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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:
58/2002/TT-BTC
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Hanoi,
June 28, 2002
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CIRCULAR
GUIDING THE FINANCIAL REGULATIONS APPLICABLE TO ONE-MEMBER
LIMITED LIABILITY COMPANIES OWNED BY THE STATE, POLITICAL ORGANIZATIONS OR
SOCIO-POLITICAL ORGANIZATIONS
In furtherance of the
Government’s Decree No. 63/2001/ND-CP of September 14, 2001 on the transformation
of State enterprises, enterprises of political organizations or socio-political
organizations into one-member limited liability companies, the Finance Ministry
hereby guides the financial regulations applicable to one-member limited liability
companies as follows:
I. GENERAL
PROVISIONS
1. This Circular prescribes the
financial regulations applicable to one-member limited liability companies
owned by the State, political organizations or socio-political organizations
(hereinafter called one-member limited liability companies for short).
2. The one-member limited
liability companies operate under the provisions of the Enterprise Law, the
documents guiding the implementation of the Enterprise Law, Decree No.
63/2001/ND-CP of September 14, 2001, this Circular and the companies charters
not contrary to the State’s stipulations.
II. SPECIFIC
PROVISIONS
A.
MANAGEMENT OF CAPITAL AND ASSETS
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The charter capital of
one-member limited liability companies shall be invested by the owners or the
owners representatives (hereinafter referred collectively to as owners) and
prescribed in the companies charters.
1.1. The charter capital of the
one-member limited liability companies shall include:
- The owners capital actually
reflected on the accounting books at the time of transformation from the State
enterprises, enterprises of political organizations or socio-political
organizations into the companies as provided for in Decree No. 63/2001/ND-CP of
September 14, 2001 of the Government or the capital invested by the owners at
the time of founding the companies;
- After-tax profits left for the
companies as addition to their capital;
- Capital supplemented to the
companies by the owners (if any);
For the State-owned one-member
limited liability companies, their capital shall also be supplemented from the
following sources:
+ Amounts remittable to the
State budget but left by the State for capital supplement (if any) according to
the State’s regulations;
+ Capital of other sorts
originating from the budget and considered as belonging to the budget under the
stipulations of the Finance Ministry.
1.2. The increase and decrease
of the companies charter capital shall be decided by owners.
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For the capital amounts to be
supplemented to one-member limited liability companies as pledged by the
owners, the owners shall have to fully invest the capital according to the
committed time limits. Where the owners, after two years, fail to invest the
pledged capital amounts fully and on time, they must make the decrease
adjustment of the companies charter capital.
2. Capital mobilization:
In addition to the capital
amounts invested by owners, the companies are entitled to mobilize capital of
organizations and individuals within and without the country under the
provisions of law in service of their business. The capital mobilization by the
companies must not alter the form of ownership of the companies.
The companies have the responsibility
to repay the mobilized capital and the interests thereon (if any) to creditors
as committed.
The company owners shall decide
on and take responsibility for the capital-borrowing contracts with value being
equal to or larger than 50% of the total asset value inscribed in the latest
financial reports of the companies on the basis of ensuring the economic
efficiency of the borrowed capital. For special cases, the owners may authorize
the Managing Boards or the company presidents to decide on these capital-borrowing
contracts. The authorization must be inscribed in the companies charters.
Where the owners decide on a
percentage smaller than 50% of the total asset value inscribed in the financial
reports, the specific percentages must be inscribed in the companies charters.
The remaining capital-borrowing projects shall be decided by the Managing
Boards or the company presidents.
3. Fixed assets:
3.1. The companies fixed assets
include tangible fixed assets and intangible fixed assets.
The standards (on time and
value) and the cost prices of fixed assets shall be determined according to the
regulations of the Finance Ministry.
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3.2. The companies are entitled
to select on their own plans for investment in the procurement of fixed assets,
renewal of technological equipment or restructure of the fixed assets to suit
the business objectives in order to raise the use efficiency of assets and
capital.
- Companies shall invest in
construction, procurement of assets according to the provisions of the current Regulation
on investment and construction management. Regarding the competence to decide
investment projects, the company owners shall decide on projects for
procurement of fixed assets with value being equal to or larger than 50% of the
total value of the companies assets inscribed in the financial reports at the
time of latest publicization. Where owners decide on percentages smaller than
50%, the specific percentages must be prescribed in the companies charters.
The remaining investment
projects shall be decided by the Managing Boards or the company presidents.
- The company directors have the
responsibility to organize the implementation and take responsibility before
the Managing Boards and the owners representatives for the tempo and quality of
the investment projects already decided.
- For fixed assets being works,
works items, which have been already completed and put to use, but their values
have not yet been settled, their cost prices shall be temporarily recorded
increasingly according to their temporarily calculated values for depreciation.
After the final settlement, if there appear the increase or decrease difference
against the temporarily calculated values, the cost prices shall be adjusted
according to the settlement values approved by competent authorities.
3.3. Management and use of fixed
assets: The fixed assets shall be managed and used according to the State’s
regulations and the companies charters. The Managing Boards or the company
presidents shall decide on the level of depreciation of fixed assets according
to the frame prescribed by the Finance Ministry in order to recover the
investment capital and preserve capital. The owners shall decide on the
depreciation levels outside the prescribed frame of the Finance Ministry.
3.4. Liquidation and sale of
fixed assets: The companies shall take initiative in drawing up plans on sale
or liquidation of fixed assets when there is no need to use them or the assets
have been unusably damaged in order to recover capital, and submitting them to
the Managing Boards or the company presidents for decision. The sale or
liquidation of assets must be effected through auctions. The proceeds from
asset sale or liquidation shall be accounted into incomes in order to determine
the business results of the companies.
For plans on liquidation or sale
of fixed assets with their residual value being equal to or larger than 50% of
the total asset value inscribed in the companies financial reports at the time
of latest publicization, they shall be decided by the owners. For special
cases, the owners may authorize the Managing Boards or the company presidents
to decide and take responsibility for the results of the plans on asset
liquidation or sale. The authorization must be inscribed in the companies
charters. Where the owners decide on percentages lower than 50%, the specific
percentages must be inscribed in the companies charters.
4. Management of stock
merchandise:
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The stock merchandise prices
shall be determined according to their original prices covering: the purchase
prices, the processing expenses and other relevant expenses such as expenses
for transportation, loading and unloading, preservation, insurance premium,
import tax (if any), for carrying stock merchandise to the present locations
and state. If the original prices inscribed on the accounting books are higher
than the net realizable value, the enterprises must make deductions to set up
reserves for stock price decrease as stipulated.
- Current assets being
instruments or labor tools shall have their values distributed into the
companies production and business expenses for one or two years depending on
the nature and value of the assets. When their values are fully distributed but
the instruments and tools are still in use, the companies shall have to open
detailed-monitoring books to manage them.
5. Debts receivable, payable:
The companies shall have to open
books to monitor debts according to each subject: The total amount of
receivable debts, the amounts already received and the amounts to be received,
the total amount of payable debts, the amounts already repaid and the amounts
to be repaid. To regularly analyze and urge the recovery of receivable debts
and the repayment of payable debts.
Before closing the accounting
books to make the annual financial reports, the enterprises must inventory and
compare debt amounts one by one with the creditors and/or the debtors. For
receivable debts which are determined as bad debts or have been overdue for two
years or more, the reserves must be set up according to the current
regulations. The receivable bad debts shall be handled by crossing them from
accounting books according to the regulations of the State and made up for with
the receivable bad debt reserves; after subtracting the pecuniary compensations
by concerned individuals and/or collectives, the deficit shall be accounted
into business expenses of the enterprises.
6. Capital management and use:
6.1. The companies are entitled
to flexibly manage and use the entire capital amounts invested by owners and
other lawful capital sources for their business activities with a view to
gaining profits, and at the same time take responsibility before the owners for
capital preservation, for the efficient use of capital and ensure the interests
of persons related to the companies such as creditors, customers, as committed.
6.2. The companies may use their
capital and assets for investment outside the companies according to the
provisions of law. The use of the land use right value as capital contribution
for investment outside the companies must comply with the provisions of the
Land Law and relevant stipulations of the State.
- The investment outside the
companies (including investment overseas) shall be effected in forms of capital
contribution to joint ventures, contribution of capital for the establishment
of limited liability companies or joint-stock companies; receipt of investment
capital transferred from other investors, or other investment forms prescribed
by law.
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The remaining projects on
investment outside the companies shall be decided by the Managing Boards or the
company presidents.
- The re-evaluation of assets
for contribution to joint ventures, to the establishment of joint-stock
companies, limited liability companies shall comply with the current law
provisions.
6.3. Annually, before closing
the accounting books to make annual financial reports, the companies must
organize the practical inventory of fixed assets, stock merchandise, capital
money, debts in order to determine the actual figures at the time of making the
financial reports; value the surplus, deficit or damaged assets; to clearly
determine the causes thereof and responsibilities of concerned individuals
and/or collectives and determine the material compensation levels according to
law provisions and charters of the companies. The compensation levels shall be
decided by the general directors or directors of the companies. The value of
surplus assets shall be accounted into other incomes. The actual values of
deficit or damaged assets, after subtracting the compensation money of
individuals and/or collectives or insurance organizations shall be accounted
into business expenses.
B.
MANAGEMENT OF TURNOVER, EXPENSES AND COST PRICES
The companies are entitled to
decide on their goods sale prices and on expenses arising in the course of
their production and business activities. The turnover and business operation
expenses are determined as follows:
1. Turnover and incomes of
companies:
1.1. The business operation turnover
means the enterprise’s entire money amount earned or expected to be earned from
goods sale and/or service provision in the period, including extras and/or
surcharges (if any).
1.2. The financial operation
turnover means the money amount earned or expected to be earned from the use of
the companies assets by other parties; incomes generated from loan capital,
deposit interests, bond and/or note interests or income divided from capital
invested outside the companies such as equity capital, joint-venture capital
The income from investment outside the enterprises, if for which the enterprise
income tax has not yet been paid, must be accounted by the companies into
pre-tax incomes.
1.3. Other incomes mean money
amounts earned or expected to be earned from liquidation or sale of fixed
assets, insurance indemnities, fines collected from customers due to their
contract breaches, payable debts which are now written off
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2. The companies expenses shall
include:
2.1. Business operation
expenses:
a/ Production and business
expenses arising in the period, including:
- Expenses for raw materials, materials,
fuel, power, semi-finished products, services purchased from outside
(calculated according to actual consumption and actual cost prices),
distributed expenses of instruments and labor tools, expenses for fixed-asset
repair;
- Expenses for fixed-asset
depreciation determined according to the provisions at Point 3, Section A, Part
II of this Circular;
- Wages and remuneration paid to
laborers, decided by the Managing Boards under the guidance of the Ministry of
Labor, War Invalids and Social Affairs;
- Social insurance fund, trade
union fund, health insurance premiums of laborers inside the enterprises, to be
paid according to regulations;
- Expenses for transactions,
brokerage, guest reception, marketing, advertisement, meetings, calculated
according to actually arising amounts. The Managing Boards or the company
presidents shall decide on the expense levels and publicize them for use as
basis for management, administration and supervision. The general directors or
directors of the companies shall decide on the expense levels and take
responsibility before the Managing Boards or the company presidents and the
owners for their decisions.
- Other pecuniary expenses such
as severance allowances for laborers, expenses for training to raise the
managerial capabilities and professional skills of laborers, medical expenses,
scientific research expenses, assorted taxes such as natural resource tax, land
tax, land rent, expenses for female laborers, prior-deducted expenses for
product warranty or asset repair, property insurance premium.
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- The value of reserves for
stock or investment security price decrease, reserves for receivable bad debts,
differences in exchange rates of long-term loan debts in foreign currency. The
appropriation levels of reserves for expenses shall be based on the practical
situation of the enterprises and the State’s regulations.
b/ The production and business
expenses shall be divided according to clauses and items as follows:
- The direct production and
business expenses include:
+ Expenses for raw materials,
materials, fuel, power, which are used directly for the manufacture of the
enterprises products; expenses payable to laborers directly involved in
production such as wages, wage allowances, social insurance, health insurance,
trade union funding.
+ General production expenses
arising in work-shops such as expenses for fixed-asset depreciation, indirect
raw materials and materials expenses, wages, wage allowances, social insurance,
health insurance, trade union funding for workshop staff.
- Enterprise
management expenses include expenses for the managerial and administrative
apparatuses related to business activities of the companies, such as:
+ Expenses for depreciation of
fixed assets, small labor tools in service of the apparatuses managing and
administering the companies.
+ Wages, wage allowances and
amounts for social insurance, health insurance, trade union funding of the
apparatuses managing and administering the companies.
+ Expenses for services
purchased from outside, other pecuniary expenses such as expenses for citizen
reception, meetings, transactions, severance allowances for laborers, expenses
for scientific research, technological renovation research, expenses for
rewards to innovations and modifications, expenses for education and training,
medical expenses for laborers of the enterprises, expenses for environmental
protection, expenses for female laborers, property insurance premiums.
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- Expenses for stock price
decrease reserves, receivable bad debt reserves, exchange rate differences of
long-term loan debts in foreign currency.
- The actual value of damaged
assets, irrecoverable debts.
2.2. Financial operation
expenses, including; expenses related to investment outside the enterprises
(capital contribution to joint-ventures, business cooperation, to the
establishment of companies), expenses for interests on borrowed business
capital, payment discount expenses, financial leasing expenses, reserve for
investment securities price decrease, expenses for buying and selling bonds,
shares, including investment losses, if any.
2.3. Other expenses
- Expenses for fixed- asset
sale, liquidation (including the remaining value of fixed assets upon
liquidation and sale);
- Expenses for recovery of
receivable bad debts already written off from accounting books;
- Expenses for fines on breaches
of economic contracts.
- Expenses for collection of
fines;
- Other irregular expenses.
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- Expenses for procurement, construction,
installation of tangible and intangible fixed assets.
- Payable loan interests,
exchange rate differences arising before the time the projects are put to use.
- Expenses not related to
business activities of the companies.
3. Cost of products and/or
services sold/provided in the period (or the cost prices of goods sold or
services provided in the period).
- Production cost of products
and/or services consumed in the period shall be calculated by the method of
weighted average of the production costs of products in the period and the
prices of stock products at the beginning of the period; or the production
costs of products which are taken in first and delivered first; or the
production costs of products which are taken in last but delivered first.
The production costs of products
in the period shall be determined with the expenses for unfinished products at
the beginning of the period, plus the direct production expenses arising in the
period, minus the expenses for unfinished products at the end of the period.
- The enterprise management
expenses arising in the period: Where the product-manufacturing cycle is long
or the production is of particular character, depending on the practical
situation of each enterprise, the Managing Board or the company president shall
decide to distribute the enterprise management expenses into products consumed
in the period, products left in stock and unfinished products at the end of the
period on the principle that the value of stock products and unfinished products
at the end of the period is not larger than the value which can be recovered.
- Goods sale expenses arising in
the period.
- Expenses for stock price
decrease reserves, receivable bad debt reserve, exchange rate differences of
long-term loan debts in foreign currency.
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4. For activities in forms of
business cooperation, product-sharing contracts, the companies must organize
the separate accountings of turnover and production expenses corresponding to
the shared- product quantity. Where the profit-sharing form is applied, the
profits earned from joint-venture cooperation contracts shall be accounted into
the financial incomes of the enterprises.
5. The companies
implemented profits shall be determined according to the financial expenses
prescribed in this Circular. The enterprise income serving as basis for
calculation of enterprise income tax shall be based on the expenses prescribed
in the Enterprise Income Tax Law and the sub-law guiding documents of the
Finance Ministry and other concerned ministries and functional branches.
C. PROFITS
AND USE OF PROFITS OF COMPANIES
1. The gross profits of a
company shall cover the business operation profits, the financial operation
profits and other profits.
The total implemented profits of
a company is the difference between the business operation turnover, the
financial operation turnover as well as other incomes against the costs of
consumed products, financial operation expenses and other expenses.
2. The companies
implemented profits, after the payment of enterprise income tax as provided for
in the Enterprise Income Tax Law and the offset for the preceding year’s losses
not deducted from pre-tax profits, shall be used under the owners decisions
according to the following directions:
a/ Deducting 10% for setting up
the financial reserve fund. When this fund balance represents 25% of the
charter capital, the deduction is no longer required.
b/ Deducting 5% for setting up
the job-loss allowance fund; when this fund balance is equal to six months
implemented wages, the deduction is no longer required.
c/ After subtracting amounts
prescribed in Items a and b, the remaining profit amount shall be used for:
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+ A maximum 10% - deduction to
set up the welfare fund;
+ A maximum 5% - deduction to
set up a fund to reward the Boards which manage and administer the companies.
The deduction level must not exceed VND 100 million provided that the ratio
between the implemented pre-tax profits and the owners capital of the companies
must be equal to or larger than the plan profit ratio; where the implemented
pre-tax profit ratio is lower than the plan profit ratio, the corresponding
reduction is required;
+ The minimum 30% - deduction to
supplement capital to the companies.
The remainder shall be retained
under the owners decisions to continue supplementing capital for the companies
or mobilize for investment in other enterprises or to remit to the Budget.
3. The financial reserve fund is
used to:
- Make up for property losses or
damage incurred in the business process after subtracting the compensation
money of concerned organizations and/or individuals and the insurance agencies.
- Make up for the companies
losses under decisions of the companies owners.
4. The job-loss allowance
funds are used to provide support for the laborers who have worked at the
enterprises and temporarily lost their jobs under the regulations of the State;
to provide funding for professional and technical retraining of laborers due to
technological changes or their transfer to new jobs or for training the
enterprises female laborers in reserve jobs.
5. The companies reward funds
are used for:
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6. The welfare funds are used
for:
- Investment in, or repair of
the welfare facilities of the companies or capital contribution to the
construction of joint welfare projects with units in the corporations,
ministries, branches, People’s Committees or other units as agreed upon in
contracts.
- Expenditures for sport and
cultural activities as well as public welfare of the labor collectives in the
companies.
- Contribution to funds or
expenditures for public welfare activities of local administrations where the
enterprises are headquartered (including charity work, the construction of
gratitude houses).
- Assistance to laborers in the
companies, including those who have retired, lost their working capacity or
left their jobs, who meet with regular or extraordinary difficulties.
7. The reward funds for
managerial and administrative boards are used for:
Rewards to the Managing Boards
of presidents, general directors, directors of the companies. The owners shall
decide the reward levels for the Managing Boards or the presidents of the
companies; the Managing Boards shall decide on the reward levels for general
directors or directors of companies according to results of the companies
activities.
8. The use of the
above-mentioned funds must be publicized according to the regulations on
grassroots democracy and the regulations of the State.
When the companies have not yet
paid all their debts and fulfilled other property obligations, they must not
make deductions for setting up of reward funds, welfare funds and reward funds
for managerial and administrative boards of the companies and the owners must
not withdraw profits of the companies. In this case, those who decide the
deductions for setting up other funds or distribute profits shall have to
recover them; if not, they shall have to pay compensations therefor.
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1. The companies shall draw up
investment schemes and plans as well as long-term and annual financial plans in
line with the business plans of the companies according to set forms.
2. The annual investment schemes
and plans shall be drawn up according to the provisions of the current
Regulations on investment and construction management.
3. The Managing Boards or the
company presidents shall decide on the companies financial plans and report
them to the owners for use as basis for supervision and evaluation of the
results of management and administration of business activities of the Managing
Boards (of the company presidents), general directors (or directors).
The norm on pre-tax profit ratio
on owners capital shall be used for determination of the deduction levels for
setting up the general directors funds from after-tax profits according to the
provisions in Clause 2, Part II of this Circular.
4. The companies must organize
and implement the work of internal audit according to the Finance Ministry’s
regulations in order to serve the work of administration by the general
directors or directors of the companies and the work of supervision and
inspection by the Managing Boards.
5. At the end of an accounting
period (quarter, year), the companies shall have to make financial reports
according to the financial regimes prescribed in this Circular, other relevant
guiding documents on finance and accounting and the charters of the companies.
The Managing Boards or the
company presidents have the task to verify the financial reports of the
companies and take responsibility for the truthfulness of the data in the
verified financial reports. After the verification, the companies shall send
the financial reports to functional bodies according to the current regulations
of the Finance Ministry and submit them to the owners for approval.
The owners must approve the
financial reports of companies within 15 days after receiving them. The written
approval of the financial reports must be addressed to the enterprises and the
financial report- receiving agencies according to the current regulations.
6. The companies shall have to
effect the financial publicity according to the regulations on grassroots
democracy and the regulations of the State.
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1. The ministries, the
ministerial-level agencies, the agencies attached to the Government, the
People’s Committees of the provinces and centrally-run cities, the
provincial/municipal Finance-Pricing Services, Tax Departments, the State
corporations and one-member limited liability companies shall have to strictly
follow the guidance in this Circular.
2. This Circular takes
implementation effect 15 days after its signing. If problems arise in the
course of implementation, the ministries, branches, localities and enterprises
are requested to report them in time to the Finance Ministry for study and
settlement guidance.
FOR THE FINANCE MINISTER
VICE MINISTER
Tran Van Ta