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THE
GOVERNMENT
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SOCIALIST REPUBLIC OF
VIET NAM
Independence - Freedom – Happiness
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No. 44/1998/ND-CP
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Hanoi, June 29, 1998
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DECREE
ON THE TRANSFORMATION OF STATE ENTERPRISES INTO JOINT-STOCK
COMPANIES
THE GOVERNMENT
Pursuant to the Law on Organization of the
Government of September 30, 1992;
Pursuant to the Law on State Enterprises of April 20, 1995;
At the proposal of the Minister of Finance,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- Subject to
the regulation of this Decree are enterprises mentioned in Article 1 of the Law
on State Enterprises, where the State needs not to hold 100% investment
capital, which shall be defined in the Appendix attached to this Decree.
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1. Mobilizing capital from the entire society,
including domestic and foreign individuals, economic organizations and social
organizations for investment in renewing technologies, creating more jobs,
developing enterprises, raising the competitiveness and restructuring State
enterprises.
2. Creating conditions for laborers in
enterprises to have shares and for the capital contributors to be the real
masters; changing the mode of management to create a motive force for
enterprises to enhance their business efficiency, increase the State's assets
and the laborers' incomes and thus contributing to the national economic
growth.
Article 3.-
1. Economic organizations,
social organizations, Vietnamese citizens, overseas Vietnamese and foreigners
residing in Vietnam shall all be entitled to buy shares in the equitized State
enterprises.
2. The sale of shares to foreign organizations
and individuals shall comply with the regulations of the Prime Minister.
Article 4.- The
ownership right and all legitimate rights of organizations and individuals that
buy shares in the equitized enterprises shall be protected by the State in
accordance with the provisions of law.
Article 5.- Shares shall
be publicized for sale at the equitized enterprises or through commercial
banks, financial companies and stock exchange services and centers.
Article 6.- The
equitized enterprises shall have to arrange and fully employ the existing
number of their laborers. As for the laborers who voluntarily terminate their
labor contracts, the current regulations shall apply.
Article 7.- The
equitization shall be conducted in one of the following forms:
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2. Selling part of the existing value of the
State's capital at the enterprise;
3. Separating a section of the enterprise that
meets conditions for equitization; or
4. Selling the entire existing value of the
State's capital at the enterprise in order to transform it into a joint-stock
company.
Article 8.- The right to
buy shares for the first time when equitization is carried out.
1. For an enterprise where the State holds
prevailing or special shares:
a/ A legal person shall be entitled to buy not
more than 10% of the total shares of the enterprise;
b/ An individual shall be entitled to buy not more
than 5% of the total shares of the enterprise.
2. For an enterprise where the State does not
hold prevailing or special shares:
a/ A legal person shall be entitled to buy not
more than 20% of the total shares of the enterprise;
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3. For an enterprise where the State does not
hold any shares:
The number of shares to be bought by each legal
person or individual shall not be limited but the minimum number of shareholders
must be ensured in accordance with the provisions of the Law on Companies.
4. The amount of capital borrowed by the
enterprise from laborers before the equitization shall be transformed into the
company's shares, if so agreed upon by the laborers.
5. Subjects prescribed in Clause 2, Article 13
of the Ordinance Against Corruption shall be entitled to buy at preferential
prices only a number of shares, not more than the average number of shares of
the shareholders in the enterprise.
Article 9.- Use of the
proceeds from the sale of shares belonging to the State's capital:
The proceeds from the sale of shares belonging
to the State's capital at the enterprise, after deducting the equitization
expenses, shall be used by the People's Committee of the province or city
directly under the Central Government (for local enterprises), by the Ministry
of Finance (for enterprises attached to the ministries and general
departments), or by the Managing Board of a Corporation 91 (for member
enterprises of the Corporation) for:
1. Training and retraining laborers to create
new jobs for them.
2. Providing allowances for the redundant
laborers.
3. Supplementing capital for State enterprises
that need to be prioritized for consolidation and investing in State enterprises
that have been equitized according to the ratified plan.
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Chapter II
PRINCIPLES FOR
DETERMINING THE VALUE OF AN ENTERPRISE, PREFERENCES FOR THE EQUITIZED
ENTERPRISE AND LABORERS THEREOF
Article 11.- Principles
for determining the value of an enterprise:
1. The actual value of an enterprise is the
price of all available assets of such enterprise at the time of equitization,
which is acceptable to both the share buyer and seller. The actual value of the
State's capital at the enterprise is the actual value of the enterprise after
deducting all its payable debts.
2. Factors for determining the actual value of
the enterprise:
a/ Data recorded in the accounting books of the
enterprise at the time of equitization;
b/ The actual value of assets of the enterprise,
determined on the basis of the current status of quality, technical properties
and use demand of the asset buyer and the market prices at the time of
equitization.
3. The business advantage of the enterprise in
terms of its geographical location and product prestige (if any). Such
advantage is reflected through the ratio of profit against the average business
capital over the last three years before the equitization. The value of this
advantage shall, at maximum, represent 30% of the actual value of the
enterprise.
Article 12.- When
determining the actual value of the enterprise, it is not necessary to hire
independent auditors. For enterprises that fail to comply with the provisions
of the legislation on accounting and statistics, the agency that decides the
enterprise's value shall consider the hiring of an independent auditing
organization for determination of such enterprise's value. The expense for
hiring auditors shall be accounted for in the equitization costs.
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1. Since the transformation of a State
enterprise into a joint-stock company is a new form of investment, such
enterprise shall be entitled to preferential treatment in accordance with the
provisions of the Law on Domestic Investment Promotion (amended).
Enterprises that fail to meet conditions for
enjoying preferential treatment in accordance with the Law on Domestic
Investment Promotion shall be entitled to the 50% reduction of profit tax
(enterprise income tax) for two consecutive years from the time it switches to
operations under the Law on Companies.
2. To be exempt from the registration fee on the
transfer of assets under the management and use of the equitized State enterprise
to the ownership of the joint-stock company.
3. To be entitled to continue borrowing capital
from State commercial banks, financial companies and other credit institutions
according to the mechanism and at the interest rates applicable to State
enterprises.
4. To be entitled to continue the export and
import of goods under the current regulations applicable to State enterprises
before equitization.
5. To be allowed, before equitization, to distribute
the residue of its reward and welfare funds (in cash) to the working laborers
(who shall not have to pay income tax thereon) for the purchase of shares.
To be entitled to maintain and develop the
welfare fund in kind, the cultural works, clubs, clinics and sanitoria in order
to ensure the welfare of the laborers in the joint-stock company. These assets
shall be placed under the ownership of the labor collective and managed by the
joint-stock company with the participation of the trade union organization.
6. The actual reasonable and necessary expenses
for transforming State enterprises into joint-stock companies shall be deducted
from the proceeds from the sale of shares which belong to the State's capital
at the level prescribed by the Ministry of Finance.
In cases where the equitization is conducted in
accordance with Clause 1, Article 7 of this Decree, the State's existing
capital at the enterprise shall be used to cover the expenses.
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1. To be sold by the State a number of shares at
the preferential prices, depending on each person's working seniority. For each
year of working for the State, a laborer is entitled to buy 10 shares at
maximum (the value of one share is 100,000 VND) with the 30% price reduction,
as compared with other subjects. The total value of preferential shares sold to
the laborers shall not exceed 20% of the value of the State's capital at the
enterprise. For enterprises with self-accrued capital representing 40% of their
value, the total value of preferential shares sold to laborers must not exceed
30% of the value of the State's capital at such enterprises.
In cases where the equitization is conducted in
accordance with Clause 1, Article 7 of this Decree, the value of preferences
for laborers shall be deducted from the State's existing capital at the
enterprise.
Laborers holding the above-said shares shall
have the right to transfer and bequeath those shares and other rights of
shareholders in accordance with the provisions of law and the Statute on
organization and operation of joint-stock companies.
2. Poor laborers in the enterprise, who are
entitled to buy shares at preferential prices may delay their payment for the
first three years to enjoy dividends and pay in installments in ten years at
maximum without bearing any interests. The number of shares bought with
deferred payment by the poor laborers shall not exceed 20% of the total shares
sold by the State at preferential prices as prescribed in Clause 1 of this
Article. The holders of deferred-payment shares shall not be allowed to
transfer the shares as long as they have not fully paid the State.
3. 12 months after the transformation of a State
enterprise into a joint-stock company, if the laborers loose their jobs due to
the re-organization of the enterprise's business operation and/or the renewal
of its technologies, they shall be entitled to the policies as prescribed in
the current regulations of the Government.
Chapter III
ORGANIZATION OF
IMPLEMENTATION
Article 15.- Competence
to select and decide enterprises for equitization:
1. Basing themselves on the conditions
prescribed in Article 1 of this Decree, the ministers, the heads of the
ministerial-level agencies, the heads of the agencies attached to the
Government (hereafter referred collectively to as the ministers), and the
presidents of the People's Committees of the provinces and cities directly
under the Central Government (hereafter collectively referred to as the presidents
of the provincial People's Committees) shall select and decide the enterprises
to be equitized.
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3. The Managing Boards of the State Corporations
established by decision of ministers or presidents of the People's Committees
of the provinces and cities directly under the Central Government (Corporations
90 for short) under the Prime Minister's authorization, shall draw up lists of
their respective member enterprises selected for equitization and submit them
to the ministers or the presidents of the provincial People's Committees for
decision.
Article 16.- Competence
to guide and decide the values of enterprises:
1. The Minister of Finance shall provide general
guidance on methods of determining the values of to-be-equitized enterprises.
2. Competence to decide the values of
enterprises:
a/ The Minister of Finance shall decide the
values of enterprises that have, at the time of equitization, the State's
capital of over 10 billion VND as recorded in their accounting books, after
consulting the concerned branch-managing ministries, People's Committees of the
provinces and cities directly under the Central Government and/or the Managing
Boards of Corporations 91.
b/ Basing themselves on guidance of the Minister
of Finance, the ministers, the presidents of the People's Committees of the
provinces and cities directly under the Central Government and/or the Managing
Boards of Corporations 91 shall decide the values of enterprises that have, at
the time of equitization the State's capital of 10 billion VND or less as
recorded in their accounting books.
Article 17.- Competence
to ratify equitization plans and decide the transformation of State enterprises
into joint-stock companies:
1. For enterprises having the State capital
value of over 10 billion VND (according to the provisions of Clause 2, Article
16 of this Decree): the ministers, the presidents of the provincial People's
Committees and the Managing Boards of Corporations 91 shall elaborate the
equitization plans and submit them to the Prime Minister for ratification and
decision on the transformation of such enterprises into joint-stock companies.
2. For enterprises having the State capital
value of 10 billion VND or less, the ministers or the presidents of the
provincial People's Committees shall ratify plans and decide on the
transformation of such enterprises into joint-stock companies and direct the
equitization on the basis of this Decree as well as on the inspection guidances
of the relevant ministries.
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Article 18.- The
competent agencies' decisions to transform State enterprises into joint-stock
companies as prescribed in Article 17 of this Decree shall replace the permits
for setting up joint-stock companies as mentioned in Article 16 of the Law on
Companies.
Article 19.-
Registration of business of a joint-stock company:
1. The enterprises, after being equitized, shall
operate in accordance with the Law on Companies and register their business at
the Planning and Investment Departments of the provinces or cities directly under
the Central Government, where the enterprises' head offices are located.
2. Within seven days from the date of receiving
the full dossiers of business registration, the Planning and Investment
Departments shall issue business registration certificates to joint-stock
companies.
3. A dossier of business registration shall
include:
a/ The decision on the transformation of the
State enterprise into a joint-stock company, issued by the competent level
prescribed in Article 17 of this Decree.
b/ The statue on organization and operation of
the joint-stock company already approved by the shareholders' congress.
c/ The report on the election of the Managing
Board and the appointment of the executive Director.
d/ The business registration certificate (if
any) of the State enterprise before equitization.
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Article 20.- Manager of
the State's capital at a joint-stock company:
1. For cases where entire independent
enterprises are transformed into joint-stock companies:
The concerned ministers, the presidents of the
provincial People's Committees or the Managing Boards of Corporations 91 shall
consult with the Ministry of Finance on the appointment of a person to directly
manage the State's capital at the joint-stock companies.
2. For cases where sections of independent
enterprises (State corporations, independent enterprises with or without
Managing Boards) are transformed into joint-stock companies:
The Managing Boards of the State enterprises
which have Managing Boards or the Directors of the independent State
enterprises which have no Managing Boards shall appoint persons to directly
manage the State's capital at the joint-stock companies established through the
equitization of sections of their respective enterprises.
3. The person directly managing the State's
capital at a joint-stock company shall exercise his/her rights and fulfill
his/her obligations as prescribed in Articles 50 and 54 of the Law on State
Enterprises.
4. The profit earned from the State's capital at
a joint-stock company shall belong to the State and be remitted to:
a/ The State budget, with regard to cases
mentioned in Clause 1 of this Article;
b/ The enterprise that manages the State's
capital in the joint-stock company, with regard to cases mentioned in Clause 2
of this Article.
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IMPLEMENTATION PROVISIONS
Article 21.- This
Decree takes effect 15 days after its signing and shall replace Decree No.28-CP
of May 7, 1996 and Decree No.25-CP of March 26, 1997. The earlier documents on
equitization which are contrary to this Decree shall cease to be effective.
Article 22.- Within 30
days from the date this Decree takes effect, the Ministry of Finance, the
Ministry of Labor, War Invalids and Social Affairs, the State Bank of Vietnam
and relevant ministries as well as agencies shall provide guidances for the
implementation of this Decree.
Article 23.- The
ministers, the heads of the ministerial-level agencies, the heads of the
agencies attached to the Government, the presidents of the People's Committees
of the provinces and cities directly under the Central Government and the
Managing Boards of the Corporations 91 shall have to implement this Decree.
THE GOVERNMENT
Phan Van Khai
APPENDIX
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I. Category of existing State
enterprises, which shall not be equitized yet:
- Public-utility State enterprises mentioned in
Article 1 of Decree No.56-CP of October 2, 1996 of the Government.
In cases where the State enterprises of this
category, that have the State's capital of more than 10 billion VND, plan to be
equitized, the permission from the Prime Minister is required. If they have the
State's capital of 10 billion VND or less, the equitization shall be decided by
the concerned ministers or the presidents of the People's Committees of the
provinces or cities directly under the Central Government.
- Enterprises engaged in the manufacture of
products and/or the provision of services which the State holds the business
monopoly thereover, such as explosives, toxic chemicals, radioactive
substances, printing of bank notes and valuable certificates, national and
international information networks.
II. Category of existing State
enterprises, where the State needs to hold prevailing or special shares when
the equitization is carried out:
- Public-utility State enterprises with the State's
capital of over 10 billion VND;
- Exploitation of precious and rare ores;
- Large-scale mineral exploitation;
- Technical service activities for oil and gas
exploitation;
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- Large-scale production of nonferrous and
precious and rare metals;
- Large-scale production of electricity, power
transmission and distribution;
- Repair of flying vehicles;
- Post and telecommunications exploitation
services;
- Railway, air and sea transport;
- Printing, publishing, large-scale production
of alcohol, beer and cigarette;
- Investment banks and banks for the poor;
- Large-scale petroleum business.
III. The remaining categories of existing
State enterprises may all be equitized and apply other forms of ownership,
where and the State does not hold prevailing or special shares.