Thông tư 28/2015/TT-BTC

CIRCULAR

PROMULGATING VIETNAM’S VALUATION STANDARD NO. 05, 06 AND 07

Pursuant to the Price Law No. 11/2012/QH13 dated June 20, 2012;

Pursuant to the Government’s Decree No. 89/2013/NĐ-CP dated August 06, 2013 on providing detailed regulations on implementation of several articles of the Price Law on the valuation;

Pursuant to the Government's Decree No. 215/2013/NĐ-CP dated December 23, 2013 defining the functions, tasks, entitlements and organizational structure of the Ministry of Finance;

At the request of the Director of the Price Management Department;

The Minister of Finance hereby promulgates Vietnam’s valuation standard No. 05, 06 and 07.

Article 1. This Circular shall be introduced together with 3 valuation standards of Vietnam with code numbers and titles as follows:

- Vietnam’s valuation standard No. 05 – Valuation process;

- Vietnam’s valuation standard No. 06 – Valuation report, certification and documentation;

- Vietnam’s valuation standard No. 07 – Asset classification;

Article 2. Effect

1. This Circular shall come into force from April 20, 2015.

2. Vietnam’s valuation standards including standard No. 04 – asset valuation report, documentation and certification issued together with the Decision No. 24/2005/QĐ-BTC of the Minister of Finance dated April 18, 2005 on promulgating 03 valuation standards of Vietnam; standard No. 05 – asset valuation process issued together with the Decision No. 77/2005/QĐ-BTC of the Minister of Finance dated November 1, 2005 on promulgating 03 valuation standards of Vietnam (2^nd edition); stander No. 12 – Asset classification issued together with the Decision No. 129/2008/QĐ-BTC of the Minister of Finance dated December 31, 2008 on promulgating 06 valuation standards (3^rd edition), shall become invalid from the effective date of this Circular.

Article 3. Implementation

1. The Price Management Department shall preside over, collaborate with relevant agencies in directing, providing guidance on and examine implementation of regulations laid down in valuation standards issued together with this Circular and other relevant legislative documents.

2. In the course of implementation, if there is any difficulty that may arise, implementing agencies shall be advised to send feedbacks to the Ministry of Finance to seek any proper solution, amendment or supplementation./.

VALUATION STANDARD SYSTEM OF VIETNAM

VIETNAM’S VALUATION STANDARD NO. 05

Valuation process

(Code: TĐGVN 05)

(Issued together with the Circular No. 28/2015/TT-BTC of the Ministry of Finance dated March 6, 2015)

I. GENERAL PROVISIONS

1. Scope of application: This standard shall stipulate and provide guidance on implementing the valuation process in accordance with legal regulations.

2. Applicable entities: The valuers who are practicing the valuation profession, and valuation enterprises and other organizations and individuals who carry out valuation operations under the provisions of the Price Law and other relevant legislative documents.

3. Clients who are offered the valuation service and the third party who uses the valuation result (if any) under the valuation contract must have necessary knowledge about regulations enshrined in these standards in order to cooperate with valuation enterprises in the course of valuation.

II. STANDARD CONTENTS

1. Valuation process shall go through the following steps:

Step 1. General determination of to-be-valued assets, and determination of market or non-market values which shall be used as the basis for the valuation.

Step 2. Formulation of the valuation plan.

Step 3. Actual survey and information collection.

Step 4. Information analysis

Step 5. Determination of value of to-be-valued assets.

Step 6. Formulation of the report on the valuation result and valuation certification, and delivery of this valuation report and certificate to clients as well as other parties concerned.

2. General determination of to-be-valued assets, and determination of market or non-market values which shall be used as the basis for the valuation, shall go through the following steps:

a) Determining basic legal, economic, technical characteristics of to-be-valued assets which affect the value of assets to be valued at the valuation date. Where there is any restriction on determination of these characteristics, this restriction must be clearly stated in the report on valuation result and certification.

b) Specifying entities that use the valuation result: Entities that use the valuation result shall be the clients who are offered valuation services and the third party that uses the valuation result (if any) under the valuation contract.

c) Defining the valuation objective and valuation date.

The valuation objective and period shall be defined after the written request sent by competent authorities, clients or the valuation contract has been obtained. The valuation objective and period must be clearly defined in the valuation contract and the report on the valuation result and certification.

The valuer needs to consult with their clients in order to determine the valuation objective and period which are consistent with the use of valuation certificate.

d) Determining the basis of valuation.

After considering the valuation objective and legal, economic, technical and market characteristics of to-be-valued assets, the valuer shall determine whether the basis of valuation will be the market or non-market value of these assets.

In the valuation report, the valuer must analyze information or data concerning the above-mentioned bases, and use the Vietnam’s valuation standard No. 02 pertaining to the market value and the Vietnam's valuation standard No. 03 pertaining to non-market value used as the basis for the valuation process in order to clearly determine whether the basis of valuation will be the market or non-market value of to-be-valued assets.

e) Determining assumptions and special assumptions

The valuer can make assumptions about restricted or unclear information that can affect the value of to-be-valued assets in case there is no measure to be taken to deal with such restriction. Information restrictions shall consist of those on the legal documentation of to-be-valued assets, characteristics of to-be-valued assets or those on other information that may affect the estimation of asset value.

Example: In the course of valuing a land plot owned by a factory, the valuer has collected information to suppose that this land plot is likely to be polluted but has no reasonable ground for reaching a conclusion that this land plot is really polluted. The valuer can assume that this land plot is not contaminated when the expense incurred from determination of pollution level is very high and unnecessary in comparison with the valuation context and scope. Another example is the valuation of an enterprise’s commercial brand-name. The valuer may assume that that enterprise shall continue to operate in a long-term manner though this long-term operation is not quite sure.

The special assumption is the one that supposes that the current status of assets is different from the assumed status of assets at the valuation date. However, this assumption must be made conform to the purpose of valuation requested by clients. For instance, a building under construction is valued on the special assumption that the building will have been completed at the valuation date; or when an enterprise has been dissolved by the valuation date but clients insist that such enterprise must be valued in case it is still operating at the valuation date.

Assumptions and special assumptions must be logical and align with the valuation objective. Special assumptions must be advised and approved by clients offered valuation services and must adhere to relevant legal regulations.

In the process of valuation, if the valuer discovers that the assumption is not logical or supported by insufficient grounds or should be made in the form of a special assumption, such assumption must be reviewed and discussed with the legal representative of valuation enterprise (or authorized person in charge of valuation matters) and with clients, based on which any proper solution will be suggested. If the valuation is carried out on the basis of a special assumption which make it become infeasible, this special assumption needs to be eliminated.

Assumptions or special assumption needs to be clearly explained in the valuation report under the provisions of Vietnam’s valuation standard No. 06 – the report on the valuation result, certification and documentation.

3. Formulation of the valuation plan shall follow the following process:

a) Drawing up the valuation plan is to serve the purpose of clearly defining the work scope, content and timeline in which each content of work is implemented, and the progress in which the entire valuation is implemented.

b) The content of the valuation plan shall include:

- Determining objectives, requirements and contents of work.

- Determining valuation methods or approaches.

- Identifying necessary data for the valuation as well as documents that need to be collected about market, to-be-valued assets or comparable assets.

- Identifying and developing sources of materials, ensure that such sources of materials must be reliable and proven, including inspection of documentation and materials about to-be-valued assets.

- Creating the implementation timeline, identifying the steps in collecting and analyzing data as well as the permitted deadline for each valuation step.

- Determining arrangement for implementation and resource distribution, including assignment of the valuer and assistant officers who assist the valuer in fulfilling the valuation requirements from clients, and ensuring that the process of valuation quality control for an enterprise must be followed.

- Determining which contents of work may require independent third party experts (if any).

4. Actual survey and information collection

Information sources that need to be collected and are used in the valuation process shall consist of information provided by clients; information obtained from the actual survey; information achieved from asset trading transactions on the market (for example, the actual trading price, offer price, bid price, trading terms and conditions, transaction volume, time and location); information provided through means of local or central mass media and those administered by competent authorities; information given in documents showing the legality of rights of the owner, economic and technical characteristics of assets, and the planning for economic and social development in regions or areas which relates to assets.

The valuer shall be responsible for carrying out their information verification in order to ensure that such information is accurate and reliable before analyzing them as well as applying valuation approaches and methods. With regard to information provided by clients, if any incomplete, insufficient or skeptical content of such information or documentation is detected, the valuer must promptly request clients to make it sufficient or have it verified or clarified.

The valuer shall get involved in the survey and append their signature on the record of survey of the current status of assets and collect inputs and data of to-be-valued assets and other comparable assets (in case comparable assets are need). Full-view and detailed photos of assets must be taken.

As for specific assets, the valuer needs to identify factors influencing the value of such assets and proceeds to collect information concerning these factors, predetermined valuation approaches or methods.

For example, information about several groups of assets shall consist of the followings:

- Machinery or equipment: Survey and collect information about economic and technical criteria and characteristics, and characteristics of technology line, manufacturer, origin, brand name, manufacturing year, the year when they are brought into operation, capacity, extent, size, material, depreciation level and other characteristics that can affect the value of such assets and comparable assets (if any). Additionally, the valuer needs to collect more information about how such assets are consumed or distributed on the market (widespread or exclusive distribution or any other form).

- Real property: Survey and collect data and inputs concerning its actual location, comparison of its location with the location of other real property at the same area, description of legal characteristics of such real property; land size and architectural structures attached to such land; geometric features; architectural types and building materials; completion date and the date on which the building structure will be brought into operation, lifetime, repair and maintenance status; infrastructural facilities (water supply and disposal, telecommunication, electricity, road, parking lot systems and other elements); landscape and surrounding environment; use of such assets determined at the valuation date; data about economy, society, environment, planning and other elements influencing the value of real property, characteristics of real estate market which serve the purpose of distinguishing the area where to-be-valued assets are located with the adjacent areas; information about natural, economic and social elements influencing the use of assets (such as geology, cadastral map, planning, administrative boundary, infrastructure and others).

- Enterprise: Survey and collection data about its business scope, rank in comparison with others in the same industry (if any), shareholders, managerial capability, connection between this enterprise with clients and suppliers; revenues and expenses; current status of assets, total equity specified at the valuation date; economic, political, scientific and technological environment, competitors, state management of the enterprise; other information influencing the value of the enterprise.

- Financial asset: Survey and collection information about market, revenues earned from such financial asset, rights and benefits obtained from the possession of such asset, and its liquidity. As for each type of financial asset, the valuer shall collect data and inputs concerning evaluation indicators applicable to each type of specific financial asset as well as other characteristics influencing the value of financial asset.

Additionally, the valuer shall collect information pertaining to the legal characteristic of such asset; relevant information about expenses, selling price, interest rate, tax and revenue policy, requirements for to-be-valued asset or comparable asset transaction (if any); information about supply – demand, entities participating in the market, preference and behavior of potential buyer – seller, inflation and price index of specific asset groups (if any).

5. Information analysis

This is the process of analyzing all of information relating to to-be-valued assets and comparable assets, which serves the purpose of evaluating the impact of elements on the final evaluation result as follows:

a) Analyze information about the legal, economic and technical characteristic of assets.

b) Analyze information about the market of to-be-valued assets: supply – demand; change to policy and law; scientific and technological growth as well as other factors.

c) Analyze the highest and best use of an asset.

The valuer shall analyze the best use of an asset in order to ensure that it will be used in a legal and reasonable manner in order to meet permitted technical and financial conditions and produce the highest value for such asset.

The highest and best use of an asset valued on a stand-alone basis may be different from its highest and best use as part of a group. Then, its contribution to the overall value of the group must be considered. The highest and best use of an asset may be different from the present use of an asset. With the intention of determining the highest and best use of an asset, the valuer shall need to analyze and point out possibilities of using an asset so that all legal, natural and financial factors are respected. In order to do this, the valuer is required to evaluate the use of an asset on the following specific aspects:

- In terms of the legal requirement for the use of such asset, restrictions on the use of such asset that have been determined under the terms and conditions of a contract or under the provisions of legal regulations. Example:

+ A long-term lease contract may cause any impact on the highest and best use of an asset because the use of such asset in the remaining term of this lease contract may be restricted.

+ Government’s regulations on development, construction, restoration, maintenance, inspection, environment and social impact on the use of such asset also causes a significant impact on determination of the use of an asset.

With respect to real property, the legislative requirements that cause an impact on the highest and best use of an asset may be regulations on construction and zoning designation (usually reflected in most of decisions on the highest and best use), construction laws or regulations stipulating restrictions on construction of a land plot or the land parcel developed to serve the purpose of the highest and best use by means of imposition of restrictions which can cause the construction cost to soar.

- Material and technical relevance to the use of an asset: The highest and best use of an asset shall be subject to consideration of material and technical factors such as size, design and natural impacts as well as other material or technical factors. The highest and best use of several assets may occur when they are used in combination with some of other predetermined assets. Under this circumstance, the valuer must determine the feasibility and possibility of combining this asset with these predetermined assets in order to make a decision on the highest and best use of such assets.

- Financial feasibility: After ensuring that the first criteria has been met, the valuer is required to analyze more criteria to determine the capability of generating revenues or incomes equal to or greater than the necessary monetary sum to meet the expenses of operations, use, fulfillment of financial obligations as well as capital recovery. All plans to use an asset with the aim of generating the positive net income shall be deemed feasible in terms of the financial aspect.

In order to determine the financial feasibility, the valuer must estimate the aggregated prospective income that may be earned from each potential utilization of an asset. Blank accounts, loss or operating expense and other necessary costs incurred from the potential use of an asset shall be deducted from the revenue to achieve the net operating income. If the revenue generated from the use of an asset is sufficient to achieve the return on investment ratios and produce the prospective income, such use proves its financial feasibility.

Meanwhile, out of the uses that have proved its financial feasibility, the use of an asset that can generate the highest amount of revenues in conformity with the rate of return in the industry sector shall be considered the highest and best use. 6. Valuation of a to-be-valued asset

Based on valuation approaches stipulated in Vietnam’s valuation standards promulgated by the Ministry of Finance, the valuer shall analyze and select the valuation method which are appropriate and relevant to the valuation objective, the underlying value of an asset, availability of valuation inputs and data used to apply this valuation method, and compliant with relevant legal regulations (if any).

The valuer shall apply 02 valuation methods or more to an asset in order to collate the valuation results and reach accurate conclusions about the valuation results, unless otherwise stipulated by legal regulations of specific specialized agencies. When applying different valuation methods, the valuer is required to appraise and specify the main valuation method, the valuation method applied for the examination or collation purposes according to which they shall carry out their analysis and calculation before reaching the final valuation result.

In case the comparison method is applied but there are only 02 (two) comparable assets, the valuation result obtained by applying the comparison method shall only be used to compare and collate the valuation the valuation result achieved by applying other valuation methods.

The valuer shall be entitled to use 01 (one) valuation method in the following cases:

- The comparison approach is adopted when there are many data and inputs from transactions (at least 03 transactions) of comparable assets on the market that take place close to the valuation date.

- There is a lack of information necessary for applying 02 (two) valuation methods or more and there are sufficient grounds for any failure to deal with the restrictions on information.

7. Formulation of the valuation report, certification and delivery of the valuation report and certificate to clients or interested parties.

- The valuation report and certification shall be formulated under the provisions of Vietnam’s valuation standard No. 06 – the report on the valuation result, certification and documentation.

- Determination of the date on which the valuation certificate begins its validity: the effective date of the valuation certificate shall be the date on which the valuation certificate is issued.

- Determination of the validity term of the valuation result:

The validity term of the valuation result is determined on the basis of legal, economic and technical characteristic of to-be-valued assets; any change to the legislation and market concerning such asset and the valuation objective but does not exceed 6 (six) months from the date on which the validation certificate begins its validity.

- The valuation report and certification, after being signed for issuance by the valuation enterprise or its branch in accordance with legal regulations, shall be delivered to clients and the third party for the purpose of use of the valuation result (if any) as agreed upon in the valuation contract that contracting parties have signed./.

VIETNAM’S VALUATION STANDARD SYSTEM

VIETNAM’S VALUATION STANDARD No.06

Report on the valuation result, valuation certification and valuation documentation

(Code: TĐGVN 06)

(Issued together with the Circular No. 28/2015/TT-BTC of the Ministry of Finance dated March 06, 2015)

I. GENERAL PROVISIONS

1. Scope of application: This Standard shall stipulate the reporting content and rules of the valuation result, valuation certification and documentation for asset valuation operations as prescribed by laws.

2. Applicable entities: The valuers who are practicing the valuation profession, and valuation enterprises and other organizations and individuals who carry out valuation operations under the provisions of the Price Law and other relevant legislative documents.

II. STANDARD CONTENTS

1. The report on the valuation result

The report on the valuation result (hereinafter referred to as the valuation report) must show genuine, descriptive and evidence-based information to give a note to the price level of to-be-valued asset. Such information must be arranged in a scientific and logical order, and describe the characteristics of assets as well as factors influencing the value of these assets. The valuation report must offer an argument and analysis for market data or inputs that help to formulate the valuation result. The valuation report shall be an integral part of the valuation certificate.

The detailed content of the valuation report is likely to change depending on the valuation entity, purpose and request for the valuation and the request made by clients. However, a valuation report must comprise the basic contents as follows:

a) Information about the valuation enterprise or branch eligible for issuing the valuation certificate.

Name and address of the valuation enterprise, transaction offices of that enterprise (if any). Name and address of branches of the enterprise issuing the valuation report and certificate.

b) Significant information about the valuation:

- Information about asset valuation clients, the number of the valuation contract and/or request/petition for the valuation.

- Name of the to-be-valued asset.

- Valuation date.

- Valuation objective

- Different sources of information used in the valuation process and the extent of examination and appraisal of such information.

- Legal grounds for the valuation: legislative documents about the valuation, Vietnam’s valuation standard applications in the valuation process, other legislative documents issued by central or local competent authorities concerning the valuation, legal documents concerning the to-be-valued asset.

c) General information about the market, information about the transaction market of asset group (category).

d) Information about the to-be-valued assets, including relevant detailed description and analysis such as name and category of the asset, legal, economic and technical characteristics of that asset.

Information about characteristics of several to-be-valued assets shown in the Appendix No. 01; materials showing the legal and technical characteristics of several to-be-valued assets shown in the Appendix No. 02 issued together with this Standard.

dd) The basis of asset value: The valuer is required to offer the sufficient grounds or arguments to determine whether the basis of the asset valuation shall be market or non-market value. Each asset to be valued in the valuation process in which only one basis of valuation is either market or non-market value.

e) Assumption and special assumption

The valuer is required to specify assumptions or special assumptions used for the valuation, bases for making such assumptions as well as the influence of these assumptions over the valuation result.

g) Application of valuation approaches and methods:

The valuer is required to clarify the selected application of valuation approach and method, and bases for choosing such valuation approach and method.

When applying valuation approaches and methods, the valuer is required to supplement his/her valuation report with any argument, ground, analysis, evidence, data, inputs, worksheet and other factors for any modifications or calculation in the whole valuation process. Sources of data and inputs used in the valuation report must be clearly cited.

h) The valuation result

i) The validity term of the valuation result

k) Exclusion and limitation clauses:

- The valuer shall consider the valuation contract or written request/petition for the valuation, asset type, and the nature of the valuation in order to lay down proper exclusion and limitation clauses.

- Exclusion and limitation clauses shall include obligatory requirements for scope of work, work extent and other requirements for limitations. Example: Unclear legislative status of the asset, restrictions on data and inputs that need to be collected, etc.

- The valuer shall need to evaluate the influence degree of limitations; concurrently recommend measures (if any) to be taken to deal with such limitations in the valuation process.

- The valuer shall need to specify personal rights and benefits (if any) concerning to-be-valued assets, interest conflicts that may arise in the valuation process.

l) Particulars and signature of the valuer and legal representative of the valuation enterprise or the authorized representative in charge of valuation operation (if any) of the valuation enterprise that implements the reporting of the valuation result:

- Name, ID card number and signature of the valuer who are held responsible for carrying out valuation operations in conformity with his/her practicing certificate at the valuation enterprise.

- l) Full name, ID card number and signature of the legal representative of the valuation enterprise or the authorized representative in charge of valuation operations (if any) of the valuation enterprise, and the stamp of the valuation enterprise, in case the valuation report is issued at the valuation enterprise. Full name, ID card number and signature of the head of the branch of the valuation enterprise and the stamp of the branch of the valuation enterprise, in case the valuation report is issued at the branch of the valuation enterprise eligible for issuing the valuation certificate in accordance with the valuation enterprise’s delegation.

m) Appendices shall include:

- List of documents and information about the valuation.

- Documents showing the legislation and economic and technical characteristics of to-be-valued assets.

- The result of the actual survey of to-be-velued assets.

- Other contents relating to the valuation (if any).

Additionally, the valuer is required to cite the sources of information, data or inputs used in the valuation report.

The valuation report sample shall be stipulated in the Appendix 03 and 04 issued together with this Standard.

2. Valuation certification

The valuation certification shall include the significant information as follows:

- The number of the valuation contract and/or request/petition for the valuation.

- Information about the valuation clients.

- Significant information about the asset to be valued (name, category of that asset, legal, economic and technical characteristics of the asset).

- Valuation objective.

- Valuation date.

- Legal base.

- Basis of asset valuation.

- Assumption and special assumption

- Valuation approach and method.

- Exclusion and limitation clauses governing the valuation result.

- The final valuation result.

- Full name, ID card number and signature of the valuer who is held responsible for carrying out valuation operations in the valuation report.

- Full name, ID card number and signature of the legal representative of the valuation enterprise or the authorized representative in charge of valuation operations (if any) of the valuation enterprise, and the stamp of the valuation enterprise, in case the valuation report is issued at the valuation enterprise. Full name, ID card number and signature of the head of the branch of the valuation enterprise and the stamp of the branch of the valuation enterprise eligible for issuing the valuation certificate at that branch in accordance with the valuation enterprise’s delegation.

- The validity term of the valuation result.

- Any appendix attached thereto (if any).

The valuation certificate sent to clients shall include the report on the valuation result. The valuation certificate sample shall be stipulated in the Appendix 05 issued together with this Standard.

3. Valuation documentation

 a) The valuer shall be responsible for formulating the valuation documentation to prove that the valuation process has conformed to Vietnam's valuation standards and relevant legal regulations on price.

The valuation documentation shall be utilized under the provisions of laws on price and document storage. The utilization of the valuation documentation must ensure the confidentiality in accordance with legal regulations.

b) The valuation documentation shall consist of all necessary information and materials and serve the purpose of valuing assets to generate the final valuation result. Documents included in the valuation documentation must be classified and arranged in order and expressed on paper, film or other information-bearing articles in accordance with applicable laws. The composition of valuation documentation may be different, depending on the valuation objective and type of assets to be valued.

c) Storage of valuation documentation

The valuation documentation must be stored on paper and in an electronic database as from the date on which the valuation certificate is issued at the valuation enterprise or the branch of the valuation enterprise eligible for issuing the valuation certificate. Depending on the form of storage, the valuation documentation is required to include all of basic information and materials as follows:

* The valuation documentation stored on paper is required to include:

- Name and serial number of the valuation document, formulation and storage date.

- Basic information and contact address of valuation clients.

- Basic information about the valuer and all of the valuation enterprise’s officers assigned to participate in the valuation process.

- An original or duplicate of the valuation contract and contract termination record (if any), or an original of the written request/ petition for the valuation.

- Information and documents about legal, economic, technical characteristics of the asset, enterprise to be valued and comparable assets (if any).

- The report of the expert who are hired to give their expert advice on the valuation (if any).

In case advisory experts are asked to give their expert advice on the design capacity, utility and function of equipment, machinery and technology line, the valuation report must clarify the consultation objective, time and conclusion of these advisory experts.

- The survey record enclosing the judgement and signature of the valuer who carries out their actual survey activities. The survey record must include the objective, time and name of the participants in the actual survey, the result gained from the actual survey and any difference (if any) between the field survey and the legal documentation as well as the reason for such difference.

- All of documents and collected information, inclusive of onsite photo, and other necessary materials or information used for generating the valuation result.

- Documents about the valuer's analysis and assessment of relevant issues relating to the valuation.

- An original report on the valuation result and appendices attached thereto.

- An original valuation certificate and appendices attached thereto.

* The valuation documentation stored in an electronic database is required to include:

- Name and serial number of the valuation document, formulation and storage date.

- Basic information of the valuer who bearing main responsibility and other participants in the valuation process.

- The basic content included in the valuation result, valuation certification, appendices and worksheet attached thereto (if any).

- Citations or references from which data and inputs are obtained.

d) The minimum term of storage shall be 10 (ten) years which is applicable to the paper-based valuation documentation and permanent which is applicable to the electronic valuation documentation. The valuation enterprise must take proper measures to maintain the confidentiality, safety, integrity, accessibility and restorability of the valuation documentation within the valid storage term.

As for the valuation documentation of which the valid storage term has expired, it will be destroyed under the provisions of laws./.

APPENDIX 01

INFORMATION ABOUT CHARACTERISTICS OF SEVERAL ASSETS TO BE VALUED
(Issued together with the Vietnam’s valuation standard No. 06)

As for each valuation method, the valuer can choose information required to be collected in order to ensure the accuracy of the valuation result. Specific information required to be collected shall be governed under the provisions of the Vietnam's valuation standard system issued by the Ministry of Finance. Several specific information about several assets to be valued shall include:

1. The legislation, economic and technical characteristics of assets to be valued shall be shown through the following information:

a) Real property:

- Geographical and administrative location.

- As for residential land: land plot number, cadastral number, land size, street grade, and land group.

- As for agricultural and forestry land: land plot number, cadastral number, land size, land grouping, weather condition, geographical characteristic, traffic, irrigation and water disposal infrastructure.

- As for architectural structures built on the land (house, road, bridge, etc.): house type, grade, rank, land size and usable land size (m²), house quality (the remaining usable percentage and life cycle), use purpose, house structure, built-in room quantity, usable room size, electricity, water supply and discharge system, the date on which such structures are brought into operation, repair and maintenance status; type and rank of traffic infrastructure.

- The location of that real property in comparison with nearby centers, natural conditions and surrounding areas, land plot shape, distance between such land and public traffic system, restaurant, school, park, hospital and main roads.

- Planning and zoning characteristics of the land plot, house and architectural structures built on that land plot.

- Checking of the current use of the real property to determine whether that real property is used in conformity with the zoning or planning designation and is likely to generate the optimal value.

- Economic benefits achieved from the real property (if the real property is leased, lease price, term and contract as well as monthly income gained from production and trading activities must be specified).

b) As for machinery, equipment, technology line, transport, material or commodity:

- Capacity of machinery and equipment.

- Characteristic of technology line.

- Technical norms or material and commodity quality.

- Manufacturing year, factory name, manufacturing country and brand name.

- Basic technical signs such as serial code, ship number, register number and other technical signs.

- Year that the use of that real property begins.

- Amortization rate specified at the valuation date.

2. The legislation characteristics of several assets to be valued shall be shown through the following information:

a) As for real property: the valuer shall check information about the Certificate of rights to use land, ownership of house and property attached to land; information about asset origin (house, land, etc.); information about asset purchase, sale, assignment, transfer, inheritance, gift of the asset; information about any dispute over the real property (if any).

b) As for machinery, equipment, technology line, transport, material or commodity:

- The legal ownership of such assets proved by invoices received from sale, purchase and lease transactions or other legal documents.

- Assets of unknown origin.

APPENDIX 02

DOCUMENTS INDICATING THE LEGISLATION, TECHNICAL CHARACTERISTIC OF ASSETS TO BE VALUED

(Issued together with the Vietnam’s valuation standard No. 06)

The legislation, economic and technical characteristics of the asset to be valued shall be shown through the following documents:

1. As for real property:

- Copy of the detailed zoning map of the region (if any).

- Certificate of land use right and ownership of house and property built on land (if any).

- One of certificates of real property origin (if the Certificate of right to use land, ownership of house and property attached to land has not been granted) including:

+ Land allotment, lease and transfer of residential land use purpose granted by the competent authority.

+ Decision to allocate house, land made by the head of an agency.

+ House purchase contract of the organization that has legal standing and obtain the allotted land used for developing commercial houses from competent authorities.

+ Documents about the residential land issued by the competent authorities of the old regime.

In case the owner of the real property keeps the aforesaid documents but these bear another name other than the user's name, supporting documents must be attached to give evidence. Example: Documents proving the house sale and purchase, inheritance, division and gift of that real property.

- House construction permit, construction design drawing, site plan and other drawings (copy).

- Details of the planning drawn up by local authorities or urban planning office (copy).

- Real property sale, purchase or lease contracts (copy).

- Full-view photo of the real property.

- Other materials proving the legislation characteristic of the real property.

2. As for other materials, machinery, equipment and commodities:

- Contract to sell or purchase other materials, machinery, equipment and commodities.

- Invoices of sale, purchase of materials, machinery, equipment and commodities; other documents showing the legislation, economic and technical characteristics of such materials, machinery, equipment and commodities.

- Economic and technical catalogue, parameters of materials, machinery, equipment and commodities.

- Documents showing the legislation and economic and technical characteristics of assets to be valued.

APPENDIX 03

VALUATION REPORT FORM APPLICABLE TO THE VALUATION ENTERPRISE

(Issued together with the Vietnam's valuation standard No. 06)

REPORT ON THE VALUATION RESULT

(Enclosed with the valuation certificate No…………..dated…………….)

1. Information about the valuation enterprise

Name, address of head office and transaction office of the enterprise (if any).

2. Basic information about the valuation

- Information about asset valuation clients, the valuation contract number and/or request/petition for the valuation.

- Name of the to-be-valued asset.

- Valuation date.

- Valuation objective.

- Different sources of information used in the valuation process and the extent of examination and appraisal of such information.

- Legal base for the valuation.

3. General information about the market, information about the transaction market of asset group (category) to be valued

The following information may be included:

- General information about the market

- Current state and prospect of supply and demand of group or category of assets to be valued.

- Analysis of replacement or competitive assets.

- Information about economic, social factors and other factors influencing the value of assets.

- Other relevant information.

4. Information about the asset to be valued

Based on the result of the actual survey, information collection and analysis, detailed information about the asset to be valued under the guidance of the Appendix No. 1 of this standard may be shown.

5. Basis of the asset valuation

6. Assumption and special assumption (if any).

7. Valuation approach and method.

a) Applicable valuation approaches and methods

- Specify the basis for selecting the valuation approach and method

-In case different valuation methods are applied, determine the main valuation method, the valuation method applied for the purpose of examination or collation according to which they shall carry out their analysis and calculation before reaching the final valuation result.

-In case only one valuation method is applied, specify the reason.

b) Determination of value of assets to be valued

- Based on the selected valuation approach and method, show any argument, analysis, evidence, data, inputs, worksheet, etc. for any modification or calculation in the whole valuation process in order to value the asset to be valued. Sources of data and inputs used in the valuation report must be clearly cited.

- The valuation result

8. The validity term of the valuation result

9. Exclusion and limitation clauses

10. Any appendix attached thereto

- List of documents and information about the valuation.

- Documents showing the legislation and technical characteristic of the asset to be valued (the detailed guidance shown in the Appendix No. 2 of this standard).

- The result of the actual survey of to-be-velued assets.

- Other contents relating to the valuation (if any).

The report on the valuation result shall be made into ……Vietnamese originals (if that report is written in 02 languages or more) enclosing the valuation certificate No. .................dated.................issued at

APPENDIX 04

VALUATION REPORT FORM APPLICABLE TO THE BRANCH OF THE VALUATION ENTERPRISE

(Issued together with the Vietnam's valuation standard No. 06)

REPORT ON THE VALUATION RESULT

(Enclosed with the valuation certificate No…………..dated…………….)

1. Information about the branch of the valuation enterprise

- Name of the parent enterprise held responsible for operations of the branch, head office and transaction office (if any).

- Name, address of the head office and transaction office (if any).

2. Basic information about the valuation

- Information about the valuation client, valuation contract number and/or valuation request/ petition.

- Name of the asset to be valued

- The valuation result.

- The valuation objective

- Different sources of information used in the valuation process and the extent of examination and appraisal of such information sources

- Legal base for the valuation.

3. General information about the market, information about the transaction market of asset group (category) to be valued

The following information may be included:

- General information about the market

- Current state and prospect of supply and demand of group or category of assets to be valued.

- Analysis of replacement or competitive assets.

- Information about economic, social factors and other factors influencing the value of assets to be valued.

- Other relevant information.

4. Information about the asset to be valued

Based on the result of the actual survey, information collection and analysis, detailed information about the asset to be valued under the guidance of the Appendix No. 1 of this standard may be shown.

5. Basis of the asset valuation

6. Assumption and special assumption (if any).

7. Valuation approach and method.

a) Applicable valuation approach and method

- Specify the basis for selecting the valuation approach and method

- In case different valuation methods are applied, determine the main valuation method, the valuation method applied for the purpose of examination or collation according to which the valuer shall carry out their analysis and calculation before reaching the final valuation result.

- In case only one valuation method is applied, specify the reason.

b) Determination of value of assets to be valued

- Based on the selected valuation approach and method, show any argument, analysis, evidence, data, inputs, worksheet, etc. for any modification or calculation in the whole valuation process in order to value the asset to be valued. Sources of data and inputs used in the valuation report must be clearly cited.

- The valuation result

8. The validity term of the valuation result

9. Exclusion and limitation clauses

10. Any appendix attached thereto

- List of documents and information concerning the valuation.

- Documents showing the legislation and technical characteristic of the asset to be valued (the detailed guidance shown in the Appendix No. 2 of this standard).

- The result of the actual survey of assets to be valued.

- Other contents relating to the valuation (if any).

The report on the valuation result shall be made into ……Vietnamese originals (if that report is written in 02 languages or more) enclosing the valuation certificate No. .................dated.................issued at ...

APPENDIX 05

VALUATION CERTIFICATE FORM

(Issued together with the Vietnam's valuation standard No. 06)

VALUATION CERTIFICATE

Dear: ……..<The valuation client and the third party using the valuation result (if any) under the terms and conditions of the valuation contract>

Based on the valuation contract No. ……dated ………..signed between and/or valuation request/ petition No……..dated………sent by ;

Based on the report on the valuation result No. ……dated ………..of ;

Based on others (if any),

shall provide the valuation certificate No……dated………with the following contents:

1. Valuation client

- Name of the agency/ organization/ individual (full name written in Vietnamese):…………….

- Address of the main office:…………………………………………………..

- Telephone number:……………………… Fax number:………………………

- Head/ legal representative: ……….<Full name, ID card number and issuance date>………

2. Information about the asset to be valued

Name, category and legal and technical characteristics of the asset to be valued.

3. Valuation date

4. Valuation objective

5. Legal base

Specify legislative documents, valuation standards concerning the asset valuation issued by the central or local competent authority.

6. Basis of the asset value

Only one type of the asset value basis (market or non-market) for one asset type.

7. Assumption and special assumption (if any).

8. Valuation approach and method

Specify applicable valuation approach and method as well as basis of such selection.

9. Valuation result

10. Exclusion and limitation clauses that govern the valuation result

11. Valid term of the valuation result

12. Documents attached thereto

- Report on the valuation result

- Appendices attached thereto (if any).

The valuation certificate is made into .........Vietnamese originals (in case the valuation certificate is made into 02 languages or more) at …

Duplicating the valuation certificate without the written consent sent by shall be considered a violation against laws.

*: Applicable to the branch delegated to issue the valuation certificate

VIETNAM’S VALUATION STANDARD SYSTEM

VIETNAM’S VALUATION STANDARD NO. 07

Classification of the asset to be valued

(Code: TĐGVN 07)

(Issued together with the Circular No. 28/2015/TT-BTC of the Ministry of Finance dated March 6, 2015)

I. GENERAL PROVISIONS

1. Scope of application: This standard shall stipulate the asset classification and provide guidance on implementing the asset classification in the valuation process.

2. Applicable entities: The valuers who are practicing their valuation profession, and valuation enterprises and other organizations and individuals who carry out valuation operations under the provisions of the Price Law and other relevant legal regulations.

II. STANDARD CONTENTS

1. The asset to be valued must be legal ones, unless otherwise stipulated by laws. In case the documentation proving the legality of these assets has been lost, damaged by fire or hostility or any unexpected events, the valuation shall be carried out based on the latest declaration, commitment or confirmation granted by the valuation client (or the asset owner), or the list of on-balance-sheet assets of the enterprise.

2. The asset shall be classified in the following manners:

- In respect of the mobility, the asset shall be divided into movable and immovable assets;

- In respect of the materiality and interest bearing form, the asset shall be divided into tangible, intangible and financial assets.

In the valuation process, the valuer shall need to take into account the legislation of the asset which is the right to the asset.

Classification of assets for the purpose of the asset valuation shall be governed under the provisions of the Civil Code, Land Law, Law on the Real Estate Trading, House Law and other applicable legislative documents issued by competent authorities, and conform to the regional or international convention on the asset classification.

In the valuation process, the valuer, the valuation enterprise shall consider regulations laid down in relevant legislative documents and laws introduced by specialized agencies to choose proper criteria and method for the asset classification that conform to valuation objectives and requirements.

3. Immovable and movable property:

a) Immovable property means a kind of property that can not move.

Immovable property is physically attached to the space, location and unable to be moved away, including:

- Land;

- Construction works attached to the land, including property associated with such construction works;

- Other kinds of property attached to land;

- Others stipulated by laws.

The legality of an immovable property shall be recognized through the followings:

- As for land: land use right certificate, or documents showing the land use right which is considered as a requirement of the State for grant of the land use right certificate as stipulated by the law on land.

- Construction works:

+ House ownership certificate;

+ One of legal documents about the ownership of house and construction works under the provisions of the law on house, such as construction permit; house inheritance documents accredited by the law; the effective verdict or judgement issued by the Court or competent authorities on the house ownership.

Details of the asset classification shall be stipulated by the Appendix enclosed herewith.

b) Movable property

Movable property means any property other than immovable property. Movable property is not physically attached to the space, location and is able to move. Example: machinery, equipment, transport and technology line.

The legality of movable property shall be based on commercial documentation, material, record, invoice, import voucher and others.

4. Tangible, intangible and financial assets

a) Tangible asset means any asset that has a physical form and is possessed by the asset owner in order to serve their own purpose.

- Assets which are of a physical form, such as land, house, other structures, machinery, equipment, transport, manufacturing equipment and transmission devices.

- Tangible assets shall have the following characteristics:

+ Physicality;

+ Be possessed by the asset owner;

+ Exchangeability;

+ Ability to bear material or spiritual value.

b) Intangible asset means the asset which does not have a physical form and is likely to create economic rights and benefits.

- Intangible asset is the entity subject to the asset valuation when it can meet all of the following requirements:

+ Have no physical form. However, several intangible assets are able to contain in or expressed in the form of a physical object while the value of such physical object is not considerable compared with intangible assets;

+ Be recognizable and supported by visible evidence for its existence, such as contract, protection deed, certificate, computer software, list of clients and other documentary evidences;

+ Be able to provide profits for the asset owner;

+ Be able to measure the value of the intangible asset.

- Intangible assets shall include main categories such as:

+ Intellectual asset;

+ Intellectual property right stipulated by the law on the intellectual property, such as authors’ right, industrial property right, etc.;

+ Right to offer economic benefits to parties as defined in the civil contract under the provision of laws, such as mineral extraction right, trading right and transferable emission right;

+ Non-contract relationships that offer economic benefits to parties, or relationships with clients, suppliers or other legal entities, such as list of clients and database;

+ Other intangible assets.

c) Financial assets shall include:

- Cash;

- Other equity instruments. The equity instrument is the contract that demonstrates the remaining benefits that an asset can generate after deducting all of financial obligations that an organization must fulfill.

- Contractual rights to:

+ Receive cash or other financial assets from other organizations;

+ Exchange financial assets or liabilities with other organizations in accordance with the contractual terms under which that organization can be benefited;

- All of financial obligations that may arise in the contract are likely to be paid by using the owner's equity instrument.

Financial assets may include government bonds, treasury bonds, corporate bonds, other kinds of bond, bills of exchange, promissory notes, treasury bills, certificates of deposit, loans or receivables, common stocks, preferred stocks, option contracts and other valuable papers.

5. Property right

Property right means the right that can be measured in monetary sums under the provisions of laws. The property right shall comprise the intellectual property right and other property rights.

Property right is a legal term, including all of relevant rights and interests pertaining to the right to own or use assets that the owner of such assets can exercise in a legal manner.

The property right is a group of powers that the law delegates to the property owner. Each power is separable from the ownership right and exchangeable in a civil transaction. The right to own an asset shall comprise the right to possess, use and decide such asset.

If the same power is granted to different assets, revenues gained from an asset must be different as well. The more powers the right holder are granted, the higher revenues derived from such asset and the higher asset value the right holder may gain.

The owner of the asset shall have entitlements to rights associated with such asset as well as revenues gained from such asset under the provisions of laws.

The valuer must conduct a comprehensive analysis of all of the legal characteristics of the asset, and grasp relevant regulations laid down in laws in order to determine the property right in a correct and sufficient manner which then serves the purpose of achieving the accurate valuation result.

6. Enterprise

a) Enterprise refers to an economic organization that has its own name, assets, permanent main office and is registered under the provisions of laws in order to carry out business operations.

Classifying assets of an enterprise shall be aimed at selecting and applying the valuation method in order to determine the value of that enterprise.

b) Classification of assets of an enterprise

An enterprise’s assets shall be classified according to different methods such as mobility, materiality, and value bearing form or other classification ways stipulated by laws. In terms of mobility, the classification of an enterprise’s assets shall be governed by Point 3 hereof. In respect of the materiality and interest bearing form, the classification of an enterprise’s assets shall be governed by Point 4 hereof.

The valuer shall refer to the legal regulations and reality (enterprise type, managerial characteristics and scope of production and business, etc.) in order to properly classify an enterprise’s assets.

The valuer can take a look at the account classification in the corporate accounting entry system, but need to add more different accounts (if any) held by the enterprise which influence the total value of that enterprise but fail to meet necessary requirements for being recorded in the corporate accounting system.

In the valuation process, the valuer shall refer to the applicable valuation approach and method to select a single or combined requirement(s) for the enterprise valuation.

d) The legal characteristics of an enterprise shall be determined through documents such as the Certificate of Business Registration, Certificate of Enterprise Registration, Investment Registration Certificate or other relevant documents stipulated by laws./.