Laws of Vietnam

DECIDES:

Article 1.- To issue together with this Decision the Procedure for transforming State enterprises into joint stock companies in accordance with Decree 28-CP of May 7, 1996 of the Prime Minister.

Article 2.- The State enterprises and sections which are detached from State enterprises to become joint stock companies must follow this procedure in a uniform way.

Article 3.- This Decision takes effect from the date of its signing.

The Steering Committees for Equitization under the Ministries, branches, agencies attached to the Government, provinces and cities directly under the Central Government; the Managing Boards of the Corporations established by decision of the Prime Minister and operating in accordance with Decision No.91-TTg of March 7, 1994 of the Prime Minister and the Equitization Boards in the enterprises shall have to implement this Decision.

The Minister-Chairman of the Central Steering Committee for Equitization

A.- The Ministries, the ministerial-level agencies, the agencies attached to the Government, the People’s Committees of the provinces and the cities directly under the Central Government, the Managing Boards of the State Corporations established by decision of the Prime Minister and operating in accordance with Decision No.91-TTg of March 7, 1994 of the Prime Minister (or Corporations 91 for short) shall:

1. Issue decisions to establish the Steering Committee for Equitization under the Ministries and localities in accordance with Item 1 Article 3 of Decision No.548-TTg of August 13, 1996 of the Prime Minister.

2. Study the business conditions and situation, and expectations of State enterprises so as to choose enterprises and enterprise sections for equitization.

3. Consult with the Party organizations of the same level, the People’s Council of the province or the city directly under the Central Government in deciding which enterprises or enterprise sections to be included in the equitization list in Appendix No.1 attached herewith, and send the decision to the Central Steering Committee for Equitization and the Ministry of Finance.

The State enterprises to be equitized are divided into two categories:

- The enterprises and enterprise sections having a State capital (State budget allocations, State budget-derived capital and self-procured capital) of 3 billion VND or less according to the balance of accounts at the time of equitization.

- The enterprises and enterprise sections having a State capital (State budget allocations, State budget-derived capital and self-procured capital) of more than 3 billion VND according to the balance of accounts at the time of equitization.

The enterprises which are selected for equitization must meet the conditions defined in Article 7 of Decree No.28-CP of May 07, 1996 of the Government.

Sections detached from enterprises for equitization must meet the following conditions:

- They must be dependent cost-accounting units, capable of calculating costs on the basis of the economic and technical norms, and can produce reports on the results of business activities (at least for the last year before equitization).

- They must be relatively independent in terms of property, capital, production technology, product marketing and working place.

- The prescribed capital for the parent enterprise’s business line still meets the set requirements even after a section is detached from the enterprise for equitization.

4. Notify each selected enterprise of the decision to equitize it

5. Issue the decision to set up the Equitization Board in the enterprise. The composition of the Board is defined in Item 3 Article 3 of Decision No.548-TTg of August 13, 1996 of the Prime Minister.

6. Provide training for Equitization Boards in the enterprises and concerned officials.

B.- The enterprises listed for equitization shall perform the following tasks:

1. Popularize and explain to the personnel in the enterprises the equitization policy and regulations of the Government and Ministries.

2. Prepare the documents and statistics related to production, finance and labor of the enterprises, including:

- The final statement of accounts of the last three years before equitization.

- The reports on the debt situation, assets, stocks of unsold raw materials and goods of poor and deteriorating quality with a clear analysis of the causes and proposal of possible solutions.

- The reports on the list of the personnel in the enterprises before equitization, clearly stating the work volume and quality as well as the seniority of each personnel.

3. Draw up the estimates of expenditures for the equitization up to the time of the closing of the first Congress of shareholders, according to the items specified in the Finance Ministry’s guiding Circular.

4. Inventory assets, materials, capital and debts of the enterprises; the planned classification of assets:

- Assets in use,

- Assets not needed,

- Assets to be liquidated,

- Assets (in kind) derived from the reward and welfare funds of the enterprises to be readied for the hand-over to the Trade Unions of the companies for management

1. Sign contracts with a lawful audit agency to audit the business operation results as the basis for determining the value of the enterprise. The selection of the audit agency must be approved by the agency managing the State property and capital in the enterprise.

2. Pay the ascertained debts, handle assets and stocks of unsold materials, and liquidate property under their competence.

3. Register with the State Treasury to open accounts for the sale of shares of the equitized enterprises.

4. Open the registry of shareholders who wish to buy shares from the enterprises. Register to buy the share certificates at the State Treasury.

A.- The Ministry in charge of the economic and technical branch, People’s Committee of the province or the city directly under the Central Government, the Managing Board of Corporation 91 shall:

1. Direct the Equitization Board in the enterprise in:

- Inventorying and determining the actual value of the enterprise.

- Elaborating the plan on equitization of the State enterprise.

- Drafting the Statute on the organization and operation of the joint stock company.

2. Preside over and coordinate with the concerned branches in solving recommendations and problems of the enterprise concerning the equitization plan.

3. Appraise the value of the enterprise submitted by the Equitization Board in the enterprise; issue a written agreement on the actual value of the enterprise and send it to the Ministry of Finance (the system of the General Department for Management of State property and capital in enterprises) for decision.

B.- The Ministry of Finance (the system of the General Department for Management of State property and capital in enterprises) shall:

1. Collaborate with the Ministry in charge of the economic and technical branch or the People’s Committee of the province or the city directly under the Central Government or the managing Board of Corporation 91 in guiding the enterprises in the following activities:

- Signing contracts with a lawful audit agency.

- Solving financial matters that surpass the competence of the enterprise: debts, losses of property due to any cause.

2. Issue written decisions on the actual value of the enterprise.

Within 30 days after receiving the full dossier requesting the appraisal of the enterprise’s value and obtaining the written agreement of the Ministry in charge of the economic and technical branch or the People’s Committee of the province or the city directly under the Central Government or the Managing Board of Corporation 91, it must issue a written decision on the actual value of the enterprise (in accordance with the provisions in Article 13 Decree 28-CP of May 7, 1996 of the Government).

C.- The Equitization Board in the enterprise shall:

1. Draw up a draft plan for:

- Distributing the reward and welfare funds (in cash)(if any) to the personnel in the enterprise.

- Determining the number of shares to be apportioned to the personnel and the dividends therefrom according to the seniority and work quality of each working personnel.

- Determining the amount of money lent to each laborer for share-buying with deferred payment at the interest rate of 4% per annum.

2. Publicize or post at public places the above mentioned draft plans for the personnel in the enterprise to discuss and implement them in a uniform way.

3. Basing itself on the audit results and the Finance Ministry’s guidance, the Equitization Board in the enterprise shall set up a Council to appraise the value of the enterprises. The Council, headed by the chairman of the Equitization Board in the enterprise and comprising the Equitization Board members, a competent representative of the agency managing State capital and property in enterprises and several economists and technicians depending on the characteristics of each enterprise, shall appraise the actual value of the enterprise. After the appraisal, the Equitization Board in the enterprise shall report it to the Ministry in charge of the economic and technical branch, the People’s Committee of the province or the city directly under the Central Government or the Managing Board of Corporation 91 for adoption before submitting it to the Ministry of Finance (the system of the General Department for Management of State capital and property in enterprises) for decision.

4. Draw up the equitization plan (the main contents of this plan are defined in Appendix No.2 attached herewith).

5. Organize an extraordinary Congress of the workers and employees to collect their comments on the plan for equitization of the enterprise.

6. Finalize the plan (after consulting the personnel).

7. Submit the plan to the competent agency for approval.

8. Draft the Statute on the organization and operation of the joint-stock company and report it to the Ministry in charge of the economic and technical branch, the People’s Committee of the province or the city directly under the Central Government or the Managing Board of Corporation 91 for comments.

A.- The Ministry in charge of the technical and economic branch, the People’s Committee of the province or the city directly under the Central Government shall:

1. Approve the plan for the equitization of enterprises with a State capital of 3 billion VND or less.

Report the plan for the equitization of enterprises with a State capital of more than 3 billion VND to the Central Steering Committee for Equitization and the Ministry of Finance which shall submit it to the Prime Minister for approval.

2. Discuss with the General Department for Management of State capital and property in enterprises on the person who shall join the Managing Board to manage the State capital in the joint stock company formed through the equitization of an independent enterprise before he/she is elected at the Congress of its shareholders.

In case of the equitization of an enterprise which is a member of the Corporation operating in accordance with the contents of Decision No.90-TTg of March 4, 1994 of the Prime Minister (or Corporation 90 for short) or a large company having a Managing Board, the Managing Board of Corporation 90 or the large company having a Managing Board shall appoint a person to the Managing Board of the joint stock company to directly manage the State capital in the joint stock company.

In case of the equitization of a section of an independent enterprise, the director of the enterprise shall appoint a person to the Managing Board to directly manage the State capital in the joint stock company.

3. Direct the Equitization Board in the enterprise in organizing the first Congress of shareholders to elect the Managing Board and adopt the Statute on the organization and operation of the joint stock company.

4. Issue the decision, according to their competence, to transform the State enterprise into a joint stock company

B.- The Managing Board of Corporation 91 shall:

1. Report the plans on the equitization of the member enterprises to the Central Steering Committee for Equitization and the Ministry of Finance which shall submit them to the Prime Minister or the authorized Minister for approval.

2. Perform the same task as defined in Step 3, Item A, Point 3 for the Ministry in charge of the economic and technical branch; appoint a person to directly manage the State capital in the joint stock company set up by equitizing a member enterprise of the Corporation.

3. Submit to the Prime Minister for decision of the transformation of enterprises and sections of enterprises into joint stock companies.

C.- The Ministry of Finance (through the intermediary of the General Department for Management of State capital and property in enterprises) shall:

1. Empower the State Treasury to sell printed share certificates so that the Companies can issue them to the shareholders who are eligible to receive shares no later than 30 days from the expiry of the issue time limit.

2. Issue decisions to transfer the property and capital of the State enterprises to the joint stock companies.

D.- The Equitization Board in the enterprise shall:

1. Make public the financial status of the enterprise before equitization.

2. Publicize the sale of shares, arrange the share-buying registration for shareholders inside and outside the enterprise.

3. Organize the sale of shares and transfer the sales to the accounts at the State Treasury.

4. Report on the implementation of the sale of shares according to the approved plan on the equitization of the State enterprise to the Ministry in charge of the economic and technical branch, the People’s Committee of the province or the city directly under the Central Government or the Managing Board of Corporation 91.

5. Make recommendations about the members of the Managing Board and seek the opinions of the Ministry in charge of the economic and technical branch, the People’s Committee of the province or the city directly under the Central Government or the Managing Board of Corporation 91 and the agency managing the State capital and property in enterprises.

6. Convene the first Congress of shareholders to:

- Elect the Managing Board.

- Adopt the Statute on organization and operation of the joint stock company.

1. The Director and the chief accountant shall, in the presence of the Equitization Board in the enterprise and the agency managing the State capital and property in enterprises, hand over to the Managing Board of the joint stock company: the labor force; property and capital according to the decision on the enterprise’s value; list and records of shareholders and all the dossiers, documents as well as records of the enterprise. The Equitization Board in the enterprise shall hand over the remaining work (if any) to the Managing Board and dissolve itself.

2. The Managing Board shall complete the following remaining tasks:

- Apply for a new seal of the joint stock company. Return the old seal of the State enterprise which has been transformed wholly into a joint stock company or the old seal (if any) of the State enterprise’s section which has been transformed into a joint stock company, in accordance with the regulation of the Ministry of the Interior.

- Complete the procedure for transferring the State ownership of property from the equitized State enterprise to the joint stock company (the registration fee is exempt for such property).

- Organize the inauguration of the joint stock company, make newspaper announcements as prescribed and publicize over the mass media or notify in writing the starting time of the joint stock company’s operation together with the new seal.

3. The joint stock company shall be responsible for registering its business with the Planning and Investment Service of the province or the city directly under the Central Government where the Company has its main office. The dossier on business registration is defined in Article 16, Decree No.28-CP of May 7, 1996 of the Government. Within 15 days after receiving the full dossier on business registration, the provincial/municipal Planning and Investment Service shall issue the business registration certificate to the joint stock company.

APPENDIX No.1 *

Form of the report on the equitization plan of State enterprises under the Ministry (branch, province, city directly under the Central Government, Corporation 91).

LIST OF THE STATE ENTERPRISES TO BE EQUITIZED

* Report on 2 lists (if any):

- The State enterprises with a State capital of 3 billion VND or less.

- The State enterprises with a State capital of more than 3 billion VND.

The plan on equitization of an enterprise shall comprise the following main parts:

1. Current general situation of the enterprise: Location, business lines, advantages and disadvantages.

2. The fluctuation of property, capital, labor and business results of the enterprises in the last three years.

3. Assessment of the enterprise’s actual situation and proposed development orientation of the equitized enterprise over the next three to five years (development strategy, business plan, prices, profits, dividend distribution, additional capital, reinvestment...).

1. Determination of specific objectives and form of equitization of the State enterprise: value of the enterprise to be equitized, additional capital to be mobilized (if any).

2. Face value of shares; number and types of shares to be issued.

3. Determination of the percentages of the shareholders’ capital in the enterprise after equitization:

- Percentage owned by the State shares.

- Percentage of the shares owned by the personnel in the enterprise.

- Percentage of the shares of shareholders outside the enterprise.

4. The financially preferential distribution for the personnel in the enterprise.

- Total value of the dividend-earning shares issued to the personnel (Number of beneficiaries, highest and lowest values of a personnel’s share).

- Total value of shares with deferred payment in five years (number of beneficiaries, highest and lowest values of a personnel’s share).

- Refund plan.

5. Share-selling duration and agency: The enterprise sells shares by itself or through the system of commercial banks or financial companies.

6. Time limit for shareholders (both inside and out side the enterprise).to pay for their shares and receive their share certificates.

7. Issues to be solved:

- Capital and property.

- Labor.

- Taxes.

- Other recommendations.

To project solutions for the following on the basis of the Law on State Enterprises and the Corporate Law:

1. Forms of State shares (predominant shares, special shares...).

2. Shares to be issued to the personnel in the enterprise.

3. Regulations on the appointment or dismissal of the person who manages the State capital in the joint stock company.

4. Powers and responsibilities of the person who is appointed to manage the State capital in the joint stock company.

5. Representatives of the enterprise’s workers and employees expected to present their candidacies, to be nominated and elected to the Managing Board and the Control Commission, of the joint stock company in accordance with the Corporate Law.

6. Other proposed regulations suited to each joint stock company.

1. Time for transforming the State enterprise into a joint stock company.

2. Issues to be further considered and resolved after the State enterprise has been transformed into a joint stock company.

3. Other issues concerning the direction for the implementation of the plan on equitization of the enterprise.