Nghị định 175/2013/ND-CP

DECREE

ISSUANCE OF CHARTER ON ORGANIZATION AND OPERATION OF VIETNAM RAILWAYS

Pursuant to the Law on Government organization dated December 25, 2001;

Pursuant to the Law on Enterprises dated November 29, 2005;

Pursuant to the Law on Railways 2005;

Pursuant to the Government's Decree No. 99/2012/ND-CP dated November 15, 2012 on responsibility to perform the duties and entitlements of state owners to state-owned enterprise and state capital invested in enterprises;

At the request of the Minister of Transport,

The government promulgates this Decree to issue the Charter on Organization and Operation of Vietnam Railways.

Article 1. Charter on Organization and Operation of Vietnam Railways is issued together with this Decree.

Article 2. This Decree comes into force from December 30, 2013.

Charter on Organization and Operation of Vietnam Railways promulgated together with decision No. 474/QD-TTg dated March 31, 2011 of the Prime Minister and previous regulations that contravene this Decree are annulled.

Article 3. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of the People’s Committees of central-affiliated cities and provinces, and the Board of members of Vietnam Railways are responsible for the implementation of this Decree./.

CHARTER

ORGANIZATION AND OPERATION OF VIETNAM RAILWAYS
(Promulgated together with the Government's Decree No. 175/2013/ND-CP dated October 13, 2013)

Chapter 1.

GENERAL PROVISIONS

Article 1. Interpretation of terms

1. In this Charter, the terms below are construed as follows:

a) “Vietnam Railways” (hereinafter referred to as VNR) is the parent company in a conglomerate, converted from a state-owned company into a state-owned single-member limited liability company under the Prime Minister’s Decision No. 973/QD-TTg dated June 25, 2010.

b) “charter capital of VNR” is the capital invested by the investor and written in the Charter of VNR.

c) “dependent units” are units established, restructured, or dissolved by the Board of members of VNR, including: representative offices, branches, and financially-dependent units within the organizational structure of VNR.

d) “public service agencies” include research institutions, training institutions, project management boards of VTC; Railway Magazine; Railway Medical Center; Emergency Response & Railway Accident Rescue Center.

dd) Affiliated units include dependent units and public service agencies.

e) "subsidiary” means a company whose 100% of charter capital is provided by VNR or a company whose controlling interest is held by VTC and organized in the form of a single-member limited liability company, multi-member limited liability company, joint-stock company, partnership, or overseas company as prescribed by law.

a) “associate company” means a company whose controlling interest is held by VNR, whose organization and operation complies with Company law and relevant regulations of law.

h) “voluntary associate company" means a company in which VNR does not shares or stakes but voluntarily becomes an associate company on the basis of shared interests in terms of finance, technologies, market, and other services with VNR, has entitlements and obligations to VTC under a cooperation contract or agreement between such company and VNR.

i) “control” means the VNR’s rights to another enterprise which consists of at least one of the following rights:

- The right to be the sole owner of the enterprise;

- The rights of controlling shareholders/contributors;

- The direct or indirect right to designate most or all of Executive Board members or the Board of members, General Director, or Director of the enterprise;

- The right to decide revisions to the enterprise’s charter;

- Other cases of control under the agreement between VNR and controlled enterprise as written in the latter’s charter.

k) “controlling shares/stake of VNR” in another enterprise means the amount of shares or stake of VNR that makes up over 50% of the enterprise’s charter capital.

l) “non-controlling shares/stake of VNR” in another enterprise means the amount of shares or stake of VNR that makes up less 50% of the enterprise’s charter capital or lower.

m) "external investment” means the use of capital, assets, or the trademark of VNR as investment or capital contribution to an external enterprise such as: contribution of capital to a joint venture; purchase of shares, bonds; increase of capital investment in subsidiaries, associate companies, other companies; and other forms of investment prescribed by law.

n) “representative” means the authorized representative of state capital in the enterprise who is authorized in writing by the owner to perform the owner’s rights, obligations, and duties to the enterprise.

o) “railway station” means the place where railway vehicles stop, take over, where cargo/passengers are loaded and unloaded, and where other techniques and services are performed. Each railway station has a terminal, hall, warehouse, freight yard, platforms, fences, tourist center, necessary equipment, and other railway works. The system of VNR is divided into many levels from central to internal. The railway station is the place where manufacturing, business, and service provision serving rail transport take place.  Business locations of the units managing railway stations and other financially-dependent units of VNR including locomotives, carriages, transport companies, the units providing services or affiliated to branches of VNR are arranged along the segments and routes with railway stations.

2. Other terms in this Charter which have been defined in the Civil Code, the Law on Enterprises, and other legislative documents shall bear the defined meanings.

Article 2. Name, address, headquarter

1. Full name (in Vietnamese language): TỔNG CÔNG TY DƯỜNG SẮT VIỆT NAM

2. Type of business entity: Single-member limited liability company.

3. Abbreviated name (in Vietnamese language): DSVN.

4. International name: Vietnam Railways, abbreviated as VNR.

5. Address of headquarter: 118 Le Duan street, Hoan Kiem district, Hanoi.

Phone number: (84-4) 39425972; Fax: (84-4) 39422866

E-mail: [email protected]

Website: http://www.vr.com.vn

6. Logo:

Article 3. Type of business entity and legal status of VNR

1. VNR is a wholly state-owned single-member limited liability company which operates by the Law on Enterprises, relevant regulations of law, and this Charter.

2. VNR:

a) has a legal status, a separate seal; is permitted to open accounts in Vietnam dong (VND) and foreign currencies at State Treasuries, banks in Vietnam and overseas in accordance with relevant regulations of law and this Charter.

b) has separate capital and assets, takes responsibility for its debts and other liabilities with all of its assets; takes civil responsibility and performs the rights and obligations of the owner to its subsidiaries and associate companies within its invested capital.

c) has the right to ownership, enjoyment, and disposal of the name, trademark, and logo of VNR as prescribed by law.

Article 4. Targets, functions, and business lines of VNR

1. Business targets:

a) Run a profitable business; preserve and develop charter capital invested in VNR and capital if VNR invested in other enterprises; accomplish other tasks given by the owner.

b) Maximize the effectiveness of VNR and its subsidiaries.

c) Develop VNR with high level of technology, management, and specialization; manage, operate the railway infrastructure system; operate rail traffic and rail transport as the primary business line; associate business with research, development, and training which participation of various economic sectors; play the leading role in the rapid and sustainable development of Vietnam’s railway industry; effectively stimulate competition and international integration; contribute to the achievement of socio-economic development and national defense and security.

2. Functions of VNR:

VNR's functions involve direct manufacturing, business operation, and financial investment in subsidiaries and associate companies; managing, directing, controlling subsidiaries and associate companies according to the holdings therein as prescribed by Law and this Charter; effective managing and operating the real estate of VNR; organizing rescues, protecting the security, order, and safety of rail transport as prescribed.

3. Business lines:

a) Primary business lines: rail transport business, domestic and international multimodal transport; managing, operating, maintaining, repairing national railway infrastructure; operate the railway infrastructure system; controlling national railway traffic; running rail, road, waterway, and air traffic services and agents; providing consultancy, survey, design, manufacturing, building, repairing railway vehicles, equipment, parts, and other mechanical products.

b) Business lines related to primary business lines: consultancy, survey, design, construction of traffic works, irrigation works, industrial works, and civil works; telecommunications and IT services; trading in railway petroleum, oil and grease; operating depots and ancillary transport services.

c) VNR shall withdraw capital from the business lines other than those mentioned in Point a and Point b Clause 3 of this Article according to the roadmap approved by the Prime Minister.

Article 5. Charter capital

1. Charter capital of VNR is VND 2,268,000,000,000 (in words: two thousand two hundred and sixty eight billion Vietnam dongs).

2. The change of VNR’s charter capital must comply with law.

Article 6. Owner of VNR

The State is the owner of VNR. The government shall uniform the performance of owner’s rights and obligations to VNR. The Ministry of Transport is responsible for performing the owner’s rights and obligations to VNR as prescribed by law.

Article 7. Legal representative of VNR

The legal representative of VNR is the General Director of VNR.

Article 8. State management

1. VNR is under the management of regulatory agencies at various levels as prescribed by law.

2. VNR shall fulfill its obligations to the local governments of the areas where its premises are located as prescribed by law.

Article 9. Organization of Communist Party and other socio-political organizations within VNR

1. The organization of Communist Party within VNR shall operate under the Constitution, law, and Charter of Communist Party of Vietnam.

2. Other socio-political organizations within VNR shall operate under the Constitution, law, and their Charters.

3. VNR has to facilitate the lawful operation of internal Communist Party and other socio-political organizations in terms of facilities, time, and other conditions.

Chapter 2.

RIGHTS AND OBLIGATIONS OF VNR

Section 1: RIGHTS OF VNR

Article 10. Rights to assets

1. Own, use, dispose of capital and assets of VNR to do business, receive lawful benefits from capital and assets of VNR as prescribed by law.

2. Manage and use assets being land, resources invested or leased out by the State as prescribed by law to do business and provide public services at the request of the State.

3. Use capital and assets under the management of VNR to make external investments as prescribed by law.

4. The State shall not transfer state capital invested in VNR and other types of capital, assets of VNR without receiving payment except for the case of restructuring of VNR or provision of public products or services.

5. Manage, invest, use capital and assets that belong to national railway infrastructure system as prescribed by regulations of the State to maintain continuous, safe, and effective railway traffic, contribute to socio-economic development; protect national defense, security, and the environment.

6. Exercise other rights to capital and assets as prescribed by law.

Article 11. The right to do business and organize business operation

1. Organize business operation, draw up plans for business cooperation; organize the management apparatus to serve business operation and ensure effective business.

2. Engage in the business lines written on the Certificate of Business registration and other business lines decided by the owner; expand the scale business depending on its capacity, demand of the domestic and overseas markets in accordance with law.

3. Find domestic and overseas markets, customers; sign contracts; decide combination of resources and business cooperation between VNR and other enterprises according to demands of the market and in accordance with regulations of law.

4. Decide selling prices and buying prices of products and services of VNR, except for public service, products, and the services, products whose prices are fixed by the State.

5. Decide projects of investment as prescribed by regulations of law on investment and relevant regulations; use capital and assets of VNR for joint venture, cooperation, capital contribution to other enterprises; lease, partially or fully buy other domestic or overseas companies as prescribed by law.

6. Use state capital derived from equitization, partial or full transfer of VNR’s stake in affiliated units, subsidiaries, or associate companies as prescribed by law.

7. Organize bidding as prescribed by law.

8. Decide establishment, restructuring, dissolution, ownership transfer of subsidiaries being single-member limited liability companies after the scheme is approved by the Prime Minister; establishment, restructuring, dissolutions of affiliated units of VNR in Vietnam and overseas after the scheme is approved by the Minister of Transport.

9. Decide capital contribution, holding, increase/decrease of capital of VNR in other enterprises; accept voluntary subsidiaries, associate companies after the scheme is approved by the Ministry of Transport.

10. Decide sale contracts, loan contracts, and other types of contracts as prescribed by law.

11. Recruit employees, conclude employment contracts; give tasks, provide training, reward, discipline employees; terminate employment contracts; decide on method of payment of wages and bonus according to business performance and regulations of law on employment and wages.

12. Formulate, promulgate, and apply standards, procedures, economic-technical norms, labor norms, piece rates, and other costs on the basis of assurance of effectiveness business operation and conformity with regulations of law.

13. Exercise other rights business operation according to demands of the market and regulations of law.

Article 12. Financial rights

1. Raise capital in the form of issuance of corporate bonds; taking loans from credit institutions, other financial institutions, individuals, external organizations; taking loans from employees; and other types of capital raising prescribed by law.

VNR is responsible for repaying the capital it raises; raised capital must be used effectively and must not affect the type of business of VNR; VNR’s raising capital for change of owner is subject to the consent of the Prime Minister and must comply with regulations of law.

2. Every foreign loan must be approved by the Ministry of Transport, evaluated and accepted by the Ministry of Finance.

3. Actively use capital to serve the business operation of VNR; manage, use funds of VNR in accordance with law.

4. Decide depreciation of fixed assets in a way that the minimum depreciation can cover tangible, intangible deterioration of fixed assets and is not lower than the minimum rate of depreciation prescribed by the Ministry of Finance.

5. Receive subsidies or other incentives of the State when performing duties pertaining to public services, national defense and security, disaster recovery, or providing products/services under price polices of the State that are not able to cover the manufacturing costs.

6. Receive awards for innovations in terms of technologies and management; rewards for raise of productivity; rewards for saving materials, fuels, and costs as prescribed by law.

7. Receive incentives for investment and reinvestment as prescribed by law; exercise the owner’s rights to capital invested in subsidiaries and other enterprises.

8. Be exempt from payment of corporate income tax on the distributed income from capital contribution to subsidiaries and other enterprises if they have paid their corporate income tax before distributing profits among capital contributors; be exempt from other double taxation.

9. Reject and report requests for provision of unlawful resources by any individual or organization, except for voluntary contributions for humanitarian purposes and public services.

10. Provide secured and unsecured guarantees for subsidiaries to take loans from credit institutions, domestic and overseas banks as prescribed by law.

11. Establish concentrated finance funds, including those serving dedicated tasks of the primary business lines according to relevant regulations of law. The establishment and use of such funds shall be specified in the financial management statutes of VNR.

12. Build up the financial reserve fund, distribute and use the profit that remains as prescribed by law after tax liability has been fulfilled, loss has been carried forward according to the Law on corporate income tax, and other liabilities have been fulfilled as prescribed by law. Only raise salaries and pay bonuses to VNR’s employees, including managers, after all due debts are settled.

13. Transfer, liquidate, lease out, mortgage assets under the management of VNR on be basis of preserving and developing capital as prescribed by law.

14. Exercise other financial rights as prescribed by law.

Article 13. The right to provide public services

1. Produce, provide public services/products through bidding. For public services ordered by the State, VNR has the obligation to sell such public services/products to proper buyers and at prices decided by the State.

2. VNR shall be reimbursed for the costs of public tasks given by the State.

VNR shall cover the costs of products/services provided through bidding itself according to the successful bid.

For public services/products ordered by the State, VNR may use the charges or revenue from provision of services/products ordered by the State to cover the reasonable costs of public service and protect the interests of its employees. If the revenue is not sufficient to cover the costs, the difference shall be covered by the State.

3. Establish and apply norms for costs and piece rates in provision of public services/products.

Article 14. Other rights of VNR

1. Formulate plans for investment, renovation, upgrade of rail infrastructure conformably with the overall strategy, master plan for railway development approved by the Prime Minister; make budget estimates; formulate and submit plans for management, operation, maintenance, repair of rail infrastructure, disaster response and railway rescue to competent authorities for approval; set targets, sign contracts with subsidiaries and other enterprises according to the plans for management, operation, maintenance, repair of rail infrastructure approved by competent authorities.

2. Perform technical management of bridges, drainage system, railways, tunnels, stations, architectures, and railway information/signal system.

3. Effectively manage and use the real estate of VNR. Allow the construction and use of spaces, land, waters within the safety perimeters of railway works, rail traffic safety corridors; close and open crossings in accordance with law; invest in traffic safety projects along the segments of railways parallel and adjacent to national highways as well as other traffic safety projects of the government and the Ministry of Transport.

4. Organize an apparatus for managing, operating, maintaining, repairing the national railway infrastructure as prescribed by law.

5. Receive funding for infrastructural development from state budget. This funding is included in the budget of the Ministry of Transport.

6. Manage, operate, maintain finished national railway infrastructure works invested by the State. Formulate and approve projects for major repairs of railway infrastructure as appointed by the Ministry of Transport.

7. Announce speeds and vehicular weight suitable for technical standards for railway infrastructure and rail traffic demand as prescribed by law.

8. Organize disaster prevention and recovery, railway accident rescue.

9. Establish a bracket of rents for national railway infrastructure works; standards, economic-technical norms for management, operation, and maintenance of national railway infrastructure; submit them to competent authorities for promulgation.

10. Set prices for public services, supplies, components, and specialized equipment produced by VNR to serve maintenance, repairs of railway infrastructure after having a written agreement with the Ministry of Finance based on applicable economic-technical norms and regulations; submit them to competent authorities for application.

11. Recall, liquidate, sell assets and supplies that belong to the national railway infrastructure as prescribed by law after a competent authority grants an approval.

12. Collect, manage, use the rents for national railway infrastructure in accordance with regulations of the State.

13. Make and publish the diagram of train dispatch on the national railway system as prescribed by law.

14. Organize the traffic control system on the national railway system so as to ensure concentrated, uniform, safe, and continuous railway traffic.

15. Set, collect, manage, use fees for railway traffic control as prescribed by law.

16. Set norms for costs and piece rates for railway traffic control as prescribed by law.

17. Subsidiaries of VNR may participate in bidding for the projects of which VNR is the investor when permitted by a competent authority, including: locomotives, carriages, and railway infrastructure.

Section 2: OBLIGATIONS OF VNR

Article 15. Obligations to capital and assets

1. Preserve and develop state capital invested in VNR and the capital raised by VNR itself.

2. Take responsibility for the debts and other liabilities of VNR within the assets of VNR.

3. Periodically evaluate assets of VNR as prescribed by law.

4. Fulfill other obligations prescribed by law.

Article 16. Obligations in business

1. Stick to the registered business lines; ensure the quality of products and services provided by VNR according to registered standards.

2. Innovate, modernize technologies and management methods to improve effectiveness and competitiveness.

3. Protect rights and interests of employees and their rights to participate in management of VNR as prescribed by law.

4. Adhere to regulations on accounting, audit, financial statements, statistical reports prescribed by law and at the request of the owner.

5. Comply with regulations of the State on national defense, security, culture, social order and safety, protection of resources and the environment.

6. Take responsibility to the owner for investment of capital in other enterprises or establishment of other enterprises.

7. Facilitate the supervision by the Ministry of Transport when establishing pay scales, payrolls, piece rates, and method of wage payment for employees, President and members of the Board of members, General Director, Deputy General Directors, Chief accountants, and other managers.

8. Facilitate the supervision and inspection by the owner; comply with decisions on inspection of finance authorities and competent authorities as prescribed by law.

9. Manage risks and obtain insurance for assets, responsibility, and personnel of VNR in business operation as prescribed by law.

10. The Board of members and General Director of VNR shall execute projects of investment, buy, sell assets, contracts to take loans and give loans of VNR in accordance with approved schemes and regulations of law.

11. Fulfill other obligations in business operation as prescribed by law.

Article 17. Financial obligations

1. Exercise exercising financial autonomy; balance the receipts and expenditures of VNR itself; ensure effective business; ensure the return on charter capital set by the State; register, declare, and pay tax in full; fulfill obligations to the owner and other financial obligations as prescribed by law.

2. Effectively manage and use: capital, including capital invested in subsidiaries and other enterprises; natural resources, land, and other resources provided or leased out by the State.

3. Use capital and other resources to perform special tasks as requested by the State.

4. Adhere to regulations of law on management of capital, assets, funds, accounting, and audit; take responsibility for the truthfulness and legitimacy of financial activities of VNR;

5. Adhere to regulations on annual financial statements and provision of information necessary for evaluation of VNR’s performance.

6. Fulfill other financial obligations prescribed by law.

Article 18. Obligations when providing public services

1. Provide public services requested or ordered by the State properly in terms of users, prices, and costs prescribed by the State.

2. Receive public service tasks given by the State and delegate part or all of them to subsidiaries according to regulations of the State.

3. Sign contracts and do bookkeeping as prescribed by law; take responsibility to the State for the result of public services provided by VNR; take legal responsibility to customers for the public services and products directly provided by VNR.

4. Ensure sufficiency, quality, and punctuality of public services and products.

5. Fulfill other public service duties prescribed by law.

Article 19. Rights and obligations of VNR to subsidiaries, associate companies in the conglomerate

1. VNR shall draw up the universal business strategy of the conglomerate in accordance with this Charter and charters of subsidiaries.

VNR shall not directly run the business of its subsidiaries and associate companies. Instead, it shall perform the rights and obligations of the sole owner, shareholder, or capital contributor via authorized representatives and representatives of VNR’ stakes in such companies to ensure effectiveness of capital investment and achievement of targets as well as common development strategy of the conglomerate.

2. VNR shall engage in research, marketing, trade promotion, and enable enterprises in the conglomerate to expand and improve their business performance.

3. VNR must not take advantage of the controlling interest to threaten the interests of its subsidiaries, creditors, other shareholders, capital contributors, and relevant parties.  VNR shall respect the rights of shareholders and contributors holding the least capital in subsidiaries and associate companies in accordance with their charters.

4. VNR shall pay damages when performing the following acts without consent of the subsidiary and relevant parties:

a) Compelling the subsidiary to sign and execute business contracts that are unfair and disadvantages to it.

b) Transferring capital, assets of the subsidiary that is a single-member limited liability company in a way that causes damage for the transferor company, except for: paid transfer, restructuring of the company, provision of public services and products.

c) Transferring some profitable business activities from one subsidiary to another without the consent of the transferor company and making it suffer from a significant loss or decrease of profit.

d) Assign business tasks against the charter of the subsidiary and regulations of law; assign tasks of VNR to subsidiaries and associate companies without business contracts with them.

dd) Forcing the subsidiary to give loans to VNR or another subsidiary with low interest rates or unreasonable terms, or to give loans to VNR or another subsidiary to perform business contracts that are risky to them.

Chapter 3.

ALLOCATION OF OWNER’S RIGHTS, DUTIES, AND OBLIGATIONS TO VNR

Section 1: Owner’s rights, duties, and obligations to VNR

Article 20. Owner’s rights to VNR

1. Decide the establishment, targets, objectives, and business lines of VNR; restructuring, ownership transfer, dissolution, and bankruptcy of VNR; capital contribution by VNR to other enterprises.

2. The right to decide revisions to the enterprise’s charter.

3. Decide investment of charter capital; change, transfer part or all of charter capital of VNR.

4. Decide organizational structure of VNR; designate, re-designate, dismiss, accept resignation, reward, and discipline the President and members of the Board of members, Controllers, General Director of VNR.

5. Decide the business strategy, plans, and development plans of VNR.

6. Approve the schemes for investment, purchase, sale of assets, contracts to give loans and take loans of VNR as prescribed by law.

7. Issue regulations on finance, distribution of profits, development and use of funds; approval for annual financial statements of VNR.

8. Issue regulations on recruitment, wages, and bonus; decide the salary of President and members of the Board of members, Controllers, General Director of VNR.

9. Decide solutions for market development, marketing, and technology; establish a mechanism for giving tasks and participating in provision of public services and products that are essential to the economy.

10. Supervise, inspect the conformity with law; evaluate the achievement of set targets, objectives, business performance and effectiveness; manage, use, preserve, and develop capital of VNR. Assess President and members of the Board of members, Controllers, General Director, Deputy General Directors, and Chief accountant of VNR.

11. Exercise other rights as prescribed by law.

Section 21: Owner’s duties and obligations to VNR

1. Provide sufficient charter capital for VNR.

2. Adhere to Charter of VNR and regulations of law relevant to the owner.

3. Take responsibility for the debts and other liabilities of VNR within the charter capital of VNR; identify and separate state-owned assets and assets of VNR.

4. Comply with regulations of law on contracts and relevant regulations of law in purchase, sale, lending, borrowing, lease, and other transactions of VNR. Take legal responsibility when deciding projects of investment, approving the scheme for purchase, sale, lending, borrowing, and lease within its competence.

5. Protect the right to business autonomy of VNR; do not illegally interfere in the business operation of VNR.

6. Perform other duties prescribed by law.

Section 2. ALLOCATION OF OWNER’S RIGHTS, DUTIES, AND OBLIGATIONS TO VNR

Article 22. Rights and obligations of the Government

1. Promulgate and revise the Charter of VNR.

2. Perform other rights and obligations as prescribed by law.

Article 23. Rights and obligations of the Prime Minister

1. Approve the Scheme for restructuring of VNR conglomerate at the request of the Minister of Transport.

2. Approve schemes for establishment of wholly state-owned subsidiaries of VNR at the request of the Ministry of Transport.

3. Perform other rights and obligations as prescribed by law.

Article 24. Rights and obligations of the Ministry of Transport

1. Decide restructuring, ownership transfer, dissolution, and bankruptcy of VNR after the scheme is approved by the Prime Minister.

Approve schemes for establishment, restructuring, dissolutions for units affiliated to VNR.

2. Submit the Charter of VNR to the government for promulgation.

3. Submit the Scheme for restructuring of VNR conglomerate at the request of the Minister of Transport the Prime Minister and direct its implementation after it is approved by the Prime Minister.

4. Decide adjustment to charter capital of VNR during its operation after having an agreement with the Ministry of Finance.

5. Designate, re-designate, dismiss, accept resgnation, reward, and discipline the President and members of the Board of members, and General Director; Designate, re-designate, dismiss, accept resgnation, reward, and discipline Controllers; pay wages to people holding the position of Controller.

6. Approve the business strategies, business plans, and 5-year development plans of VNR; annual list of Group A and Group B of VNR; notify the Ministry of Planning and Investment and the Ministry of Finance for supervision. Approve or authorize VNR to approve prices for public services related to maintenance, repair of railway infrastructure as prescribed by law; decide or authorize VNR to decide investment in infrastructural development projects and major repairs of Group C railway infrastructure.

7. Approve VNR’s contribution of capital, holding, increase/decrease of investment in other enterprises; acceptance of voluntary subsidiaries, associate companies of VNR.

8. Approve schemes for taking loans, giving loans, buying, selling assets whose values are equal to or greater than 50% of VNR’s charter capital; approve schemes for VNR to take foreign loans and request the Ministry of Finance to make evaluation and consider granting approval.

9. Decide the wages and annual wage fund for President, members of the Board of members, and General Director of VNR; Decide wages and pay wages to Controllers they designate as prescribed by law.

10. Allow the Board of members of VNR to approve annual financial statements, distribute profit, build up and use VNR’s funds.

11. Regularly monitor and inspect conformity with law; management, use, preservation, and development of capital; implementation of strategies and plans; implementation of regulations on employment, wages, and bonus of VNR.  Assess the achievement of set targets, objectives, business performance of VNR. Assess the performance of President and members of the Board of members, Controllers, General Director, Deputy General Directors, and Chief accountant of VNR.

12. Perform other owner’s rights and obligations as prescribed by law.

Article 25. Rights and obligations of the Ministry of Finance

1. Reach an agreement of the Ministry of Transport on adjustment to VNR’s charter capital.

2. Make and submit annual reports on business performance, provision of public services, and finance of VNR to the government.

3. Cooperate with the Ministry of Transport in carrying out regular supervision and inspection of the management, use, preservation, and development of VNR’s capital.

4. Evaluate and approve foreign loans taken by VNR according to regulations and approved plan for taking foreign loans.

5. Allow the Board of members of VNR to approve the financial management statutes.

6. Offer opinions about the issues mentioned in Clause 1 and Clause 2 Article 23 of this Charter.

7. Offer opinions about the issues mentioned in Clause 4 Article 24 of this Charter to the Ministry of Transport.

8. Perform other owner’s rights and obligations as prescribed by law.

Article 26. Rights and obligations of the Ministry of Planning and Investment

1. Make and submit annual reports on business performance, provision of public services, and finance of VNR to the government. Cooperate with the Ministry of Transport in carrying out annual supervision and inspection of the implementation of strategies, business plans, and 5-year development plans of VNR.

2. Offer opinions about the issues mentioned in Clause 1 and Clause 2 Article 23 of this Charter.

3. Offer opinions about VNR’s contribution of capital, holding, increase/decrease of investment in other enterprises; acceptance of voluntary subsidiaries, associate companies of VNR to the Ministry of Transport.

4. Perform other owner’s rights and obligations as prescribed by law.

Article 27. Rights and obligations of the Ministry of Home Affairs

1. Offer opinions about the issues mentioned in Clause 1 and Clause 2 Article 23 of this Charter.

2. Cooperate with the Ministry of Transport in carrying out regular supervision and inspection of adherence to regulations of Communist Party and the State on management of officials in VNR.

3. Perform other owner’s rights and obligations as prescribed by law.

Article 28. Rights and obligations of the Ministry of Labor, War Invalids and Social Affairs

1. Offer opinions about the issues mentioned in Clause 1 and Clause 2 Article 23 of this Charter.

2. Cooperate with the Ministry of Transport in carrying out annual supervision and inspection of the implementation of regulations on recruitment, wages, and bonus of VNR.

3. Perform other owner’s rights and obligations as prescribed by law.

Article 29. Controllers

1. VNR has 1 – 3 Controllers who are designated, re-designated, dismissed, paid, rewarded, and disciplined by the Minister of Transport.

2. Standards, conditions, work conditions, tasks, entitlements, obligations of Controllers, and relationship between Controllers and relevant organizations shall comply with regulations of law.

The Board of members of VNR shall perform some of the owner’s rights, duties, and obligations to VNR as prescribed in Article 32 of this Charter.

Chapter 4.

ORGANIZATIONAL STRUCTURE OF VNR

Article 30. Organizational structure of VNR

1. The organizational structure of VNR consists of:

a) The Board of members.

b) General Director.

c) Deputy General Directors and Chief accountant.

dd) Assistance apparatus, Internal Control Board.

2. Organizational structure of VNR may be changed during its operation.

Section 1: BOARD OF MEMBERS

Article 31. Composition and functions of the Board of members

1. The Board of members is the direct representative of the owner of VNR. The Board of members shall organize the performance of owner’s rights and obligations prescribed in this Charter and regulations of law; perform the owner’s rights and obligations to subsidiaries whose 100% charter capital is provided by VNR and to VNR’s stake in other enterprises.

2. The Board of members has the right to, in the name of VNR, decide every issue related to determination and achievement of targets, objectives, and interests of VNR, except for the issues within the competence of the government, the Prime Minister, Ministries, relevant agencies prescribed by this Charter.

3. Members of the Board of members of VNR are legally responsible to the owner for its decisions that cause damage for VNR, the owner, except for the owners that vote against such decisions; perform duties prescribed by this Charter, the Law on Enterprises, and relevant legislative documents.

4. The Board of members of VNR has 05 members, including full-time and part-time members who are designated, dismissed, rewarded, and disciplined by the Ministry of Transport. The tenure of members of the Board of members shall not exceed 05 years. Members of the Board of members may be re-designated. The Ministry of Transport shall decide the structure of the Board of members, the number of full-time and part-time members. If the number of members is below 05, within 90 days, the Board of members shall request the Minister of Transport to consider designating more members.

Article 32. Rights and obligations of the Board of members

1. Receive, manage, effectively use capital, land, natural resources and other resources provided for VNR by the owner; manage, supervise the use of funds of VNR.

2. Decide business strategy, plans, and 5-year development plans of VNR after they are approved by the Ministry of Transport.

3. Decide annual business plans and development plans of VNR; send decisions to the Ministry of Transport, the Ministry of Planning and Investment, and the Ministry of Finance for consolidation and supervision.

4. Request the Minister of Transport to consider designating, re-designating, dismiss, accept resignation of, reward, and discipline the President, member of the Board of members, and General Director of VNR.

Designate, re-designate, dimissed, accept resignation of, reward, and discipline Deputy General Directors, Chief accountant of VNR at the request of the General Director.

5. Decide the use of VNR’s trademark; solutions for market and technology development; specialization, cooperation, access, expansion, and share of information, market; research and application of technologies between VNR and its subsidiaries, associate companies, and voluntary associate companies.

6. Request the Ministry of Transport to submit VNR’s Charter and revisions thereof to the government for approval. Request the Ministry of Transport on adjust VNR’s charter capital.

7. Decide capital contribution, holding, increase/decrease of capital of VNR in other enterprises; acceptance of voluntary subsidiaries and associate companies after the scheme is approved by the Ministry of Transport.

8. Appoint VNR’s representatives at other enterprises at the request of General Director; assign VNR’s representatives to decide the issues mentioned in Point d Clause 20 and Point d Clause 21 of this Article.

9. Request the Ministry of Transport to approve schemes for taking loans, giving loans, buying, selling assets whose values are equal to or greater than 50% of VNR’s charter capital; schemes for VNR to take foreign loans.

10. Decide or authorize General Director to decide projects of investment, contracts to take loans and give loans, purchase, sale, lease of assets whose values are below 50% of VNR’s charter capital as prescribed by law.

11. Decide establishment, restructuring, dissolutions for affiliated units after the schemes are approved by the Ministry of Transport.

12. Decide wages and bonus of the positions designated by the Board of members of VNR.

13. Carryout restructuring of the enterprise after the master scheme is approved by the Prime Minister.

14. Decide capital raising plans that do not exceed 50% of VNR’s charter capital as prescribed by law.

15. Decide internal rules and regulations, composition of the management apparatus of VNR, business organization plans.

16. Approve annual financial statement, distribute profits; build up and use funds after the Ministry of Transport grants an approval.

17. Approve operating statutes of affiliated units in accordance with regulations of law and this Charter.

18. Manage and operate VNR in accordance with law and the owner’s decisions; manage, use, preserve, and develop capital effectively; identify and separate owner’s assets and VNR’s assets; report the loss, insolvency, failure to achieve targets and objectives set by the owner, and other cases of misconducts to the owner.

19. Rights and obligations to subsidiaries whose 100% charter capital is held by VNR:

a) Decide the establishment, targets, objectives, and business lines of the company. Decide the restructure, ownership transfer, dissolution, and bankruptcy of the company after a competent authority grants an approval.

b) Approve and revise the company’s Charter.

c) Decide the company’s charter capital upon establishment and revise charter capital throughout the operation of the company.

d) Decide designation, re-designation, dismissal, acceptance of resignation, conclusion of contract, termination of contract, rewards and discipline, wages of President and members of the Board of members or President, General Director (Director), and Controllers of the company.

dd) Approve the company’s business strategies, plans, and 5-year development plans.

e) Approve the schemes for taking loans, giving loans, buying, selling assets whose values are equal to or greater than 50% of the company’s charter capital or a smaller ratio prescribed by the company’s charter.

g) Approve annual financial statements, distribute profits; build up and use the company’s funds.

h) Direct the company’s restructuring after the master scheme is approved by the Prime Minister.

i) Perform other rights and obligations as prescribed by law, this Charter, and the company’s charter.

20. Rights and obligations to subsidiaries over 50% charter capital of which is held by VNR:

a) Decide the capital contribution, transfer of VNR’s stake in the company; exercise the right of shareholders/capital contributions prescribed by law and the company’s charter; take responsibility for the debts and other liabilities of the company within the amount of capital contributed to the company by VNR.

b) Appoint a representative to exercise the rights of shareholders/capital contributors; dismiss, reward, or discipline the representative; decide the wage, bonus, allowances, and other benefits of the representative; assess the representative.

c) Request the representative to perform the given tasks prescribed in Point d of this Clause unless otherwise prescribed by the company’s charter; Submit periodic or extraordinary reports on the investment, finance, and use of capital of VNR, and the company’s business performance.

d) The Board of members shall request the representative to decide the following issues of the company based on the resolutions/decisions of the Board of members of VNR:

- The company’s targets, objectives, business lines; restructuring and bankruptcy of the company;

- The company’s charter and revisions thereto;

- Increase or decrease of charter capital; time and method of capital raising; type of shares and amount of each type of authorized shares; repurchase of over 10% of sold shares of each type;

- Designation, dismissal, commendation, disciplinary actions of President and members of the Board of Directors, President of the Board of members, and members of the Control Board of the company.  Designation, dismissal, conclusion/termination of contract with the General Director (Director) of the company. Wages, bonus, and other benefits of members of the Board of Directors, members of the Board of members, members of the Control Board, the company’s General Director (Director); quantity of members of the Board of Directors, members of the Control Board, Deputy General Directors (Deputy Directors) of the company.

- Business strategies, plans, and 5-year development plans of the company; annual list of Group A and Group B projects>

- The company’s scheme for contribution of capital, holding, increase/decrease of state investment in other enterprises; establishment, restructuring, dissolution of affiliated units; acceptance of voluntary subsidiaries, associate companies of the company;

- The company’s schemes for taking loans, giving loans, buying, selling assets whose values are equal to or greater than 50% of the company’s charter capital or a smaller ratio prescribed by the company’s charter; the company’s scheme for taking foreign loans;

- Financial statements, profit distribution, development and use of the company’s funds, annual dividends;

- Recruitment, wage, bonus scheme of the company.

dd) Request the representative to submit reports to serve regular supervision and inspection of conformity with law; management, use, preservation, and development of capital of VNR in the company; implementation of strategies and plans; assess achievement of set targets, objectives, and business performance.

21. Rights and obligations to subsidiaries up to 50% charter capital of which is held by VNR:

a) Decide the capital contribution, transfer of VNR’s stake in the company; exercise the right of shareholders and capital contributions prescribed by law and the company’s charter; take responsibility for the debts and other liabilities of the company within the amount of capital contributed to the company by VNR.

b) Appoint a representative to exercise the rights of shareholders/capital contributors; dismiss, reward, discipline the representative; decide the wage, bonus, allowances, and other benefits of the representative; assess the representative.

c) Request the representative to perform the given tasks prescribed in Point d of this Clause unless otherwise prescribed by the company’s charter; Submit periodic or extraordinary reports on the investment, finance, and use of capital of VNR, and the company’s business performance.

d) The Board of members shall request the representative to decide the following issues of the company based on the resolutions/decisions of the Board of members of VNR:

- The company’s targets, objectives, business lines; restructuring and bankruptcy of the company;

- The company’s charter and revisions thereto;

- Increase or decrease of charter capital; time and method of capital raising; type of shares and amount of each type of authorized shares; repurchase of over 10% of sold shares of each type;

- Designation, dismissal, commendation, disciplinary actions of President and members of the Board of Directors, President of the Board of members, and members of the Control Board; designation, dismissal, conclusion/termination of contract with the General Director (Director) of the company. Wages, bonus, and other benefits of members of the Board of Directors, members of the Board of members, members of the Control Board, the company’s General Director (Director); quantity of members of the Board of Directors, members of the Control Board, Deputy General Directors (Deputy Directors) of the company.

- Business strategies, plans, and 5-year development plans of the company;

- Schemes for establishment of subsidiaries; establishment, restructuring, dissolutions of units affiliated;

- The company’s schemes for taking loans, giving loans, buying, selling assets whose values are equal to or greater than 50% of its charter capital according to the latest financial statement or a smaller ratio prescribed by the company’s charter;

- Annual financial statements, profit distribution, development and use of the company’s funds, annual dividends.

dd) Request the representative to report to carry out regular supervision and inspection, assess the effectiveness of the use of VNR’s capital by the company.

22. Inspect, supervise General Director of VNR, heads of affiliated units of VNR; President and members of the Board of members or President of the company; Director, Controllers of single-member limited liability companies owned by VNR and representatives of VNR in other enterprises performing their given tasks as prescribed by law and this Charter; supervise and assess the performance of subsidiaries as prescribed by law.

23. Report, propose the issues within the owner's competence to decide or approve; organize the implementation of the owner’s decisions; decide, approve the issues within its competence after the owner grants an approval.

24. Report the result and business performance of VNR to the owner.

25. Decide issuance of the financial management statutes of VNR after they are approved by the Ministry of Finance; organize implementation and supervise implementation of financial management statutes of VNR; revise Financial Management Regulation of VNR as prescribed by law or at the request of the owner.

26. Take responsibility to the owner for performance of their duties and for the development of VNR according to the targets and objectives given by the owner. If VNR incurs a loss or its return on charter capital is decreased or the owner fails to achieve the targets/objectives given by the owner without justifiable explanation which is accepted by the owner, responsible persons shall be dismissed or have to pay damages depending on the seriousness.

27. The Board of members shall delegate specific duties and entitlements to the General Director in order to stimulate the autonomy in operation of VNR.

28. Send Deputy General Directors and Chief accountant to work or study overseas.

29. Perform other rights and obligations as prescribed by law.

Article 33. Standards for members of the Board of members

A member of the Board of members must:

1. Be a Vietnamese citizen and has a permanent residence in Vietnam.

2. Have a bachelor’s degree or a higher degree; be capable of doing business and business administration. The President of the Board of members must have at least 03 years’ experience of management of enterprises that engage in the primary business lines of VNR.

3. Has good health, moral qualities, honesty, integrity, understanding of law, and observance of law.

4. Not be an official who works for a state management apparatus, political organization, socio-political organization, or holds a managerial position in any affiliated units.

5. Has never been dismissed from the position of President of the Board of members, President of the Board of members, member of the Board of members, member of the Board of Directors, President of company, General Director/Director of a state-owned enterprise or had the employment contract terminated ahead of time.

6. Has civil capacity, not be banned from holding managerial positions in enterprises as prescribed by law.

7. Satisfy other standards as prescribed by law.

Article 34. Dismissal, replacement of members of the Board of members

1. A member of the Board of members shall be dismissed when he/she:

a) commits violations of law that are liable to criminal prosecution or dismissal prescribed in this Charter.

b) fails to adhere to the owner’s decisions.

c) commits violations against the Charter or Statutes of VNR, decisions of the Board of members and cause damage for VNR.

d) performs his/her duties or entitlements in a dishonest manners; misuse his/her power to reap benefits for himself/herself or another person; appropriate business opportunities and threaten the interest of VNR.

dd) fails to achieve given targets and objectives; makes VNR incurs a loss or fails to reach the desired return on charter capital for 02 consecutive years, or make VNR incurs intermittent loss without viable solutions, unless the loss or decrease in return on charter capital is allowed by a competent authority, or there is justifiable explanation for the loss or decrease in return on charter capital which is accepted by a competent authority, or due to investment in expansion of manufacturing, technological innovation.

2. A member of the Board of members shall be replaced when he/she:

a) is dismissed in any of the cases in Clause 1 of this Article.

b) is not capable for given tasks, has limited civil capacity or has lost civil capacity.

c) hands in a resignation which is then accepted by a competent authority.

d) receives a decision on retirement or reassignment.

3. When the President or a member of the Board of members is replaced, within 60 days, the Board of members shall request the Minister of Transport to consider appointing a substitute.

Article 35. President of the Board of members

1. President of the Board of members must not concurrently hold the position of General Director of VNR.

2. The Chairperson of the Board of members has the following rights and obligations:

a) Receive capital, land, natural resources, and other resources given by the owner to VNR on behalf of the Board of members.

b) Prepare, organize the preparation of the agenda and materials of meetings of the Board of members or for seeking members’ opinions.

c) Convene and chair meetings of the Board of members or seeing of members’ opinions.

d) Supervise or organize the supervision of implementation of resolutions and decisions of the Board of members.

dd) Sign or authorize a member of the Board of members to sign resolutions and decisions of the Board of members.

e) Organize formulation and compilation of development strategies, midterm and long-term plans, important projects of VNR, and restructuring plans of VNR.

g) Formulate and supervise the implementation of financial management statutes, statutes on management of VNR’s stakes in other enterprises, and other rules and regulations of VNR.

h) Immediately necessary measures ultra vires in an emergency (war, natural disaster, epidemic, conflagration), and then report to the Board of members and the owner.

i) Other rights prescribed by law and the owner.

3. If the President is absent, he/she may authorize another member of the Board of members in writing to perform his/her rights and obligations. If no member of the Board of members is authorized or the President of the Board of members is not able to perform his/her rights and obligations because of force majeure events, other members of the Board of members shall elect one of them, under majority rule, as the provisional President to perform the rights and obligations of the President.

4. President the Board of members is accountable to the owner for lateness or failure to sign the decisions of the Board of members.

Article 36. Working mode; conditions and methods for holding meetings of the Board of members

1. The Board of members shall work as a collective and hold at least one meeting per quarter to consider and decide the issues within its competence. With regard to the issues that do not need discussing, the Board of members may seek opinions of the members (in writing). The Board of members may hold extraordinary meetings at the request of President of the Board of members, General Director, or over 50% of members of the Board of members. If the President of the Board of members does not agree to convene an extraordinary meeting at the request of over 50% of members of the Board of members, such members may appoint a person to convene and chair the meeting.

2. The President of the Board of members or a member of the Board of members authorized by the President shall convene and chair the meeting. Contents and materials of the meeting must be sent to members of the Board of members and other participants (if any) at least 03 days before the meeting date.

3. A meeting of the Board of members is legitimate when it is attended by at least two thirds of the members of the Board of members. A resolution/decision of the Board of members is effective if it is voted for by over 50% of members of the Board of members. In case the numbers of affirmative and negative votes are equal, the President of the Board of members or a person authorized by the President to chair the meeting shall cast the deciding vote. Members of the Board of members may only cast affirmative and negative votes; abstention is not allowed. Members of the Board of members are entitled to reserve their opinions, have them written in the minutes of meeting, and file complaints to the owner.

4. According to the contents and agenda of the meeting, the Board of members, where necessary, is entitled or obliged to invite authorized representatives of relevant entities to attend and discuss certain issues in the agenda. Invited participants may offer their opinions but must not cast votes. Opinions of invited representatives (if any) shall be written in full in the minutes of meeting.

5. Contents of discussions, opinions, voting results, decisions approved by the Board of members, and conclusions of meetings of the Board of members must be written in the minutes of meeting. The chair and secretary of the meeting are jointly responsible for the accuracy and truthfulness of the minutes of meeting. VNR has to implement resolutions/decisions of the Board of members.

6. A resolution/decision of the Board of members may be approved by either voting at the meeting or seeking written opinions if a meeting cannot be held.

7. If an issue within the competence of the Board of members needs to be resolved immediately without convening a meeting of the Board of members or seeking written opinions, the President of the Board of members shall discuss with General Director of VNR and full-time members to reach a decision, then report to the Board of members.

8. Members of the Board of members are entitled to request General Director, Chief accountant, or managers of subsidiaries wholly owned by VNR, representatives of VNR’s stakes in other enterprises shall provide information and documents about finance and operation of units according to the communication statutes of the Board of members or resolutions of the Board of members. The persons requested to provide information must promptly provide sufficient and accurate information, documents at the request of members of the Board of members, unless otherwise decided by the Board of members.

9. The Board of members shall employ the management apparatus and assistance apparatus (if any) and seal of VNR to perform their duties.

10. Expenditures of the Board of members, including wages, allowances, and other wages are included in administrative expense of VNR.

11. Where necessary, the Board of members may consult Vietnamese and foreign experts before deciding important issues within its competence. The cost of consultation is specified in financial management statutes of VNR.

Section 2: GENERAL DIRECTOR

Article 37. Functions of General Director

General Director shall operate everyday activities of VNR according to the targets, plans, resolutions, and decisions of the Board of members, VNR’s Charter, and regulations of law; take legal responsibility to the owner and the Board of members for the performance of given tasks and entitlements.

Article 38. Designation of General Director

1. General Director of VNR is a member of the Board of members of VNR, the designation, re-designation, dismissal, acceptance of resignation, reward and discipline of whom are proposed by the Board of members of VNR to the Minister of Transport; the term of office of a General Director is up to 05 years. The General Director may be re-designated.

2. To be designated as General Director, the person must:

a) Be a Vietnamese citizen and has a permanent residence in Vietnam.

b) Has civil capacity, not be banned from holding managerial positions in enterprises as prescribed by law.

c) Have a bachelor’s degree or a higher degree; be capable of doing business and business administration; has at least 03 years’ experience of management of enterprises that engage in the primary business lines of VNR or related business lines.

d) Has good health, moral qualities, honesty, integrity, understanding of law, and observance of law.

dd) Not be a related person of any member of the Board of members, Controller, Chief accountant, or treasurer of VNR.

e) Not concurrently hold a managerial position in a subsidiary, associate company of VNR, or an external agency/unit.

g) Satisfy all standards and conditions for designation as prescribed by law.

3. The following persons shall not be designated as General Director:

a) Any person who used to hold the position of President of the Board of Directors, President of the Board of members, President of company, General Director/Director of a state-owned company and committed violations that lead to dismissal or premature termination of contract.

b) Any person banned from holding managerial positions in enterprises as prescribed by law.

Article 39. Replacement, dismissal of General Director

1. The General Director shall be dismissed in any of the following cases:

a) VNR incurs a loss or fails to reach the desired return on charter capital for 02 consecutive years, or VNR incurs intermittent loss without viable solutions, unless the loss or decrease in return on charter capital is allowed by a competent authority, or there is justifiable explanation for the loss or decrease in return on charter capital which is accepted by a competent authority.

b) The General Director is dishonest while performing his/her duties or entitlements; misuses his/her power to reap benefit for himself/herself or another person; makes untruthful reports on the finance or business performance of VNR.

c) VNR was driven into bankruptcy but the General Director does not petition for bankruptcy as prescribed by regulations of law on bankruptcy.

d) Health of the General Director is deteriorating and renders him/her unable to operate VNR; the General Director’s civil capacity is lost or limited.

dd) The General Director commits violations of law that are liable to criminal prosecution; the General Director is dismissed and replaced as prescribed in this Charter.

e) The General Director deliberately commits violations or commits serious violations against VNR’s Charter, financial management regulations, other rules and regulations; resolutions/decisions of the Board of members of VNR.

2. The General Director shall be replaced when he/she:

a) is dismissed as prescribed in Clause 1 of this Article.

b) hands in a resignation which is then accepted by a competent authority.

d) receives a competent authority’s decision on retirement or reassignment.

Article 40. Duties and entitlements of General Director

1. Organize the implementation of resolutions/decisions of the Board of members and the owner.

2. Decide everyday issues related to business operation of VNR.

3. Formulate a strategy for development of VNR; formulate annual plans and long-term plans of VNR; formulate plans form risk management, capital raising, capital investment, cooperation; organizational structure, personnel, and management apparatus of VNR; rules and regulations of VNR; draft and revise Charter of VNR; plans for adjustment to charter capital; plans for business cooperation between VNR, subsidiaries, and other companies, among subsidiaries, or between subsidiaries and other companies; technological solutions, market development and marketing plans which are subject to approval by the Board of members.

4. Submit annual financial statements to the Board of members; propose plans for using profits or handling loss in business.

5. Request the Board of members of VNR to consider deciding the issues within the competence of the Board of members.

6. Appoint managers, employees of VNR, members of the Board of members, or President, Controllers, General Director, Directors of subsidiaries wholly owned by VNR, affiliated units of VNRs to work and study overseas; receive foreign individuals and delegations that come to Vietnam to work with VNR; authorize the President, General Director, Directors of subsidiaries wholly owned by VNR affiliated units of VNRs to appoint their managers and employees to work, study overseas and receive foreign individuals and delegations that come to Vietnam to work with them.

7. Decide projects of investment, contracts to buy, sell assets of VRN, contracts to take loans, grant loans, lease contract, rent contact, and other business contracts as authorized by the Board of members of VNR and regulations of law.

8. Decide the issues assigned or authorized by the Board of members in accordance with this Charter and relevant requirements.

9. Decide the plan for using capital, assets of VNR to contribute capital, buy shares of Vietnamese companies within the limits imposed by the Board of members of VNR and other regulations of law.

10. Recruit employees, sign/terminate employment contracts with employees, designate, dismiss, reward, discipline, pay wages and provide benefits for employees of VNR, except for those under the management of the Board of members of VNR.

11. Request the Board of members of VNR to designate, dismiss, accept resignation, reward, discipline, and decide wages of the following positions: Deputy General Directors, Chief accountant of VNR, members of the Board of members, President of the company, Controllers, General Directors/Directors of subsidiaries that are single-member limited liability companies wholly owned by VNR;

12. Give tasks to Deputy General Directors of VNR

13. Request the Board of members to appoint representatives of VNR’s stakes in other enterprises.

14. Organize the implementation of business plans, investment plans; operate everyday activities, audit, inspection; decide solutions for market development, marketing, technologies, and other works necessary for effective implementation of resolutions/decisions of the Board of members and the owner; manage the operation of VNR in order to implement resolutions/decisions of the Board of members.

15. Monitor, supervise, inspect operation of member enterprises as assigned or authorized by the Board of members.

16. Sign business contracts and civil contracts of VNR. The General Director may only sign the contracts that are beyond his/her competence after the Board of members issues a resolution/decision.

17. Report the business performance of VNR to the Board of members; publish financial statements as prescribed by law.

18. Facilitate the inspection and supervision by the Board of members, Controllers, competent authorities with regard to the performance of the General Director’s functions and duties prescribed in this Charter and other regulations of law.

19. Take necessary in an emergency and immediately report to the Board of members and competent authorities.

20. Receive annual wages corresponding to VNR’s performance as decided by the Ministry of Transport. The payment, statement of wages and bonus are similar to that of full-time members of the Board of members.

21. Perform other rights and duties as prescribed by law, this Charter, and Decisions of the Board of members.

Article 41. Relationship between the Board of members and General Director in the management of VNR

1. If the General Director finds anything disadvantageous to VNR while organizing the implementation of a resolution/decision of the Board of members and the owner, he/she must immediately propose revision of the resolution/decision to the Board of members. The Board of members must consider the proposal of the General Director. If the Board of members does not revise the resolution/decision, the General Director still has to implement it. In this case he/she may reserve his/her opinion and make a proposal to the owner.

2. Within 15 days from the end of the month/quarter/year, the General Director must send a written report on business performance and a plan for the next period of VNR to the Board of members.

3. President of the Board of members is entitled to attend or appoint a representative of the Board of members to attend regular meetings and meetings for preparation of projects to be submitted to the Board of members that are chaired by the General Director. The President of the Board of members or the representative of the Board of members is entitled to offer their opinions but does not have the right to conclude the meeting.

Article 42. Duties and obligations of members of the Board of members and General Director of VNR

1. President, members of the Board of members, and General Director of VNR have the following obligations:

a) Comply with law, this Charter, decisions of the owner of VNR with regard to performance of given tasks and entitlements.

b) Perform given tasks and entitlements in the most honest and discreet manner in order to serve the best interest of VNR and its owner.

c) Always serve and protect the interest of VNR and its owner. Do not use information, secrets, and business opportunities of VNR; do not misuse the power, capital, and assets of VNR to reap benefits for themselves or to serve the interest of another entity. Do not give assets of VNR to other people; Do not reveal secrets of VNR while holding the position of member of the Board of members or General Director and for at least 03 years after stop holding such position, unless otherwise accepted by the Board of members.

d) Promptly send notifications to VNR of the enterprises that the Board of members, General Director, and their related persons own or hold over 35% of charter capital as prescribed by Law on Enterprises. These notifications must be posted at the headquarter, branches, and affiliated units of VNR.

dd) In case VNR fails to settle its debts and other liabilities that are due, General Director must report to the Board of members, seek a solution for financial difficulties, and inform the finance of VNR to all creditors. In this case, President of the Board of members, members of the Board of members, and General Director must not raise wages, extract profits to pay bonuses to managers and employees.

e) If Point dd of this Clause is not complied with in case VNR fails to settle its debts and other obligations safety that are due, they must take personal responsibility for the damage to the creditors.

g) The President of the Board of members, General Director of VNR, or any member of the Board of members that violates the Charter, makes decisions beyond their competence, or misuses their power and causes damage for VNR and the State must pay compensation as prescribed by law and this Charter.

h) Do not allow their spouse, birth parents, adoptive parents, children, adopted children, or siblings (hereinafter referred to as related persons) to hold the position of Chief accountant or treasurer of VNR. Report the business contracts, civil contracts of VNR with the related persons of members of the Board of members or General Director to hold the position of Chief accountant or treasurer of VNR to the Ministry of Transport.

The member of the Board of members or the General Director shall be requested not to sign contracts that are considered self-seeking; concluded contracts shall be invalidated and the member of the Board of members or General Director must pay compensation to VNR and be dealt with as prescribed by law.

2. Members of the Board of members are jointly responsible to the owner for the decisions of the Board of members and performance of VNR.

3. The General Director is legally responsible to the Board of members for the everyday operation of VNR within the ambit of his/her given tasks and entitlements.

4. The President of the Board of members, General Director, or a member of the Board of members commits any of the following violations that is not liable to criminal prosecution shall not receive bonus, pay raise, and shall be disciplined depending on the seriousness of violations.

a) VNR incurs a loss.

b) State capital is lost.

c) Projects of investment are ineffective and fail to recover capital or pay debts.

d) Wages and benefits to employees of VNR are not paid sufficiently as prescribed by regulations of law on employment.

dd) There are violations against regulations of law on management of capital and assets, accounting, audit, and other regulations of the State.

5. The President of the Board of members whose irresponsibility or failure to perform his duties and entitlements leads to one of the violations mentioned in Clause 4 of this Article shall be dismissed and has to pay damages depending on the seriousness of the violations.

6. If VNR is thrown into the situation mentioned in Point a Clause 1 Article 39 of this Charter, depending on the seriousness of violations and consequences, the President of the Board of members or General Director shall have their wages lowered or be dismissed and has to pay damages as prescribed by law.

7. If VNR runs into bankruptcy but the General Director does petition for bankruptcy, he/she shall be dismissed and has to incur responsibility as prescribed by law; If the Board of members does not request General Director to petition for bankruptcy, the President and members of the Board of members shall be dismissed.

8. If VNR is has to be restructured, dissolved, or transferred but procedures for restructuring, dissolution, or ownership transfer is not carried out, the President, members of the Board of members, and General Director shall be dismissed.

Article 43. Contracts, transactions between VNR and relevant persons

1. Contracts, transactions between VNR and the following entities must be considered and decided by the Board of members, General Director, and Controllers of VNR under the majority rule (each person has one vote).

a) The owner, authorized representative, General Director, and Controller.

b) Related persons of the persons mentioned in Point a of this Clause;

The representative of VNR must send the draft contract or notification of transaction to the Board of members and Controller. It must also be posted at the headquarter and branches of VNR.

2. The contracts and transactions mentioned in Clause 1 of this Article are only accepted when all of the following conditions are satisfied:

a) The signatories to a contract or transaction must be independent legal entities that have separate rights, obligations, property, and interests.

b) Prices of a contract or transaction are market prices at the time the contract is concluded or the transaction is made.

c) The owner must comply with regulations of law on contracts and relevant regulations of law in purchase, sale, lending, borrowing, lease between VNR and the owner.

3. A contract or transaction shall be invalidated and dealt with as prescribed by law if it is not concluded in accordance with Clause 1 of this Article. The representative of VNR and signatories to the contract must pay damages and return the benefits derived from the execution of the contract/transaction to VNR.

Section 3: DEPUTY GENERAL DIRECTORS, CHIEF ACCOUNTANT, AND ASSISTANCE APPARATUS

Article 44. Deputy General Directors and Chief accountant

1. VNR has 07 Deputy General Directors and 01 Chief accountant whose designation, dismissal, contract conclusion/termination, wages, and other benefits are decided by the Board of members at the request of General Director.

2. Deputy General Directors shall assist General Director in operating VNR as assigned and authorized by General Director; take legal responsibility to the General Director for performance of the tasks given or authorized by the General Director.

3. The Chief accountant has the responsibility to organize accounting works of VNR; propose solutions and create conditions to generate capital serving the business performance and investment of VNR; assist the General Director in financial supervision; utilize financial resources of VNR in accordance with regulations of law on finance and accounting; has the rights and obligations prescribed by law. Chief accountant is responsible to General Director for performance of the given tasks. Standards for recruiting Chief accountant of VNR shall comply with the Law on Accounting and other regulations of law.

4. Term of office of a Deputy General Director or Chief accountant is decided by the Board of members. Nevertheless, it must not exceed 05 years.  Deputy General Directors and Chief accountant may be re-designated or have their contracts renewed.

5. Wages and other benefits of Deputy General Directors and Chief accountant shall comply with applicable regulations of law.

Article 45. Assistance apparatus

1. The assistance apparatus consists of offices and specialized departments of VNR that are meant to assist the Board of members and General Director in performing their tasks.

2. The functions and tasks of offices and specialized departments are specified in the decision on establishment or specific decisions of the Board of members or General Director according to rules and regulations issued by the Board of members or General Director as prescribed by law.

3. During the operation, General Director is entitled to request the Board of members to change the organizational structure, payroll, quantity, functions, and tasks of specialized departments to suit the business operation of VNR and regulations of law.

Article 46. Wages and other benefits of the Board of members, Controllers, General Director, Deputy General Directors, and Chief accountant

President and members of the Board of members, Controllers, General Director, Deputy General Directors, and Chief accountant of VNR shall receive wages and other benefits according to VNR’s performance or control effectiveness as prescribed by regulations of law on state-owned single member limited companies.

Section 4: INTERNAL CONTROL

Article 47. Internal control

1. VNR has a Control Board that is established by the Board of members and is affiliated to the Board of members.

2. The Control Board is meant to assist the Board of members in inspecting, controlling the operation of VNR; discovering, preventing, minimizing mistakes and risks to VNR’s operation.

3. The Board of members shall decide the organizational structure, functions, tasks, powers, standards, conditions, wages, bonus, relevant issues of the Control Board, and issue operating statutes of the Control Board.

Section 5: PARTICIPATION OF EMPLOYEES IN MANAGEMENT OF VNR

Article 48. Method of participation

Employees shall participate in management of VNR through:

1. General meetings or meetings of deputies of employees of VNR.

2. Trade Union of VNR.

3. Discussion at the workplace or direct discussion between the employer and employees, or between the representative of employees and the employer.

4. The rights to file complaints and denunciations as prescribed by law.

Article 49. Scope of participation and obligations of employees

1. Employees are entitled to offer their opinions about the following issues:

a) Formulation or revision of rules and regulations that must be published at the enterprise.

b) Solutions for reducing costs, improving productivity, occupational safety, occupational hygiene, environmental safety, and fire safety.

c) Formulation or revision of collective bargaining agreement; the form of collective bargaining agreement.

d) Resolutions of employees’ conventions.

dd) Procedures for settling labor disputes, labor discipline, and liabilities.

e) Other issues directly related to rights and obligations of employees as prescribed by law.

2. The following issues shall be decided by employees:

a) Conclusion, execution, revision, termination of employment contracts as prescribed by law.

b) Contents and form of collective bargaining agreement.

c) Ratification of resolutions of employees’ conventions.

d) Participation in the trade union, professional organization, and other organizations as prescribed by law.

dd) Participation in strikes.

e) Other contents prescribed by law.

3. The following issues shall be supervised by employees of VNR:

a) Implementation of resolutions of employees’ conventions.

b) Implementation of the Charter, statutes, rules and regulations of VNR.

c) Implementation of collective bargaining agreement.

d) Execution of employment contracts.

dd) Provision of benefits for employees; collection and use of funds contributed by employees.

e) Settlement of complaints, denunciations, and labor disputes.

g) Annual commendations and rewards.

4. Employees also have other rights in addition to those mentioned above.

5. Employees have the obligation to execute their employment contracts, collective bargaining agreements; maintain labor discipline; Comply with labor regulations, and lawful management of VNR.

Article 50. Labor relationships in VNR

1. The relationship between VNR and its employees shall comply with regulations of law on employment.

2. Managers of VNR must respect enterprise protect the democratic rights of employees at the work place; democratic rights shall be exercised within the law through the democracy statutes of VNR.

VNR shall formulate and implement the statutes on internal democracy at the workplace to protect the lawful rights and interests of employees, the employer, and the State.

3. Redundant employees due to restructuring shall be dealt with in accordance with law.

Chapter 5.

RELATIONSHIP BETWEEN VNR AND AFFILIATED UNITS, SUBSIDIARIES, PUBLIC SERVICE AGENCIES, ASSOCIATE COMPANIES, AND VOLUNTARY ASSOCIATE COMPANIES

Section 1: MANAGEMENT OF VNR’S CAPITAL INVESTED IN OTHER ENTERPRISES

Article 51. VNR’S capital invested in other enterprises

Equity capital provided by the State for VNR to be invested in other enterprises includes:

1. Monetary capital, land use rights, land rents, values of other assets invested in or contributed to other enterprises by VNR.

2. Charter capital invested in or contributed to other enterprises that is under the management of VNR.

3. Values of shares in equitized state-owned companies; values of state capital in single-member limited liability companies and multi-member limited liability companies.

4. Capital raised by VNR for investment.

5. Other types of capital prescribed by law.

Article 52. VNR’S rights and obligations to management of capital invested in other enterprises

1. The Board of members of VNR shall perform the rights and obligations of the owner to subsidiary single-member limited liability companies; the rights and obligations of the co-owner that holds the controlling interest in multi-member limited liability companies, joint-stock companies, partnerships; rights and obligations of the co-owner that does not hold controlling interest in associate companies according to regulations of law applied to such companies.

2. Rights and obligations of VNR to manage state capital invested in other enterprises shall be performed by the Board of members of VNR, including but not limited to the following contents:

A) Decide to make investment, contribute capital, transfer capital invested in other enterprises; increase, reduce invested/contributed capital or charter capital as prescribed by relevant regulations of law and Charter of the enterprises that receive capital contributions from VNR; take responsibility for the debts and other liabilities of the enterprises within the capital contributed by VNR to them.

b) Decide to:

- Designate, dismiss members of the Board of members, Presidents, Directors, Controllers of subsidiaries wholly owned by VNR; propose, replace, dismiss authorized representatives, representatives of VNR’s capital contribution to exercise the rights of shareholders, capital contributors; propose representatives to the Board of Directors, the Board of members, the Control Board of companies having shares/stakes of VNR according to their Charters and relevant regulations of law of Vietnam and the foreign country.

- Reward, discipline, assess representatives of VNR’s stake who participate in the Board of Directors, the Board of members, the Control Board, or act as Directors, Controllers of subsidiaries wholly owned by VNR, subsidiaries in which VNR has controlling interest, and associate companies.

- Decide wages, allowances, bonus, and other benefits of representatives of VNR’s stakes, unless they are being paid by the enterprises that receive capital contributions from VNR.

c) Give tasks and request representatives of VNR’s stakes in other companies to:

- Decide the contents of the company as prescribed in Point d Clause 20 and Point d Clause 21 Article 32 of this Charter;

- Orient the company to achieve the targets set by VNR and implement the business cooperation plan of the conglomerate;

- Make periodic or extraordinary reports on finance, business performance, and other issues about the companies that receive capital contributions from VNR;

- Report on important issues of companies invested by VNR to obtain instructions before voting;

- Report the use of shares, stakes, market, technological secrets to serve the development orientation and targets of VNR.

d) Settle complaints of representatives of VNR’s stakes in other enterprises.

dd) Collect profits and take the risks derived from the stakes in other enterprises. VNR shall decide the use of recovered capital, including profits, for its business targets. In case of restructuring, the capital contributions shall be managed as prescribed by law.

e) Supervise and inspect the use of VNR's invested capital and take responsibility for the efficiency, preservation, and development of such capital.

g) Inspect, supervise the activities of representatives; discover their weaknesses and mistakes to make timely intervention.

Article 53. Representatives of VNR’s stakes in other enterprises

1. Representatives of VNR’s stakes in other enterprises are designated, dismissed, and replaced by the Board of members; the term of office of a representative shall not exceed 05 years and equal to that of the Board of members or the Board of Directors of the enterprise that receives capital contributions from VNR.  If multiple persons are designated as representatives of VNR’s stakes in an enterprise, the ratio of each representative must be specified and one of them must be appointed as leader. Representatives may be re-designated.

If not representative is appointed, the Board of members shall directly perform all rights and obligations of shareholders/capital contributors to the enterprise that receives capital contributions from VNR.

2. To be designated as a representative of VNR’s stakes in other enterprises, a person must:

a) Be a Vietnamese citizen and has a permanent residence in Vietnam; be an official of VNR.

b) Be capable, virtuous, honest, integrated, healthy enough to perform his/her duties, and be trusted by the enterprise that receives capital contributions from VNR.

c) Be understanding of law and observing the law.

d) Have knowledge about corporate finance or primary business lines of the enterprise that receives capital contributions from VNR; be capable of doing business and business administration. The person directly managing VNR’s stake in companies cooperating with foreign companies must have sufficient foreign language skills.

dd) Not be a related person of any member of the Board of Directors, the Board of members, President, General Director/Director, Chief accountant of the enterprise in which he/she represents VNR’s stake.

e) Not have invested capital in establishment of the enterprise, given loans, signed sale contracts with the enterprise in which he/she represents VNR’s stake, except for shares in an equitized company.

g) Not be banned from business administration.

h) Satisfy other standards as prescribed by law.

3. The representatives who nominate themselves for the Board of Directors, the Board of members, Presidents, General Directors/Directors of enterprises that receive capital contributions from VNR must satisfy all standards and conditions prescribed by law and their charters.

Article 54. Rights, obligations, and benefits of representatives of VNR’s stakes in other companies

1. A representative of VNR’s stakes in other enterprises has the following rights and obligations:

a) Represent VNR to perform tasks and entitlements of shareholders/capital contributions of the subsidiary/associate company. In case VNR holds controlling interest in the company, the representative of VNR’s stake shall use their control to orient the subsidiary to follow VNR’s strategy and targets.

b) Nominate himself/herself to the management apparatus of the subsidiary/associate company according to its charter.

c) Monitor the finance and performance of the subsidiary/associate company.

d) Make periodic and extraordinary reports at the request of the Board of members, President of the Board of members, or General Director of VNR on finance, performance, of the enterprise that receives capital contributions from VNR; efficiency of VNR’s stake, and performance of other tasks given by VNR.

dd) Seek opinions from the Board of members, General Director of VNR before voting at the General Meeting of Shareholders, a meeting of the Board of Directors or the Board of members of the subsidiary/associate company in terms of: orientation, strategy, business plans; revision to the charter; change of business lines; increase/decrease of charter capital; investments in projects; profit distribution; sale of high-value assets; organizational structure, and other important issues.  In case multiple VNR’s representatives participate in the Board of Directors or the Board of members of the company in which VNR invests, the person in charge appointed by VNR must seek opinions from the Board of members, General Director of VNR about important issues of the company before voting.

e) Monitor collection of profits, dividends derived from VNR’s investment.  The representative must send periodic reports to monitor the profitability of investment at the request of VNR to the Board of members and General Director of VNR.

g) Take responsibility to the Board of members and General Director of VNR for the management, use of VNR’s investment in the company in which he/she represents VNR’ stake;

The representative whose failure report, abuse of the right to represent VNR’s stake, or irresponsibility causes damage for the enterprise and VNR shall bear the responsibility, pay damages, and be dealt with as prescribed by law financial management regulation, and the statutes on VNR’s Representatives.

h) The representatives authorized to perform VNR’s rights and obligations to the enterprises over 50% major shareholders of which are held by VNR must comply with law and perform their duties when deciding the issues mentioned in Point d Clause 20 Article 32 of this Charter; report to VNR the loss, insolvency, failure to achieve targets, objectives given by VNR, and other violations.

i) The representatives authorized to perform VNR’s rights and obligations to the enterprises up to 50% major shareholders of which are held by VNR must comply with law and perform their duties when deciding the issues mentioned in Point d Clause 21 Article 32 of this Charter; report to VNR the loss, insolvency, failure to achieve targets, objectives given by VNR, and other violations.

k) Perform other rights and obligations according to the Regulation on representatives of VNR’s stakes in other enterprises, this Charter, and regulations of law.

2. Representatives shall receive wages, bonus, and responsibility allowance according to decisions of the Board of members on a case-by-case basis and depending on their performance. Representatives’ performance shall be assessed according to Regulation on representatives of VNR’s stakes in other enterprises; their wages, allowances, and benefits shall be paid in accordance with financial management regulations of VNR and regulations of law.

3. Representatives have the responsibility to comply with regulations of law, Regulation on representatives of VNR’s stakes in other enterprises. The Board of members and General Director of VNR shall discipline representatives that violate regulations of VNR or other agreements in a way that threatens the interest of the State and VNR, unless their violations are liable to criminal prosecution. 

4. The representatives shall be designated, dismissed, rewarded, disciplined, and provided with benefits in accordance with Regulation on representatives of VNR’s stakes.

5. Other rights and obligations as prescribed by law.

Section 2: RELATIONSHIP BETWEEN VNR AND AFFILIATED UNITS, SUBSIDIARIES, ASSOCIATE COMPANIES, AND VOLUNTARY ASSOCIATE COMPANIES

Article 55. Affiliated units, subsidiaries, associate companies of VNR

VNR has affiliated units, subsidiaries, and associate companies. The list of affiliated units, subsidiaries, and associate companies at the time the Charter is approved is provided in the Appendix enclosed herewith.

Article 56. Relationship between VNR and financially dependent units

Financially dependent units are units that do not have their own capital and assets. All capital and assets of financially dependent units are owned by VNR and are on the accounting records of VNR. Financially dependent units of VNR may conclude business contracts, do business, perform financial activities, and organize their personnel according to regulations of VNR or their statutes, which are formulated by General Director and approved by the Board of members. VNR are responsible for liabilities of financially dependent units.

Article 57. Public service agencies

1. Public service agencies operate under regulations of the State and statutes approved by the Board of members of VNR.

2. Facilities and budgets of public service agencies are funded by VNR within the overall expense of VNR. Public service agencies may earn revenues to cover their own costs and do bookkeeping under regulations of VNR. They may earn revenues from performance of tasks given by VNR, contracts for service provision, scientific research and training, technology transfers with internal and external units, benefit from commendation fund and benefit fund. Other issues of public service agencies that affect their stability and development shall be decided by VNR.

Article 58. Relationship between VNR and subsidiary single-member limited liability companies

1. Single-member limited liability companies shall be organized and operated in accordance with Law on Enterprises and relevant regulations of law.

2. VNR is the owner of its subsidiary single-member limited liability companies. The Board of members of VNR shall exercise the rights of the owner to its subsidiary single-member limited liability companies in accordance with Clause 19 Article 32 of this Charter.

3. The Board of members of VNR shall perform the duties of the owner to its subsidiary single-member limited liability companies:

a) Provide charter capital sufficiently and punctually as agreed; take responsibility for their debts other liabilities within he agreed capital if capital is not provided sufficiently and punctually as agreed.

b) Comply with their charters.

c) Take responsibility for their debts and other liabilities within their charter capital; identify and separate their assets and that of VNR.

d) Comply with regulations of law on contracts and relevant regulations of law in purchase, sale, lending, borrowing, lease, and other transactions between them and VNR.

dd) Protect their right to do business lawfully.

e) Perform other duties prescribed by law.

Article 59. Relationship between VNR and subsidiaries being joint-stock companies, multi-member limited liability companies in which VNR holds controlling interest

1. Subsidiaries of VNR that are joint-stock companies, multi-member limited liability companies in which VNR holds controlling interest are established, organized, and operated in accordance with Law on Enterprises, relevant regulations of law, and their charters.

2. VNR shall perform the rights and duties of controlling shareholders, partners, and capital contributors in subsidiaries in accordance with law and their charters.

3. VNR shall directly manage controlling shares/stakes in its subsidiaries via its representatives in the subsidiaries.

4. VNR has the rights and obligations to its investment in its subsidiaries as prescribed in Clause 20 Article 32 of this Charter.

5. Subsidiaries have rights and obligations to VNR as prescribed by Law and their charters.

Article 60. Relationship between VNR and associate companies

1. Associate companies of VNR are enterprises in which VNR does not hold controlling interest.

Associate companies are established, organized, and operated in accordance with regulations of law on their type of business.

2. When using the trademark, logo of VNR, associate companies must have the written consent of VNR regarding the contents, purposes, scope, use duration, and value of the trademark or logo.

3. VNR shall appoint representatives to perform rights and obligations of shareholders/capital contributors according to charters of associate companies, or perform rights and obligations under association contracts; or propose candidates for managerial positions of associate companies.

Representatives must obtain the consent before voting associate companies according to Regulation on representatives of VNR’s stakes.

4. Associate companies have the rights and obligations to VNR as prescribed by law and their charters.

5. VNR has the rights and obligations to its investment in its associate companies as prescribed in Clause 21 Article 32 of this Charter.

Article 61. Relationship between VNR and voluntary associate companies

1. VNR does not have shares/stakes in voluntary associate companies. They are established, organized, and operated in accordance with regulations of law on their type of business.

2. When using the trademark, logo of VNR, voluntary associate companies must have the written consent of VNR regarding the contents, purposes, scope, use duration, and value of the trademark or logo.

3. VNR and voluntary associate companies are binding by agreements on trademark, market, technology, research, training, human resources development, and other agreements.

Chapter 6.

FINANCIAL MECHANISM; INSPECTION AND AUDIT

Article 62. Adjustment to charter capital

1. Charter capital of VNR is specified in Article 5 of this Charter.

2. During its operation, charter capital of VNR may be increased from the following sources:

a) Development investment fund.

b) Fund for arrangement of enterprises in VNR after a competent authority issues a decision to permit the increase.

c) Other sauces (if any).

3. The increase of charter capital of VNR is decided by the Ministry of Transport at the request of the Board of members after reaching an agreement with the Ministry of Finance.

4. In case of increase of charter capital, VNR must announce its charter capital and follow the procedures for adjusting charter capital in this Charter.

5. The owner must provide additional capital punctually for VNR as agreed (if any). The owner’s responsibility for assurance of sufficient charter capital of VNR shall comply with law.

Article 63. Management of capital, assets, revenues, expenditures, prices, and distribution of profits of VNR

1. The management of capital, assets, revenues, expenditures, prices, profits and distribution of profits, development of funds shall comply with regulations of law and financial management statutes of VNR.

2. Financial management statutes of VNR are formulated in accordance with law and principles for financial management of state-owned single-member limited liability companies. The Board of members has the responsibility to elaborate financial management statutes of VNR.

Essential contents of financial management statutes:

a) Mechanism for management and use of capital.

b) Mechanism for management and use of assets.

c) Mechanism for management of revenues, expenditures, and business performance of VNR.

d) Mechanism for distribution of profits; funds and purposes of funds of VNR.

dd) Mechanism for management of financial plans, accounting, statistics, and audit regimes.

e) Management of revenues, expenditures, prices, profits and distribution of profits, and use of funds.

g) Rights and obligations of the Board of members and General Director to financial management of VNR.

h) Financial relationship between VNR and its subsidiaries, associate companies, and voluntary associate companies.

Article 64. Finance, accounting, audit

1. The fiscal year of VNR begins on January 01 and ends on December 31 every year.

2. General Director shall submit the business plan, investment plan, and financial plan for the next year to Board of Members for approval. The Board of members has the responsibility to send annual business plans and development plans of VNR to the Ministry of Transport, the Ministry of Planning and Investment, and the Ministry of Finance for consolidation and supervision.

3. General Director shall submit annual financial statements that have been audited to the Board of members by the deadline for approval, including:

a) Financial statement of VNR.

b) Consolidated financial statement of conglomerate.

4. The Board of members of VNR shall approve the annual financial statement of VNR after it is accepted by the Ministry of Transport; approve financial statement of affiliated units, consolidated financial statement of the conglomerate, financial statements of subsidiaries wholly owned by VNR according to documents and data provided by independent audit; take responsibility for the completeness, truthfulness, and rationality of the figures in financial statements. After the annual financial statement is examined and approved by the Board of members, VNR shall send it to competent authorities as prescribed.

5. VNR shall organize and provide guidance on:

a) Internal audit according to regulations of the Ministry of Finance in order to facilitate the management of General Director, supervision and inspection by the owner and the Board of members regarding affiliated units and subsidiaries of VNR.

b) Mandatory control of annual financial statements of VNR, affiliated units, subsidiaries; financial statements of construction projects prescribed by law.

6. VNR must ensure financial transparency as prescribed by regulations of the State.

7. VNR shall do bookkeeping and statistics in accordance with regulations of law.

Chapter 7.

RESTRUCTURING, TRANSFER, DISSOLUTION, AND BANKRUPTCY OF VNR

Article 65. Restructuring of VNR

1. The restructuring and method of restructuring of VNR is decided the owner.

2. After restructuring, VNR has the responsibility to comply with the procedures prescribed by law.

Article 66. Transfer of ownership of VNR

1. Ownership of VNR shall be transferred as follows:

a) Full or partial equitization of VNR.

b) Selling all or part of VNR.

c) Other methods prescribed by law.

2. When a decision on ownership transfer is issued by a competent authority, VNR shall follow procedures for ownership transfer prescribed by law.

Article 67. Dissolution of VNR

1. VNR shall be dissolved in the following cases:

a) VNR suffers from a long-term loss but has not run into bankruptcy.

b) VNR fails to accomplish the objectives given by the owner after having taken every necessary measure.

c) The existence of VNR is no longer necessary.

2. VNR shall be dissolved under the procedures prescribed by law.

3. The dissolution of VNR is decided by the owner as prescribed by law.

Article 68. Bankruptcy of VNR

1. If VNR fails to settle due debts at the request of creditors, General Director must petition for bankruptcy of VNR.

2. VNR shall follow bankruptcy procedures prescribed by regulations of law on bankruptcy.

Chapter 8.

DOCUMENTS OF VNR

Article 69. Access to documents of VNR

1. Every month, every quarter, and every year, the Board of members shall send reports on the finance and operation of VNR to the owner and competent authorities as prescribed by law and this Charter.

2. In case of urgency, the owner is entitled to request the Board of members in writing to provide any document related to the owner’s rights prescribed in this charter.

3. The General Director shall prepare and report for the Board of members to provide documents at the request of the owner.

4. The President, members of the Board of members, and Controllers, are entitled to request General Director and managers of VNR to provide every document about performance of the Board of members, inspection, supervision, and assessment by Controllers.

5. The General Director is responsible for retention and security of VNR’s documents as prescribed by law.

6. Employees of VNR are entitled to access information as prescribed by law.

Article 70. Publishing of information

1. The General Director is responsible for publishing of in as prescribed by law and this Charter.

2. The forms, contents, and places to send information shall comply with regulations of law.

3. In case of inspection and/or audit by competent authorities, the General Director is responsible for providing information as prescribed by law on inspection and/or audit.

Chapter 9.

SETTLEMENT OF INTERNAL DISPUTES AND REVISIONS TO CHARTER OF VNR

Article 71. Settlement of internal disputes

1. The internal disputes of VNR shall be settled through amicable negotiations according to regulations of this Charter.

2. If a dispute cannot be settled under this Charter, either party is entitled to bring the case to a competent authority.

Article 72. Revisions to the Charter of VNR

The Charter of VNR shall be revised when the law or documents of competent authorities contravene regulations of the Charter, or whenever the Board of members finds it necessary to revise, or at the request of the owner. The revised Charter of VNR shall be submitted by Ministry of Transport to the government for promulgation.

Chapter 10.

IMPLEMENTATION

Article 73. Scope of implementation

1. The owner of VNR, relevant units and individuals of VNR have the responsibility to comply with regulations of this Charter.

2. Internal rules and regulations of VNR issued by the Board of members and General Director must comply with this Charter.

3. Affiliated units, subsidiaries of VNR, according to regulations of law on their type of business and this Charter, shall formulate their own charters or statues, and submit them to competent authorities for approval. Charters or statutes of affiliated units and subsidiaries must not contravene this Charter.

4. In case of any discrepancies between applicable regulations of law and this Charter, regulations of law shall prevail./.