Thông tư 21/2014/TT-BTC

CIRCULAR

PROMULGATING THE REGULATION ON ACTIVITIES OF AUTHORIZED REPRESENTATIVES FOR STATE CAPITAL INVESTED IN ENTERPRISES1

Pursuant to the Government’s Decree No. 99/2012/ND-CP of November 15, 2012, on assignment and decentralization of the exercise of rights and performance of responsibilities and obligations of the state owner toward state enterprises and state capital invested in enterprises;

Pursuant to the Government’s Decree No. 61/2013/ND-CP of June 25, 2013, on the Regulation on financial supervision and assessment of operation effectiveness and financial publicity of stated-owned and state- invested enterprises;

Pursuant to the Government’s Decree No. 71/2013/ND-CP of July 11, 2013, prescribing the investment of state capital in enterprises and financial management of enterprises of which the State holds 100% of charter capital;

Pursuant to the Government’s Decree No. 215/2013/ND-CP of December 23, 2013, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of the director of the Corporate Finance Department;

The Minister of Finance promulgates the Circular on the Regulation on activities of authorized representatives for state capital invested in enterprises.

Article 1. To promulgate together with this Circular the Regulation on activities of authorized representatives for state capital invested in enterprises.

Article 2. This Circular takes effect on April 1, 2014.

Article 3. Authorized representatives for state capital invested in enterprises; agencies and organizations assigned, decentralized or delegated by the Government or the Prime Minister to act as owners of state capital invested in enterprises shall implement this Circular.-

REGULATION

ON ACTIVITIES OF AUTHORIZED REPRESENTATIVES FOR STATE CAPITAL INVESTED IN ENTERPRISES
(promulgated together with the Ministry of Finance’s Circular No. 21/2014/TT-BTC of February 14, 2014)

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. Scope of regulation: This Regulation prescribes activities of authorized representatives for state capital invested in enterprises; the relationship between owners of and authorized representatives for state capital invested in enterprises in the exercise of the rights and performance of the responsibilities and obligations of the owners (in the capacity as shareholders or capital contributors) in joint-stock companies or limited liability companies with two or more members.

2. Subjects of application: This Regulation applies to owners of and authorized representatives for state capital invested in enterprises; organizations and individuals related to activities of authorized representatives for state capital invested in:

a/ Enterprises in which the State holds more than 50% of charter capital. b/ Enterprises in which the State holds no more than 50% of charter capital.

Article 2. Interpretation of terms

In this Regulation, the terms and phrases below are construed as follows:

1. Owner of state capital invested in an enterprise (below referred to as owner of state capital) means a ministry, ministerial-level agency, People’s Committee of a province or centrally run city (below collectively referred to as line ministry or provincial-level People’s Committee) that is assigned or decentralized to exercise the rights and perform the responsibilities and obligations of the owner toward state capital invested in enterprises.

2. Authorized representative for state capital invested in an enterprise (below referred to as representative) means an individual who is authorized in writing by an owner of state capital to exercise the rights and perform the responsibilities and obligations of the latter, including:

a/ Representative working on a full time basis at the enterprise.

b/ Representative who is a cadre or civil servant of a state administrative agency (ministry or provincial-level People’s Committee) appointed to be part- time representative at the enterprise.

Chapter II

STANDARDS, ACTIVITY REGIME, TASKS, POWERS AND OBLIGATIONS OF REPRESENTATIVES AND RELATIONSHIPS BETWEEN REPRESENTATIVES AND RELATED ORGANIZATIONS AND INDIVIDUALS

Article 3. Authorized representatives must satisfy the following standards and conditions:

1. Being a Vietnamese citizen permanently residing in Vietnam.

2. Having full civil act capacity.

3. Possessing good moral qualities and being physically fit for the post.

4. Possessing legal knowledge and a sense of law observance.

5. Possessing professional university or higher qualifications, ability and practical experience of three or more years in corporate finance management, business and organization of corporate management relevant to the requirements of the post of authorized representative. In foreign-involved enterprises, the representative must have adequate foreign language skills to work directly with foreigners.

6. Not being a spouse, parent or adoptive parent, birth or adopted child or natural sibling of a manager or executive of the enterprise with state- contributed capital and of a person competent to decide on authorization of representatives.

7. To join the Board of Directors or Members’ Council or hold the post of general director or director of an enterprise, a representative must satisfy all standards and conditions of such post as prescribed by the Law on Enterprises; the charter of the enterprise; standards of leading and managerial

posts as prescribed by the Law on Cadres and Civil Servants for persons appointed to be representatives of enterprises with state-contributed capital.

8. Not being banned from business management by law.

9. Other standards and conditions as prescribed by the Government and other relevant laws.

Article 4. Number of representatives and content of written authorization of representatives

1. Owners of state capital may decide on number, composition and structure of representatives at enterprises with state-contributed capital in accordance with the Law on Enterprises as well as charters and characteristics of each of these enterprises on the following grounds:

a/ Charter capital of the enterprise;

b/ Percentage of state capital invested in the enterprise;

c/ Business line and characteristics of production and business activities of the enterprise;

d/ The development strategy and objectives of enterprises in line with the State’s orientation;

dd/ Other provisions of law.

In case the owner of state capital authorizes 2 (two) or more representatives, the former shall specify the quantities of shares and numbers of votes authorized to each representative and assign one of them to take overall responsibility (representative in overall charge).

2. Authorization of representatives by owners of state capital must be established in writing. A written authorization must include the following details:

a/ Tasks assigned to the representative;

b/ Performance assessment of the representative;

c/ Relief from duty, commendation and reward, and disciplining of the representative;

d/ Salary, bonus and remuneration payable to the representative based on performance of the representative;

dd/ Regulations on material compensation in case the representative commits acts causing damage to the interests of the owner and related organizations and individuals;

e/ Other contents (if any).

Article 5. Activity regime of representatives

1. A representative shall work under the following regime:

a/ Working on a full-time basis in the board of directors or an executive at the enterprise (Members’ Council, Board of Directors, Board of General Directors/Directors);

b/ Working on a part-time basis in the Members’ Council or Board of Directors.

2. Authorization duration of representatives:

a/ The authorization duration of a representative shall be decided by the owner of state capital according to the term of office of the Members’ Council or Board of Directors;

b/ In case of change of a representative during the term of office of the Members’ Council or Board of Directors, the authorization duration of the new representative is the remaining term of office of such Members’ Council or Board of Directors.

3. A representative authorized by the owner of state capital may not re- assign or re-authorize another person to represent him/her in voting or deciding on issues already authorized or decided by the owner of state capital.

Article 6. Tasks of representatives

1. Exercising the rights of shareholders or capital-contributing members assigned by the owner:

a/ Representatives at an enterprise in which the State holds more than 50% of charter capital shall obtain written opinions of the owner of state capital in order to give opinions, cast votes or make decisions at meetings of the Members’ Council or Board of Directors, Shareholders’ General Meetings or other meetings (if any) regarding issues prescribed in Clause 4, Article 20 of the Government’s Decree No. 99/2012/ND-CP of November 15, 2012, on assignment and decentralization of the exercise of the rights and performance of the responsibilities and obligations of the state owner toward state enterprises and state capital invested in enterprises;

b/ Representatives at an enterprise in which the State holds no more than 50% of charter capital may give opinions, cast votes or make decisions at meetings of the Members’ Council or Board of Directors, Shareholders’ General Meetings or other meetings (if any) regarding issues prescribed in Clause 4, Article 29 of the Government’s Decree No. 99/2012/ND-CP of November 15, 2012, on assignment and decentralization of the exercise of the rights and performance of the responsibilities and obligations of the state owner toward state enterprises and state capital invested in enterprises . For issues not prescribed in Clause 4, Article 29 mentioned above, which may affect the interests of the State, such as decreasing state capital or the percentage of state capital or other interests of the State (if any) at the enterprise, the representative shall obtain written opinions of the owner of state capital before giving opinions, casting votes or making decisions.

2. Reporting responsibility of representatives a/ Forms of reporting:

- Periodical (quarterly and annual) reporting: On the basis of financial statements and other reports of the enterprise, periodically (quarterly and annually), representatives prescribed at Point a, Clause 1, Article 6 of this Regulation shall summarize, analyze and evaluate the enterprise’s operations (according to form No. 01 attached to this Regulation).

Biannually and annually, representatives prescribed at Point b, Clause 1, Article 6 of this Regulation shall summarize, analyze and evaluate the enterprise’s operations (according to form No. 02). The owner of state capital may determine specific contents to be reported by the representatives on the basis of the ratio of state-contributed capital to charter capital of the enterprise.

Representatives shall send reports to the owner of state capital within 10 days from the deadline for making quarterly or annual financial statements prescribed in the Minister of Finance’s Decision No. 15/2006/QD-BTC of March 20, 2006.

- Reporting upon request:

Based on the management purpose of the owner of state capital and management requirements of the state management agency, pursuant to regulations or written notices of the owner of state capital or a competent state management agency, representatives shall provide information relating to the production and business or about the investment and financial status of enterprises. Representatives shall fully report all information as requested by the owner of state capital or state management agency.

- Reporting on unexpected events:

Representatives shall fully and timely report to the owner of state capital on unusual information of great impact on production and business activities of enterprises or on the interests of enterprises and the owners of state capital within 5 (five) days after obtaining such information, such as information that the enterprise’s bank account is blockaded; the enterprise suspends its business; the enterprise’s registration, establishment and operation license or operation license is revoked; a decision on institution of criminal case is issued against the enterprise’s Board of Directors or Executives or chief accountant; a court judgment or ruling is issued in relation to the enterprise’s activities; examination or inspection conclusions are issued by tax, examination, inspection or state audit agencies or disputes arise over assets, capital, land or labor, and other abnormal events (if any).

b/ Methods of reporting

- Representatives shall send written reports to the owners of state capital and state management agencies and take responsibility for reported contents.

- Written requests for opinions of the owners of state capital shall be made by representatives (according to form No. 03 attached to this Regulation) and sent to the latter at least 5 working days in advance (according to the stamp of incoming official letter) for the latter’s opinions (unless the deadline has been specified).

Within 15 days after the end of the meeting [of the Members’ Council or Board of Directors or of the Shareholders’ General Meeting or another meeting (if any)], representatives shall send the meeting minutes and other related documents to the owners of state capital (according to form No. 04 attached to this Regulation).

If the above time limit cannot be met due to a force majeure event, representatives shall notify the owners of state capital via means of communication (telephone, fax, email) for opinion.

- For secret information and documents, the provision of information between representatives and the owners of state capital or state management agencies must comply with current laws.

Article 7. Rights of representatives

1. To be considered and appointed by the owner of state capital to join the Members’ Council or nominated to join the Board of Directors in accordance with the Law on Enterprises, enterprise charter and other relevant laws.

2. To be authorized by the owner of state capital to give opinions and cast votes at meetings according to the quantity of shares (capital percentage) they are authorized to represent. For issues on which opinions of the owner of state capital must be sought, after receiving written approval of the owner of state capital, representatives shall contribute opinions, cast votes or make decisions in strict accordance with written directions of the owner of state capital. If there emerges any new issue that needs direction, to request the meeting to delay the voting or decision.

3. To enjoy salaries, bonuses and responsibility allowance (if any), remuneration and other benefits as prescribed by law.

4. To participate in professional and refresher training programs held by the owner of state capital.

5. Other rights as prescribed by law and enterprise charters and as authorized.

Article 8. Obligations of representatives

1. To strictly observe the provisions of law and charters of enterprises in which they act as representatives; regulations of the owner of state capital in the performance of assigned tasks and in the exercise of their rights and performance of their responsibilities.

2. To regularly monitor and collect information on the operation and results of production and business; to supervise the financial status; to send periodical (quarterly and annual) reports and irregular reports at the request of the owner of state capital and competent state agencies in accordance with law.

3. To promptly report and propose solutions to the owner of state capital on enterprises that operate at a loss; fail to ensure solvency; make investment at variance with objectives, strategies, master plans or plans; fail to achieve targets and tasks assigned by the owner of state capital, or other cases of violation.

4. Other obligations as prescribed by law.

Article 9. Relationships between representatives and owners of state capital

1. The owner of state capital shall:

a/ Appoint representatives to exercise the rights of shareholder or capital-contributing member in accordance with law and enterprise charters.

b/ Relieve from office, commend and reward and discipline representatives; decide on salaries, remuneration, bonus and responsibility allowance (if any) and other benefits of representatives; make assessment of representatives;

c/ Request representatives to make periodical or irregular reports on the investment, finance, use efficiency of state capital, and business results of enterprises;

d/ Examine and supervise activities of representatives, detect mistakes and weaknesses of representatives for prevention, handling and timely rectification;

dd/ Assign tasks to and direct representatives to protect the lawful interests and benefits of the State at enterprises. To request representatives to report (quarterly and annually) on the performance of their assigned tasks, powers, responsibilities and obligations;

e/ Issue the Regulation on performance-based assessment of representatives and, based on this assessment, decide on payment of salaries, remuneration, bonus and other benefits (if any) to representatives; issue written regulations on assignment and coordination among representatives (in case of having two or more representatives) at an enterprise and between representatives and the owner of state capital;

g/ Give timely written directions when requested by representatives within 15 working days (from the date of receipt on the stamp of receipt of incoming official letters or of receipt of a notification via means of communication (telephone, fax, mail) or another time as requested, for representatives to know and follow. In case of lack of documents and grounds for giving opinions, within three (3) working days (after receiving documents or notifications via means of communication), the owner of state capital shall notify such in writing to representatives for supplementation of documents and information;

h/ Perform other responsibilities as prescribed by law.

2. Representatives shall fully perform the tasks prescribed in Article 6 of this Regulation and the following:

a/ Every January, to prepare annual work plans and report them to the owner of state capital.

For representatives at enterprises in which the State holds more than 50% of charter capital, they shall put forward plans, orientations and measures for their activities at these enterprises to the owner of state capital for approval in order to direct the enterprises to perform the objectives and strategy set by the State.

b/ To draft the Regulation on Activities of Representatives and submit it to the owner of state capital for approval.

c/ Within 15 days from the end of a quarter and 30 days from the end of a year, to send to the owner of state capital reports on the situation and content of their activities.

Article 10. Relationships between representatives and enterprises with state-contributed capital

1. Enterprises with state-contributed capital shall fully provide dossiers, documents and information relating to their production and business activities, investment, financial status and other issues (if any) to representatives upon request in accordance with the Law on Enterprises and their charters.

2. When sending reports to the owner of state capital and state management agencies, representatives shall concurrently send them to their enterprises. If enterprises hold different opinions compared to representatives’ reports, assessments and remarks, within 10 working days after receiving representatives’ reports, enterprises shall send documents to the owner of state capital for consideration.

3. Representatives at enterprises in which the State holds more than 50% of charter capital, when sending reports to the owner of state capital, shall collect opinions of their enterprises. If enterprises hold different opinions compared to representatives’ reports, assessments and remarks, enterprises shall discuss and explain their opinions directly to the representatives in order to reach agreement on these reports, assessments and remarks. After discussion, if there remain different opinions, they shall follow the provisions of Clause 2 of this Article.

Article 11. Relationships between representatives

1. Representatives shall take direct responsibility for the results of work assigned by the owner of state capital and together with other representatives take responsibility for overall results of their activities (if enterprises have two or more representatives).

2. Representatives who are assigned by the owner of state capital to act as representatives in overall charge shall summarize opinions and data provided by all representatives in work reports, programs and plans and send them to the owner of state capital, and also take responsibility for overall results of activities of representatives (if enterprises have two or more representatives).

Chapter III

ORGANIZATION, IMPLEMENTATION

Article 12. Organization, implementation

1. Based on this Regulation and other regulations of the Government, within 90 days from the effective date of this Circular, line ministries and provincial-level People’s Committees assigned, decentralized or delegated to act as owners of state capital at enterprises shall promulgate regulations on activities of authorized representatives in conformity with the enterprises’ charters and their practical conditions; and regulations on performance-based assessment of representatives serving as the basis for deciding on contents related to representatives such as commendation and reward, disciplining, benefits, continuation or termination of authorization, or replacement of representatives, and other contents (if any).

2. For representatives who are performing tasks before the effective date of this Circular, within 60 days from the effective date of this Circular, line ministries and provincial-level People’s Committees assigned, decentralized or delegated to act as owners of state capital at enterprises shall review and adjust contents of written authorizations for representatives.

3. Parent companies - groups, corporations, companies organized after the parent company-subsidiary company model in which the State holds 100% of charter capital; companies with state-contributed capital and organized after the parent company-subsidiary company model; and the State Capital Investment Corporation (SCIC) shall, pursuant to this Circular, formulate regulations on activities of authorized representatives at enterprises to which they contribute capital.

Any difficulties and problems arising in the course of implementation should be promptly reported to the Ministry of Finance for amendment and supplementation.-