State owned
company undergoes equitization, it shall apply one of the following methods of valuation of the enterprise:
1. The asset method.
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3. Other methods.
The Ministry of Finance shall provide guidelines on valuation
of an enterprise undergoing equitization
in accordance with the above methods.
Section 2. VALUATION OF AN ENTERPRISE IN ACCORDANCE WITH THE
ASSET METHOD
Article 17. Value of an enterprise
undergoing equitization in accordance with
the asset method
1. The actual value of an enterprise undergoing equitization shall be the total value of all existing assets of the enterprise at the time of equitization, including the profitability of the enterprise, as accepted by
both the purchaser and the seller of shareholding.
The actual value of the portion
of State owned capital in an enterprise shall be the actual value of the
enterprise minus (-) debts payable, including
balances in reward and welfare
funds and balance in
the professional funding source
(if any).
In the case of equitization of the whole of a corporation for which the State made the decision on
investment and establishment, the value of the portion of
State owned capital in the
whole of the corporation undergoing equitization shall be the actual value of the portion of State owned capital in the office of the corporation, in the member companies, and in the professional units belonging to the
corporation (if any).
In the case of equitization of the whole of a corporation for which companies made their own [f on]
investment and establishment, the value of the portion
of State owned capital [in the whole of the corporation] undergoing equitization shall be the actual value of the portion of State owned capital in the parent company.
2. The following items shall
not be included in the value of an enterprise undergoing equitization:
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(b) Debts
receivable but which the
enterprise does not
have the ability to collect;
(c) Expenses of unfinished capital construction
works in abeyance prior to the time of valuation
of the enterprise;
(dd)
Long-term investments in other enterprises stipulated in clause 2(b)
of article 14 of this Decree.
Article 18. Bases for determining actual
value of an enterprise
1. Data from books
of account of the enterprise at the time of equitization.
2. Data on the inventory, classification and assessment of quality of assets of the enterprise at the time of equitization.
3. Market value
of assets at the time of equitization.
Article 19. Value of land use rights
and value of business advantages
of enterprise
1. With respect to areas of land which the enterprise undergoing equitization is currently using as land for
construction of its head office,
transaction office and production and business establishment; or land
for the purposes of agriculture, forestry, aquaculture
and salt production (including land which
has been allocated by the State with or without collection of land use fees), then the enterprise undergoing equitization shall be entitled
to select the form of land lease or the form of land allocation pursuant
to the Law on Land.
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(b) If the enterprise undergoing equitization selects the form of land allocation then the value of the
land use right must be included in the value of the enterprise undergoing equitization. The value
of a land use right which is included in the value of an enterprise
undergoing equitization
shall be the price stipulated by the people’s committee of the province
or city under central
authority, close to the actual market prices of assignment of land use rights and announced annually
on 1 January in accordance
with regulations of the Government. The order and procedures for land allocation, payment of land use fees, and issuance of certificates of land use right
shall
be implemented in accordance
with the current law on land.
2. With respect to areas of land which the State has
allocated to the enterprise
for construction of residential
housing for sale or lease, or for construction of infrastructure business for assignment or
lease, the value of the land use right must be included in
the value of the enterprise
undergoing equitization. Such value of land use rights shall be determined in accordance with clause 1(b) of this
article.
3. Business
advantages of an enterprise shall comprise geographical position,
the value of trade names,
and the potential for development.
Value of business advantages of the enterprise shall be based on the ratio of after-tax
profits over State
owned capital in the enterprise prior to equitization and the pre-paid
interest rate for long term
Government bonds at the most recent
date prior to the time of valuation of the enterprise.
Article 20. Determining value of long-term investment capital of the enterprise undergoing
equitization in other enterprises
1. The value of the long-term investment capital of a State owned company in other enterprises shall be determined
on the following bases:
(a) Value of the capital of the owner recorded in the most recent audited financial statements of the enterprise in
which the State owned company made
its investment;
(b) Investment capital ratio of the State owned company prior
to equitization in other enterprises;
(c) Where the State owned company made its investment in foreign currency, when determining the investment capital it must be converted
into Vietnamese dong at the average
trading exchange rate on the inter-bank foreign exchange market as announced by the State Bank at the date of valuation.
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3. The value of the capital contribution of a State owned company in shareholding companies listed on the
securities market shall be determined on the basis of the share trading
price on the securities market at the time of valuation of the
enterprise.
Section 3. VALUATION OF AN ENTERPRISE IN ACCORDANCE WITH THE
DISCOUNTED CURRENCY METHOD
Article 21. Value of an enterprise
in accordance with
the discounted currency method
1. The actual value of the portion of State owned capital in an enterprise undergoing equitization shall
be determined by the discounted
currency method based on the ability
of the enterprise to be profitable
in the future.
Where the whole of a State owned company is valued by this method, the ability of the State owned
company to be profitable shall be determined on the basis of the profit of the State owned company pursuant
to provisions in the financial
regulations of [such]
State owned company.
Where the State owned company made capital investments in other enterprises, then the basis for valuation of the enterprise to be equitized shall be the profit brought in from such capital investments
in other enterprises.
2. The actual value
of the enterprise shall comprise
the actual value
of the portion of State owned capital, debts payable1,
cash balances in reward and welfare
funds and balance in the professional funding source (if any).
If the enterprise selects the form of land allocation then the value of the land use right must also be
included in the value of the enterprise undergoing equitization in accordance with clause 1 of article
19 of this Decree.
Article 22. Bases for determination
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2. Plan for production and
business operations of the
enterprise for from three
to five years after conversion
to a shareholding company.
3. Interest rate for long term Government bonds at the most recent date prior to the time of valuation
of the enterprise and the discounted currency indicator
of the enterprise being valued.
Section 4. HOLDING A VALUATION
OF AN ENTERPRISE
Article 23. Methods of holding a valuation of an enterprise undergoing equitization
1. If an enterprise
undergoing equitization has
total asset value in its
books of account of thirty (30) billion Vietnamese dong or more then
valuation of the enterprise shall be conducted by an organization specializing in valuations such as an auditing company, a securities company, a price
evaluation organization or an investment bank, either domestic or foreign, with the capacity to make
the valuation (hereinafter
referred to as a valuation organization).
The agency
authorized to make the decision
valuing
the enterprise undergoing equitization shall select
a valuation organization from the list announced by
the Ministry of Finance.
If a foreign valuation organization not yet operating in Vietnam
is selected, it must be approved by the Ministry of Finance.
When the valuation
organization holds a valuation of an enterprise undergoing equitization, it must
comply with current regulations
and complete the valuation within the time schedule stipulated in the
signed contract, and the valuation organization shall be
liable for the accuracy
and legality of the results of the valuation.
2. If an enterprise undergoing equitization has total asset
value in its books of account of less than thirty
(30) billion Vietnamese dong then it shall not be absolutely necessary to hire a valuation
organization to value such
enterprise, and in such a case
the enterprise shall be
permitted to conduct its own valuation and shall
notify the result to the agency authorized to make the decision valuing
the enterprise.
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Article 24. Use of results of valuation of
enterprise
The results of a valuation
of an enterprise carried out in accordance with the provisions of this Decree shall be the basis for fixing the scale of charter capital, the structure of shares for the initial issue, and a price as the starting point for holding an
auction to sell shares.
Article 25. Adjustment of value of an enterprise undergoing equitization
Up until the time when an enterprise officially converts into a shareholding company, the agency authorized
to make the decision
valuing the enterprise shall be responsible to inspect and deal with any
financial issues arising between the time of the valuation and the time when the business registration certificate is issued
to the shareholding company, in order to adjust the value of the portion of State owned capital in the
enterprise.
The difference between the actual value of the portion of State owned capital in the enterprise at the time
when the enterprise converts into a shareholding company and
the actual value of the portion of State owned capital in the
enterprise at the time of the valuation shall be dealt with as follows:
1. Where
the difference is an increase:
(a) It shall be paid to the State owned corporation or to the independent State
owned company when
a member of such State owned corporation
or a section of such independent
State owned company is equitized, and shall be used
in accordance with article 35 of this Decree.
(b) It
shall
be paid to
the Assistance Fund
for Restructure of Enterprises under the Ministry of
Finance when the whole of an
independent State owned company
or the whole of a State owned corporation is equitized, and shall
be used in accordance with
article 35 of this Decree.
2. Where the difference is a decrease, the enterprise shall be responsible to report to the agency which
made the decision on equitization in order for the latter to check and clarify the reasons, deal with
liability to pay compensation for material loss (if such loss was due to subjective reasons), and the
remaining difference shall
be dealt with as follows:
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(b) If there is insufficient, then there shall be a reduction in the portion of State owned capital in the enterprise and the plan for share sales at incentive rates to employees of the enterprise,
and at the same time there shall be an adjustment to the scale and structure of charter capital
of the shareholding company;
(c) If after taking the action stipulated in sub-clauses (a) and (b) above there is still insufficient to
cover the decrease, then:
- The agency which made the decision on equitization shall consider making a decision on conversion to
the form of sale or bankruptcy of the enterprise (where business registration
pursuant to the Law on Enterprises has not yet been conducted);
- The board
of management shall convene an
extraordinary general meeting of shareholders (in a case where business registration pursuant to the Law on Enterprises
has already been conducted) in order to vote on:
+ Agreement to inheriting remaining losses so as to continue to operate;
+ Agreement to sell the enterprise on condition
that the purchaser
inherits debts and losses;
+ Declare
bankruptcy and sell assets in
order to pay debts.
- In the case of conversion to implementing a sale or bankruptcy, the enterprise shall be
responsible to co-ordinate with the relevant authorities to return to all investors the money they paid to purchase
shares, prior to paying any other creditors.
Chapter IV.
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Section 1. INITIAL SALE OF
SHARES
Article 26. Who may purchase initial shares
1. Employees
of the enterprise.
2. Strategic investors
being domestic investors such as producers
and regular suppliers of raw materials to the enterprise; people who undertake to purchase the products of the enterprise on a long-term
basis; people closely connected to the
long-term strategic business interests [of the enterprise], with financial potential and management
capability.
When
an enterprise undergoing
equitization formulates its equitization plan, such enterprise
may select strategic investors
and submit a list of them for approval
to the agency which
made the decision on equitization.
3. Other investors (including
foreign investors).
Article 27. Initial share structure
1. Shares
which the State shall hold.
2. Shares for sale at incentive rates for the employees of the enterprise as provided for in article
37 of this Decree.
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4. The initial shares to be sold at a publicly announced price to investors shall not be less than twenty
(20) per cent of charter capital (including shares
purchased additionally to incentive shares
by strategic investors and employees of the
enterprise).
Article 28. Selling price of initial shares
1. The selling price of incentive shares to employees of an enterprise shall be a reduction of forty (40)
per cent compared to the average auction price.
2. The selling price of incentive shares to strategic investors shall be a reduction of twenty (20) per cent compared
to the average auction price.
3. The selling price to entities prescribed in article 27.4 of this Decree shall be the successful auction bid of each such investor.
Article 29. Value of incentives
to strategic investors and employees
of an equitized enterprise
The total value
of incentives to employees of an equitized enterprise and
to strategic investors shall be taken from additional
funding collected from share auctions,
and if there is a deficiency
then it shall be deducted from the portion of State owned capital in the equitized enterprise but
shall not exceed the portion of State owned capital
in the equitized enterprise after deducting shares held by the State and equitization expenses.
Article 30. Methods of holding initial share auction
1. Auction directly at the enterprise in the case of an enterprise undergoing
equitization with a volume of shares for sale of one billion Vietnamese dong or less (the enterprise
shall itself hold the share sale auction).
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In the case of an enterprise undergoing equitization with a volume of shares for sale above ten (10) billion Vietnamese dong, an auction shall be held at a Securities Trading Centre in order to attract
investors.
The agency which made
the decision on equitization
of the State owned company shall
make a selection in order
to hire auctioneering organizations.
3. In the case of an enterprise in a remote area where there is no intermediary financial organization
available to take on the
sale of shares, the agency which
made the decision on
equitization shall reach agreement with the Ministry of Finance
on a sale method.
Article 31. Order for holding
initial share auction
1. At least twenty (20) days prior to the auction, the organization holding the auction (the enterprise,
or an intermediary financial organization, or a Securities Trading
Centre) must make a public announcement at the enterprise, at the place where the auction will be held, and on the mass media
about the time, location, form of sale, conditions for participation,
number of shares proposed to be sold and
other issues relevant to the share auction.
2. The auction to other investors shall be held in accordance with the methods prescribed in article 30 of this Decree.
3. The average auction price shall be determined in order to calculate the incentive price for strategic
investors and employees of the
enterprise.
4. There shall be distribution and
sale of shares to each strategic
investor and employee of the enterprise.
5. The enterprise must complete the sale of shares within a time-limit of four months from the date of the decision approving
the equitization plan. If the shares are not all sold, then the enterprise shall
report to the agency authorized to make the decision on equitization in order for the latter to adjust the
scale or structure
of charter capital in the equitization
plan and to implement conversion of the
State owned company into
a shareholding company.
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After completion of the sale of shares and after holding a general
meeting of shareholders correctly in accordance with the Law
on Enterprises,
the equitized enterprise must conduct business registration
pursuant to Decree No. 109-2004-ND-CP of the Government dated 2 April 2004 on business registration.
Article 33. Ensuring public notification and transparency of information, listing on the securities market
1. An equitized enterprise must provide publicly notified financial statements
to its shareholders and to
the administrative agency correctly
in accordance with the Law on Enterprises and
other laws.
2. The State shall have a preferential policy in favour of equitized enterprises which satisfy
the conditions for immediate listing on the securities market.
Article 34. Management of portion of State owned capital in a shareholding company
1. The portion of State owned capital
in a shareholding company shall be managed in accordance with
the law on management of
the portion of State owned capital invested in other enterprises.
2. In the case of equitized enterprises not in the category of those in which it is necessary for the State to be the controlling shareholder,
then depending on the particular
conditions, the agency representing the owner of the portion of State owned capital in the shareholding company shall have
the right to make decisions to on-sell the State shares in the shareholding company in accordance with current law and the
charter of the shareholding company.
Article 35. Management and utilization of proceeds from equitization
of a State owned company
The proceeds which the State collects from equitization of a State owned company (comprising proceeds
from the sale of the portion of State owned capital
and the difference being an
increase resulting from the auction of additionally issued shares in an equitized enterprise), after deducting equitization
expenses shall be used for the following purposes:
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(a) To assist the enterprise to pay subsidies to employees who cease work or lose their job
upon conversion of the State owned
company into the shareholding company.
(b) To assist
the enterprise to train employees
of the equitized enterprise so as to assign them to new work
in the shareholding company.
2. The remaining sum of money shall be managed and
used
as follows:
(a) In the case of equitization of a member of a State owned corporation or equitization of a section
of an independent State owned company, then such State owned corporation or independent
State owned company shall
use
the proceeds for business operations and to assist equitized enterprises
to continue to resolve the issue of retrenched
employees in accordance with
article 36.8 of this Decree;
(b) In the case of equitization of the whole of an independent
State owned company or the whole of a State owned corporation,
the remaining sum of money shall be
transferred to the Assistance Fund
for Restructure of Enterprises
at the Ministry of Finance for
investment in companies in which it is necessary for the State to hold one hundred (100) per cent of capital but which lack capital, in shareholding
companies in which the State is the controlling shareholder where the State capital in such equitized enterprise is insufficient to ensure the full
number of State shares, and to assist equitized enterprises to continue to resolve the issue of
retrenched employees in accordance with article
36.8 of this Decree. The remaining sum of money shall be invested in enterprises via the
State Capital Business and Investment Corporation.
Chapter V
POLICIES APPLICABLE TO
ENTERPRISES AND TO EMPLOYEES AFTER EQUITIZATION
Article 36. Incentives applicable to enterprises
after they have been equitized
1. Incentives shall be applicable as in the case of newly-established enterprises in accordance with the provisions of the law on encouragement of investment, and equitized
enterprises
shall not be required to carry
out procedures for issuance of a certificate
of investment incentives.
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2. Exemption from registration fees shall be granted with respect to any transfer of assets
under the right of management and use of an equitized State owned enterprise to the
ownership of the shareholding company.
3. Equitized enterprises shall
be exempt from registration fees
for the issuance of a business
registration certificate upon
conversion from a State owned
enterprise into a shareholding company.
4. Equitized
enterprises shall be entitled to maintain lease contracts for residential housing and other
buildings of State agencies or shall be entitled to preferential treatment with respect to acquisition of such
housing and buildings
at the market price as at the time of equitization, in order to stabilize production and
business activities.
5. Equitized enterprises shall be entitled
to land use rights in accordance with the provisions of the Law on Land
when the value of the enterprise undergoing
equitization included the
value of land use
rights.
6. The regime applicable to State owned companies shall continue to apply to loans borrowed by equitized enterprises from commercial
banks, finance companies and other credit institutions of the
State.
7. Equitized enterprises shall
be permitted to maintain and
develop welfare funds in kind, such as cultural
facilities, clubs, dispensaries,
nursing homes and kindergartens, in order to ensure the welfare of employees of shareholding companies. Such assets shall be under the ownership of the
labour collective and shall be managed by the shareholding
company.
8. If after a State owned company converts into a shareholding company, some employees in the State
owned company which has
converted lose their jobs or cease work including voluntary cessation because of the need to
restructure business operations or the
need to change technology, then
these issues shall be resolved as follows:
(a) Any employee who within
twelve months from the date the shareholding company is issued
with a business registration certificate loses his job as a result of the company restructure and falls within the category of retrenched employees of a reorganized State owned enterprise entitled to assistance pursuant
to Decree No. 41-2002-ND-CP
of the Government dated 11 April
2002, then such employee shall receive assistance from
the Fund for Assistance of Retrenched Employees;
The remaining employees who lose their jobs or cease work shall be entitled to a retrenchment allowance or to an allowance for loss of work pursuant to the current law on labour and shall
receive assistance from the State's proceeds from equitization of State owned companies as stipulated in article 35 of
this Decree.
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Article 37. Employees of an equitized enterprise shall
be entitled to the following
incentives:
1. Employees named on the list of regular employees of the equitized enterprise as at the time of the
decision on equitization, shall be entitled to purchase up to a maximum of one hundred (100) shares for each year of actual employment
in the State sector at a discount rate of forty (40) per cent of the average
auction price on sales to other investors.
2. Employees who transfer to work in the shareholding company shall continue to participate
in social insurance and
shall be entitled to benefits in
accordance with current regulations.
3. Employees who satisfy the conditions
for entitlement to pension benefits as at the time of equitization
shall be entitled to receipt of a
pension on retirement and to benefits in accordance with
current regulations.
4. Employees
who lose their jobs or who cease
work at the time of equitization shall
be paid retrenchment allowances
and allowances
on ceasing work in accordance
with regulations.
Chapter VI
RIGHTS AND OBLIGATIONS
OF SHAREHOLDERS
Article 38. Strategic investors shall have the following
rights and obligations:
1. Rights:
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(b) To engage in management of the shareholding company in accordance with the provisions of law and
the charter of the shareholding company;
(c) To use their
shares to pledge or mortgage in credit relationships in
Vietnam;
(d) To exercise other rights stipulated by the law and the
charter of the shareholding company.
2. Obligations:
(a) To discharge undertakings
made when purchasing shares;
(b) Not to transfer shares purchased at incentive rates pursuant
to article 27.3 of this Decree
within a period of three years after the
date on which a business registration
certificate is issued to the shareholding company. If in special circumstances this number of shares needs
to be transferred, then the board of management of the company must agree;
(c) Other obligations stipulated by the
law and the charter of the shareholding
company.
Article 39. Rights and obligations of other shareholders
Other shareholders shall have the rights and obligations stipulated
in the Law on Enterprises and the charter of the shareholding company.
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Chapter VII
ORGANIZATION OF
IMPLEMENTATION
Article 40. Powers and responsibilities of ministries,
people's committees of provinces and cities
under central authority, and boards of management
of State owned corporations
1. Ministers,
heads of ministerial equivalent bodies, heads of Government bodies
and chairmen of people's committees of provinces and cities under central authority shall, based on the plans for restructuring State owned enterprises as
approved by the Prime Minister of the Government:
(a) Organize
valuations of State owned corporations
undergoing equitization
and send the results to
the Ministry of Finance to check and to
make a decision on announcement;
(b) Submit equitization plans for the whole of State corporations to
the Prime Minister of the Government for approval;
(c) Make decisions on equitization of enterprises within their management; make decisions on the value of enterprises; and approve
equitization plans in order to convert
State owned companies
into shareholding companies;
(d) On their own initiative check for enterprises which no longer have any portion of State owned capital and then transfer those enterprises from the list of enterprises to undergo equitization to the list of enterprises
to be assigned, sold or declared bankrupt;
(dd)
Resolve, within their authority,
any difficulties for equitized enterprises within a
time-limit of fifteen (15) days from the date of receipt of a complete file. Any issues outside authority must be promptly
reported to the Prime Minister
of the Government for
his consideration
and decision;
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If any approved
equitization plan fails
to be implemented,
the head of the agency managing
the enterprise shall be disciplined in accordance with
current regulations.
2. Boards
of management of State owned corporations shall be
responsible:
(a) To organize the restructure of enterprises under the corporation in accordance with the plans
for restructuring State owned enterprises
as approved
by the Prime Minister of the Government;
(b) To direct member companies to deal with existing financial issues in accordance with Chapter II
of this Decree, to hold valuations of enterprises,
and to prepare equitization plans and submit them
to the competent level for approval;
(c) To themselves deal with existing financial issues of enterprises undergoing equitization within
their authority;
If any approved equitization plan fails to be implemented, the board of management of a State
owned corporation shall be disciplined
in accordance with current
regulations.
3. The Steering
Committee for Enterprise Renovation
and Development and the Ministry of Finance shall be responsible to assist the Prime Minister of the Government to direct,
inspect, supervise and
activate ministries,
ministerial equivalent bodies, Government bodies, people's committees
of provinces and cities under central authority and State corporations to carry out equitization work in accordance with law and approved
plans for restructuring State owned enterprises.
Chapter VIII
IMPLEMENTING PROVISIONS
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This Decree shall replace Decree 64-2002-ND-CP
of the Government dated 19 June 2002 and shall be of
full force and effect after fifteen (15) days
from the date of its publication in the Official Gazette. Any previous
provisions on equitization which are inconsistent with this Decree shall
no longer be effective.
Any enterprise undergoing equitization for which there was a decision approving a plan for conversion of the State owned company
into a shareholding company
prior to the effective date of this Decree shall remain
effective and need not be changed to a plan in accordance with this Decree.
Article 42
The Ministry of Finance; the Ministry
of Labour, War Invalids and Social Affairs; the State Bank of Vietnam; the Ministry of Natural Resources
and Environment, and other
relevant ministries and
bodies shall be responsible to provide guidelines for implementation of this Decree.
Article 43
Ministers, heads
of ministerial equivalent bodies, heads
of Government bodies, chairmen
of people's committees of provinces and cities under
central authority, and boards
of management of State corporations
for which the Prime Minister of the Government made the decision on
investment and establishment
shall be responsible for implementation of this Decree.
FOR THE GOVERNMENT
THE PRIME MINISTER
Phan Van Khai