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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
38/2003/ND-CP
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Hanoi,
April 15, 2003
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DECREE
ON TRANSFORMING A NUMBER OF FOREIGN-INVESTED ENTERPRISES TO
OPERATE IN THE FORM OF JOINT-STOCK COMPANY
THE GOVERNMENT
Pursuant to the December 25, 2001 Law on
Organization of the Government;
Pursuant to the June 12, 1999 Enterprise Law;
Pursuant to the November 12, 1996 Law on Foreign Investment in Vietnam and the
June 9, 2000 Law Amending and Supplementing a Number of Articles of the Law on
Foreign Investment in Vietnam;
Proceeding from the opinions of the National Assembly Standing Committee in
Document No. 08/UBTVQH of January 13, 2003 on the promulgation of the
Government’s decree on transforming a number of foreign-invested enterprises to
operate in the form of joint-stock company;
At the proposal of the Minister of Planning and Investment,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- Scope of
application
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Foreign-invested joint-stock companies shall
operate under the provisions of this Decree and relevant legislation.
Article 2.- Objectives
of transformation
The transformation of a number of
foreign-invested enterprises to operate in the form of joint-stock company aims
to:
1. Raise the operational efficiency of
foreign-invested enterprises.
2. Mobilize capital of investors at home and
abroad to invest in technological renovation, job creation and enterprise
development.
3. Diversify investment forms, improve the
investment environment and attract foreign investment capital.
4. Create more sources of commodities for
Vietnam’s securities market.
Article 3.-
Interpretation of terms
In this Decree, the following terms shall be
interpreted as follows:
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2. "Foreign-invested joint-stock
companies" (hereinafter referred to as joint-stock companies for short)
mean enterprises with their charter capital divided into many equal portions
called "shares", with foreign founding shareholders holding at least 30%
of their charter capital; organized and operating in the form of joint-stock
company as provided for in this Decree, and enjoying the assurances of the
Vietnamese Sate as well as the preferences prescribed by the Law on Foreign
Investment in Vietnam.
3. "Foreign-invested enterprises"
(hereinafter referred to as enterprises for short) mean joint-venture
enterprises or enterprises with 100% foreign-owned capital, established under
the Law on Foreign Investment in Vietnam.
4. "Charter capital" means the capital
amount contributed by shareholders and inscribed in the charters of
foreign-invested joint-stock companies.
5. "Voting capital" means the
contributed capital amount with which its owner has the right to vote on
matters decided by the shareholders’ general assembly.
6. "Foreign shareholders" mean foreign
organizations and/or individuals holding shares in joint-stock companies.
7. "Vietnamese shareholders" mean
Vietnamese organizations and/or individuals holding shares in joint-stock
companies.
8. "Founding shareholders of joint-stock
companies" mean investors making contributions to the legal capital of
enterprises before their transformation, or organizations or individuals owning
founding shareholders’ share certificates.
9. "Dividend" means the annual cash
amount deducted from the profits of foreign-invested joint-stock companies to
be paid to each share.
10. "Enterprise managers" mean
Managing Board members, directors (general directors) and other important
managerial posts as prescribed by the charters of joint-stock companies.
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Enterprises shall be transformed in the
following forms:
1. Keeping intact the enterprise’ value and
investor(s).
2. Transferring part of the enterprise’s value
to new shareholders.
3. Keeping intact the enterprise’s value or
transferring part of its capital and issuing more shares to attract investment
capital.
Article 5.- Buyers of
shares
The buyers of joint-stock companies‘ shares
include:
1. Vietnamese organizations and individuals.
2. Foreign-invested enterprises in Vietnam;
foreign organizations and individuals.
3. Overseas Vietnamese, who shall be entitled to
decide by themselves either to be foreign shareholders or Vietnamese
shareholders but must make registration for buying shares and shall enjoy
interests and fulfill corresponding obligations.
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Capital ownership and all legitimate rights and
interests of shareholders and joint-stock companies shall be protected by the
Vietnamese State under the law provisions.
Where the Vietnamese Government signs with
foreign countries the international agreements on investment encouragement and
protection, which contain provisions different from those of this Decree, the
provisions of such international agreements shall apply.
Chapter II
TRANSFORMATION CONDITIONS
Article 7.-
Transformation conditions
To be transformed, enterprises must satisfy the
following conditions:
1. Having fully contributed the legal capital as
prescribed in the investment licenses.
2. Having officially operated for at least three
years with profits earned in the last year before transformation.
3. Having compiled dossiers of application for
transformation.
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Article 8.-
Responsibilities and powers of enterprises in the process of transformation
1. Enterprises shall continue maintaining their
organizational structures and operation under the Law on Foreign Investment in
Vietnam until they are granted the adjusted investment licenses approving the
enterprise transformation.
2. Enterprises must ensure normal production and
business activities and ensure the laborers’ rights and interests according to
the law provisions on labor.
3. The Vietnamese State encourages enterprises
to sell shares under preferential terms to managerial officials, employees and
workers working at the enterprises, depending on their contributions to the
enterprises’ production and business results.
Article 9.- Enterprise’s
value for transformation
1. The enterprise’s value for transformation is
the whole value of properties inscribed in the enterprise’s records already
audited within six months before the time the dossier of application for
transformation is submitted. The enterprise’s value shall serve as a basis for
the determination of the minimum price for selling shares and the issuance of
share certificates of the companies.
2. For joint-venture enterprises, the
capital-holding percentages of the joint-venture parties after the revaluation
of enterprises shall be their legal capital-contributing percentages of the
parties prescribed in the investment licenses.
3. For joint-venture enterprises where the Vietnamese
parties contribute capital with the land use right value, the land use right
value and the period of capital contribution therewith shall be kept intact
under the provisions of the investment licenses and included into the
enterprise’s value for transformation. Upon the expiry of the period of capital
contribution with the land use right value, the joint-stock companies shall
shift to the form of leasing land of the Vietnamese State.
Enterprises may hire consulting companies,
financial companies, auditing companies and/or securities companies at home or
abroad to determine their value, selling prices of shares or prices for
issuance of share certificates.
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ORGANIZATION AND
OPERATION OF FOREIGN-INVESTED JOINT-STOCK COMPANIES
Article 10.- Shareholders
of foreign-invested joint-stock companies
1. Joint-stock companies must have at least one
foreign founding shareholder, the total value of shares held by foreign
founding shareholders must be at least equal to 30% of the charter capital
throughout the operating process of the companies.
2. Shareholders of joint-stock companies shall
be responsible for their joint-stock companies’ liabilities and other property
obligations within the limit of their capital amounts already contributed to
the companies.
3. Shareholders shall be entitled to transfer
their shares under the provisions of this Decree.
4. Shareholders may be organizations or
individuals; the minimum number of shareholders is three and the maximum number
is unlimited.
5. Foreign shareholders shall be entitled to
participate in managing joint-stock companies.
Article 11.-
Shareholder registers
1. Joint-stock companies must make and keep
shareholder registers, which may take the form of documents, electronic files
or both.
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a/ The name and head office of the joint-stock
company;
b/ Total quantity of shares entitled to be
offered for sale, types of shares entitled to be offered for sale and the
quantity of shares of each type entitled to be offered for sale; total quantity
of shares held by foreign shareholders;
c/ Total quantity of shares of each type already
sold and the value of share capital already contributed;
d/ The names, nationalities and addresses of
shareholders, each shareholder’s quantity of shares of each type, his/her/its
share registration date.
3. The shareholder registers shall be kept at
the joint-stock companies’ head offices or elsewhere, which must be notified in
writing to the Ministry of Planning and Investment and all shareholders.
Article 12.- Share
certificates
1. Share certificates of joint-stock companies
are certificates issued by the joint-stock companies, certifying the ownership
of one or a number of shares of shareholders contributing capital to the
companies.
2. The par value of joint-stock companies’ share
certificates shall be inscribed in Vietnam Dong or a common freely convertible
foreign currency. All share certificates traded in Vietnam must be denominated
in Vietnam Dong. The rate of exchange between Vietnam Dong and a foreign
currency is the average transaction exchange rate on the inter-bank foreign
exchange market, announced by the State Bank of Vietnam at the time of
exchange.
3. Foreign founding shareholders must hold
registered share certificates at least corresponding to the value of shares
specified in Clause 1, Article 10 of this Decree.
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a/ The name and head office of the company;
b/ The serial number and date of issuance of the
adjusted investment license approving the enterprise transformation;
c/ The quantity of shares;
d/ The type of share;
e/ The par value of each share and the total par
value of shares inscribed on the share certificate;
f/ The name and nationality of the shareholder
holding the share certificate, for registered share certificates;
g/ Summarized procedures for share transfer;
h/ Specimen signature of the representative at
law and the seal of the company;
i/ The registration number in the company’s
shareholder register and the date of issuance of the share certificate;
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Article 13.- Rights and
obligations of foreign-invested joint-stock companies
1. To be exempt from registration fee for the
transformation of the enterprise’s property ownership into the company’s
ownership.
2. To inherit the rights and obligations of the
transformed enterprises towards the Vietnamese State, third parties and
laborers.
3. To continue executing the approved investment
projects, paying unpaid debts and fulfilling other financial obligations of the
transformed enterprises.
4. Joint-stock companies’ shareholders shall
fulfil tax obligations as prescribed by law.
5. Joint-stock companies shall enjoy enterprise
income tax-related preferences, settle arising disputes and have other rights
and obligations as prescribed by the Law on Foreign Investment in Vietnam and
the investment licenses granted before transformation.
Article 14.- Listing on
the securities market
1. Joint-stock companies may be listed on the
domestic securities market under the law provisions on the securities market.
2. Joint-stock companies may be listed on
overseas securities markets after obtaining the approval of competent
Vietnamese State bodies.
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1. In the course of operation, foreign founding
shareholders may transfer their shares to foreign organizations and
individuals.
2. The transfer of shares held by foreign
founding shareholders to Vietnamese organizations and/or individuals must be
approved by the Ministry of Planning and Investment and comply with the
provisions in Clause 1, Article 10 and Clause 3, Article 12 of this Decree.
Foreign founding shareholders must reinvest in Vietnam the money amounts earned
therefrom; if they wish to transfer them abroad, they must obtain the approval
of competent bodies.
Article 16.-
Dissolution of foreign-invested joint-stock companies
Joint-stock companies shall be dissolved in the
following cases:
1. No extension decision is issued upon the
expiry of the operating duration inscribed in their Charters;
2. By decisions of the shareholders’ general
assemblies;
3. The companies fail to maintain the minimum
quantity of shareholders for six consecutive months;
4. Having their investment licenses withdrawn.
Article 17.- Order of
operation termination, asset liquidation, dissolution
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1. The Ministry of Planning and Investment
issues a decision on terminating the operation of the joint-stock company;
2. The joint-stock company shall have to set up
a Liquidation Board for liquidating its assets;
3. After the completion of the liquidation, the
joint-stock company shall submit the liquidation dossier to the Ministry of
Planning and Investment for consideration and decision.
Article 18.- Bankruptcy
of joint-stock companies
The bankruptcy of joint-stock companies shall
comply with the provisions of the Vietnamese legislation on enterprise
bankruptcy.
Article 19.-
Application of a number of provisions of the Enterprise Law to foreign-invested
joint-stock companies
1. Shares shall be categorized under the
provisions of Article 52 of the Enterprise Law.
2. The rights and obligations of ordinary share-holders
shall comply with the provisions in Articles 53 and 54 of the Enterprise Law.
3. The rights of preferential shareholders shall
comply with Articles 55, 56 and 57 of the Enterprise Law.
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5. The managerial and organizational structures
of joint-stock companies, shareholders’ general assemblies and organization of
shareholders’ general assemblies shall comply with the provisions in Articles
69, 70,71, 72, 73, 74, 75, 76, 77, 78, 79 and 87 of the Enterprise Law.
6. The organization, powers, tasks and operation
of the Managing Boards of joint-stock companies shall comply with Articles 80,
81, 82, 83, 84 and 87 of the Enterprise Law.
7. The appointment, rights and obligations of
directors (general directors) and managers of the companies shall comply with
the provisions in Articles 85 and 86 of the Enterprise Law.
8. The rights and tasks of the Control Boards of
joint-stock companies shall comply with Articles 88, 89, 90 and 91 of the
Enterprise Law.
9. The audit, information publicity and archival
regime of joint-stock companies shall comply with the provisions in Articles
92, 93 and 94 of the Enterprise Law.
Chapter IV
ORGANIZATION OF
IMPLEMENTATION
Article 20.- Dossiers
of application for transformation
Dossiers of application for transformation shall
be addressed to the Ministry of Planning and Investment with 8 (eight) sets, of
which at least 1 (one) set is the original; each set comprises:
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2. The transformation plan;
3. The report on the enterprise’s
pre-transformation operation situation;
4. The draft Charter of the joint-stock company;
5. The Resolution of the Managing Board or the
investor(s) ratifying the transformation plan.
Article 21.- Contents
of transformation plans and reports on the operation situation of enterprises
1. The enterprise’s transformation plan shall
include the following contents:
a/ Objectives and requirements of the
transformation;
b/ The planned scale and form of transformation:
the charter capital, the quantity of shares, the value of a share, percentages
of shares held by founding shareholders, percentages of shares held by other
shareholders;
c/ The time of transformation, the time of
issuance and the venue of sale of shares (if any);
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e/ The plan on issuance of share certificates on
the domestic and overseas securities markets, stating quantities, control and
management mechanisms;
f/ The result of the enterprise’s valuation.
2. The report on the enterprise’s operation
situation shall contain the following contents:
a/ The project execution situation regarding the
investment capital, legal capital and production and business situation over
the past years;
b/ The situation of liabilities, assets,
supplies, inventory, an analysis of causes and proposed remedies;
c/ The labor situation;
d/ Inventory of assets, supplies, capital and
liabilities of the enterprise;
e/ The audited financial statements of the last three
years immediately preceding the time of application for transformation;
3. The draft charter of a joint-stock company
shall have the following principal contents:
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b/ The business objectives and lines;
c/ Charter capital;
d/ The full names, nationalities and addresses
of all founding shareholders;
e/ The quantity of shares which the founding
shareholders have pledged to buy, types and par value of shares and the total
quantity of shares of each type entitled for sale offer;
f/ Rights and obligations of shareholders;
g/ The organizational and managerial structure;
h/ The representative at law;
i/ Modes of adopting decisions of the
joint-stock company, principles for settling internal disputes;
j/ Cases where shareholders may request the
joint-stock company to re-purchase shares;
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l/ Cases of dissolution, order of dissolution
and procedures for liquidation of the company’s assets;
m/ Modes of amending and supplementing the
joint-stock company’s Charter;
n/ The signature of the representative at law or
signatures of all founding shareholders;
Other contents of the joint-stock companies’
Charters shall be agreed upon by shareholders but must not be contrary to the
law provisions.
Article 22.- Competence
to decide on transformation
1. Basing itself on the provisions of this
Decree, the Ministry of Planning and Investment shall guide enterprises to
compile and submit the dossiers of application for transformation.
Within thirty days after receiving the valid
dossiers, the Ministry of Planning and Investment shall assume the prime
responsibility for collecting the opinions of the concerned ministries and
branches and submitting them to the Prime Minister for consideration and
approval.
2. After they are approved by the Prime
Minister, the Ministry of Planning and Investment shall notify the enterprises
thereof so that they can perform the work specified in Article 23 of this
Decree and report the results thereof to the Ministry of Planning and
Investment for granting the adjusted investment licenses approving the
enterprise transformation. The adjusted investment licenses shall be as valid
as the business registration certificates.
Article 23.-
Transformation
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1. Widely notifying their transformation on the
mass media and to their creditors.
2. Organizing the sale of shares or issuance of
share certificates.
3. Convening the first shareholders’ general
assembly to adopt the Charter and elect the Managing Board of the joint-stock
company.
4. Electing the general director or director by
the Managing Board.
5. Organizing the hand-over of capital, assets, labor,
liabilities… between the Managing Board or the enterprise investor(s) and the
Managing Board of the joint-stock company
Article 24.-
Publicization of operation in the form of joint-stock company
1. Within thirty days after being granted the
adjusted investment licenses regarding the enterprise transformation, the
joint-stock companies must publish on local newspapers or central dailies for
three consecutive issues the following principal contents:
a/ The enterprise’s name;
b/ The serial number and date of the adjusted
investment license;
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d/ The business objectives and line(s);
e/ Charter capital;
f/ Full names and addresses of founding shareholders;
g/ The full name and permanent address of the
joint-stock company’s representative at law.
2. When changing the above-said contents, the
joint-stock companies must publicize such changes according to the provisions
in Clause 1 of this Article.
Article 25.-
Responsibilities of State management agencies
The State management agencies shall perform the
function of management over the transformation of enterprises and the operation
of joint-stock companies in accordance with their respective jurisdiction and
the law provisions.
Once every six months, the Ministry of Planning
and Investment shall report to the Government and, as authorized by the
Government, report to the National Assembly Standing Committee the situation of
transformation of foreign-invested enterprises into joint-stock companies.
Chapter V
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Article 26.-
Implementation effect
This Decree takes effect 15 days after the date
of its publication on the Official Gazette.
The selection of enterprises for transformation
shall be effected within one year after the effective date of this Decree.
After two years as from the effective date of
this Decree, the Ministry of Planning and Investment shall assume the prime
responsibility for reviewing, together with the concerned ministries and
branches, the implementation of this Decree and report the results to the
Government for submission to the National Assembly Standing Committee and the
National Assembly.
Article 27.-
Organization of implementation
1. The Ministry of Planning and Investment, the
Ministry of Finance, the State Bank of Vietnam and other concerned agencies
shall have to guide the implementation of this Decree.
2. The ministers, the heads of the
ministerial-level agencies, the heads of the agencies attached to the Government
and the presidents of the People’s Committees of the provinces and
centrally-run cities shall have to implement this Decree.
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