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THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 43/2004/TT-BTC
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Hanoi, May 20, 2004
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CIRCULAR
GUIDING THE HANDLING OF STATE
ENTERPRISES' LOSSES ARISING IN THE PERIOD FROM THE TIME OF ENTERPRISE VALUATION
TO THE TIME OF THEIR OFFICIAL TRANSFORMATION INTO JOINT-STOCK COMPANIES
In implementation of the Prime Minister's direction in the
Government Office's Official Dispatch No. 280/VPCP-DMDN of January 15, 2004,
the Ministry of Finance hereby guides the handling of equitized State
enterprises' business losses arising in the period from the time of enterprise
valuation to the time of their transformation into joint-stock companies as
follows:
I. FOR ENTERPRISES CURRENTLY UNDERGOING EQUITIZATION
1. The directors of State enterprises and the Enterprise
Renewal and Development Boards (called the Enterprise Renewal Boards for short)
must expeditiously complete the transformation plans within 6 months as from
the date the equitization plans are approved. In the course of implementing the
equitization plans (before the enterprises make business registration to
operate as joint-stock companies), if in the period from the time of enterprise
valuation to the time of making of quarterly or annual financial statements,
the enterprises suffer from business losses, then the enterprise directors and
the Enterprise Renewal Boards must clearly identify the causes,
responsibilities of the collectives as well as individuals, handle the
compensation for material damage (if due to subjective causes), and at the same
time coordinate with the finance agencies and commercial banks in considering
the conditions and carrying out procedures to write off debts being tax
arrears, State budget remittances and unpaid bank loan interests in order to
handle the remaining losses (if any) as prescribed in the Finance Ministry's
Circular No. 85/2002/TT-BTC of September 26, 2002 and Vietnam State Bank's
Circular No. 05/2003/TT-NHNN of February 24, 2003.
2. After the losses have been handled as prescribed at Point
1 but there remain some losses, the enterprise directors and the Enterprise
Renewal Boards shall have to report thereon to the agencies with
equitization-deciding competence for consideration and handling as follows:
2.1. If the enterprises suffer from losses which are smaller
than the actual value of the State's capital portions at the enterprises and do
not fall into the subjects where the State holds dominant shares: To adjust the
equitization plans on the basis of reducing the State's capital portions
planned to be contributed to the enterprises corresponding to the remaining
losses, if not enough, to further reduce the value of the State's capital
portions used for implementation of preferential policies on sale prices of
shares and plans on sale of preferential shares.
2.2. Where the enterprises suffer from losses which are
smaller than the actual value of State's capital portions at the enterprises
but they fall into the subjects where the State needs to hold dominant shares:
To adjust the equitization plans by reducing the size of their charter capital
and the plans on sale of preferential shares to laborers, raw-material
producers and suppliers while still ensuring that the State still holds
dominant shares.
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II. FOR ENTERPRISES WHICH HAVE BEEN EQUITIZED AND MADE
BUSINESS REGISTRATION UNDER THE ENTERPRISE LAW
After having been equitized and made business registration
under the Enterprise Law, the enterprises must make financial settlements at
the time of being granted the business registration certificates for hand-over
to the joint-stock companies. If they suffer from losses arising in the period
from the time of valuation to the time of being granted the business
registration certificates, the enterprise directors and the Enterprise Renewal
Boards must clearly identify the causes, responsibilities of the collectives as
well as individuals and report thereon to the agencies with
equitization-deciding competence for examination and handling of the
responsibility to compensate for material damage (if due to subjective causes),
the remaining losses (after the material damage-compensating responsibility is
fulfilled) of the enterprises shall be handled as follows:
1. For enterprises not falling into the subjects where the
State needs to hold dominant shares:
1.1. If the losses are smaller than the proceeds from the
sale of the State's capital portions at the enterprises, the enterprises shall
be refunded by the funds in support of reorganization and equitization of State
enterprises (the enterprise reorganization funds) part of the proceeds already
remitted into the funds for offsetting such losses.
1.2. If the losses are bigger than the proceeds from the
sale of the State's capital portions at the enterprises but smaller than the
value of the State's capital portions prior to the time of equitization, then:
- The enterprises shall be refunded by the enterprise
reorganization funds the whole of the proceeds from the sale of the State's
capital portions at the enterprises.
- The remaining losses (the difference between the loss
amounts proposed for handling and the amounts refunded by the enterprise
reorganization funds) must be reported by the enterprises to the agencies with
equitization-deciding competence for consideration and decision on the
reduction of the State's capital portions contributed to the enterprises and
the quantity of preferential shares sold at a lowered price (if the State's
capital amounts contributed to the joint-stock companies are smaller than the
remaining losses); and at the same time an extraordinary shareholders' meeting
shall be convened in order to decide on the issuance of additional shares to
offset the reduced quantity of the State's shares or to adjust the size and
structure of the charter capital, to re-elect the managing boards and adjust
the business registration certificates.
1.3. If the losses are bigger than or equal to the value of
the State's capital portions at the enterprises prior to the time of
equitization:
- The enterprises shall be refunded by the enterprise
reorganization funds the remitted money amounts collected from the sale of the
State's capital portions at the enterprises.
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Where there remain some losses even after the State's
contributed capital amounts have been reduced to zero, the companies must
convene an extraordinary shareholders' meeting to notify the enterprises'
actual conditions and vote on matters related to the enterprises' existence
along the direction of:
+ Accepting to inherit the remaining losses and continuing
operation;
+ Selling the enterprises provided that the purchasers
inherit all debts and losses;
+ Declaring the companies bankrupt, liquidating their assets
for payment of debts to creditors and refund of contributed money to
shareholders.
2. For enterprises falling into the subjects where the State
needs to hold dominant shares, they may use the supports from the Enterprise
Renewal Funds to offset and maintain the percentage of the State's capital
portions contributed to the joint-stock companies.
III. ORDER AND PROCEDURES
1. In order to have grounds for examining and handling
losses in time, the enterprises must take initiative in working out handling
plans (according to the provisions of Section I and Section II of this
Circular) and compile dossiers to propose the loss handling to the agencies
with equitization-deciding competence, the Ministry of Finance (for enterprises
which belong to the provinces, centrally-run cities and State corporations and
suffer from losses which reduce the State's capital portions at the enterprises
by VND 500 million or more), to State corporations (if enterprises are members
of such corporations), and the agencies managing the enterprise reorganization
funds.
2. A dossier of proposal for handling losses of an
enterprise consists of:
- An written request for handling losses of the enterprise
and the State corporation (if the enterprise is a member of the corporation).
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For equitized enterprises being corporation members, their
financial statements must contain evaluation opinions of the corporations.
- The written record identifying the causes of the losses,
the responsibilities of the collectives as well as individuals and the
enterprise's loss-handling plan.
- The competent agencies' decision stating the value of the
equitized enterprise and decision approving the equitization plan.
- The dossier of valuation of the equitized enterprise.
3. Within 15 days as from the date of receiving the complete
dossiers, the agencies with equitization-deciding competence shall have to
examine and identify the causes of losses at the enterprises and coordinate
with the agencies managing the enterprise reorganization funds in handling them
according to the current regime and the provisions of this Circular.
For equitized State enterprises being members of State
corporations, such corporations shall have to coordinate with the agencies
which have decided on the equitization in examining and handling losses of such
member enterprises.
For equitized enterprises each suffering from losses of VND
500 million or more, written agreements of the Minister of Finance must be
obtained before such losses are handled.
4. The use of the enterprise reorganization funds for handling
losses arising from the time of valuation of State enterprises for equitization
to the time of their official transformation into joint-stock companies is
prescribed as follows:
4.1. The funds into which the enterprises remit the proceeds
from the sale of the State's capital portions shall have to coordinate with the
agencies which have decided on the equitization and the Ministry of Finance in
handling the losses according to the provisions above.
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IV. ORGANIZATION OF IMPLEMENTATION
1. This Circular takes effect 15 days after its publication
in the Official Gazette.
2. The agencies with equitization-deciding competence shall
have to coordinate with the enterprise finance agencies and the agency in
charge of the enterprise reorganization funds in guiding, examining and
supervising equitized enterprises in handling losses arising in the period from
the time of enterprise valuation to the time of their transformation into
joint-stock companies according to the provisions of this Circular.
3. Any problems arising in the course of implementation
should be promptly reported to the Ministry of Finance for study and
settlement.
FOR THE MINISTER OF FINANCE
VICE MINISTER
Le Thi Bang Tam