Laws of Vietnam

DECREES:

I. THE ESTABLISHMENT OF STATE ENTERPRISES

1. The establishment of State enterprises defined in Article 1 and Article 2 of the Law on State Enterprises shall be considered when competent State agencies defined in Article 3 and Article 4 of this Decree deem it necessary for the industries, sectors and fields of operation where there is need to regulate, guide and boost the growth of the multi-sector economy along the socialist orientation.

2. The industries and domains to be given priority consideration in the establishment of State enterprises are defined in Appendix No.1 attached to this Decree.

1. The statutory capital at the time of establishing a State enterprise shall not be less than the total prescribed capital set for each business line in Appendix No.2 attached to this Decree.

2. The proposer of the establishment of a State enterprise stipulated in Article 3 must ensure that:

a) The statutory capital at the time of the proposal to establish the enterprise has been readied;

b) The statutory capital comes from lawful and clear sources as provided for by the Finance Ministry.

3. The establishment of a State enterprise without the statutory capital is strictly forbidden. No borrowed capital shall be included into the statutory capital of a State enterprise.

Article 3.- The proposer of the establishment of a State enterprise.

1. The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the provinces and the cities directly under the Central Government (provincial level for short), the Managing Boards of the State Corporations may propose the establishment of State enterprises in line with the development plan of their respective branches, localities or Corporations.

2. The Presidents of the People’s Committees of districts, cities and townships directly under the provincial level may propose the establishment of public utility enterprises operating in their respective territories.

3. The proposer of the establishment of a State enterprise must not be at the same time the person who decides to establish it.

Article 4.- Deciding the establishment of atSte enterprises.

1. The Prime Minister shall decide the establishment of State Corporations, enterprises in direct service of defense and security, enterprises with the statutory capital at the time of establishment equivalent to the capital of Group A investment projects and enterprises whose establishment is proposed by the Ministry that manages the economic and technical branch encompassing their main business lines. After approving the plan on the establishment of enterprises, the Prime Minister shall empower a Minister to decide the establishment of a number of corporations and State enterprises under the Prime Minister’s competence.

2. The Minister in charge of the economic and technical branch is assigned the responsibility to decide the establishment of State enterprises whose main business lines come within the economic and technical branch of this Ministry and whose establishment is proposed by other Ministers, and of businesses whose establishment is proposed by the provincial People’s Committees or the Managing Boards of the State Corporations (which are empowered or assigned to sign the decision of establishment) and public utility enterprises of his/her own Ministry.

3. The Presidents of the provincial People’s Committees shall decide the establishment of State enterprises which are members of the Corporations established by their decision and public utility enterprises in their respective localities.

Article 5.- Contents of the plan to establish a State enterprise.

1. The name of the enterprise. Location where the enterprise is to be built. List of products and services expected to be undertaken. Market situation or market demand for each kind of these products and services.

2. Estimated capability of supply of raw materials, materials, fuel, additive materials and other necessary conditions for the normal operation of the enterprise after it is established. Projected raw material areas. Projected labor source and capability of labor recruitment.

3. Projected categories of products or services and the level of technological equipment.

4. Design capacity. Possibility of exploiting the design capacity in the first five (5) years after the enterprise starts its operation.

5. Projected total of initial investment capital, including the source and percentage of State capital, sources and forms of raising the remaining capital; capability, forms and schedules of the refunding of the raised capital. Estimated demand and measures to generate working capital after the enterprise is put into operation.

6. Schedules of completion of capital construction, test operation and official operation.

7. Possibility of marketing the products or services. Expected socioeconomic efficiency of the enterprise.

8. Expected impacts on the environment and measures for environmental protection.

Article 6.- Dossier proposing the establishment of a State enterprise.

1. A dossier proposing the establishment of a State enterprise includes:

a) The application for establishment of the enterprise;

b) The plan for the establishment of the enterprise. For enterprises which are established under the authorization of the Prime Minister as prescribed in Item 1 of Article 4, there must be a written approval of the Prime Minister of the plan for establishment;

c) The statutory capital and written opinions of the financial agency on the source and the statutory capital allocated;

d) The draft Statute on the organization and operation of the enterprise;

e) Recommendations on the form of organization of the enterprise;

f) The written opinion of the Ministry in charge of the economic-technical branch about the main business lines; business licenses for a number of business lines where licenses are required by law.

For a number of business lines defined in Article 11 of the Corporate Law, there must be the approval of the Prime Minister.

g) Description of environmental protection measures;

h) The written opinion of the President of the provincial People’s Committee on the land-use right and other issues related to the locality where the enterprise has its head office and sets up its production establishment(s).

2. In cases of empowerment defined in Article 4, within 50 days after receiving the Prime Minister’s written approval of the plan for the establishment of the enterprise, the proposer must send the full dossier of application to the person empowered by the Prime Minister to make the decision.

Article 7.- Appraising the establishment of State enterprises.

1. Depending on the nature, scale and scope of operation of an enterprise, the person competent to sign the Decision to establish the enterprise (according to the assignment of responsibilities or empowered) shall set up an Appraisal Council by using its assisting apparatus and inviting the participation of specialists with extensive knowledge of the contents to be evaluated, in order to examine the dossier proposing the establishment of the enterprise.

2. Contents to be thoroughly examined and appraised before deciding the establishment of the enterprise:

a) The dossier of proposal must be complete and valid as provided for in Article 6 of this Decree. If the dossier is not valid, clear or lacks the necessary information about the establishment of the enterprise, the Appraisal Council shall ask the proposer to supplement and complete it;

b) The plan for the establishment of the State enterprise must ensure its feasibility, efficiency and conformity to the socio-economic development plan of the State; ensure that the technology and equipment meet the standards set by the State and ensure environmental protection and observance of other provisions of law;

c) The statutory capital must correspond with the scale, business line and field of operation, and be consistent with the provisions of Article 2 of this Decree;

d) The draft Statute on the organization and operation of the enterprise must not be contrary to the Law on State Enterprises and other provisions of law;

e) The location of the head office and the business site must suit the nature and scope of business, must meet the necessary conditions of the business needs of the enterprise and must be approved in writing by the competent State agency in the locality where the head office and the business and production site are located.

3. Specialists, appointed or invited to the Appraisal Council to evaluate the dossier, shall exchange their opinions, make their independent comments in writing and assume the accountability for these comments. The Chairman of the Appraisal Council shall summarize these comments and submit them to the person competent to sign the Decision to establish State enterprises. The principle of majority vote shall not apply to the work of the Appraisal Council.

4. The person competent to sign the Decision to establish the State enterprise shall perform fully his/her powers and take responsibility for the establishment or non-establishment of the proposed State enterprise.

Article 8.- Time limit for publicizing the results of the examination for the establishment of a State enterprise.

1. Within thirty (30) days after receiving the dossier proposing the establishment of the State enterprise, a competent person shall consider the dossier, sign the approval decision and ratify the Statute on the organization and operation of the enterprise. All the decisions to establish State enterprises must be sent to the Ministry of Planning and Investment and the Ministry in charge of the economic and technical branch for monitoring. Within thirty (30) days after receiving the approval, the appointment of the President and members of the Managing Board (if any) and the General Director or Director of the enterprise must be completed in accordance with the provisions of law.

2. In case the proposal is not accepted, the person competent to decide the establishment of enterprises must reply in writing to the proposer within the time limit specified in Item 1 of this Article. For the enterprises whose the plans for establishment have been approved by the Prime Minister, the person empowered by the Prime Minister to sign the Decisions must report to the Prime Minister the reason(s) for the non-acceptance.

Article 9.- Registration of business.

1. The dossier on business registration includes: the establishment Decision, the Statute on the organization and operation of the enterprise (already approved), the paper issued by a financial agency verifying the statutory capital allocated, the certificate of the enterprise’s rights to use the land and houses, the Decision on the appointment of the President and members of the Managing Board (if any), the General Director or the Director of the enterprise.

2. The business registration must be completed within sixty (60) days from the date of signing of the Decision to establish the enterprise. The enterprise shall have the legal person status for undertaking business activities from the time it obtains the certificate of business registration.

3. Within forty five (45) days after signing the Decision to establish the enterprise, the enterprise must submit the full dossier to the Planning and Investment Service of the province where the enterprise has its head office.

4. Within fifteen (15) days after receiving the full dossier, the provincial Planning and Investment Service shall issue the certificate of business registration to the enterprise.

5. If beyond the time limit prescribed in Item 2 of this Article the procedure for issuing the certificate of business registration is not completed, the Decision to establish the enterprise shall cease to be valid; in case of plausible reasons, the person who signed the establishment Decision may grant an extension thereto, but for not more than thirty (30) days.

6. Within seven (7) days after issuing the certificate of business registration, the provincial Planning and Investment Service shall send a copy of the certificate of business registration to each of the following agencies: the provincial Taxation Department; the General Department or Department for management of the State capital and property in enterprises assigned to its management; the provincial Statistics Department; the People’s Committees of the provinces/cities where the enterprise has its head office; the Ministry of Planning and Investment; the Ministry in charge of the economic and technical branch.

Article 10.- Announcement in newspapers on the establishment of State enterprises.

1. Within thirty (30) days after receiving the certificate of business registration, the enterprise must make an announcement of its establishment in five (5) consecutive issues of a central or local daily newspaper in the locality where the enterprise has its head office. The enterprise shall not have to make such newspaper announcement in a number of special cases approved in the Decision to establish the enterprise by the person who signed the establishment Decision.

2. The contents of a newspaper announcement includes:

a) The name and address of the head office of the enterprise; the full name of the President and members of the Managing Board (if any), and of the General Director of the State Corporation or the Director of the other independent enterprises; telephone, telegraph and telex numbers;

b) Account number; the bank where the enterprise opens its accounts; the statutory capital at the time of establishment;

c) The name of the agency which issued the establishment Decision; the serial number and date of signing of the Decision; the serial number of the certificate of business registration, the date and name of the agency which issued the certificate of business registration;

d) Business lines;

e) Time of commencement and term of operation.

1. The Managing Board of the State Corporation shall decide the establishment of dependent cost-accounting units of the independent cost-accounting member enterprises in the Corporation.

2. The Managing Board of the State enterprise or the Director of the enterprise without a Managing Board shall decide the establishment of dependent units of the enterprises.

3. The enterprise is allowed to set up its branches or representative offices in the provinces and the cities directly under the Central Government, except in the province or the city directly under the Central Government where the enterprise has its head office, after getting a written agreement of the President of the People’s Committee of the province where it plans to open its branch or representative office.

4. The enterprise which has dependent units, branches or representative offices shall define their functions, tasks and details of the operation and take full responsibility before law for all of their activities.

5. Within 15 days after establishing dependent units or branches, the enterprise must register its business with the provincial Planning and Investment Service of the locality where the enterprise sets up the offices of its dependent units or branches.

6. The setting up of overseas branches or representative offices of the enterprise shall be carried out in accordance with the current regulations.

II. REORGANIZATION, DISSOLUTION AND BANKRUPTCY OF STATE ENTERPRISES

Article 12.- Reorganization of State enterprises.

1. The merger or splitting of independent State enterprises or independent cost- accounting member enterprises of State Corporations to establish one or several independent enterprises or members of the Corporations; the transformation of a dependent cost-accounting enterprise into an independent enterprise or independent cost-accounting member of the Corporation must be decided by the person who signed the decision to establish that enterprise and must conform to the procedure and order of establishing enterprises as provided for in Section I of this Decree.

2. The merger of one or several enterprises into another independent enterprise must be decided by the person who signed the Decision to establish those enterprises with respect to the plan for such merger and deletion of the names of the merged enterprises. The enterprise that accepts the merged enterprises shall still keep its legal person status, shall not have to repeat the procedure of establishment and business registration but must register its new statutory capital after the merger is completed. If the enterprise changes its business line, it must make an additional registration for such change.

3. The acceptance of new members or the splitting of member units from the State Corporations shall be proposed by the Managing Boards of the Corporations to the person who signed the Decision to establish the Corporations for consideration and decision. For State Corporations established by decision of the Prime Minister, the Prime Minister may empower one Minister to consider and decide the matter. If an independent enterprise outside the Corporation wishes to join the corporation, it shall submit its membership application which must be approved in writing by the person who has decided the establishment of that enterprise.

Article 13.- Other changes after the registration of business.

1. Except the business lines that require the permission from the Prime Minister or business licenses in accordance with the current regulations, the enterprise shall be entitled to change its business lines as long as Grade 1 business line is not affected and, at the same time, must register such change with the agency which has issued the business registration certificate. After changing its business line, the enterprise must make newspaper announcements about the change of the business line; the agency issuing the business registration certificate must send copies of the certificate of the change of the business line to the agencies defined in Item 6, Article 9 of this Decree.

If the change of the business line may result in the change in Grade 1 business line of the enterprise, it must be approved by the person who has decided the establishment of the enterprise, be registered by the enterprise with the agency which has issued the business registration certificate and announced in the newspapers as prescribed above.

2. If it is necessary to change the names of the member units of a State Corporation or independent enterprises, the Managing Board (for the enterprises having a Managing Board) or the Director (for the enterprises without a Managing Board) shall report to the person who decided the establishment for consideration and decision. After being permitted to change such names, the enterprises must report to the agency which has issued the business registration certificate in order to change the names accordingly in the business registration certificate; make a new seal and newspaper announcements as provided for in this Decree.

3. If it is necessary to move its business location or head office, the enterprise must work out a plan for such change and have the certificate of its right to use houses and land, issued by the People’s Committee of the province/city where the enterprise plans to set up its business location or head office and submit them to the person who has decided its establishment for consideration and decision. After being permitted to move, the enterprise must report to the agency which has issued the business registration certificate and other concerned agencies as well as make newspaper announcements on the change of the business location or head office.

4. The restructuring of the production organization, the managerial and executive apparatus and the replacement of key officials must conform to the provisions of the Statute on the organization and operation of the enterprise and other relevant provisions of law.

The Prime Minister shall empower one Minister to decide the reorganization of member units of Corporations established by decision of the Prime Minister.

Article 15.- Dissolution of State enterprises.

1. A State enterprise shall be dissolved in the following cases:

a) The continued maintenance of the enterprise is no longer necessary;

b) The business term defined in the Decision of establishment and the business registration certificate has expired and extension thereto is not applied;

c) The enterprise has suffered from prolonged losses in business activity but not to the extent that it is unable to repay due debts and the situation has not improved though various forms of reorganization have been adopted.

d) It fails to fulfill the State-assigned tasks, even after necessary measures have been applied.

2. The person who decided the establishment of an enterprise shall have the power to decide the dissolution of the enterprise. If the enterprise was established under the empowerment of the Prime Minister, the signing of the dissolution Decision must be also empowered by the Prime Minister.

3. The person who signed the dissolution Decision (according to the division of responsibility or as empowered) shall have to set up the Council for Dissolution of the enterprise.

4. The order, procedure and concrete measures for dissolving State enterprises must conform to the Finance Ministry’s regulations.

The bankruptcy of a State enterprise must be handled in accordance with the Law on Bankruptcy.

III. IMPLEMENTATION PROVISIONS

Article 17.- Objects of application.

1. This Decree shall apply to the State enterprises defined in Article 1 and Article 2 of the Law on State enterprises.

2. The order, procedure of establishment and forms of the enterprises’ managerial and executive organization shall be implemented in accordance with the Corporate Law by the State enterprises which contribute to the statutory capital.

1. This Decree takes effect from the date of its signing for promulgation and replaces Decree No.388-HDBT of November 20, 1991 of the Council of Ministers promulgating the regulation on the establishment and dissolution of State enterprises. Decisions No.315-HDBT of September 1st, 1990 of the Council of Ministers on strengthening and reorganizing the production and business in the public economic sector, No.330-HDBT of October 23, of 1991 of the Council of Ministers amending and supplementing Decision No.315-HDBT of September 1st, 1990 of the Council of Ministers shall cease to be effective from that date.

The approval of the plans for the reorganization and rearrangement of State enterprises, the implementation of the plans for the reorganization and rearrangement of State enterprises, which were approved by the Prime Minister in his Directive No.500-TTG of August 25, 1995, must be completed not later than December 31, 1996. After this date, those State enterprises which have not been rearranged according to Directive No.500-TTg must implement the reorganization and rearrangement in accordance with the provisions of this Decree.

The previous provisions contrary to this Decree are now annulled.

2. The Ministry of Finance shall preside over and coordinate with the Ministry of Planning and Investment and other concerned State agencies in providing detailed guidance not later than the end of the third quarter of 1996 on the order, procedure and measures of dissolving State enterprises, the setting up and regulations on the operation of the dissolution council.

3. The Ministry of Planning and Investment, the Ministry of Finance and other concerned Ministries, ministerial-level agencies, agencies attached to the Government shall guide the implementation of this Decree.

4. The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Central Government, the Presidents of the People’s Committees of the provinces and the cities directly under the Central Government, the Managing Boards of the State Corporations and State enterprises, the General Directors and Directors of State enterprises shall have to implement this Decree.

On behalf of the Government

The Prime Minister

1. Production and repair of weapons, military gear and specialized equipment in direct service of defense and security.

2. Provision of public works and transport services in urban and industrial areas.

3. Electricity generation and supply from the national electricity grid.

4. Provisions of services catering for air ports, sea ports and river ports of national importance, maritime transportation, transportation on the national railway system and key land transportation routes of the State.

5. Provisions of postal and telecommunications services with investment in new technologies and in service of rural, mountainous, island and underdeveloped areas.

6. Construction and management of large- and medium-sized irrigation and agricultural water works.

7. Production and raising or farming of animals or plants of original breeds; advanced biological technologies.

8. Provision of essential services for social and cultural development.

9. Provision of services for environmental and ecological protection.

10. Exploitation of crude oil and natural gas.

11. Large-scale exploitation of minerals.

12. Production of cement, new construction materials and new materials.

13. Metallurgy.

14. Import-substitute equipment manufacturing.

15. Production of basic chemicals, pharmaco-chemicals, petro-chemicals.

16. Production of electronic, computer and telecommunications components and equipment, .

17. Large-scale production of export goods or import-substitute goods.

18. Trades in currencies, finance and insurance.

19. Other industries and fields in which other economic sectors have not yet invested or do not invest, particularly in underdeveloped areas.