Nghị định 91/2015/ND-CP

DECREE

STATE CAPITAL INVESTMENT IN ENTERPRISES, USE AND MANAGEMENT OF CAPITAL AND ASSETS IN ENTERPRISES

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

Pursuant to the Law on use and management of state capital invested in manufacturing and business operations of enterprises dated November 26, 2014;

Pursuant to the Law on Enterprises dated November 26, 2014;

Pursuant to the Law on Investment dated November 26, 2014;

Pursuant to the Law on Public Investment dated June 18, 2014;

At the request of the Minister of Finance,

The Government hereby promulgates the Decree on state capital investment in enterprises, use and management of capital and assets in enterprises.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

This Decree provides for state capital investment in enterprises, financial management in state enterprises and state capital investment management in joint stock companies and multiple members limited liability companies.

Article 2. Applicable entities

1. The state agency which exercises rights and obligations of the state capital owner on behalf of the state (hereinafter referred to as representative agency).

2. State enterprises shall include:

a) A single-member limited company of which charter capital is wholly owned by a parent company of a state economic corporation, a parent company of a state incorporation or a parent company that belongs to the group of a parent company - subsidiary company.

b) An independent single-member limited company of which charter capital is wholly owned by the state.

3. The representative person of state capital invested in a joint stock company, multiple-member limited liability company (hereinafter referred to as representative person).

4. Other agency, organization or individual engaged in investment, use and management of state capital and assets in state enterprises.

Article 3. Application of related laws

In addition to complying with provisions stated in this Decree, state enterprises that currently operate in finance-specific industries or sectors must implement the Government’s specific regulations applied to such specific financial aspects. Where there exists a discrepancy between such regulations and those enshrined in this Decree, the latter shall prevail.

Article 4. Interpretation of terms

Terms used herein shall be construed as follows:

1. Representative agency of state capital owner refers to Ministries, Ministry-level agencies and Government agencies (hereinafter referred to as managing Ministry); People’s Committees of centrally-affiliated cities and provinces (hereinafter referred to as provincial People’s Committee), or organizations established under legal regulations.

2. Same-level financial institution refers to the Ministry of Finance in a relationship with state enterprises established under the decision of the Prime Minister and the managing Ministry or delegated to exercise management authority; the Department of Finance in a relationship with state enterprises established under the decision of the provincial People’s Committee or delegated to exercise management authority.

3. Government-guaranteed loan and state-owned investment and development loan will be defined as state capital invested in state enterprises in the event that such loans have been repaid by the state, transformed into state loans allocated to enterprises under the decision of competent authorities.

4. Mobilized capital of a state enterprise refers to the capital that such state enterprise borrows from credit institutes, other financial organizations, or domestic and foreign individuals; the capital that such state enterprise obtains by issuing bonds and employing other methods of capital mobilization under laws for the purpose of financing for manufacturing and trading activities.

5. Other state capital invested in an enterprise refers to the capital invested in a joint stock company or multiple-member limited liability company to which the portion of capital contributed is owned by the representative agency.

6. State enterprise’s outward investment capital refers to the capital of a state enterprise invested in a joint stock company, limited liability company or invested in other forms as stipulated by laws.

Chapter II

STATE CAPITAL INVESTMENT IN ENTERPRISES

Section 1. STATE CAPITAL INVESTMENT IN ESTABLISHMENT OF STATE ENTERPRISES

Article 5. Scope of state capital investment in establishment of state enterprises

1. State enterprises which supply essential public products and services, and ensure the social security, including:

a) Public postal services;

b) Publication (exclusive of publication printing and release sector);

c) Agricultural and forestry operations stipulated by laws;

d) Management and operation of inter-province or inter-district water resources and agricultural irrigation works;

dd) Monitoring, operation and management of national and urban rail infrastructural facilities; systems for ensuring aviation and navigation safety;

e) Others decided by the Prime Minister.

2. State enterprises involved in the field of providing direct assistance for national defence and security under the Government’s regulations.

3. State enterprises involved in the field of natural monopoly, including:

a) National electric power transmission systems; large and multiple-objective hydropower plants, nuclear power plants which have special importance in socio-economic, national defence and security aspects;

b) Printing of paper money and coining of currency as well as manufacture of gold pieces;

c) Lottery;

d) State enterprises that have functions such as state capital investment and trading and debt trading and treatment for restructuring and macroeconomic regulation and stabilization purposes;

dd) Others decided by the Prime Minister.

4. State enterprises that apply high technologies make large investments, stimulate rapid growth of other industries and sectors and the whole economy.

Article 6. Procedures for state capital investment in establishment of state enterprises

1. Procedures for request for state capital investment in establishment of state enterprises

a) The representative agency prepares documents submitted to apply for state capital investment in establishment of state enterprises to same-level finance agencies within a permitted period of 30 days as from the date on which the decision on establishment of a state enterprise was obtained from competent authorities.

Application documents shall be composed of the followings:

- Copy of the decision on establishment of a state enterprise granted by competent authorities, enclosing the scheme for establishing such state enterprise. The scheme for establishing such state enterprise must be implemented under the Government's regulations on establishment, restructuring and dissolution of enterprises;

- Copy of the document explaining funding sources used for investing in establishment of a state enterprise and already approved by competent authorities (finances derived from the state budget, finances derived from the Enterprise Arrangement and Development Fund and other state capital).

b) Same-level financial institution:

Within a maximum period of 15 days of receipt of applications for state capital investment in establishment of state enterprises, this same-level financial institution shall be held responsible for verifying that submitted application documents conform to specified regulations to initiate procedures for state capital investment in establishment of state enterprises under the provisions of Clause 2 of this Article.

Where documents submitted to apply for state capital investment in establishment of state enterprises fail to meet stipulated requirements, finance agencies must send written response in which reasons are clearly stated to the representative agency within a permitted period of 07 days of receipt of such documents.

2. Procedures for state capital investment in establishment of state enterprises

a) With regard to investment in establishment of a new state enterprise and non-execution of projects for investment in development of fixed asset formation works, given the charter capital specified in the decision on establishment of state enterprises approved by competent authorities, and the planned investment fund already arranged in the state expenditure estimate approved and made known by competent authorities or the investment capital from the Enterprise Arrangement and Development Fund approved by the Government, finance agencies will provide such funds for such state enterprise.

b) With regard to investment in establishment of a new state enterprise on the basis of transfer of assets from completed construction projects, given the decision on establishment of state enterprises and the final account in completed construction works approved by competent authorities in accordance with regulations, project owners or state capital representative agencies will carry out the transfer of assets, identify state capital sources and amounts invested in such projects transferred to such state enterprise in order to complete procedures for providing financing for the charter capital for such state enterprise.

Where the completed final account of projects has not been approved by the competent authority, project owner or representative agency shall have state capital amounts specified in the budget plan accounted for by the state enterprise. After the completed final account of projects has been approved by competent authorities, the state enterprise shall proceed to adjust the difference between state capital amounts which have been accounting for in accounting reports and those which have been approved.

c) With regard to a newly-established state enterprise which is destined for execution of fixed asset formation projects of such state budget, and allocation of state capital for the purpose of payments during the process of implementation and final account of state invested capital upon completion of such projects, that state enterprise must comply with procedures for capital allocation in accordance with current legislation on management and use of state investments.

d) Funding sources that the State has been invested in establishment of an enterprise as stipulated in Point a, b and c of this Clause shall be defined as the state-invested charter capital of a state enterprise as it has been established.

Where the amount of charter capital which is lower than that of the charter capital which has been registered in the application for establishment of a state enterprise, such state enterprise shall be responsible for making an adjustment to the charter capital amount stated in the enterprise registration certificate so that it equals the actual contributed capital amount under the provisions of the Enterprise Law 2014.

Section 2. ADDITIONAL INVESTMENT IN THE CHARTER CAPITAL OF CURRENT STATE ENTERPRISES

Article 7. Scope of additional investment in the charter capital of currently active state enterprises

1. The additional investment in the charter capital shall be applicable to state enterprises in accordance with Article 5 hereof which are currently operating and fall in one of the following circumstances stipulated in Clause 2 of this Article.

2. The following circumstances under which an enterprise shall have access to an additional investment in the charter capital:

a) A currently active state enterprise has demonstrated its operating effectiveness after being evaluated according to the performance assessment criteria under the provisions of Article 8 hereof, but such state enterprise has the current charter capital amount can not afford its main scope of operations approved by competent authorities.

b) A state enterprise is directly involved in national defence and security but its current charter capital can not afford implementation of duties assigned by the State.

Article 8. Criteria for assessing the operating performance of currently active state enterprises

The performance assessment criteria shall be governed by the Government’s regulations on financial supervision and performance assessment in state enterprises.

2. A state enterprise will be accredited as an effectively operating one if it has held B-rank or higher which has been announced by competent authorities in the ranking of state enterprises specified in 3 years immediately preceding the year of determination of additional investment in the charter capital.

Article 9. Method of determining the charter capital of current active state enterprises

1. Basis and method of charter capital determination:

a) The charter capital of a state enterprise shall be allowed for any adjustment within a permitted period of 03 years from the date on which the decision on approval of such charter capital was issued.

b) An increased amount of a state enterprise's charter capital shall be determined in proportion to funding sources coming from the state budget, enterprise arrangement and development fund, internal enterprise arrangement fund or development investment fund in state enterprises which have been specified in projects for formation of assets used for manufacturing and trading activities that fall within the main scope of operations, and directly for main business sectors under the competent authority’s ratification or decision on investment intention within a minimum duration of 03 years from the year of determination of charter capital adjustment, including currently executing investment projects approved by competent authorities.

c) With regard to manufacturing and trading of products, commodities and services, the determination of charter capital adjustment, based on the 5-year production and business plan and strategy approved under the decision on investment intention by competent authorities, shall be specified in the plan for additional investments coming from the state budget, the enterprise arrangement fund or the development investment fund in state enterprises within a permitted period of 03 years from the year of determination of adjustment to the charter capital of a state enterprise.

A maximum increased amount of charter capital accounts for 30% of the difference (proposed increase) between revenues generated from manufacturing and trading of products, commodities or services in the following third year and realized revenues generated from manufacturing and trading of products, commodities or services defined in the audited financial report of an enterprise prepared in the year immediately preceding the year of commencement of redetermination of the charter capital.

d) The adjusted charter capital of a state enterprise shall be determined according to the following formula:

2. Procedures for approval of charter capital adjustment:

a) A state enterprise which is entitled to additional investment in its charter capital under the provisions of Article 7 hereof prepares an application for adjustment to the permitted amount of charter capital for submission to the representative agency for verification purposes. Application documents shall be composed of the followings:

- A copy of the decision on approving the charter capital issued by competent authorities at the time prior to a state enterprise’s request for charter capital adjustment;

- A document explaining the method of determination of the adjusted amount of charter capital (enclosing a copy of the decision on approval of construction investment projects concerning main business sectors of such state enterprise); a document explaining funding sources used for additional investment in the charter capital;

- A copy of the competent authority’s decision on announcement of ranks that a state enterprise has held for 3 years immediately preceding the year on which the application for charter capital adjustment was filed.

b) The representative agency:

- Within a permitted period of 15 days of receipt of all application documents from a state enterprise, the representative agency shall be responsible for checking and determining that the charter capital amount complies with laws, and sending a written request (including attached dossiers of such state enterprise) to the same-level financial institution for its consideration and written opinions;

Where application documents fail to meet statutory requirements, the representative agency is obliged to send a written request to the applicant for any modification made to submitted documents to make them comply with legal regulations within a maximum duration of 07 working days of receipt of such documents.

- After consulting the written opinion obtained from the same-level financial institution, the representative agency proceeds to submit a complete report to request the Prime Minister’s consideration and decision to adjust the charter capital of a state enterprise established under the Prime Minister's decision, or a state enterprise of which the charter capital is increased to an amount equivalent to the permitted amount of capital invested in projects of national importance under the National Assembly’s decision on investment intention;

- The representative agency shall decide the redetermined amount of charter capital and a deficit in the amount of charter capital that requires additional investment in enterprises established under the representative agency’s decision or falling under its delegated authority.

c) Same-level financial institution:

- Within a permitted period of 15 days of receipt of the written request from the representative agency and enterprise’s dossiers, the same-level financial institution must send the written opinion on charter capital adjustment to the representative agency to prepare a complete report for submission to the Prime Minister for his consideration or decision, or decide the redetermined amount of charter capital of an enterprise established under its decision or falling under its delegated authority;

- If the same-level financial institution rejects the application for charter capital adjustment, it must send a written response (with clear reasons for such rejection) to the representative agency and the applicant within a permitted period of 07 days of receipt of the written request from the representative agency.

Article 10. Procedures for preparation and approval of the application for additional investment in the charter capital of currently active state enterprises

1. Given the redetermined amount of charter capital and a deficit in the amount of charter capital that requires additional investment after being approved by competent authorities under the provisions of Article 9 hereof, a state enterprise prepares its application to request competent authorities to allow additional investment in the charter capital of such state enterprise. Documentation filed to the representative agency shall be composed of the followings:

a) The request form for additional investment in the charter capital.

b) The duplicate decision on approval of the charter capital issued by competent authorities.

c) The report on assessment of financial status and operating performance of the applicant.

d) Socio-economic objectives and effectiveness generated from additional investments in the charter capital.

dd) The document explaining funding sources used for additional investment in the charter capital which have been approved under the competent authority's decision on investment intention, including the funding source derived from the state budget, enterprise arrangement and development fund and development investment fund or enterprise arrangement fund in the state enterprise.

2. The representative agency:

a) Within a permitted period of 15 days of receipt of a state enterprise's dossiers, the representative agency shall be responsible for checking whether submitted dossiers comply with legal regulations, verifying information included in the assessment report and explanation regarding the additional investment in the charter capital which are enclosed in the enterprise's dossiers, and sending a written request (enclosing documents prepared under the provisions of Clause 1 of this Article) to the same-level financial institution with the intention of creating cooperation in carrying out verification and perfection of the plans for such additional investment before reporting to the Prime Minister.

b) Where enterprise’s dossiers fail to meet statutory requirements, the representative agency is obliged to send a written request to the applicant for any modification made to submitted dossiers to make them comply with legal regulations within a maximum duration of 07 working days of receipt of these dossiers.

3. The same-level financial institution:

a) Within a permitted period of 15 days of receipt of the written request from the representative agency and enterprise’s dossiers, the same-level financial institution must send the written opinion on additional investment in the charter capital to the representative agency to obtain its decision, or to make a complete report to the Prime Minister to request his consideration or granting of the decision on the additional amount of capital invested in the charter capital in the financial year within its jurisdiction as prescribed in Article 15 of the Law on management and use of state capital invested in enterprise's manufacturing and business operations.

b) If the same-level financial institution rejects the application for additional investment in the enterprise’s charter capital in the financial year, it must send a written response (with clear reasons for such rejection) to the representative agency and the applicant within a permitted period of 07 days of receipt of the written request from the representative agency.

4. With regard to the plan for additional investment in the charter capital by investing finances derived from the enterprise arrangement and development fund, or the enterprise arrangement fund in the enterprise, the representative agency is required to put forward the additional investment plan to the Ministry of Finance (enclosing the application for additional investment in the enterprise’s charter capital) to request its verification or report to the Prime Minister for the purpose of asking for his consideration or granting of the decision.

Article 11. Procedures for additional investment in the charter capital of current state enterprises

1. The representative agency prepares a written request (enclosing the enterprise’s dossiers approved by competent authorities under the provisions of Article 9 hereof) for the financial institution's allocation of funds additionally invested in the enterprise’s charter capital.

2. The same-level financial institution allocates funds used for additional investment in the enterprise’s charter capital which are categorized as follows:

a) With respect to the financing for additional investment in the charter capital derived from the state budget is defined in the state expenditure plan approved and made known by the competent authority (according to the delegated authority over the state budget), the financial institution shall allocate such financing from the state budget to the state enterprise under procedures stipulated by the Law on State Budget.

b) With respect to financing for additional investment in the enterprise’s charter capital derived from the enterprise arrangement and development fund, after consulting the decision granted by the Prime Minister, the Ministry of Finance shall allocate such financing from the enterprise arrangement and development fund.

3. An enterprise shall carry out additional investment in the charter capital under the following circumstances:

a) The enterprise uses the development investment fund or the enterprise arrangement fund in the enterprise for financing for additional investment in the charter capital.

Given the plan for additional investment in the charter capital approved by competent authorities, the enterprise shall carry out the carryforward of the development investment fund and enterprise arrangement fund in the enterprise to make an increase in the owner’s equity in the enterprise.

b) Where an enterprise is assigned other transferred asset invested by the funding source derived from the state budget, or government-contributed aids (those used for residential resettlement, rearrangement, real property treatment and investment in technical infrastructural facilities of industrial zones) in order to implement projects for investment in construction, improvement and refurbishment of manufacturing and trading facilities, this enterprise shall consult the asset assignment decision issued by the competent authority and the record on asset handover to make the final account of government-contributed aids and record an increase in state capital invested in such enterprise.

4. The enterprise shall be responsible for replacing the amount of charter capital registered in the enterprise registration certificate by the actual amount of owner's equity under the provisions of the Enterprise Law 2014.

Section 3. ADDITIONAL STATE CAPITAL INVESTMENT IN A JOINT STOCK COMPANY, MULTIPLE-MEMBER LIMITED LIABILITY COMPANY

Article 12. ADDITIONAL STATE CAPITAL INVESTMENT IN A JOINT STOCK COMPANY, MULTIPLE-MEMBER LIMITED LIABILITY COMPANY

1. The additional state capital investment aims at maintaining the rate of state-owned share and contributed capital in a joint-stock company or a multiple-member limited liability company if it falls into either of circumstances stipulated in Article 16 of the Law on management and use of state capital invested in the enterprise's operations.

2. An enterprise will be eligible for additional state capital investment in maintaining the rate of state-owned share and contributed capital as stipulated in Clause 1 of this Article if it is engaged in the following industries and sectors:

a) Operation and maintenance of airports and runways; operation of seaports.

b) Management, maintenance of road and inland waterways systems; maintenance of national rail infrastructure systems.

c) Provision of telecommunications facilities.

d) Mineral extraction; oil and natural gas extraction.

dd) Oil and natural gas processing.

e) Cigarette production.

g) Wholesaling of medicinal products; wholesaling of foods; wholesaling of petroleum.

h) Electric power distribution.

i) Urban drainage and sewerage; environmental sanitation; urban lighting system; extraction, manufacturing and supply of urban clean water.

k) Basic geological and meteorological investigation; survey, exploration and investigation of land, water and mineral resources as well as other natural resources.

l) Production and storage of plant and animal varieties and frozen semen; production of human and veterinary vaccines and biologics.

m) Production of basic chemicals, chemical fertilizers and plant protection products.

n) International sea, rail and air transport.

o) Agricultural and forestry operations as stipulated by laws.

Article 13. Procedures for preparation and submission of applications for additional state capital investment in a joint stock company or multiple-member limited liability company

1. The representative person of state capital invested in a joint stock company, multiple-member limited liability company shall prepare an application for additional state capital investment in a joint stock company or a multiple-member limited liability company to report to the representative agency for document verification and perfection before submitting it to the Prime Minister for his consideration and decision prior to the representative person's voting in the shareholders' general meeting or the membership meeting. Application documents shall be composed of the followings:

a) The copy of the enterprise registration certificate; the plan for an increase in the enterprise’s charter capital.

b) The plan for additional state capital investment in accordance with Clause 1 Article 18 of the Law on management and use of state capital invested in the enterprise’s operations.

c) The copy of the audited financial statement in the quarter or year closest to the date on which the plan for additional state capital investment in the enterprise is devised.

d) The proposal of funding source for additional state capital investment which aims at maintaining the rate of state-owned share and contributed capital in a joint-stock company or a multiple-member limited liability company, including funding source derived from the state budget, enterprise arrangement and development fund, share dividends and distributed profits (if applicable).

2. The representative agency:

Within a permitted period of 15 days of receipt of the application from the representative person, the representative agency shall be responsible for checking that such application complies with legal regulations and sending the written request (enclosing dossiers stipulated in Clause 1 of this Article) to the same-level financial institution for verification purposes before completing the plan submitted to the Prime Minister for his consideration and decision, or for making its decision on additional state capital investment which aims at maintaining the rate of state-owned contributed capital in a joint stock company or a multiple-member limited liability company under its delegated authority in accordance with Article 17 of the Law on management and use of state capital invested in the enterprise's operations.

Where application documents fail to meet statutory requirements, the representative agency is obliged to send a written request to the representative person for any modification made to submitted documents to make them comply with legal regulations within a maximum duration of 07 working days of receipt of such documents.

3. The same-level financial institution: Within a permitted period of 15 days of receipt of application documents and the written request from the representative agency, the same-level financial institution must send its written opinion on additional state capital investment in maintenance of the rate of state-owned shares and contributed capital in the enterprise.

4. With respect to the plan for additional state capital investment in a joint stock company, or a multiple-member limited liability company that wishes to request the Prime Minister to decide to use the enterprise arrangement and development fund for investment purposes, the representative agency is required to send the proposal for such investment (enclosing dossiers submitted to apply for additional state capital investment) to the Ministry of Finance for its verification and reporting to the Prime Minister to request his consideration and decision.

Article 14. Procedures for financing for additional state capital investment in a joint stock company or multiple-member limited liability company

1. Given the amount and source of financing for additional state capital investment in a joint stock company or a multiple-member limited liability company which has been approved by the competent authority (as per Article 13 hereof), the representative agency shall request in writing the financial institution to commence procedures for financing for additional state capital investment in a joint stock company or a multiple-member limited liability company.

2. Given the time limit for financing for additional state capital investment according to the notification issued by a joint stock company or a multiple-member limited liability company, and the written request filed by the representative agency, the same-level financial institution shall finance additional state capital investment in a joint stock company or a multiple-member limited liability company by taking into account the approved amount of state capital investment under the following circumstances:

a) With respect to the additional state capital investment derived from the state budget as defined in the state expenditure plan approved and made known by the competent authority (according to the delegated authority over the state budget), the financial institution shall allocate such financing from the state budget to the state enterprise under procedures stipulated by the Law on State Budget.

b) With respect to financing for additional state capital investment in a joint stock company or a multiple-member limited liability company by using the enterprise arrangement and development fund, after consulting the decision granted by the Prime Minister, the Ministry of Finance shall allocate such financing from the enterprise arrangement and development fund for enterprises.

c) With respect to use of share dividends or distributed profits in proportion to the state-owned state capital portion for the purpose of additional state capital investment in a joint stock company or a multiple-member limited liability company, the enterprise shall record an increase in state capital after obtaining the resolution of the shareholders’ general meeting or the membership meeting.

Section 4. STATE CAPITAL INVESTMENT IN PARTIAL OR COMPLETE ACQUISITION OF AN ENTERPRISE

Article 15. Scope of state capital investment in partial or complete acquisition of an enterprise

1. The partial or complete acquisition of an enterprise shall be carried out through the repurchase of state-owned shares or contributed capital in an enterprise in accordance with relevant laws.

2. The state capital investment in the partial or complete acquisition of an enterprise that belongs to other economic sector shall occur under the following circumstances:

a) The economy is restructured through restructuring of enterprises that are currently operating in several industries or sectors having significant socio-economic influence under the Prime Minister’s decision.

b) Such acquisition serves national defence and security purposes, which applies to enterprises that operate as assistants to the national defence industry, and those that operate in strategic areas, land borders or islands.

c) Such acquisition is aimed at supplying essential public products and services to the society.

3. State capital investment in partial or complete acquisition of an enterprise as per Clause 2 of this Article must correspond to the general strategy and plan for socio-economic development, or the industrial development proposal which has been approved under the provisions of the Government's Decree No. 92/2006/ND-CP dated September 7, 2006.

Article 16. Principles of state capital investment in partial or complete acquisition of an enterprise

1. State capital investment in partial or complete acquisition of an enterprise shall only be applicable to several circumstances stipulated in Article 15 hereof.

2. The plan for partial repurchase of an acquired enterprise’s equity must ensure that the rate of state capital invested in such acquired enterprise is sufficient to exercise the voting right to such enterprise’s issues in the shareholders' general meeting or the membership meeting as per Clause 3 Article 60 and Clause 1 Article 144 of the Enterprise Law 2014.

3. The state capital investment in partial or complete acquisition of an enterprise must have the proposal decided or approved under the decision on investment intention by the competent authority as per Article 20 of the Law on management and use of state capital invested in the enterprise's operations in order to secure legal rights and interests of shareholders in such enterprise as prescribed by current laws.

Article 17. Procedures for preparation and submission of the application for state capital investment in partial or complete acquisition of an enterprise

1. The representative agency shall take charge of setting up a plan for state capital investment in partial or complete acquisition of an enterprise and collaborate with the same-level financial institution in carrying out verification and perfection of the final plan submitted to the Prime Minister for his consideration and decision, or shall decide on state capital investment in partial or complete acquisition of an enterprise under its delegated authority. Key elements of the plan shall consist of the followings:

a) Evaluation of financial status and operating performance of the target enterprise.

b) Objectives, necessity, economic and social efficiency of state capital investment in partial or complete acquisition of an enterprise.

c) Investment outlay.

d) Proposed funding sources, including funds derived from the state budget, the enterprise arrangement and development fund and other legal financing.

2. The same-level financial institution:

a) Within a permitted period of 15 days of receipt of the written request and the plan for state capital investment in partial or complete acquisition of an enterprise from the representative agency, the same-level financial institution shall carry out verification of contents of the plan and send its written opinion on state capital investment in partial or complete acquisition of an enterprise to the representative agency.

b) Where the plan for state capital investment in partial or complete acquisition of an enterprise fail to meet stipulated requirements, the same-level financial institution must send written response in which reasons are clearly stated to the representative agency so that the plan will be further checked and improved within 07 days of receipt of such plan.

3. With respect to the plan for state capital investment in partial or complete acquisition of an enterprise under which the Prime Minister is requested to decide on the finance derived from the enterprise arrangement and development fund for such investment, the representative agency shall send that plan to the Ministry of Finance so that it will be subject to the Ministry’s appraisal before being submitted to the Prime Minister to request his consideration or decision.

Article 18. Procedures for financing for state capital investment in partial or complete acquisition of an enterprise

1. The representative agency shall prepare and send a written request along with the plan for state capital investment in partial or complete acquisition of an enterprise which has been approved by the competent authority in accordance with Article 17 hereof in order to request the same-level financial institution to commence the procedure for allocation of the fund for payments to sellers for partial or complete acquisition of an enterprise.

2. The same-level financial institution:

a) After consulting the competent authority’s decision on approval of investment outlay and funding source used for investing in partial or complete acquisition of an enterprise, it will allow allocation of investment fund for payments to sellers for partial or complete acquisition of an enterprise.

b) With respect to financing for partial or complete acquisition of an enterprise derived from the state budget and specified in the state expenditure plan approved or made known by the competent authority (according to the delegated authority over the state budget), the financial institution shall follow the procedure for financing derived from the state budget as per the Law on State Budget.

c) With respect to financing for partial or complete acquisition of an enterprise derived from the enterprise arrangement and development fund, the Ministry of Finance shall allocate such financing from the enterprise arrangement and development fund to pay sellers in accordance with laws.

Chapter III

FINANCIAL MANAGEMENT IN STATE ENTERPRISES

Section 1. MANAGEMENT AND USE OF STATE-OWNED CAPITAL AND ASSETS IN STATE ENTERPRISES

Article 19. Charter capital of a state enterprise

1. With regard to newly-established state enterprises, the charter capital shall be determined by taking into account the followings:

a) The scale and designed capacity of manufacturing and trading industries, sectors or operations of an enterprise.

b) The development investment strategy and plan of that enterprise, and main business sectors of that enterprise approved in the enterprise establishment proposal by the competent authority.

c) The production and business plan of that enterprise.

d) The amount of charter capital which is not allowed to be less than the amount of legal capital required for manufacturing and business industries, sectors or operations in accordance with laws.

2. With regard to currently active state enterprises:

a) The charter capital of state enterprises, after making an adjustment to the charter capital, shall be determined by applying regulations laid down in Clause 1 of this Article.

b) The method of determination of the charter capital shall be subject to regulations laid down in Article 9 hereof.

c) Procedures for preparation and submission of the application for additional state capital investment in the charter capital and allocation of financing for additional investment in the charter capital under the provisions of Article 10 and 11 hereof.

Article 20. Capital mobilization in state enterprises

1. The capital mobilization in state enterprises shall comply with regulations laid down in Article 23 of the Law on management and use of state capital invested in the enterprise’s operations.

2. State enterprises shall be entitled to directly apply for foreign loans and autonomously repay their debts to foreign lenders as agreed upon in loan agreements. Requirements and procedures for consideration and approval of a foreign loan taken out by an enterprise shall comply with legislation on management of the enterprise’s foreign loan application and repayment in terms of loans which are not guaranteed by the Government. An enterprise’s foreign loan must fall within the annual national limits on an amount of foreign loan under the Prime Minister’s decision, and must be registered and endorsed by the State Bank of Vietnam in accordance with current regulations.

3. State enterprises shall use loans for predetermined purposes, take all risks and legal liabilities during the process of mobilizing, managing and utilizing loans and obeying loan repayment due dates. The state shall not be held responsible for repaying debts incurred from the enterprise’s direct application for loans, except for Government-guaranteed loans.

4. Total mobilized fund for a state enterprise's manufacturing and business operations (even inclusive of guarantees on loans taken out by subsidiary companies of a state-owned parent company in accordance with Clause 1 Article 189 of the Enterprise Law 2014) must ensure the stipulated debt-to-equity ratio where the debt does not exceed three times the equity as specified in that state enterprise’s quarterly or annual financial report issued at the time closest to the time of fund mobilization under its assigned competence under the provisions of Clause 3 Article 23 of the Law on management and use of state capital invested in an enterprise's operations. Including:

a) The equity reported on a balance sheet in a(n) quarterly or annual financial report compiled by a state enterprise in which the item "other funding resources and funds" is not included, and the equity mentioned in this Point which is applicable to the content stated in Point a Clause 1 Article 26 and point a Clause 2 Article 27 hereof.

b) The liabilities reported on a balance sheet in a(n) quarterly or annual financial report compiled by a state enterprise in which items such as “reward and welfare fund”, “price stabilization fund", and “scientific and technological development fund”, are not included.

5. State enterprises shall provide their subsidiary companies with guarantees for loans made by domestic credit institutions on condition that these subsidiary companies demonstrate their healthy financial status and do not owe undue debts. The guarantee for loans for investment projects shall be subject to the evaluation of efficiency of such projects and commitments to make repayments on guaranteed loans according to the agreed schedule. State enterprises shall assume their responsibility to monitor the utilization of loans for predetermined purposes and make repayments on enterprise-guaranteed loans according to the agreed schedule.

Article 21. Outward capital investment

1. State enterprises shall be vested with the right to use assets and capital amounts that fall within their remit for outward investment purposes, including overseas investment activities that such state enterprises perform under the provisions of Article 28 and 29 of the Law on management and use of state capital invested in an enterprise's operations.

a) Outward investment operations must adhere to legal regulations, correspond to their main scope of operations, cause no impact on their manufacturing and business activities and ensure efficiency, conservation and development of their invested capital.

b) State enterprises shall not be allowed to contribute their capital to or invest in real estate (except those whose main businesses are types of real estate stipulated in the Law on Real Estate Business), or contribute their capital or buy shares of banks, insurance companies, securities companies, venture investment funds, securities investment funds or securities investment companies, except for special cases decided by the Prime Minister.

c) Where state enterprises have already contributed their capital to or invested in sectors stipulated in Point b of this Clause and excepted from the Prime Minister’s investment permission, they are required to implement the plan for restructuring and assignment of all invested capital in compliance with legal regulations.

2. The representative agency shall be charged with inspecting and supervising management and use of outward invested capital in compliance with legal regulations. Where any state enterprise has made outward investment in sectors stipulated in Clause 1 of this Article, but failed to restructure invested capital amounts, the representative agency shall be responsible for cooperating with the Ministry of Finance in submission of a final report to the Prime Minister so that he will consider, decide and handle responsibilities assumed by the Board of Members or the Chairperson of such state enterprise in accordance with current legislation.

3. State enterprises shall not be allowed to use operating-lease assets, borrowed assets, safe-custody assets, contract-manufacturing assets, and consignment-sale or consigned assets, for outward investment purposes.

4. The management of state enterprise's outward investment capital in a joint stock company, or a multiple-member limited liability company, must be subject to Section 2 Chapter III hereof.

Article 22. Conservation of state enterprises’ equity

1. State enterprises shall be responsible for conserving and developing the state invested capital. All changes (increase or decrease) in the state capital invested in state enterprises must be reported to the representative agency and financial institution for monitoring and supervisory purposes.

2. Conservation of state capital invested in state enterprises shall be carried out by taking the following measures:

a) Comply with policies on management of use of equity, assets, distribution of profits as well as other financial management policies and accounting standards as stipulated by laws.

b) Buy asset insurance in accordance with legal regulations.

c) Promptly deal with lost or damaged asset values, irrecoverable debts and setting aside provisions against risks as follows:

- Provision against devaluation of inventories;

- Provision against bad debts;

- Provision against devaluation of financial assets;

- Provision for warranties over products, goods and construction works.

d) Implement other measures regarding conservation of state capital invested in enterprises in accordance with laws.

3. State enterprises are required to conduct the annual evaluation of the level of state capital conservation by employing the following evaluation methods:

a) If, after setting aside stipulated provisions, the bottom line of income statement shows neutral or positive numbers, such state enterprises have succeeded in conserving their capital.

b) If, after setting aside stipulated provisions, the bottom line of income statement shows negative numbers (including accumulated losses), such state enterprises have failed to conserve their capital.

Article 23. Fixed asset investment, development and shopping in state enterprises

1. Fixed asset investment, development and shopping in state enterprises shall comply with regulations laid down in Article 24 of the Law on management and use of state capital invested in the enterprise’s operations. In which:

a) With regard to fixed asset investment and shopping carried out by such state enterprises, the process of fixed asset investment and development must comply with legal regulations on construction, procurement and other relevant laws.

b) With regard to investment in and shopping for external fixed assets for use, such state enterprises must comply with legal regulations on procurement and other relevant laws.

c) With regard to investment in, shopping for and use of vehicles (motor vehicles) for the purpose of business trips of leadership and general work, such state enterprises are required to meet rigorous shopping standards and limits in order to ensure public disclosure, transparency, cost efficiency and effectiveness under the direction of the Prime Minister.

2. State enterprises that belong to business sectors that require particular regulations on specialized fixed asset investment, construction, shopping, management and use shall comply with both regulations hereof and specialized law regulations.

Article 24. Rental of operating assets

1. State enterprises shall be entitled to rent assets (even in a finance lease form) for manufacturing and business operations to meet their demands and ensure business efficiency.

2. Rental and use of leased assets must comply with regulations enshrined in the Civil Code and relevant law regulations.

Article 25. Use and management of fixed assets

1. State enterprises shall use and manage fixed assets during business operations in compliance with regulations laid down in Article 25 of the Law on management and use of state capital invested in the enterprise’s operations. In which:

a) State enterprises shall be responsible for establishing, issuing and implementing rules and regulations on management and use of their fixed assets.

b) Depending on requirements for management of specific fixed assets, rules and regulations on management of fixed assets that is adopted by state enterprises must specify cooperation between divisions and responsibilities of each division or individual engaged in monitoring and management of fixed assets used by such enterprises.

2. State enterprises shall lease out and offer fixed assets as pledges or collateral in accordance with Article 26 hereof.

Article 26. Leasing out, offering assets as pledges or collateral

1. State enterprises shall be vested with the right to lease out, offer their assets as pledges or collateral by adhering to the principle that efficiency, capital conservation and development is assured in accordance with laws, whereby:

a) The Board of Members or the Chairperson of a state enterprise shall decide on the contract to lease out an asset of which the value is restricted to under 50% of the equity reported in the quarterly or annual financial report at the time closest to the time of making decision to lease out such assets, and of which the residual value does not exceed the investment outlay financing group-B projects in accordance with regulations enshrined in the Law on Public Investment.

b) The authority to make a decision to put an enterprise’s assets up as pledges or collateral for loans shall be governed by regulations laid down in Article 23 of the Law on management and use of state capital invested in an enterprise's operations.

2. With regard to state enterprises established to serve the purpose of regular and stable manufacturing and supply of public products, and directly meet national defence and security requirements, once leasing out or providing assets directly assisting in performing these duties, the representative agency's consent must be obtained.

3. Using assets for lease purposes, or as pledges or collateral, must comply with regulations enshrined in the Civil Code and other relevant law regulations.

Article 27. Disposal, transfer or sale of fixed assets

1. State enterprises shall be allowed to act on their initiative in disposal, transfer or sale of fixed assets which have been damaged beyond repair, technically obsolete, removed from service or worn beyond utilization in order to recover invested capital on the principle of public disclosure, transparency and capital conservation in accordance with applicable legislation.

2. The authority to make a decision on disposal, transfer or sale of fixed assets:

a) The Board of Members or the Chairperson of a state enterprise shall decide on the plan for disposal, transfer or sale of an asset of which the residual value is restricted to 50% of the equity reported in the quarterly or annual financial report at the time closest to the time of making such decision on disposal, transfer or sale of such asset and this value does not exceed the investment outlay financing group-B projects in accordance with regulations enshrined in the Law on Public Investment.

The plan for disposal, transfer or sale of a fixed asset of which the value is greater than the value that falls within the delegated decision-making authority of the Board of Members or the enterprise’s Chairperson shall be subject to the representative agency after it receives a report from this Board or Chairperson.

b) With regard to state enterprises established to serve the main purpose of manufacturing and supply of essential public products to the society and economy, and directly meet national defence and security requirements, once disposing of, transferring or selling assets directly assisting in performing these duties, the representative agency's consent must be obtained.

c) Where the state enterprise’s plan for transfer or sale of fixed assets is not capable of recovering a full amount of invested capital, state enterprises must clearly state reasons for and report this incapability to the representative agency and same-level financial institution prior to transfer or sale of such fixed assets to serve supervision purposes.

d) If newly-shopped fixed assets have already been used for 03 first years but failed to achieve economic efficiency as stated in an investment project approved by the competent authority, and such assets have no longer been used by state enterprises but the transfer or sale of these assets fail to recover the invested capital, which leads to such enterprises’ default on debt repayment as agreed upon in the specified loan contract or arrangement, related persons’ liabilities for this must be clearly defined so that the representative agency will be reported to find appropriate resolutions in accordance with laws.

dd) With regard to disposal, transfer or sale of fixed assets that belong to certain particular sectors (such as tobacco, seafaring ships and aircraft), these activities shall be subject to both regulations laid down in this Decree and relevant specialized laws.

3. Method of fixed asset disposal, transfer or sale:

a) State enterprises shall carry out the transfer or sale of fixed assets by way of an auction conducted by an organization which is competent to auction assets or by enterprises on their own in an open manner according to the legitimate procedures for asset auctions. In the event of transfer or sale of fixed assets of which the residual value reported in accounting records equals less than VND 100 million, the Director General or Director shall decide on an auction sale or a deal but the selling price should not be less than the market price. In the event of fixed assets which are not available for transactions on the market, state enterprises shall be allowed to hire an organization that is competent to conduct an appraisal to determine the price at which such assets shall be sold by employing aforesaid methods.

b) The disposal or transfer of fixed assets associated with land must comply with laws on land.

4. Procedures for asset disposal, transfer or sale:

a) The Board of Members or the Chairperson of a state enterprise makes a decision on establishment of the council on fixed asset disposal, transfer and sale in such enterprise. The council is composed of a Director General or Director, Chief Accountant, related department heads; representatives of the Executive Board of Trade Union in a state enterprise and several experts on technical specifications of these fixed assets (when necessary). The council on fixed asset disposal, transfer and sale shall take on the following duties:

- Identify the technical status and remaining value of assets held for disposal, transfer or sale;

- Define the reasons and responsibilities of collectives or individuals for the circumstance under which newly-shopped fixed assets do not generate required economic value, have to be disposed of, transferred or sold without assurance of the invested capital recovery, or fixed assets which have not been fully depreciated have been damaged beyond repair and must be held for disposal, transfer or sale in order to report to owners in accordance with legal regulations;

- Identify or hire other organization competent to conduct appraisal to determine the value which may be obtained from asset disposal, transfer or sale;

- Conduct an auction sale or hire an organization competent to conduct an auction sale of these assets in accordance with relevant laws;

- Automatically terminate operations of the council on asset disposal, transfer and sale upon completion of the enterprise's asset disposal, transfer or sale.

b) Where a state enterprise is executing construction investment projects approved by the competent authority, and such enterprise is obliged to demolish or eliminate old fixed assets, the disposal or transfer of such assets and recording of such assets into accounting records must be carried out in the same manner as the disposal or transfer of fixed assets in accordance with this Point.

Section 2. MANAGEMENT OF STATE ENTERPRISE’S CAPITAL INVESTED IN A JOINT STOCK COMPANY AND A LIMITED LIABILITY COMPANY

Article 28. Management of state enterprise's capital invested in a subsidiary company which is a single-member limited liability company and of which the charter capital is wholly owned by that state enterprise, and management of state enterprise's capital contributed to a joint stock company or a multiple-member limited liability company

1. A state enterprise shall carry out the financial management towards subsidiary companies of which the charter capital is wholly owned by such state enterprise, and management of that state enterprise's capital contributed to a joint stock company or a multiple-member limited liability company in accordance with Article 30 of the Law on management and use of state capital invested in the enterprise’s operations, in which:

a) The state enterprise is required to issue financial rules and regulations of these subsidiary companies under which setting aside after-tax profits for funds, collecting remaining amounts of after-tax profit after being set aside for funds in these subsidiary companies, and collecting margins between the equity and the charter capital from these subsidiary companies must be specified.

b) Amounts collected from after-tax profits and margins between the equity and the charter capital of subsidiary company are revenues from financial activities of the state enterprise.

c) If a state enterprise receives stocks from a joint stock company to which that state enterprise contributes its capital without having to make payment for such stocks because of the fact that such joint stock company has used its share capital surplus or equity-based funds, or has distributed share dividends by issuing stocks to increase its charter capital, based on the number of received stocks it will create accounting records to monitor, enter and post such stocks in its financial statement in accordance with applicable corporate accounting standards and regulations.

2. Appointment and eligibility standards of the representative person of state enterprise’s capital contributed to a joint stock company or a multiple-member limited liability company shall be governed under Article 46 and 47 of the Law on management and use of state capital invested in the enterprise’s operations.

Article 29. Transfer of outward invested capital of a state enterprise

1. The transfer of outward invested capital of a state enterprise is governed under the provisions of Article 31 of Law on management and use of state capital invested in an enterprise's operations while the method of transferring outward invested capital of a state enterprise (including the transfer of the right to buy shares or contribute capital to a joint stock company or a multiple-member limited liability company) is governed under the provisions of Clause 3, 4 and 5 Article 38 hereof.

2. If the transfer price is close to the market price (this price evaluated by an organization competent to carry out price appraisal and evaluation in accordance with legal regulations on price appraisal and evaluation), but the value that may be achieved is still lower than the value reported in accounting records of a state enterprise, and that state enterprise has already set aside a provision fund, the following actions must be taken:

a) If provisions are equal to or greater than the difference between the value that may be gained and the value reported on accounting records, the Board of Members or the enterprise’s Chairperson shall make a transfer decision to recover outward invested capital.

b) If provisions remain less than the difference between the value of invested capital reported on accounting records and the transfer value that may be gained, the Board of Members or the enterprise’s Chairperson must report to the representative agency for consideration or decision prior to commencement of such transfer.

3. Revenues generated from the transfer of a state enterprise’s outward invested capital (shares, contributed capital and the right to buy shares or contribute capital) after deducting the value of invested capital, transfer cost and tax obligations in accordance with laws, shall be determined as income from financial activities of that state enterprise.

4. As for types of debentures and bonds that a state enterprise has invested in to earn profits, the transfer shall be governed under the same regulations as applied to the issue of these ones, or accord with the issue method of the issuing organization or entity. If a state enterprise transfers bonds prior to the maturity date, the transfer price must adhere to the principle of capital conservation. Transfer of bonds which have been deposited, listed or traded on the stock market shall be governed under laws on securities.

Section 3. REVENUE, EXPENSE AND PROFIT DISTRIBUTION IN A STATE ENTERPRISE

Article 30. Management of revenue, other income and expense of a state enterprise

1. The Board of Members or the enterprise’s Chairperson, the Director General or Director, shall be held accountable to the representative agency and assume legal liability for their management which is required to be sufficiently strict, and ensures the accuracy, reliability and legitimacy of revenues, other income and operating expenses of the state enterprise.

2. All revenues, other income and expenses arising from the state enterprise’s manufacturing and business operations must be fully documented in accordance with legal regulations and entered into accounting records of the state enterprise in accordance with applicable accounting standards and regulations.

3. Revenues, other income and expenses arising from the state enterprise’s manufacturing and business operations shall be denominated in Vietnamese dong. If collected or paid in foreign currencies, they must be converted into Vietnamese dong in accordance with applicable laws.

4. The state enterprise is obliged to calculate a correct and adequate amount of operating expense, pay all costs by spending their revenues and assume the sole responsibility for their business result.

5. Calculating revenue, income and expense to determine tax liabilities and other financial obligations in a state enterprise shall be governed under laws on taxation and other relevant legislation.

Article 31. Profit distribution

Profit of a state enterprise after being used for making up for prior-year losses under the provisions of the Law on Corporate Income, setting aside of the scientific and technological development fund under legal regulations, and paying corporate income tax, shall be distributed in following order:

1. Distribute profits to associated capital contributing parties under terms and conditions of a signed economic contract (if any).

2. Make up for prior-year losses of which the permitted period of loss carry-forward for being deducted from pre-tax profits expires in accordance with legal regulations.

3. Distribute the remaining amount of profit after deductions stipulated in Clause 1, Clause 2 of this Article in following order:

a) Set aside the special fund under the Prime Minister's decision (if applicable).

b) Set aside a maximum amount accounting for 30% of profit for the enterprise’s development investment fund.

c) Set aside the reward and welfare fund for the enterprise’s staff:

- State enterprises rated A shall be allowed to set aside an amount equivalent to three months’ earned income of employees for two reward and welfare funds;

- State enterprises rated B shall be allowed to set aside an amount equivalent to one and a half month’s earned income of employees for two reward and welfare funds;

- State enterprises rated C shall be allowed to set aside an amount equivalent to one month’s earned income of employees for two reward and welfare funds;

- Unrated state enterprises shall not be allowed to set aside two reward and welfare funds.

d) Set aside the reward fund for the enterprise’s managers and comptrollers:

- State enterprises rated A shall be allowed to set aside an amount equivalent to one and a half month’s earned income of managers and comptrollers for this fund;

- State enterprises rated B shall be allowed to set aside an amount equivalent to one month’s earned income of managers and comptrollers for this fund;

- State enterprises rated C or unrated ones shall not be allowed to set aside the reward fund for their managers and comptrollers.

dd) If the remaining amount of profits after being set aside for the development investment fund stipulated in Point b of this Clause are not adequate enough to set aside reward and welfare funds, reward funds for managers or comptrollers at a stipulated level, the state enterprise shall be allowed to deduct an amount of profits set aside for the development investment fund to be added to a stipulated level of such reward and welfare funds, reward funds for managers or comptrollers, but a maximum deduction shall not be allowed to exceed an amount of profits set aside for the development investment fund in a financial year.

e) The remaining amount of profits after being set aside for funds stipulated in Point a, b, c and d of this Clause shall be paid to the state budget.

Article 32. Use and management of funds

1. Funds of a state enterprise must be used to serve the right purpose and beneficiaries.

a) The state enterprise is obliged to establish and enforce internal rules and regulations on management and use of funds in accordance with laws, which must ensure the justice, democracy and transparency with participation of the Executive Board of Trade Union and must be made known in the enterprise before coming into force.

b) In a financial year, state enterprises shall act on their initiative in temporarily setting aside funds on the basis of their income statement which reports positive operating profits and their corporate income tax which has been paid in accordance with legal regulations in order to spend for stated purposes.

2. The development investment fund shall be used for executing the enterprise development and investment projects as well as for adding to the enterprise's charter capital.

3. Reward funds shall be used for:

a) Providing year-end, periodic, spontaneous rewards and those stipulated by laws on emulation and reward for employees working in enterprises (including managers who work under employment contracts). The enterprise’s reward funds shall not be allowed to provide rewards for state-appointed managers and comptrollers (except for rewards stipulated by laws on emulation and rewards).

b) Providing rewards for external individuals or collectives that make a lot of contributions to business and managerial activities in the enterprise.

c) Reward payments decided by the Director General or Director shall be specified in the internal rules and regulations on use and management of funds.

4. Welfare funds shall be used for:

a) Investing in development or repair of welfare facilities in an enterprise.

b) Paying for welfare activities of staff members, including managers and comptrollers who work under employment contracts, and state-appointed managers and comptrollers.

c) Investing a portion of capital in construction of welfare facilities commonly shared among industries or other organizations as agreed upon in contracts.

d) Take advantage of a part of the welfare fund to help staff members deal with their unexpected difficulties, including those who are retired, incapable of working or suffer hardships, homeless conditions, or serve charitable purposes.

dd) Welfare amounts decided by the Director General or Director shall be specified in the internal rules and regulations on use and management of funds.

5. Reward funds for managers and comptrollers shall be used for:

a) Providing annual rewards or rewards for the Chairperson and members of the Board of Members, the President, Director General, Director, Deputy Director General, Deputy Director, Comptroller and Chief Accountant of the enterprise at the end of their term in office.

b) Payments for annual rewards and rewards provided at the end of term in office shall be decided by the representative person, which conform to criteria for evaluating managers and comptrollers as well as operating performance of the enterprise, as requested by the Chairperson of the Board of Members or the enterprise's Chairperson.

c) Where the Chairperson and members of the Board of Members, enterprise's Chairperson, Director General, Director, Deputy Director General, Deputy Director, Comptroller and Chief Accountant are provided with rewards or bonuses in accordance with laws on emulation and reward, the enterprise shall use the enterprise’s reward funds for paying abovementioned entities at amounts stipulated by laws on emulation and reward in respect of specific emulation and reward forms.

Section 4. FINANCIAL PLAN, AND ACCOUNTING, STATISTICAL, AUDITING AND REPORTING REGULATIONS

Article 33. Financial plan

1. Based on the plan, scheme and proposal for production and business development of state enterprises approved by the representative agency, a state enterprise shall set up the plan for operating activities and the long-term financial plan in alignment with the enterprise’s scheme decided by the representative agency.

2. Every year, based on the long-term production and business plan, enterprise’s capability and market demands, a state enterprise shall prepare the following year’s production and business plan for submission to the Board of Members or the enterprise’s Chairperson for decision.

3. Based on the production and business plan approved by the Board of Members or the enterprise’s Chairperson, the state enterprise shall prepare an evaluation report on production and business operations that take place in the reporting year and the following year’s financial plan for submission to the representative agency and the financial institution ahead of every July 31.

4. The representative agency shall take charge of or cooperate with the same-level financial institution in review of the financial plan prepared by state enterprises and shall send its written opinions to such state enterprises to request them further improve their financial plan. The final financial plan shall be considered the official plan which serves as the basis for supervision, evaluation, management and operation of the enterprise’s business activities carried out by the representative agency and the same-level financial institution.

Article 34. Accounting, statistical, auditing regulations

State enterprises are obligated to organize accounting and statistical operations in accordance with applicable laws; create and write original documents, update accounting records, and assure that economic and financial transactions be mirrored in a sufficient, timely, honest, accurate and objective manner. Annual financial statements of state enterprises must be audited before being submitted to state enterprises and made known to the public.

Article 35. Financial, statistical report and other report

1. At the end of an accounting period (quarter or year), state enterprises must formulate, present and send financial and statistical reports to state agencies and carry out financial public disclosure in accordance with applicable laws. The Board of Members or the enterprise’s Chairperson shall be responsible for the accuracy and fidelity of financial and statistical reports as well as financial public disclosure.

2. In addition to financial and statistical statements periodically prepared and sent in accordance with aforesaid regulations, state enterprises must prepare and send ad-hoc reports upon the request of the representative agency and state agencies. If state enterprises have Government-guaranteed foreign or domestic loans, they are required to prepare and send reports in accordance with applicable legal regulations on Government-guaranteed debt management.

Chapter IV

MANAGEMENT OF STATE CAPITAL INVESTED IN A JOINT STOCK COMPANY, MULTIPLE-MEMBER LIMITED LIABILITY COMPANY

Article 36. The representative agency of owners of state capital invested in a joint stock company or multiple-member limited liability company

1. The representative agency shall carry out management of state capital invested in a joint stock company or multiple-member limited liability company through its representative person.

2. Rights and responsibilities of the representative agency shall comply with regulations laid down in Article 43 of the Law on management and use of state capital invested in the enterprise’s operations.

Article 37. Representative person of state capital invested in a joint stock company, multiple-member limited liability company

1. The representative person shall be selected and appointed in writing by the representative agency in order to exercise his/her rights and assume his/her responsibilities to act on behalf of state capital owners to manage state capital invested in a joint stock company or multiple-member limited liability company.

2. Appointment and eligibility standards of the representative person of state enterprise’s capital contributed to a joint stock company or a multiple-member limited liability company shall be governed under Article 46 and 47 of the Law on management and use of state capital invested in the enterprise’s operations.

3. Rights, responsibilities, wage, remuneration, bonus and other benefits of the representative person shall be governed under Article 48 and 50 of the Law on management and use of state capital invested in the enterprise’s operations.

Article 38. Transfer of state capital invested in a joint stock company, multiple-member limited liability company

1. State capital transfer principles:

a) The state capital transfer shall be subject to the plan approved by competent authorities and conform to the criteria for classification of enterprises under the Prime Minister's decision, and shall not be allowed to fall within the scope of industries or sectors where the state has decided to make additional investment in maintenance of its share and contributed capital ratio as prescribed by Article 12 hereof.

b) This transfer must adhere to the principle of market, public disclosure, transparency and capital conservation at the highest level as well as maximum restriction on losses incurred from investment activities if state capital is transferred at the price lower than the face value.

c) Determination of the start price of state capital before an open auction is held or an arrangement is made through an organization competent to conduct price evaluation in accordance with legal regulations on price evaluation must ensure that the actual value of such state invested capital be determined, including the value generated from the value of the title to the land under the legal land transfer or receipt as stipulated in laws on land, and the value of intellectual rights (if any) of these state enterprises in accordance with applicable legal regulations that remain in force at the time of state capital transfer.

d) Transfer of state capital which relates to the land title must comply with legal regulations on land.

dd) The representative agency shall select and sign a contract to hire an organization competent to conduct price evaluation to determine the start price of transferred state capital, or hire consultants to establish the state capital transfer plan in accordance with legal regulations. The representative agency shall decide and assume legal responsibility for amounts which will be paid to hire an organization to carry out price evaluation and provide consultancy to formulate the state capital transfer plan and will be deducted from revenues earned from the state capital transfer.

2. Authority to make a decision on state capital transfer:

a) The Prime Minister shall make a decision on the transfer of state capital invested in joint stock companies, multiple-member limited liability companies which have been transformed from state enterprises established under the Prime Minister's decision.

b) The representative agency shall make a decision on the transfer of state capital invested in joint stock companies, multiple-member limited liability companies which have been transformed from state enterprises established under the representative agency's decision or assigned to be managed under its authority after obtaining opinions from the Ministry of Finance and the Ministry of Planning and Investment.

3. Method of transfer of state capital invested in multiple-member limited liability companies:

a) If the Prime Minister or the representative agency requests a multiple-member limited liability company to repurchase contributed capital, the sale of such state capital under agreements shall be governed under the provisions of Article 52 of the Enterprise Law 2014. The agreed price shall be determined under the provisions of Point c Clause 1 of this Article.

b) If the Prime Minister or the representative agency transfers contributed to other members or organizations or individuals which are not members of state enterprises, the transfer shall be governed under Article 53 of the Enterprise Law, in which:

- If state capital is transferred to other members of state enterprises, the transfer price must be agreed with other members. The determination of the agreed price on the basis of results of price evaluation conducted by a price evaluation organization shall be governed under Point c Clause 1 of this Article;

- If state capital is transferred to organizations or individuals that are not members of state enterprises, an open auction must be held or direct agreement must be entered into in accordance with Clause 4 of this Article.

4. Method of transfer of state capital invested in joint stock companies:

a) With regard to joint stock companies which have been listed on the stock market or registered for transactions on the Upcom, the transfer of state capital (or transfer of stocks) shall be carried out by employing the trading method (order-matching and put-through) in accordance with laws on securities. In the event that transfer is carried out by employing the put-through method, the agreed price shall be within price fluctuation limits on securities codes transacted on the transfer date.

b) With regard to joint stock companies which have not been listed or registered for transactions on the Upcom, the transfer of state capital shall be carried out by employing the following methods:

- Holding an open auction. If such open auction is not successful, the competitive bidding shall be used in a form of bidding for blocks of shares. As for transfer of state capital worth more than VND 10 billion, it shall take place at the Stock Exchange. As for transfer of state capital worth less than VND 10 billion, financial intermediaries shall be hired to carry out auction sale or hold auctions on their own at state enterprises or conduct auctions at the Stock Exchange;

- Selling state capital under a direct agreement between the representative agency and investors in the event that auction sale of blocks of shares is not successful (only one investor applies for purchase of shares, or this is allowed in writing by the Prime Minister);

- When transferring state capital under direct agreement, persons delegated authority to decide state capital transfer shall not be allowed to make their transfer decision on behalf of a state enterprise of which wife, husband, father, foster father, mother, foster mother, natural son/daughter, son/daughter-in-law, adopted son/daughter, younger/elder brother, sister, or younger/elder son/daughter-in-law, is a manager and shall not be entitled to make their decision to transfer state capital to those stated above.

5. If state capital is invested in enterprises outside of sectors or industries that require no more additional investment from the state according to the classification criteria or list of state enterprises issued by the Prime Minister, the representative agency shall consider and decide transfer of the right to purchase additionally issued shares (applicable to joint stock companies) and contribute capital (applicable to multiple-member limited liability companies) to other organizations or individuals.

The principle applied to the transfer of the right to purchase shares or the right to contribute capital shall be the same as the principle applied to the open auction. The determination of the start price shall be carried out through an organization competent to conduct price evaluation in accordance with laws on price evaluation. In the event that the permitted duration within which shareholders or capital contributing members exercise the right to purchase shares or the right to contribute capital according to the stock issuing plan of the issuing enterprise is too short for the representative agency to hold auctions to transfer its state capital, it shall consider deciding the transfer price and method of transfer under direct agreements in accordance with legal regulations as well as ensure efficiency.

Persons delegated authority to decide to transfer the right to purchase shares or the right to contribute capital shall not be allowed to decide to transfer state capital to the transferred enterprise of which wife, husband, father, foster father, mother, foster mother, natural son/daughter, son/daughter-in-law, adopted son/daughter, younger/elder brother, sister, or younger/elder son/daughter-in-law, is a manager and shall not be entitled to make their decision to transfer state capital to those stated above.

6. The Prime Minister shall issue regulations on requirements and procedures for the auction sale of blocks of shares.

Article 39. Collection of receipts from transfer of equity, profits and share dividends of a joint stock company or multiple-member limited liability company

1. Collection of receipts from transfer of state capital invested in a joint stock company, multiple-member limited liability company shall be specified as follows:

a) Receipts from the transfer of state capital, transfer of the right to purchase additionally issued shares (applicable to joint stock companies) and the right to contribute capital (applicable to multiple-member limited liability companies ) to other organizations or individuals (investors), after deducting reasonable transfer-related costs, shall be deposited in the enterprise arrangement and development fund.

b) The representative agency (or the competent authority authorized or assigned in writing by the representative agency) shall be responsible for providing sufficient information for investors before paying such receipts to the enterprise arrangement and development fund (information including beneficiary, address, bank account number, payment time, and payment reason (auction-winning payment)).

c) Permitted duration of payment to the enterprise arrangement and development fund:

- With regard to transfer of state capital invested in joint stock companies which have been listed on the stock market or registered for transactions on the Upcom, the permitted duration within which investors are required to make payment to the enterprise arrangement and development fund shall vary depending on specific transaction methods when transferring shares in accordance with legal regulations on securities;

- With respect to transfer of state capital invested in joint stock companies which have yet listed on the stock market or have yet registered for transaction on the Upcom; transfer of state capital invested in multiple-member limited liability companies; transfer of the right to purchase additionally issued shares, the right to contribute capital in a form of an open auction, a competitive bidding or an agreement, the permitted duration within which investors are required to make payment to the enterprise arrangement and development fund shall not be allowed to exceed 15 days from the date of announcement of the result of such open auction, competitive bidding or signing of such transfer agreement.

If investors refusing making such payment or do not abide by the due payment date, they shall be subjected to sanctions or enforcement actions under the provisions of regulations on use and management of the enterprise arrangement and development fund issued by the Prime Minister.

d) The representative agency shall be charged with inspecting and supervising payment to the enterprise arrangement and development fund in compliance with laws.

2. Collection of profits and share dividends on state capital invested in joint stock companies or multiple-member limited liability companies shall be specified as follows:

a) Within a maximum duration of 15 days of receipt of profit, share dividend distribution notice from joint stock companies or multiple-member limited liability companies, the representative person shall be responsible for requesting these companies to pay distributed profits or share dividends to the state budget.

In the event that the representative person does not request joint stock companies or multiple-member limited liability companies to pay distributed profits or share dividends to the state budget in compliance with laws, the representative agency shall consider discharging this person from office. This person shall pay compensation for any loss or damage caused by his/her negligence.

b) Joint stock companies or multiple-member limited liability companies shall be responsible for making payment to the state budget within 30 days of receipt of the request of the representative person.

If joint stock companies or multiple-member limited liability companies do not make payment or follow the due payment date, they shall be subjected to sanctions or enforcement actions as per regulations on tax payment failure or undue tax payment stated in laws on taxation.

Chapter V

IMPLEMENTATION

Article 40. Transitional provisions

1. With regard to financial rules and regulations of state enterprises issued by competent authorities before July 1, 2015, state enterprises shall be allowed to continue to implement these rules and regulations by the end of December 31, 2015.

2. With regard to the projects for state capital investment in enterprises approved or decided by competent authorities before December 8, 2014, such projects shall be continued.

3. Activities relating to use and management of state capital and assets invested in state enterprises, and management of state capital invested in joint stock companies, multiple-member limited liability companies that arise before July 1, 2015 shall be governed under current legal regulations by the end of December 31, 2015.

4. Activities relating to state capital investment in enterprises, and use and management of state capital, assets invested in state enterprises, and use and management of capital and assets invested in joint stock companies, multiple-member limited liability companies that arise July 1, 2015 onwards shall be governed under regulations laid down in this Decree.

Article 41. Effect

This Decree shall enter into force from December 1, 2015 and replace Decrees, such as the Government’s Decree No. 71/2013/ND-CP dated July 11, 2013 on state capital investment in enterprises and financial management towards enterprises of which the charter capital is wholly held by the State; the Government’s Decree No. 09/2009/ND-CP dated February 5, 2009 on providing for financial management in state enterprises and management of state capital invested in other enterprises; regulations on financial management towards state-owned single-member limited liability companies laid down in the Government’s Decree No. 25/2010/ND-CP dated March 19, 2010.

Article 42. Enforcement responsibilities and implementation

1. Authority to enforce financial regulations provided for state enterprises:

a) The Government shall issue financial regulations provided for certain state enterprises that are parent companies of state-owned economic corporations and incorporations established under the Prime Minister’s decision.

b) The representative agency shall enforce financial regulations provided for parent companies, state-owned incorporations established under the decision of the representative agency or assigned to be managed under its authority after entering into an agreement with the Ministry of Finance; enforce financial regulations provided for the rest of state enterprises established under the decision of the representative agency or assigned to be managed under its authority.

2. The Ministry of Finance shall provide regulations on the depreciation of fixed assets of enterprises; dealing with, taking an inventory of assets and setting aside provisions; dealing with exchange rate differences; criteria for the enterprise’s financial plan; accounting and financial reporting regulations.

3. The Minister of Finance shall bear responsibility to provide guidance on, inspect and supervise the enforcement of this Decree.

4. Political organizations, socio-political organizations can apply provisions laid down in this Decree to their implementation of financial management towards enterprises owned by these organizations.

5. Parent companies of a state economic corporations, parent companies of state incorporations or parent companies that belong to the parent company - subsidiary company group shall assume the following responsibilities:

a) Set and enforce regulations on financial management towards a subsidiary company that is a single-member limited liability company of which the charter capital is wholly held by a parent company.

b) Contents of financial management regulations issued by a parent company on the basis of applying regulations laid down in this Decree must conform to regulations enshrined in the Enterprise Law 2014 and other relevant laws.

4. Ministers, Heads of Ministry-level agencies, Heads of Government agencies, the Presidents of the People’s Committees of centrally-affiliated cities, provinces and state enterprises, and representative persons of state capital, shall be responsible for enforcing this Decree./.