Nghị định 71/2013/ND-CP

DECREE

ON INVESTMENT OF STATE CAPITAL IN ENTERPRISES AND FINANCIAL MANAGEMENT OF ENTERPRISES OF WHICH 100% CHARTER CAPITAL IS HELD BY THE STATE

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 Investment dated November 29, 2005;

At the request of the Minister of Finance;

The Government promulgates a Decree on investment of state capital in enterprises and financial management of enterprises of which 100% charter capital is held by the State.

Chapter 1.

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree deals with the investment of state capital in enterprises and financial management of enterprises of which 100% charter capital is held by the State (hereinafter referred to as 100% state-owned enterprises).

Article 2. Subjects of application

1. This Decree is applicable to:

a) Single-member limited liability companies of which 100% charter capital is held by the State, which are established by the Prime Minister or Ministries, ministerial agencies, Governmental agencies (hereinafter referred to as managing Ministries), or People’s Committees of central-affiliated cities and provinces (hereinafter referred to as provincial People’s Committees). Including:

- Single-member limited liability companies that are parent companies of economic corporations, parent companies of state-owned corporations; parents in the parent company-subsidiary company relationship.

- Independent single-member limited liability companies.

b) Authorized representatives of 100% state-owned enterprises and representatives of the state capital invested in other enterprises.

c) The organizations and individuals related to the investment of state capital and financial management of 100% state-owned enterprises, and the management of state capital invested in other enterprises.

2. The parent companies in Point a Clause 1 of this Article shall formulate and promulgate the regulations on financial management of subsidiary companies of which 100% of charter capital is held by the parent companies in accordance with this Decree.

3. The 100% state-owned enterprises that engage in the finance fields shall comply with separate regulations of the Government or the Prime Minister, and other regulations in this Decree.

Article 3. Interpretation of terms

In this Decree, the terms below are construed as follows:

1. “Enterprises” mean single-member limited liability companies of which 100% charter capital is held by the State provided for in Point a Clause 1 Article 2 of this Decree.

2. “State capital at the enterprise” means the capital directly invested by the State budget and concentrated funds of the State when establishing the enterprises, and supplemented during the operations; the amounts payable to the budget that are retained; Development investment funds of enterprises; Enterprise arrangement funds; state capital sent from other places; value of the right to use land and national resources delegated by the State, and other assets delegated to enterprises in accordance with law.

3. “Equity of the enterprise” means the capital generated from the sources in Clause 2 of this Article, undistributed profit and exchange differences recorded in financial statements of the enterprise in accordance with law.

4. “State capital invested in other enterprises” means the state capital contributed to joint-stock companies, multi-member limited liability companies under the ownership of managing Ministries and provincial People’s Committees.

5. “Corporate capital” is the equity of the enterprise and capital raised by the enterprise.

6. “Corporate capital invested in other enterprises” is the capital of the enterprise which is invested in subsidiary companies and associate companies.

7. “Authorized representative of the state capital invested in other enterprises” means the individual authorized in writing by the owner to exercise the rights and perform the duties of the owner at other enterprises.

8. “Authorized representative of the corporate capital invested in other enterprises” means the individual authorized in writing by the enterprise to exercise the rights and perform the duties of the enterprise at other enterprises.

The authorized representatives mentioned in Clause 7 and Clause 8 of this Article shall be referred to as representatives.

9. “Managers” mean the President and members of the Member assembly or the Company President, the Controller, the General Director or Director, the Deputy General Director or Deputy Director, and the Chief accountant (except for the General Director or Director, Deputy General Director or Deputy Director, and Chief accountant working under labor contracts).

Chapter 2.

INVESTMENT AND MANAGEMENT OF STATE CAPITAL INVESTED IN ENTERPRISES

SECTION 1. INVESTMENT OF STATE CAPITAL IN ENTERPRISES

Article 4. Principles of investment of state capital in enterprises

1. Investment of state capital in enterprises is to provide essential public services and products for the society, serve National defense and security, regulate the economy and stabilize the macro- economy in each period.

2. Investment of state capital in enterprises must be accurate, efficient, suitable for every project of investment, open and transparent.

3. The investments of state capital for contributing to the establishment of enterprises or cooperating with other economic sectors must be assessed and approved by competent authorities.

4. Investment of state capital must be lawful, punctual, ensure the quality; avoid scattering, wastefulness, and losses.

5. Increasing the value of state capital invested in enterprises.

Article 5. Forms of investment of state capital in enterprises

1. Investing state capital in the execution of important projects of the State at enterprises.

2. Investing in establishing new enterprises.

3. Investing, supplementing charter capital in enterprises for expanding their scale, raising productivity and capacity, upgrading technologies, reducing, environmental pollution, serving National defense and security.

4. Investing state capital to maintain the control or proportion of state capital in joint-stock companies and multi-member limited liability companies.

5. Buying part or the whole enterprises in other economic sectors for economic restructuring.

Article 6. Conditions for investment of state capital in enterprises

1. Investing in important projects of the State at enterprises, including:

a) The projects of which the total investments are at least 35,000 billion VND, among which the state capital is at least 11,000 billion VND;

b) The projects that significantly affect the environment or are likely to significantly affect the environment, including:

- Nuclear power plants;

- The projects that require the conversion of purposes of at least 50 hectares of land of national parks, wildlife sanctuaries, landscape conservations, research forests, upstream protection forests; or at least 500 hectares of protection forests that block wind, sand, waves, or at least 1,000 hectares of production forests;

c) The projects that require the conversion of purposes of at least 500 hectares of paddy land for at least 2 crops.

d) The projects that at least 20,000 people in highlands or 50,000 people in other areas must be resettled.

dd) The projects in localities where historic or cultural national remains or landscapes are situated.

e) The projects in the localities that are extremely important to National defense and security.

g) The projects that requires the application of special policies.

h) The projects of national importance overseas which satisfy one of the criteria below:

- The total overseas investment is at least 20,000 billion VND, among which the state capital is at least 7,000 billion VND;

- The projects that requires the application of special policies that need the decision of the National Assembly;

- Other imported projects decided by the Prime Minister.

2. Investing state capital in establishing new 100% state-owned enterprises:

a) Investing state capital in establishing new enterprises in the following fields and localities:

- Provision of essential products and services for the society or for National defense and security.

- The fields that apply high technology which motivate other fields and the whole economy, requiring massive investments;

- The localities facing extreme socio-economic difficulties that are not invested by other economic sectors.

b) The Prime Minister shall make a list of fields and localities specified in Point a of this Clause.

c) The investment of state capital in the establishment of subsidiary companies of an enterprise must directly serve the main business line of the enterprise.

3. Supplementary charter capital shall only be provided for the 100% state-owned enterprises in accordance with the criteria and enterprise classification decided by the Prime Minister in each period, which are provided with sufficient charter capital by the State.

4. The supplementary state capital is provided to sustain or increase the proportion of invested capital in other enterprise, including:

a) Other enterprises providing public services and products serving National defense and security.

b) Other enterprises that significantly affect the development of the sectoral or regional economy in which the controlling shares are held by the State as decided by the Prime Minister in each period.

5. The purchase of part or the whole enterprises in other economic sectors for economic restructuring shall be decided by the Prime Minister.

Article 7. The power to decide investment of state capital in enterprises

1. The Prime Minister shall decide the investment of state capital in enterprises to:

a) Execute key projects of the State specified in Clause 1 Article 6 of this Decree after they are approved by the National Assembly.

b) Establish state-owned corporations; provide supplementary charter capital during the operation of state-owned corporations and State Capital and Investment Corporation.

c) Provide supplementary state capital contributed to economic corporations after equitization.

d) Purchase part or the whole enterprises in other economic sectors at the request of managing Ministries and provincial People’s Committees.

2. Ministers of managing Ministries and Presidents of the provincial People’s Committees shall decide the investment of state capital in enterprises to:

a) Establish enterprises affiliated to managing Ministries and provincial People’s Committees after the establishment plans are approved by the Prime Minister.

b) Provide supplementary charter capital during the operations of the enterprise. The supplementation of charter capital of enterprises established by managing Ministries must be agreed by the Ministry of Finance.

c) Increase the state capital contributed to other enterprises under the ownership of managing Ministries and provincial People’s Committees.

d) Cooperate with the Ministry of Finance and the Ministry of Planning and Investment in examining the plan for purchasing part or the whole enterprises in other economic sectors, and request the Prime Minister to decide.

SECTION 2. MANAGEMENT OF STATE CAPITAL INVESTED IN ENTERPRISES

Article 8. Rights and obligations of managing Ministries and provincial People’s Committees to the state capital invested in other enterprises

1. The rights of shareholders, contributors and partners are specified by law and the charters of other enterprises.

2. Designate, dismiss, award commendations, and discipline representatives at the other enterprises; decide the salaries, allowances, bonuses, and benefits for representatives, unless the representatives receive salaries from the other enterprises.

3. Request representatives to send periodic or unscheduled reports on the performance and finance of the enterprises.

4. Assign and instruct representatives to protect the lawful rights and interests of the State at the other enterprises. Request the representatives to report the fulfillment of their obligations and, especially to the orientation of the enterprises the State they hold controlling shares or contribution, in order to implement the strategies of the State; providing written instructions at the request of the representatives.

5. Decide the increase or withdrawal of capital invested in the other enterprises in accordance with laws and the charters of such enterprises.

6. Inspect and supervise the representatives; rectifying the faults of the representatives.

7. Supervise the withdrawal of capital invested in other enterprises and the collection of profit divided by other enterprises.

8. Take responsibility for the efficient use, preservation, and development of capital.

9. Other rights and obligations defined by law.

Article 9. Rights and obligations of representatives

1. Rights and obligations of representatives

a) Representatives of state capital invested in other enterprises are responsible for complying with law and fulfilling the tasks assigned by the owner when making decisions on the issues mentioned in Article 8 of this Decree. Report the loss, insolvency, and failure to accomplish the tasks assigned by the owner, or other misconduct.

b) The representative must obtain the written opinion of the owner before providing opinions, voting, and making decisions in General meetings of shareholders, meetings of the Board of Directors and the Member assembly on the business line, targets, objectives, strategies, business plans, investment and development plans; restructuring, dissolution, bankruptcy; promulgation and adjustment of the charter; increase or decrease of the charter capital; voting for or against members of the Board of Directors, the Member assembly, General Director (Director), Deputy General Director (Deputy Director); distribution of profit; establishment, raising and use of fund; and annual distribution of dividends.

2. Salaries, bonus and benefits of representatives

a) Full-time representatives in the management board of other enterprises shall be given salaries, responsibility allowances (if any), bonuses, and other benefits that are defined in the charter of the enterprises and paid by the enterprises.

b) The salaries, responsibility allowances (if any), bonuses, and other benefits of part-time representatives in the management board of other enterprises shall be paid by the owners in accordance with law.

c) A written report shall be sent to the owner when the representatives are allowed to buy additional shares and convertible bonds as decided by the joint-stock company (unless they are bought by the right of present shareholders). The amount of shares the representatives are allowed to buy shall be decided in writing by the owner, which depends on the contribution and performance of the representatives. The capital owner is entitled to buy the residual amount. Where a representative is assigned to represent the state capital at multiple units, such representative may exercise the call option at 01 unit. The representative at the joint-stock company shall transfer the residual call option to the capital owner.

3. Standards of representatives

Representatives must meet the standards defined in Clause 2 Article 48 of the Law on Enterprises and the Government’s regulations on the application of the laws on officials and civil servants to the managerial positions of single-member limited liability company of which 100% charter capital is held by the State and representatives of state capital of enterprises contributed by the State.

4. Responsibility of representatives to report:

Every quarter, at the end of the fiscal year, or at the request of the owner, based on financial statement and other reports of the enterprise, the representatives shall summarize and assess the operation, finance of the enterprise, suggest solutions for the difficulties in order to raise the efficiency of state capital invested in other enterprises, and send a report to the owner.

Article 10. Collection of distributed dividends and profit

1. Distributed profit and dividends from the state capital invested in other enterprises shall be remitted to the Enterprise Arrangement and Development Fund.

2. Representatives shall request other enterprises to remit distributed profit and dividends to the Enterprise Arrangement and Development Fund.

Article 11. Deciding the increase, decrease, and withdrawal of state capital invested in other enterprises

1. State capital invested in other enterprises shall be increased as follows:

a) The power to decide the plan for increasing state capital invested in other enterprises is specified in Article 7 of this Decree.

b) The method of increasing the capital invested in the other enterprises shall comply with law and the charters of such enterprises.

c) When an other enterprise increases its capital but the managing Ministry or provincial People’s Committee does not wish provide supplementary capital, the managing Ministry or provincial People’s Committee shall consider transferring the right to buy or the right contribute capital in accordance with law.

2. The decrease or withdrawal of state capital invested in other enterprises shall be done in the form of a transfer according to Section 3 of Chapter II of this Decree.

SECTION 3. TRANSFER OF STATE CAPITAL INVESTED IN ENTERPRISES

Article 12. Purposes of the transfer of state capital invested in enterprises

1. The State shall transfer part or the whole state capital invested in enterprises according to Article 5 of this Decree.

2. The State shall transfer the capital invested in enterprises to:

a) Restructure the enterprises in the fields which the State no longer holds 100% charter capital.

b) Withdraw state capital invested in other joint-stock companies and limited liability companies that engage in the fields that the State does not need to maintain capital contribution.

c) Attract investments of strategic investors at home and overseas.

Article 13. Principles of transferring state capital invested in enterprises

1. The plan for transferring state capital invested in enterprises must be approved by competent authorities.

2. The transfer of state capital invested in enterprises must ensure transparency and efficiency, minimize loss, and facilitate the development of enterprises.

3. The transfer of state capital invested in enterprises that are related to land must comply with the laws on land.

Article 14. Methods of transferring state capital invested in enterprises

1. The transfer of capital in 100% state-owned enterprises during equitization must comply with the regulations on equitization of 100% state-owned enterprises.

2. The transfer of state capital in single-member limited liability companies or multi-member limited liability companies must comply with the Law on Enterprises. The transfer of state capital invested in enterprises that are related to land must comply with the laws on land.

3. The sale of 100% state-owned enterprises must comply with regulations on selling enterprises.

4. Transfer of state capital in joint-stock companies:

a) The joint-stock companies listed at Stock Exchanges shall make matching transactions or reach agreements via the transaction system of Stock Exchanges.

b) For the joint-stock companies that are not listed at Stock Exchanges but have registered in the securities trading system, the transfer is similar to selling shares of listed companies according to Point a of this Clause.

c) The joint-stock companies that are not mentioned in Point a and Point b of this Clause shall sell the shares at public auctions. When only one investor registers to buy the shares or the Prime Minister makes a written approval, the shares shall be sold under agreements with the investor.

Article 15. The power to decide the transfer of state capital invested in enterprises

1. The Prime Minister shall decide the transfer of state capital in the form of equitization, selling enterprises, or conversion into multi-member limited liability companies, applicable to the enterprises established by the Prime Minister; decide the transfer of state capital invested in equitized corporations.

2. Ministers of managing Ministries and Presidents of provincial People’s Committees shall decide the transfer of state capital invested in the enterprises they establish in the form of equitization, selling enterprises, or conversion into multi-member limited liability companies according to the enterprise restructuring plans approved by the Prime Minister; Decide the transfer of shares and capital contributions in other enterprises of which the capital is under the ownership of managing Ministries or People’s Committees at all levels after consultation with the Ministry of Finance and the Ministry of Planning and Investment.

Article 16. Collecting money from state capital invested in enterprises

The amount of money from the transfer of state capital invested in enterprises in the forms in Article 14 of this Decree that remains after deducting relevant expenditures on capital transfer, fulfillment of obligations to the state budget, and benefits for redundant employees shall be remitted to Enterprise Arrangement and Development Fund.

SECTION 4. MANAGEMENT AND USE OF ENTERPRISE ARRANGEMENT AND DEVELOPMENT FUND

Article 17. Management and use of Enterprise Arrangement and Development Fund

The Prime Minister shall decide the establishment and issue the Regulation on the management and use of Enterprise Arrangement and Development Fund. The Ministry of Finance is in charge of state management, assurance of concentration, uniformity, and efficiency of sources of income of the fund.

1. Sources of income of Enterprise Arrangement and Development Fund:

a) The difference between the equity and charter capital of the enterprise which is approved by the owner according to Clause 4 Article 38 of this Decree.

b) Incomes from the equitization and other forms of ownership transfer of 100% state-owned enterprises.

b) Incomes from the transfer of state capital invested in other enterprises of which the capital ownership is represented by managing Ministries and provincial People’s Committees, after deducting the expenditures on the transfer.

d) Income from post-tax profit of 100% state-owned enterprises according to Point dd Clause 3 Article 38 of this Decree.

dd) Incomes from distributed profit and dividends of the enterprises of which the capital ownership is represented by managing Ministries and provincial People’s Committees.

e) Regulation of enterprise restructuring funds of corporations and parent companies.

g) Other incomes defined by law.

2. Expenditures of Enterprise Arrangement and Development Fund:

a) Providing supplementary charter capital for 100% state-owned enterprises that lack capital, or for new enterprises.

b) Buying part or the whole enterprises in other economic sectors.

c) Investing in joint-stock companies where state capital contributions are maintained.

d) Investing in the projects decided by the Prime Minister.

dd) Expenditure on support for redundant employees.

g) Other incomes defined by law.

Chapter 3.

FINANCIAL MANAGEMENT OF 100% STATE-OWNED ENTERPRISES

SECTION 1. MANAGEMENT AND USE OF ASSETS AND CAPITAL

Article 18. Charter capital

1. For new enterprises:

The charter capital is specified in the establishment plan approved by competent authorities. The charter capital shall not exceed 30% of total investment in assets of the enterprise, which ensures the normal operation of the enterprise according to the design scale and capacity. Where all assets of the enterprise are invested by the state budget, the charter capital shall equal the total state capital invested.

2. When an operating enterprise wishes to increase its charter capital, the owner shall approve the increase of charter capital based on the objectives, strategy for services and expansion, and characteristics of the enterprise. The increase of charter capital shall be sustained for at least 03 years from the year in which the decision on charter capital adjustment is made.

a) The Prime Minister shall decide the increase of charter capital of the enterprises established by the Prime Minister at the request of managing Ministries, according to consultation with the Ministry of Planning and Investment and assessment of the Ministry of Finance.

b) Ministers of managing Ministries shall decide the increase of charter capital of the enterprises they establish under written agreements with the Ministry of Finance.

c) Presidents of provincial People’s Committees shall decide the increase of charter capital of the enterprises established by provincial People’s Committees.

3. The Ministry of Finance shall provide guidance on the documentation, procedure and method for determination of charter capital.

4. Right and obligation to provide supplementary charter capital:

a) The enterprises shall use development investment fund to supplement the insufficient charter capital after the charter capital is approved by competent authorities. The use of the enterprise-restructuring fund of the parent company (if any) for providing supplementary charter capital must be approved in writing by the Prime Minister.

b) The Ministry of Finance shall supplement the insufficient charter capital of the enterprises that the Prime Minister or managing Ministries decide to increase the charter capital during their operation after they use the sources mentioned in Point a of this Clause.

b) Provincial People’s Committees shall fund the deficit of charter capital of the enterprises that provincial People’s Committees decide to increase the charter capital during their operation after they use the sources mentioned in Point a of this Clause. The request for provision of charter capital from the central budget or other legal capital sources under the management of the central agencies shall be sent to the Ministry of Finance and approved by the Prime Minister.

Article 19. Capital mobilization

1. Methods of capital mobilization: issuing bonds; taking loans from credit institutions, other financial institutions, individuals, external organizations, employees, and other methods of capital mobilization defined by law.

2. Capital mobilization principles:

a) The plan for capital mobilization must be approved by competent authorities to ensure solvency. The persons who approve the capital mobilization plans shall carry out inspections and supervisions to ensure the capital mobilized is used properly and efficiently.

b) The enterprise must make a loan contract with the organization or individual in Vietnam that gives the loan in accordance with law; the maximum interest rate must not exceed the interest rate for the same duration imposed by the commercial bank where the enterprise opens its account at the loaning date; If the enterprise opens accounts in multiple banks, the maximum interest rate shall not exceed the highest loan interest rate for the same duration imposed by the commercial bank where the enterprise opens its account.

c) The mobilization of loans from foreign organizations and individuals shall comply with the laws on taking and repaying foreign loans. The unsecured loans taken by the enterprise shall comply with relevant legislative documents on taking foreign loans. Managing Ministries and provincial People’s Committees shall approve the policies on foreign loans of enterprises and request appraisal and approval from the Ministry of Finance.

d) The capital mobilization in the form of bond issuance to serve the primary business line shall comply with the regulations on issuance of corporate bonds in the Law on Enterprises and relevant legislative documents on issuance of corporate bonds.

3. The power to approve capital mobilization plans:

a) Enterprises may actively mobilize capital to serve their business as long as the ratio of debt to equity does not exceed 3:1, including loan guarantees for enterprises contributed by parent companies according to Clause 4 of this Article. The Member assembly or the Company President shall decide the plan for mobilizing capital that does not exceed 50% of charter capital of the enterprise. If the General Director or Director is delegated by the Member assembly or the Company President to decide the capital mobilization plan, the level of capital mobilization must be specified in the Charter and Finance Regulation of the enterprise.

b) When an enterprise wishes to mobilize a level of capital that exceeds the limit in Point a of this Clause to make investments in important projects, it shall request the owner to consider and decide based on the solvency and efficiency of the projects that need capital. The owner shall notify the Ministry of Finance to monitor and supervise in cooperation.

4. The parent company may guarantee the loans taken from banks and credit institutions by the subsidiary companies of which 100% charter capital is held by the parent company. The total value of loan guarantees given to a subsidiary company shall not exceed the capital contributed to the subsidiary company by the parent company.

Where an enterprise contributed by the parent company wishes to have its loans guaranteed, the parent company may provide guarantee as long as the rate of guarantee (%) for each loan does not exceed the proportion of capital contributed by the parent company to the guaranteed enterprises, and the total amount of loan guarantees does not exceed the actual capital contribution of the parent company at the guaranteed enterprises.

The total value of loan guarantees given by the parent company to the subsidiary companies of which 100% charter capital is held by the parent company and the enterprises contributed the parent company shall not exceed the equity of the parent company but the ratio of debt to equity must comply with Point a Clause 3 of this Article. The parent company shall supervise the use of loans and punctual repayment of the loans taken by the enterprises that are guaranteed by the parent company.

5. The owner shall supervise the capital mobilization and the use of mobilized capital of enterprises. If the mobilized capital is not properly used or the exceeds 3 times the equity and not accepted by the owner, the owner shall cooperate with the Ministry of Finance in inspecting and requesting the Prime Minister to consider and decide the actions against the Member assembly or the Company President in accordance with current law.

Article 20. Investment, construction, and procurement of fixed assets of enterprises

The enterprise shall make 5-year plan for project development, including projects in class B or above according to the laws on project management, or at a lower level specified in the charter, then request the owner to makes an approval.

1. The power to decide projects of investment, construction, and procurement of fixed assets of enterprises:

a) The Member assembly and the Company President shall decide the projects of investment, construction, and procurement of fixed assets that are smaller than 50% of charter capital of the enterprise and do not exceed the levels of projects in class B according to the laws on project management. The competence of the Member assembly and the Company President must be specified in the charter of the enterprise. The enterprise owner shall consider and decide the projects that beyond the competence of the Member assembly and the Company President.

The Member assembly or the Company President shall delegate the General Director or Director to decide the projects of investment, construction, and procurement of fixed assets within the competence of the Member assembly and the Company President.

b) The procedure for investment, construction, and procurement of fixed assets shall comply with the laws on project management.

2. Investment and procurement of vehicles serving the operation of the enterprise:

The managers shall use vehicles to commute from their residences to work, to go on business trips, or to serve operation of the enterprise shall comply with the regulations of the Prime Minister. The procurement or replacement of vehicles shall be decided by the Member assembly or the Company President. If the procurement of vehicles is delegated to the General Director or Director, it must be specified in the charter or finance regulation of the enterprise.

3. The persons who decide investment, construction, and procurement of fixed assets are responsible for the inappropriate, obsolete, or unusable assets.

Article 21. Depreciation of fixed assets

1. Depreciation principles:

All fixed assets shall be appreciated, except for:

a) The fixed assets that are completely depreciated but are still being used for the business.

b) The fixed assets that are lost before being completely depreciated.

c) Other fixed assets under the management of the enterprise that are not under the ownership of the enterprise (except for fixed assets being finance lease).

d) The fixed assets that are not managed, monitored, or recorded in accounting books of the enterprise.

dd) The fixed assets used for the provision of benefits for employees, (except for the fixed assets serving employees at the enterprise such as the recreation ward, canteen, locker room, rest room, fresh water reservoir, parking lot, clinic, worker bus, training ward, and housing for employees invested by the enterprise).

e) Fixed assets from non-refundable aid that are allocated to the enterprise to serve scientific research.

2. The Ministry of Finance shall provide guidance on the management, use, and duration of depreciation of fixed assets.

Article 22. Leasing and mortgaging assets

1. Enterprises may lease and mortgage their assets in a way that ensures the efficiency, preservation and development of capital in accordance with law.

a) The Member assembly or the Company President shall decide the conclusion of asset lease contracts valued at below 50% of charter capital of the enterprise.

b) The power to decide the lease and mortgage of assets to apply for loans is specified in Article 19 of this Decree.

2. The lease and mortgage of assets of the enterprises established to maintain a continuous provision of public products or serve National defense and security must be approved by the owner.

3. The lease and mortgage of assets must comply with the Civil Code and relevant laws.

Article 23. Liquidation of fixed assets

1. Enterprises may actively liquidate fixed assets that are broken, obsolete, not needed, or unusable to recover capital in an open and transparent manner to preserve capital.

2. The power to decide the liquidation of fixed assets:

a) The Member assembly or the Company President shall decide plans for liquidating assets valued at below 50% of charter capital of the enterprise but do not exceed the level of projects in class B.

The plan for liquidating fixed assets beyond the competence of the financial the Member assembly and the Company President shall be decided by the owner.

b) The liquidation of assets serving the maintenance of continuous production and provision of public animal products or serving national defense and security must be approved by the owner.

c) When an enterprise that is incapable of recovering its capital plans to liquidate fixed assets of enterprises, the reasons for the incapability of capital recovery must be reported to the owner and a finance authority at the same level before liquidating the fixed assets.

d) When an enterprise sells its new fixed assets that are not efficiency as planned, and the sale is not able to recover its capital and leads to the failure to repay loan according to the loan contracts, responsibility of the persons involved must be clarified and reported to the owner.

dd) Apart from this Decree, the liquidation of assets of enterprises engaged in special fields (tobacco production, ships, aviation, etc.) must also comply with specialized laws.

3. Fixed assets shall be liquidated at auctions via an organization licensed to hold auctions, or openly liquidated by the enterprise itself in accordance with the laws on asset auction. The General Director or Director shall decide to liquidate fixed assets of which the residual book values are below 100 million VND at an auction or at agreed prices as long as their values are not below the market prices. For the fixed assets that are not traded on the market, the enterprise may hire a valuation organization to determine the prices at the basis for selling assets using the aforesaid methods.

The Ministry of Finance shall specify the procedure for asset liquidation.

Article 24. Management of unsold goods

1. Unsold goods are goods for sale that are left over, materials, tools in stock or in transit, unfinished products in production, finished products that are not in stock, finished products that are unsold, and finished products on sale.

2. The enterprise is entitled and obliged to dispose of defective and obsolete goods that are unsold in order to recoup investment. The power to decide the disposal is specified in Clause 2 Article 23 of this Decree.

3. At the end of the accounting period, when the cost of unsold goods in the accounting book is higher than the recoverable net worth, the enterprise shall make provision against devaluation of unsold goods according to Clause 3 Article 34 of this Decree.

Article 25. Management of receivables and payables

1. Management of receivables

a) The enterprise shall:

- Formulate and issue a regulation on the management of receivables, defining the responsibility for monitoring, collecting, and paying debts.

- Monitor debts of every debtors; frequently classify debts (circulating debts, bad debts, irrecoverable debts), and urge the debt repayment.

- The Member assembly, the Company President, and the General Director/Director of the enterprise are responsible for settling bad debts and irrecoverable debts. If the irrecoverable debts are not settled, the Member assembly, the Company President, General Director or Director shall be dismissed, similarly to the cases in which the finance of the enterprise is untruthfully reported twice or more. They shall be responsible before the owner and law if the unresponsiveness leads to the wastage of equity of the enterprise.

- When debt is classified as bad debt, the enterprise shall make a provision for such bad debt in accordance with Clause 3 Article 34 of this Decree;

- For the debts that are irrecoverable, the enterprise shall identify the responsibility for compensation of organizations and individuals involved; the residual amount shall be made up for using the provision for bad debts. If the debts are still unsettled, they shall be included in the business expense of the enterprise;

- After irrecoverable debts are settled, the enterprise must monitor them on the account outside the balance sheet and organize the collection. The debt collected shall be classified as an income of the enterprise.

b) Entitlements of the enterprise:

The enterprise is entitled to sell overdue debts, bad debts, and irrecoverable debts to recoup its capital. The enterprise shall sell debts to the organizations licensed to trade in debts; do not sell debts directly to debtors. Both parties shall reach an agreement on the sale prices of debts and take responsibility for the decision to sell receivables. If the sale of debts makes the enterprise suffer from a loss, lost its capital, or insolvent, which leads to the dissolution or bankruptcy of the enterprise, the Member assembly, the Company President and the persons involved in occurrence of such debts must pay compensations and incur penalties in accordance with law and its charter.

2. Management of payables:

a) Monitor all payables, including their interests.

b) Settle the payables on schedule. Frequently assess the solvency of enterprises; early detect the difficulties in debt repayment in order to provide solutions and avoid the occurrence of overdue debts. The payables that are written off or without creditors shall be recorded as incomes of the enterprise.

Article 26. Exchange differences

The exchange difference that occurs during the payment of accounts derived from foreign currencies, or when making reports on accounts derived from foreign currencies of the enterprise at other exchange rates than the current exchange rate or the exchange rate in the financial statement:

1. During the period of investment to form fixed assets of a new enterprise that have not operated, the exchange differences that occur during when making payment of accounts derived from foreign currencies and when reassessing the accounts derived from foreign currencies at the end of the fiscal year shall be accrued and separately recorded in the balance sheet. When this period is over, the exchange differences that occur during this period shall by gradually distributed into the financial income or cost for at least 5 years from the day on which assets are put into operation.

2. For operating enterprises, the exchange differences that occur when making payment of accounts derived from foreign currencies and reassessing accounts derived from foreign currencies at the end of the fiscal year, including investment in fixed assets of the enterprises, shall be classified as financial income or financial cost of the enterprise.

The Ministry of Finance shall provide guidance on the settlement of exchange differences.

Article 27. Asset check

1. The enterprise shall carry out periodic or unscheduled asset checks to determine the amount of assets (fixed assets, long-term investments, current assets and short-term investments); compare the payables and receivables when closing the accounting book to make the annual financial statement, when deciding the division, merger, amalgamation, ownership transfer of the enterprise, after a disaster or an event that cause the assets to change, or according to regulations of the State. Determine the surplus, deficit assets, irrecoverable debts, and overdue debts; find the reasons and responsibility of organizations and individuals involved; determine the level of compensation.

2. Measures taken after asset checks

a) Damage after asset checks.

Asset damage is assets are lost, broken, defective, obsolete, or unsold assets which are classified during periodic and unscheduled asset checks. Enterprises must determine the damage value, the causes, responsibility, and:

- If the damage is due to subjective causes, the persons that cause the damage shall pay compensation in accordance with law. The Member assembly or the Company President shall decide the level of compensation in accordance with law and take responsibility for their decisions.

- The damage of insured assets shall be settled in accordance with insurance contracts;

- After the damage is made up by compensation provided by individuals, organizations, or insurers, the deficit shall be included to the business expense.

- For the severe damage caused by natural disasters or force majeure that the enterprise cannot remediate itself, the Member assembly or the Company President shall make and send a plan for damage remediation to the owner and a competent finance authority. The owner shall decide the remediation of damage in accordance with the opinion provided by the finance authority within their competence;

- Enterprises are responsible for settling the damage to assets. If the damage is left unsettled, the Member assembly, the Company President, and the General Director/Director of the enterprise bear responsibility to the owner similarly to the cases in which untruthful reports on the enterprise finance are made.

b) Surplus assets after asset check

The surplus assets after asset check are the difference between the actual amount of assets and that in the accounting book. The surplus value after the asset check shall be classified as an income of the enterprise.

Article 28. Reassessing assets

1. Assets shall be reassessed in the following cases:

a) At the request of competent authorities.

b) Transferring the enterprise ownership: equitizing, selling, or transferring the enterprise ownership in other forms.

c) Making outward investments with assets.

d) Other cases defined by law.

2. The reassessment of assets must comply with regulations of the State. The surplus or deficit of value after asset reassessment in each case shall be settled in accordance with law.

Article 29. Outward investment

1. Outward investment principles

a) Enterprises may use assets under their management that are invested by corporate capital to make outward investment. The use of assets related to land for making outward investment shall comply with the laws on land.

b) the investment of corporate capital in other enterprises must be conformable with law, strategies, and development plans of enterprises, not affect their operation, ensure the efficiency, preservation and development of capital.

c) Enterprises must not contribute capital or make investment in real estate (except for the enterprises of which the main business line is real estate), must not contribute capital or buy shares from banks, insurers, securities companies, securities investment funds, and securities investment companies, except for the special cases decided by the Prime Minister.

d) The enterprises that have made contribution or investment in the fields in Point c of this Clause that are not permitted by the Prime Minister must make plans for restructuring and withdraw all investments at the request of competent authorities.

dd) Enterprises must not contribute capital or buy shares from other enterprises of which the managers or owners are spouses, parents, children, brothers or sisters of the President and members of the Member assembly, the controller, the General Director (Deputy General Director), the Director (Deputy Director) and the chief accountant.

2. Methods of outward investment

a) Making contribution, buying shares to establish joint-stock companies, limited liability companies, contribute to cooperation without establishing a new legal entity.

b) Buying shares or contributing capital to operating joint-stock companies, limited liability companies, or partnerships.

c) Acquiring another enterprise to establish a new legal entity.

d) Buy bonds for interest.

dd) Other methods of outward investment defined by law.

3. The power to decide projects of outward investment

a) The Member assembly or the Company President shall decide the projects of outward investment after the policies are approved by the owner.

b) The owner shall decide the capital contribution to foreign investors in Vietnam; investment in contribution to establishment of enterprises overseas; the acquisition of enterprises from other economic sectors; investment in enterprises established to maintain the continuous provision of public services and products or to serve national defense and security; other projects of financial investment beyond the competence of the Member assembly or the Company President.

4. Apart from the cases in which capital contribution is banned specified in Points c and dd Clause 1 of this Article, enterprises are also restricted from receiving capital contribution, in particular:

a) The parent company must not receive capital contribution from subsidiary companies.

b) The subsidiary companies of which 100% charter capital is held by the parent company and the dependent companies must not make capital contribution in cooperation with the parent company to establish new enterprises; must not make capital contribution to buy shares when other subsidiary companies in the same corporation or in the same or system is equitized.

Annually, managing Ministries and provincial People’s Committees shall inspect and supervise the management and use of capital for outward investment. Managing Ministries and provincial People’s Committees shall cooperate with the Ministry of Finance and request the Prime Minister to consider taking action against Member assemblies or the Company Presidents of the enterprises that make outward investments in improper subjects without restructuring the investment mechanism as specified in Clause 1 of this Article.

Article 30. Transferring outward investments

The transfer of outward investment shall comply with the Law on Enterprises, the Law on Securities and current laws, in particular:

1. Transfer method:

Depending on the method of contribution, the enterprise shall transfer the investments in accordance with law, the charters of the contributed enterprises, and agreements in cooperation contracts.

a) The transfer of corporate capital in a single-member limited liability company or multi-member limited liability company shall comply with Clause 2 Article 14 of this Decree.

b) The transfer of investments in the joint-stock companies listed on securities market or registered on UPCOM may be made in the form of … auction, agreement, or competitive offers as long as the prices are not lower than the market price at that time.

c) The transfer of investments in unlisted joint-stock companies may be made at public auctions and ensure the capital preservation. In particular:

The transfer of investments of 10 billion VND or higher must be put up for auctions via Stock Exchanges. The financial investments of below 10 billion VND shall be transferred at auctions held by an intermediate financial institution (securities company), by the enterprise itself, or via Stock Exchanges.

The transfer agreement shall only be made after the public auction is held and only 01 person wishes to buy. The price must be close to the market price at that time. In this case, the market price at that time depends on the prices provided by at least 03 securities companies that trade securities of the contributed joint-stock companies; if no transaction is made, the sale price must not fall below the price in accounting books of the enterprise.

2. The Member assembly or the Company President shall decide the transfer of investments in other enterprise within their competence. The transfer prices must be close to market prices and not fall below the prices in accounting books of enterprises.

3. Enterprises shall request the owners to consider and decide the transfer of outward investments that are lower than the book values (after making provision for loss of capital investment and earnings from capital investment).

Article 31. Rights and obligations of the enterprises that invest capital in other enterprises

1. The enterprises that invest capital in single-member limited liability companies of which 100% charter capital is held by the enterprises shall exercise the rights and fulfill the obligations defined by the Law on Enterprises.

2. Enterprises that invest capital in other enterprises have the rights and obligations below:

a) The rights of shareholders, capital contributors, and partners defined by law and the charters of the other enterprises.

c) Designating, dismissing, rewarding, and disciplining representatives at the other enterprises; deciding the salaries, allowances, bonuses, and benefits for representatives, except for the representatives that receive salaries from the other enterprises.

c) Requesting representatives to make periodic and unscheduled reports on the performance and business of the other enterprises.

d) Assigning and instructing the representatives to protect the lawful rights and interests of the enterprise at the other enterprises. Requesting the representatives to report the fulfillment of their tasks and obligations, especially to direct the enterprises in which the controlling shares are held by the State to achieve the targets of the enterprise.

dd) Inspecting and supervising representatives, finding and repairing the errors of representatives.

e) Deciding or requesting competent persons to decide the increase or withdrawal of investments in other enterprises in accordance with law and the charters of the other enterprises.

g) Supervising the withdrawal of investments in the other enterprises, collection of dividends distributed by the other enterprises.

h) Taking responsibility for the efficiency, preservation and development of capital.

i) Other rights and obligations defined by law.

3. Rights, obligations, salaries, bonuses, interests, and standards of representatives of the enterprise at other enterprises:

The rights, obligations, salaries, bonuses, interests, and standards, and obligations to report of representatives of the corporate capital invested in other enterprises shall be decided in accordance with Article 9 of this Decree.

4. Obligation to report of representatives of enterprises

Every quarter and at the end of the fiscal year or at the request of the owner, based on financial statement and other reports, representatives shall summarize, assess the performance and finance of enterprises, suggest solutions for difficulties in order to raise the efficiency of corporate capital invested in other enterprises, and send reports to the capital owner.

5. Collection of profit distributed from corporate capital invested in other enterprises.

Representatives are responsible for requesting the other enterprises to send distributable profit and dividends to the contributing enterprise.

Article 32. The right to decide the increase or decrease of corporate capital invested in other enterprises

The increase or decrease of corporate capital invested in other enterprises shall be decided as follows:

1. The person that decides the plan for capital investment in other enterprises shall also decide the increase or decrease of such investments.

2. The methods of increasing or decreasing investments in other enterprise shall comply with law and the charter of the enterprise.

3. When an other enterprise increases its charter capital but the contributing enterprise does not wishes provide supplementary capital, the contributing enterprise shall consider transferring the right to buy or to contribute capital in accordance with law.

Article 33. Withdrawing investments in other enterprises.

The amount of capital that is withdrawn when decreasing the corporate capital invested in other enterprises or when an enterprise is dissolved or bankrupt shall be remitted to the contributing enterprise.

Article 34. Capital preservation

1. Enterprises are responsible for preserving and developing their equity. Enterprises must report the increases and decreases of their equity to the owners and finance authorities for supervising.

Every 6 months and every year, enterprises must assess the efficiency of capital by the criteria on capital preservation guided by the Ministry of Finance.

2. The equity of enterprises shall be preserved as follows:

a) Complying with the regime for management and use of capital and assets, profit distribution, other financial management regimes, and accounting regimes defined by law.

b) Buying asset insurance in accordance with law.

c) Responsively settling asset damage, irrecoverable debts, and make the following provisions:

- Provision against devaluation of unsold goods

- Provision for bad debts;

- Provision for devaluation of long-term financial investments;

- Provisions for product and construction warranty.

d) Measures for preserving equity of enterprise defined by law.

3. Principles of making provisions:

a) The aforesaid provisions shall be classified as business expenses in the reporting year when making the financial statement to ensure the budget for making up for the damage that might be incurred in the next year.

b) Enterprises must formulate regulations on the management of supplies, goods, and debts to minimize risks; identify responsibility of every department and individual for the management of goods and debt collection.

c) Enterprises are prohibited from making improper provisions and classifying them as expenses to reduce payments to the state budget. This act shall be considered tax avoidance according to current law.

The Ministry of Finance shall provide guidance on making and use of provision against devaluation of unsold goods, provision for bad debts, provision for loss of financial investments, and provision for warranty.

SECTION 2. REVENUE, EXPENDITURES AND BUSINESS RESULTS

Article 35. Revenue and other incomes

1. Revenue and other incomes of the enterprise shall be determined in accordance with accounting standards and current laws on taxation.

2. Revenue includes revenue from the business and revenue from financial activities, in particular:

a) Revenue from the business is the receivables that arise during the sale of goods and services of the enterprise. For the enterprises that provide public services and products, their revenue also includes the subsidies provided by the State when they suffer from a loss while providing the products and services ordered by the State.

b) Revenue from financial activities includes the amounts of money earned from royalties, leasing assets, interests on loans, deposits, deferred payments, installments, finance lease; exchange differences, including exchange differences of payables in foreign currencies, of which the exchange rates when making the financial statement is low than those in the accounting books; revenue from transfer of corporate capital invested in other enterprises; distributable profit and dividends from outward investment (including post-tax profit retained for raising funds of the single-member limited liability companies of which 100% charter capital is held by the enterprise, which distribute dividends in the form of shares in joint-stock companies). If the enterprise income tax on the distributed profit is paid, the enterprise shall not pay the income tax on this profit.

3. Other incomes include the revenues from the liquidation of fixed assets, insurance money, the payables without creditors that are recorded as incomes, fines for contract violations paid by customers, value of intellectual property received by the contributors and classified as other incomes of the enterprises, and other revenues as prescribed by law.

4. The revenue of enterprises engaged in banking or insurance shall be determined in accordance with specialized laws.

Article 36. Operating expenses

Operating expenses include the expenditures on the business operation in the fiscal year. The determination of expenditures must comply with accounting standards and current laws on taxation. Operating expenses include:

1. Business expenses:

a) Expenditures on raw materials, fuel, power, semi-finished products, external services (according to actual consumption and prices); expenditures on allocation of tools, equipment, repairs of fixed assets, provisions for major repairs of fixed assets.

b) Depreciation of fixed assets.

c) Expenditures on salaries and wages paid to employees decided by the Member assembly or the Company President in accordance with the guidance of the Ministry of Labor, War Invalids and Social Affairs.

d) Payments for social insurance, unemployment insurance, union fees, health insurance for employees paid by the enterprise.

dd) Expenditures on transactions, brokerage, customer service, marketing, trade promotion, advertisement, meetings at actual prices in accordance with the Law on Enterprise income tax.

e) Other monetary expenditures, including:

- Taxes and fees imposed by law that are classified as business expenses;

- Land rents;

- Severance pay and redundancy pay for employees;

- Training for employees;

- Expenditure on health care.

- Rewards for ideas, innovations, productivity improvement, saving of materials and money. The rewards shall be decided by the General Director/Director of the enterprise based on the efficiency, and shall not exceed the total saving the innovation offers for 01 year.

- Expenditures on female employees;

- Expenditures on environment protection;

- Expenditures on catering.

- Expenditures on activities of the Communist Party at the Decree (the expenditures outside the budget of the Communist Party)

- Other monetary expenditures.

g) Irrecoverable debts according to Clause 1 Article 25 and actual asset damage according to Clause 2 Article 27 of this Decree.

h) The value of provision against devaluation of unsold goods, provision for bad debts, provision for loss of financial investments, and provision for warranty in Article 34 of this Decree, exchange differences, provision for warranty, and other provisions made by the enterprises engaged in special fields.

i) Expenditures on financial activities, including expenditures on external financial investments (including the expenditures incurred by contributors, even loss distributed by contributed enterprises); value of transferred capital contribution, interest on mobilized capital, exchange differences, expenditures on discounts, expenditures on asset lease; provision against devaluation of long-term investments.

2. Other expenses, including:

a) Expenditures on the liquidation of fixed assets, including residual value of fixed assets when liquidating.

b) Expenditures on collection of debts removed form accounting books;

c) Expenditure on collection of fines;

d) Expenditure on fines for contract violations.

dd) Other expenditures defined by law.

3. The expenditures provided for by other sources and expenditures that are not related to the business must not be classified as business expenses, in particular:

a) Expenditure on procurement, construction, installation of tangible and intangible fixed assets.

b) Expenditures on loan interest classified as expenditures on investment and construction.

c) Other expenditures that are not related to the business of the company; the expenditures that have not invoices.

d) Fines for violation of law committed by individuals, not in the name of the company.

4. The expenditures of enterprises engaged in banking or insurance shall be determined in accordance with specialized laws.

Article 37. Expenditure management

Enterprises shall strictly manage their expenditures to reduce expenditures and prices and increase profit as follows:

1. Establish and implement economic - technical limits that suit the business line, management model, and infrastructure of the enterprise. The limits must be known by the persons in charge and employees for them to inspect and supervise. The reasons and responsibility for failure to comply with the limits which leads to increase of expenditure must be identified. Compensation shall be paid if the reasons are subjective. The power to decide the level of compensation is specified din Clause 2 Article 27 of this Decree.

2. The enterprises engaged in the fields that must register prices with the State must send reports on their business expenses to the owners and the Ministry of Finance (for enterprises under the management of central government) or Services of Finance (for enterprises under the management of local governments). The reports must analyze and compare the intended and actual expenditures on depreciation of fixed assets, wages, materials, fuel, enterprise management, including expenditures on advertisement, marketing, transaction, customer service, other expenditures; identify the reasons and responsibility for excess expenditures.

3. Periodically analyze production cost and prices in order to find weaknesses in the management and the causes of the increase of cost and prices, and promptly provide solutions.

4. The General Director/Director of the enterprise shall establish economic - technical limits, labor limits, limits on financial expenditures and other expenditures as the basis for business management, and request the Member assembly or the Company President to put them into effects. Make plans for reducing expenditures that suit the performance and operation of the enterprise.

Article 38. Income distribution

After the profit is used for offsetting the loss of the previous year according to the Law on Enterprise income tax, raising the science and technology development fund, and paying enterprise income tax, the residual profit shall be distributed as follows:

1. Distribute profit among capital contributors in accordance with contracts (if any).

2. Offset the loss of the previous years that are not deducted from pre-tax profit.

3. The residual profit after doing the works in Clause 1 and Clause 2 of this Article shall be distributed as follows:

a) 30% shall be deducted to raise the development investment fund.

b) Raising the reward fund welfare fund:

- The enterprises rated A may deduct no more than 3 months’ salary to raise the reward fund and welfare fund;

- The enterprises rated B may deduct no more than 1.5 months’ salary to raise the reward fund and welfare fund;

- The enterprises rated C may deduct no more than 1 month’s salary to raise the reward fund and welfare fund;

The enterprises that are not rated may not establish the reward fund and welfare fund.

c) Raising manager bonus fund.

- The enterprises rated A may deduct no more than 1.5 months’ salary to raise the manager bonus fund;

- The enterprises rated B may deduct no more than 01 month’s salary to raise the manager bonus fund;

- The enterprises rated C and unrated enterprises may not establish the manager bonus fund.

d) If the reward fund and welfare fund are not sufficient according to Point b of this Clause, the amount deducted to raise the development investment fund may be reduced in order to supplement the reward fund and welfare fund. The supplementary amount must not exceed the amount deducted to raise the development investment fund in the fiscal year.

dd) The residual profit after the deductions in Points a, b, c and d of this Clause shall be remitted to Enterprise Arrangement and Development Fund.

4. The Ministry of Finance shall make plans and request the Prime Minister to transfer the development investment fund of the enterprises of which the equity is higher than the charter capital approved by competent authorities to the Enterprise Arrangement and Development Fund. Enterprises shall send money to Enterprise Arrangement and Development Fund within 05 days from the day on which the Prime Minister makes decisions.

The Ministry of Finance shall provide guidance on profit distribution and transfer of development investment funds to Enterprise Arrangement and Development Fund.

Article 39. Purposes of funds

1. Science and technology development funds of enterprises:

The establishment, management and use of the Science and technology development fund shall comply with guidance of the Ministry of Finance.

2. The Development investment fund is used for providing supplementary charter capital of enterprises.

3. The reward fund is used for:

a) Giving year’s end rewards or periodic rewards based on the productivity and accomplishments of managers and employees.

b) Giving unscheduled rewards to individuals or collectives in the enterprise.

c) Giving rewards to external individuals and units that contribute to the business or management of the enterprise.

The levels of the rewards in Points a, b, and c of this Clause are decided by the General Director/Director. The level of rewards in Point a of this Clause must be discussed with the Union before being given.

4. The welfare fund is used for:

a) Making investment in building or repairing welfare works of the enterprise.

b) Paying for welfare activities of employees in the enterprise.

c) Making investment in common welfare works for the field or with other units under contracts.

d) Providing unscheduled support for employees facing difficulties, including the employee that retire, face difficulties, are disabled, homeless, or do charitable works.

The use of the welfare fund shall be decided by the Member assembly or the Company President after discussion with the Union.

5. The manager bonus fund is used for giving bonus to the President and members of the Member assembly, the Company President, the Ministry of Education and Training, the controller, and the Chief accountant. The level of bonus shall be decided by the owner based on the criteria and efficiency of the enterprise at the request of the President of the Member assembly or the Company President.

6. The establishment and use of aforesaid funds must be approved by the owner and follow the principle of financial transparency, democracy, and law.

7. The enterprise may only use the reward fund, welfare fund, and manager bonus fund after all due debts and other financial obligations are settled.

SECTION 3. FINANCIAL PLANS, ACCOUNTING, STATISTICS, AND AUDIT

Article 40. Financial plans

1. Based on the strategy and development plan of the enterprise that is approved by the owner, the enterprise shall make long-term business plans and financial plans that are conformable with the orientation decided by the owner.

2. Annually based on the long-term business plan, capacity of the enterprise, and demand of the market, the enterprise shall make a business plan for the next year and submit it to the Member assembly or the Company President.

3. Based on the business plan decided by the Member assembly or the Company President, the enterprise shall assess the business performance of the current year, then make and send a financial plan for the next year to the owner and finance authority before July 31.

4. The owner shall cooperate with the finance authority at the same level in reviewing the financial plan made by the enterprise and provides opinions in writing. The enterprise shall complete the financial plan based on such opinions. The completed financial plan is the official plan which is the basis for the owner and the finance authority at the same level to assess the management and operation of the enterprise.

Article 41. Financial statement and other reports

1. At the end of every accounting period (quarter, year), the enterprise shall make and send financial statements and statistics reports in accordance with law. The Member assembly or company president is responsible for the accuracy of which reports.

The enterprise shall have their financial statements audited in accordance with law.

2. The Ministry of Finance shall provide guidance on report forms, time, and places to which reports are sent.

Chapter 4.

IMPLEMENTATION

Article 42. Effect

This Decree takes effect on September 01, 2013.

Article 43. Responsibility for the implementation

1. The Minister of Finance shall provide guidance, inspect, and supervise the implementation of this Decree. The guidance on special financial mechanisms applicable for enterprises engaged in lottery, Stock Exchanges, and Securities Depository Institutions must be approved in writing by the Prime Minister.

2. Political organizations and socio-political organizations to organize the investment and management of capital and assets of the enterprises under their ownership.

3. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of provincial People’s Committees, Presidents of the Member assemblies, company presidents, Directors of 100% state-owned enterprises, and representatives of state capital invested in other enterprises are responsible for the implementation of this Decree./.