Laws of Vietnam

THE GOVERNMENT

Article 1.- Objectives and requirements of the transformation of enterprises with 100% state capital into joint-stock companies (below referred to as equitization for short)

1. To transform enterprises in which the State does not need to hold 100% of their capital into ones with multiple owners; to mobilize capital of domestic and foreign investors to increase financial capacity, renew technology and renovate management modes with a view to increasing the effectiveness and competitiveness of the economy.

2. To harmonize the interests of the State, enterprises, investors and enterprise laborers.

3. To ensure publicity and transparency on the market principle; to prevent self-contained equitization within enterprises; to link with development of the capital and securities markets.

Article 2.- Enterprises to be equitized

1. Independent state companies of ministries, branches and localities.

2. Parent companies of economic groups (below referred to as groups for short) and state corporations (including state-owned commercial banks).

3. Parent companies in parent company-subsidiary company conglomerates.

4. Corporations' independent cost-accounting member companies which are invested and established under the State's decision.

5. Dependent cost-accounting units of independent state companies, groups, state corporations, parent companies or corporations' independent cost-accounting member companies.

6. Limited liability companies in which the State holds 100% of their charter capital.

Article 3.- Equitization conditions

1. Enterprises specified in Article 2 of this Decree may be equitized when fully meeting the following two conditions:

a/ They are other than those in which the State needs to hold 100% of their charter capital. The list of enterprises in which the State needs to hold 100% of their charter capital is decided by the Prime Minister for each period;

b/ There remains some state capital after their financial issues are handled and their value re-assessed.

2. Dependent cost-accounting units must, apart from the conditions specified in Clause 1 of this Article, ensure the following conditions:

a/ They have adequate conditions for practicing independent cost-accounting;

b/ Their equitization will not cause difficulties to, or adversely affect production and business efficiency of the enterprises or other remaining sections of the enterprises;

c/ Their equitization has been included in the general enterprise reorganization plan already approved by the Prime Minister.

3. If the actual value of an enterprise, after its financial issues are handled and its value re-assessed under the provisions of Chapters II and III of this Decree, is lower than payable amounts, the enterprise shall be sold, dissolved or bankrupted.

Article 4.- Forms of equitization

1. Keeping unchanged the existing state capital amount in the enterprises, issuing shares to increase their charter capital.

2. Selling part of the existing state capital amount in the enterprises only or in combination with issuing shares to increase their charter capital.

3. Selling all existing state capital amount in the enterprises only or in combination with issuing shares to increase their charter capital.

Article 5.- Method of initial sale of shares

1. Initial sale of shares shall be conducted by public auction, issuance underwriting or direct negotiation under the provisions of Chapter IV of this Decree.

2. Depending on enterprises and conditions on initial sale of shares, equitization-deciding agencies shall make decision on the method of share sale as appropriate.

3. The Ministry of Finance shall provide detailed guidance on initial sale of shares under the provisions of this Decree.

Article 6.- Share purchasers and conditions for purchasing shares

1. Domestic investors:

a/ Domestic investors include Vietnamese individuals, economic organizations and social organizations established and operating under Vietnamese law;

b/ Domestic investors may purchase shares of equitized enterprises in unlimited quantity, except for the case specified in Clause 4 of this Article.

2. Foreign investors:

a/ Foreign investors include foreign organizations and individuals investing their capital in Vietnam;

b/ Foreign investors may purchase shares of equitized enterprises under the provisions of this Decree and relevant legal documents;

c/ Foreign investors wishing to purchase shares shall open deposit accounts at payment service-providing organizations currently operating on the Vietnamese territory in accordance with Vietnamese law. All activities of purchasing and selling shares; receiving and using dividends and other revenues from share purchase investment must be conducted via these accounts.

3. Strategic investors:

a/ Strategic investors are domestic investors and foreign investors that have financial and business management capacity; transfer new technologies, supply materials and raw materials, develop product outlets; and are attached to enterprises in long-term interests;

b/ On the basis of the charter capital size, characteristics of business lines and development and expansion requirements of enterprises, the enterprise equitization steering committees shall submit to equitization-deciding persons the initial sale of shares to strategic investors and criteria for selection of strategic investors;

c/ Strategic investors may purchase shares at the prices not lower than the average successful bid. For groups and state corporations (including state-owned commercial banks), if strategic investors are absolutely necessary, equitization-deciding agencies shall report to the Prime Minister for decision a separate bidding for strategic investors;

d/ Strategic investors may not transfer their purchased shares within 03 years from the date the joint-stock companies are granted business registration certificates. In special cases, if they wish to transfer their shares within this period, approval of the general shareholders' meeting is required.

4. When an enterprise is concurrently equitized and listed on the stock exchange or a securities trading center, the agency competent to approve the equitization plan shall determine the maximum and minimum quantities of shares which may be ordered for purchase with respect to the quantity of shares on sale to the public in the plan on initial issuance of shares so that the post-equitization enterprise is eligible for listing. The maximum and minimum quantities of shares which may be ordered for purchase set out in the plan on initial issuance of shares must not discriminate against investors of all economic sectors.

5. Members of the enterprise equitization steering committee (excluding those who are representatives of the enterprise), intermediary financial institutions, and individuals engaged in providing consultancy, valuing and auctioning shares of an equitized enterprise may not participate in the bidding to purchase its initially issued shares.

Article 7.- Currency used in share purchase payment

Domestic and foreign investors shall purchase shares of equitized enterprises in Vietnam dong.

Article 8.- Equitization expenses

Equitization expenses shall be subtracted from the state capital in an equitized enterprise. The contents and levels of equitization expenses comply with the guidance of the Ministry of Finance.

Article 9.- Shares and share certificates

1. Charter capital is divided into equal portions called shares. The par value of a share is VND 10,000.

2. Share certificates are certificates issued by a joint-stock company or are book entries certifying the ownership of one or several shares of shareholders in that company. Share certificates may be registered or bearer ones which must fully contain principal contents specified in Article 85 of the 2005 Enterprise Law.

Article 10.- Principles for take-over of the rights and obligations by joint-stock companies transformed from companies with 100% state capital

1. Equitized enterprises shall arrange and employ to the maximum the number of laborers working at the time of equitization decision and provide benefits according to current regulations to redundant laborers.

Joint-stock companies are obliged to take over all responsibilities to laborers transferred from equitized enterprises; may select, arrange and employ laborers and coordinate with concerned agencies in providing benefits to laborers according to the provisions of law.

2. Equitized enterprises shall coordinate with concerned agencies in examining and handling financial issues in order to determine the value of state capital amounts at the time of official transformation into joint-stock companies.

3. Joint-stock companies may use all assets and capital amounts they have been delivered for organizing production and business; take over all interests, obligations and liabilities from equitized enterprises and have other rights and obligations as prescribed by law.

Obligations and responsibilities of equitized enterprises which are additionally identified after their financial settlement and delivery to joint-stock companies do not belong to these joint-stock companies.

Article 11.- Publicity and transparency of information and listing on the securities market

1. Equitized enterprises must make public and transparent information on enterprises, their equitization plans, and the situation of land and labor management in accordance with the Enterprise Law and other laws.

2. Equitized enterprises whose financial status meets all listing conditions prescribed by the securities law shall work out equitization plans to ensure the structure of shareholders and be listed on the stock exchange or a securities trading center.

Equitization-deciding agencies shall determine the equitization at the same time with the listing on the securities market in the equitization plans and announce them to investors before initial sale of shares. Representatives for state capital amounts in enterprises shall vote at the first general shareholders' meeting to adopt a resolution on the listing.

Article 12.- Equitization consultancy

1. Equitized enterprises may hire a consultancy organization to determine their value; and elaborate plans on equitization and initial sale of shares.

2. Equitization-deciding agencies shall select equitization consultancy organizations in accordance with law and the guidance of the Ministry of Finance.

3. Expenses for hiring equitization consultancy are accounted as equitization expenses.

Article 13.- Inventory and classification of assets and handling of financial problems

1. After receiving a competent agency's equitization decision, an enterprise shall inventory and classify assets it is currently managing and using at the time of its valuation.

2. An equitized enterprise shall get its annual financial statement audited according to state regulations. If the time of its valuation does not coincide with the ending time of a fiscal year, the enterprise shall make a financial statement up to the time of its valuation.

3. On the basis of the results of asset inventory and financial statement audit, an equitized enterprise shall coordinate with concerned agencies in proactively handling according to their powers and law outstanding financial problems before its valuation.

If the handling meets with difficulties or falls beyond its competence, the equitized enterprise shall report them to competent agencies for consideration and settlement.

If the reported problems cannot be settled yet, they must be clearly stated in the written enterprise valuation record for further settlement in the duration from the time of enterprise valuation to the time of official transformation into a joint-stock company.

Article 14.- Handling of assets which are leased, borrowed, accepted as capital contributed to joint-venture or business cooperation, assets which are no longer needed and assets formed with investment from reward and welfare funds

1. Assets which an equitized enterprise has leased, borrowed, accepted as capital contributed to joint-venture or business cooperation and other assets not belonging to the enterprise are not included in the enterprise value for equitization. Before its transformation into a joint-stock company, the enterprise shall reach agreement with the asset owners so that the joint-stock company can take over or liquidate the signed contracts.

2. Assets which are no long needed or used by an enterprise or await liquidation shall be disposed of (liquidated or sold) by the enterprise according to current financial management regulations. Those assets which have not yet been disposed of by the enterprise by the time of its valuation are excluded from the enterprise's value and are delivered to the following agencies:

a/ The Debts and Assets Trading Company for handling according to law, for enterprises specified in Clauses 1, 2 and 3, Article 2 of this Decree, and limited liability companies in which the State holds 100% of their charter capital and which belong to ministries, ministerial-level agencies, government-attached agencies or People's Committees of provinces and centrally run cities;

b/ Groups, state corporations, parent companies and independent state companies for handling according to regulations, for enterprises specified in Clauses 4 and 5, Article 2 of this Decree, and limited liability companies in which groups, corporations or parent companies hold 100% of their charter capital.

3. For welfare facilities, including nurseries, kindergartens, infirmaries and other welfare assets invested with reward and welfare funds, they shall be assigned to the joint-stock companies for management and use in service of laborers in the equitized enterprise.

For dwelling houses of cadres, employees and workers constructed with investment from the enterprises' welfare funds, including dwelling houses constructed with state budget capital, they shall be assigned to local housing and land agencies for management.

4. For assets formed with investment from the enterprise's reward and welfare funds and used in production and business activities, they shall be included in the enterprise's value and further used by the joint-stock company in production and business. Capital equivalent to the value of these assets shall be returned by the equitized enterprise to the reward and welfare funds for division to the enterprise's laborers working by the time of enterprise valuation.

Article 15.- Receivable debts

1. Equitized enterprises shall check, certify and recover debts which become due before the time of equitization. By the time of enterprise valuation, any remaining bad debts shall be handled according to the State's current regulations on handling of outstanding debts.

2. Equitized enterprises shall hand over irrecoverable debts which have been excluded from their value (together with related dossiers and documents) to concerned agencies stated in Clause 2, Article 14 of this Decree.

3. Amounts already prepaid to goods suppliers or service providers, such as house rents, land rents, goods purchase money and remuneration, shall be verified against relevant contracts and supplied goods and service volumes before being included in the value of the equitized enterprises.

Article 16.- Payable debts

1. Debts payable to organizations and individuals:

Enterprises shall mobilize capital from lawful sources for paying debts which become due before the time of equitization or reach agreement with creditors to handle or convert them into contributed share capital.

The conversion of debts due at the time of enterprise valuation into contributed share capital shall be conducted based on creditors' successful auction bids.

2. Outstanding tax amounts and state budget remittances: Equitized enterprises shall pay taxes and amounts owed to the state budget before transformation; if an equitized enterprise has not yet fulfilled its tax payment obligation, the joint-stock company shall take over the whole of this obligation.

3. In the course of equitization, if an equitized enterprise meets difficulties in repaying overdue debts (loans provided by state-owned commercial banks and the Vietnam Development Bank) due to business losses, these debts shall be handled according to the State's current regulations on handling of outstanding debts.

Article 17.- Reserves, losses or profits

1. Reserves for stock price decreases, bad debts, securities price decreases, and exchange rate differences shall be used to offset losses according to current regulations; any remaining amounts shall be accounted as state capital increase.

2. The job-loss allowance reserve: An equitized enterprise shall make adequate deductions for this reserve according to state regulations and may use it to pay allowances to laborers left redundant in the course of equitization; if there remains any amount by the time of official transformation into a joint-stock company, it shall be accounted as state capital increase at the time of hand-over.

3. Risk reserve and professional reserve funds of the banking or insurance system, after they are used to offset losses according to regulations, shall be left to the equitized enterprise and included in the reserve price for the initial issuance of shares.

4. The financial reserve fund shall be used to offset losses (if any), property losses, irrecoverable debts, after being offset against compensations (if any) paid by responsible individuals; any remaining amount shall be included in the value of the state capital amount in the equitized enterprise.

5. Profits shall be used to offset previous years' losses (if any) according to the Enterprise Income Tax Law, losses in the form of assets no longer needed or awaiting liquidation, asset price decreases and irrecoverable debts; any remaining amount shall be distributed according to current regulations before the enterprise valuation.

6. After the losses are handled according to the above provisions, if there is still some loss while there is no state capital left by the time of valuation of an equitized enterprise, the enterprise shall coordinate with the Vietnam Development Bank (formerly the Development Assistance Fund) and state-owned commercial banks in writing off outstanding loans according to the State's current regulations on handling of outstanding debts.

Article 18.- Longer-term investment capital in other enterprises, such as capital contributed to joint ventures or business cooperation, contributed as shares, contributed for the formation of limited liability companies, and other forms of long-term investment

1. When an equitized enterprise takes over long-term investment capital already invested in another enterprise, this capital amount shall all be included in the enterprise value for equitization on the principles set out in Article 32 of this Decree.

2. When an equitized enterprise does not take over long-term investments in other enterprises, it shall report them to a competent agency for handling as follows:

a/ Transferring them to another enterprise in which the State holds 100% of capital as a partner;

b/ If unable to transfer them, taking them over as part of its value under Clause 1 of this Article.

Article 19- Cash balances of reward and welfare funds

The cash balances of reward and welfare funds shall be divided to laborers currently working in an equitized enterprise at the time of enterprise valuation based on the number of years they work in the enterprise.

Article 20- Balance of the enterprise reorganization assistance fund in enterprises

The balance (if any) of the enterprise reorganization assistance fund in an equitized enterprise shall be accounted as state capital increase in the enterprise.

Article 21- Handling of financial issues at the time of official transformation of an enterprise into a joint-stock company

1. On the basis of the value of an equitized enterprise already decided by a competent agency, the enterprise shall adjust its accounting book figures accordingly; preserve and deliver liabilities and assets excluded upon enterprise valuation under Clause 2, Article 14, and Clause 2, Article 15 of this Decree; and prepare a financial statement from the time of enterprise valuation to the time of official transformation into a joint-stock company.

2. Within one month from the date of obtaining the first-time business registration certificate, an equitized enterprise shall complete a financial statement at the time of business registration, determining the value of the state capital amount at the time of official transformation into a joint-stock company and financial problems to be handled.

3. The positive difference between the actual value of the state capital amount in an enterprise at the time it is transformed into a joint-stock company and the actual value of the state capital amount at the time of enterprise valuation is handled as follows:

a/ It shall be remitted into the enterprise reorganization assistance fund at the group, state corporation or parent company, if the equitized enterprise is its member enterprise, subsidiary company or dependent cost-accounting unit; to the independent state company or independent cost-accounting member company, if the equitized enterprise is its section;

b/ It shall be remitted into the enterprise reorganization assistance fund at the State Capital Investment Corporation; if the equitized enterprise is an independent state company, group or state corporation; or a parent company.

4. If the difference is negative, the equitized enterprise shall report it to the equitization-deciding agency, which shall then coordinate with concerned agencies in examining, identifying the cause and the responsibilities of related collectives and individuals, and handle the negative difference as follows:

a/ If it is due to an objective cause (natural disaster, enemy sabotage; state policy change, international market change or other force majeure events), the equitized enterprise shall report it to the equitization-deciding agency for consideration and decision on the use of the proceeds from the sale of shares to offset losses, after subtracting insurance indemnities (if any). If the proceeds from the sale of shares is not enough to offset losses, the equitization-deciding agency shall consider and reduce the size and structure of the charter capital of the joint-stock company;

b/ If it is due to a subjective cause:

- If losses are incurred due to the incomplete handling of financial problems according to the State's current regulations during enterprise valuation, the responsibilities of related agencies: the enterprise, valuation consultancy organization and equitization-deciding agency, shall be clearly determined for compensation payment;

- If losses are incurred due to production and business management, the enterprise's managers shall pay compensations for all losses caused by their faults according to current regulations;

- If, for force majeure reasons, responsible persons are unable to pay compensations according to competent agencies' decisions, any remaining losses shall be treated as those incurred due to an objective cause under Point a of this Clause.

c/ After being handled under the above provisions, if there remains some negative difference, the joint-stock company shall take over this loss.

Section 1. ENTERPRISE VALUATION ORGANIZATIONS

Article 22.- Enterprise valuation organizations

1. An equitized enterprise having a total book value of assets of VND 30 billion or more or a book value of state capital of VND 10 billion or more or situated at a favorable location shall hire a valuation organization such as audit company, securities company, price assessment organization, domestic or foreign investment bank with a valuation function (hereinafter referred to as a valuation consultancy organization) to provide enterprise valuation consultancy.

2. An equitized enterprise not falling into the category defined in Clause 1 of this Article shall not necessarily hire a valuation consultancy organization to conduct its valuation. If not hiring a valuation consultancy organization, the enterprise shall determine its value by itself and report it to the agency competent to decide on enterprise value.

3. The equitization-deciding agency shall select an equitization valuation organization on the list announced by the Ministry of Finance. If 02 or more valuation consultancy organizations register to participate in providing valuation consultancy services, a bidding must be organized to select an organization according to current regulations.

4. The valuation consultancy organization may select appropriate enterprise valuation methods to ensure the principles set out in this Decree and complete the valuation on schedule and in accordance with its commitments in the signed contract. An equitized enterprise shall fully supply truthful information on the enterprise for use by the valuation consultancy organization during its valuation.

The valuation consultancy organization shall take responsibility for enterprise valuation results. If the enterprise valuation results are incompliant with the State's regulations, the equitization-deciding agency may refuse to pay valuation service charges; if causing damage to the State, the valuation consultancy organization shall pay compensations and be removed from the list of organizations eligible for providing valuation consultancy.

5. Domestic and foreign valuation consultancy organizations that wish to participate in providing valuation consultancy services for equitized enterprises must fully meet the criteria prescribed by the Ministry of Finance.

Article 23.- Methods of enterprise valuation

Methods of enterprise valuation include: asset method, discount cash flow method, and other methods.

The determined and announced value of an enterprise must not be lower than the value of the enterprise determined by the asset method prescribed in Section 2 of this Chapter.

Article 24.- Announcement of enterprise values

1. On the basis of the enterprise valuation dossier compiled by the valuation consultancy organization (or by the equitized enterprise itself), the enterprise equitization steering committee shall verify the enterprise valuation in terms of its process, procedures and compliance with the provisions of law on enterprise valuation, and submit it to the agency competent to decide on enterprise value for decision.

2. The agency competent to decide on enterprise value shall consider, decide and announce the enterprise value within 10 days from the date of receipt of a complete dossier.

Article 25.- Use of enterprise valuation results

Enterprise valuation results announced by competent agencies serve as a basis for determining the charter capital amount and the structure of shares for initial issuance and the reserve price for share auction.

Article 26.- Adjustment of enterprise values

1. An equitized enterprise may adjust its announced value in the following cases:

a/ There appear objective causes (natural disaster, enemy sabotage, state policy change or other force majeure events) affecting the value of its assets;

b/ It cannot organize the sale of its shares within 12 months from the time of enterprise valuation.

2. The provisions of Clause 1 of this Article only apply to equitized enterprises that have not sold their shares.

3. Agencies competent to decide on enterprise equitization shall consider and decide on the adjustment and re-announcement of the values of equitized enterprises. The enterprise value adjustment decision serves as a basis for elaborating an equitization plan.

Section 2. ENTERPRISE VALUATION BY THE ASSET METHOD

Article 27.- Value of equitized enterprises by the asset method

1. The actual value of an equitized enterprise is the value of all existing assets of the enterprise at the time of equitization, taking into account its profitability which is acceptable to both share purchasers and sellers.

The actual value of an equitized enterprise's state capital is the enterprise's actual value after subtracting payable debts, the reward fund and welfare fund balances and the non-business budget balance (if any).

2. In case of equitizing the whole of a group or state corporation, the value of the state capital amount is the actual value of the state capital amount determined in the group or state corporation.

3. In case of equitizing the whole of a parent company in a parent company-subsidiary company conglomerate, the value of the state capital amount is the actual value of the state capital amount in the parent company.

4. For a financial institution or credit institution, when conducting enterprise valuation by the asset method, it is possible to use the results of audit of the financial statement for determining its assets in money and liabilities but its fixed assets, long-term investments and the land use right value must be inventoried and assessed according to the State's regulations.

Article 28.- The following amounts are not included in the enterprise value for equitization

1. The value of assets specified in Clauses 1, 2 and 3 of Article 14 of this Decree.

2. Receivable debts which are irrecoverable.

3. Capital construction expenses of uncompleted works which are cancelled or postponed before the time of enterprise valuation.

4. Long-term investments in other enterprises, specified at Point a, Clause 2, Article 18 of this Decree.

5. Persons competent to decide on enterprise value shall consider and decide on the exclusion from the enterprise value for equitization of the amounts specified in Clauses 1, 2, 3 and 4 of this Article, and take responsibility for their decision.

Article 29.- Bases for determination of the enterprises' actual value

1. Figures in the enterprises' accounting books at the time of enterprise valuation.

2. Documents on the inventory, classification and quality assessment of the enterprises' assets at the time of enterprise valuation.

3. Market prices of assets at the time of valuation.

4. Value of the use rights of the allocated or leased land and the value of the business advantages of the enterprises.

Article 30.- Value of land use rights

1. For land areas which the equitized enterprise is using as grounds for construction of working offices and transaction offices; construction of production and business establishments; land for agricultural production, forestry, aquaculture or salt making (including land assigned by the State with or without collection of land use levies), the equitized enterprise may make a land use plan and submit it to a competent agency for consideration and decision. It may opt for the form of land lease or land allocation in accordance with the Land Law.

If an enterprise which has been allocated land chooses to lease land, it shall carry out procedures for switching to land lease and send a dossier to the equitization-deciding agency and the local house and land management agency before its official transformation into a joint-stock company.

2. If an equitized enterprise has been allocated land (including land areas allocated by the State to the enterprise for construction of houses for sale or lease for hotel business, trade and services; for construction of infrastructure for transfer or lease), the value of land use rights calculated based on the land price prescribed and announced by the People's Committee of the province or city (where the allocated land areas exist) must be included in the enterprise's value.

3. If an equitized enterprise chooses to lease land:

a/ The land rent is not included in the value of the equitized enterprise, for enterprises paying land rents on an annual basis;.

b/ The land rent calculated based on the market price prescribed and announced by the People's Committee of the province or city at the time of valuation is included in the value of the enterprise, for enterprises paying land rents in a lump sum for the whole land lease term.

4. If the land price used as a basis for determining the value of land use right or the land rent is not close to the market land use right transfer price under normal circumstances at the time of equitization, the People's Committees of provinces or centrally run cities shall decide on specific land prices as appropriate;

Within 30 days from the date of sending complete dossiers, if it fails to receive the documents of the People's Committee of the province or centrally run city on the land price, the agency competent to decide on enterprise value may include the value of land use rights or land rent in the enterprise value according to the plan proposed by the enterprise which must be at least equal to the value of land use rights or land rent calculated based on the announced land price, and notify it the People's Committee of the province or centrally run city.

5. The People's Committees of provinces and centrally run cities shall direct their specialized agencies to provide guidance for equitized enterprises to fully carry out procedures in order to be granted land use right certificates or sign land lease contracts in accordance with the current provisions of law on land before their official transformation into joint-stock companies.

Article 31.- Value of business advantages of enterprises

1. Business advantages of an enterprise include advantages in terms of its geographical location, brand and development potential.

2. The value of business advantages of an enterprise shall be considered and decided by the agency competent to decide on enterprise equitization but must be at least equal to the value of business advantages determined under the guidance of the Ministry of Finance.

Article 32.- Valuation of long-term investment capital of equitized enterprises in other enterprises

1. The value of an equitized enterprise's long-term investment capital in other enterprises shall be determined on the basis of:

a/ The ratio of the equitized enterprise's investment capital in other enterprises to the charter capital of or total actually contributed capital amount in other enterprises;

b/ The value of owner capital in other enterprises reflected in the audited financial statement. If no audited financial statement is available, the value of owner capital reflected in the latest financial statement of the enterprise concerned is used;

c/ For investment capital in foreign currency, it shall be converted into Vietnam dong at the average transaction exchange rate on the inter-bank foreign-currency market publicized by the State Bank of Vietnam at the time of valuation.

d/ If the long-term investment capital value of an equitized enterprise in another enterprise is determined to be lower than the book value, it shall be determined according to the book value of the equitized enterprise.

2. The value of capital contributed by an equitized enterprise to a joint-stock company already listed on the securities market shall be determined on the basis of the price of shares traded on the securities market at the time of enterprise valuation.

Section 3. ENTERPRISE VALUATION BY THE DISCOUNT CASH FLOW METHOD

Article 33.- Value of equitized enterprises by the discount cash flow method

1. The actual value of the state capital amount in an enterprise shall be determined by the discount cash flow method based on the future profitability of the enterprise.

When the value of the whole of a corporation is determined by this method, the profitability of the corporation shall be determined on the basis of the state corporation's profit according to the regulation on financial management of state companies.

When an enterprise invests capital in another enterprise, the value of the enterprise shall also be determined on the basis of profits brought about by such investment.

2. The actual value of an enterprise consists of the actual value of the state capital amount, payable debts, cash balances of the reward and welfare funds, and the non-business fund balance (if any).

When an enterprise chooses the form of land allocation or land lease with payment of land rent in a lump sum, the land use right value or land rent must be also included in the value of the enterprise under the provisions of Article 30 of this Decree.

Article 34.- Bases for valuation of enterprises by the discount cash flow method

1. The enterprise's financial statements of the last five years preceding the time of enterprise valuation.

2. The enterprise's production and business plan for between 3 and 5 years after the enterprise's transformation into a joint-stock company.

3. The interest rates of five-year government bonds at the time closest to the time of enterprise valuation and the discount cash flow co-efficient of the valued enterprise.

Article 35.- Determination of charter capital and structure of initial shares

1. On the basis of the announced value of the state capital amount in an equitized enterprise and the production and business plan for several years following the enterprise's transformation into a joint-stock company, the equitization-deciding agency shall decide on the size and structure of the enterprise's charter capital.

a/ In case of sale of part of the state capital amount in the enterprise, the determined charter capital must be at least equal to the actual value of the state capital amount in the enterprise;

b/ In case of additional issuance of shares, the charter capital is determined to be the actual value of the state capital amount in the enterprise and the value of additionally issued shares calculated based on share par value.

2. On the basis of the determined charter capital, the equitization-deciding agency shall decide on the structure of initial shares, comprising:

a/ State-held shares: The percentage of state-held shares is based on the criteria for classification of state enterprises publicized by the Prime Minister for each period. For enterprises in which the State does not need to hold dominant shares, the equitization-deciding agency shall consider and decide on the percentage of state-held shares as appropriate;

b/ Shares to be sold to strategic investors and other investors must be at least equal to 25% of charter capital (except for the case specified at Point b, Clause 3 of this Article). The quantity of shares to be sold to other investors must be at least equal to 50% of the above quantity of shares;

For large enterprises with the state capital amount of more than VND 500 billion or doing business in particular domains or professions (insurance, banking, post and telecommunications, aviation, exploitation of rare and precious minerals), the percentage of shares auctioned to investors shall be considered and decided by competent authorities on a case-by-case basis;

c/ Shares sold to trade unions in equitized enterprises:

Trade unions in equitized enterprises may use their lawful funds (of trade unions) in equitized enterprises (other than mobilized capital or loans) to purchase shares not exceeding 3% of charter capital. This quantity of shares shall be held by trade unions and are non-transferable. The Ministry of Finance and the Vietnam General Confederation of Labor shall guide the use of lawful funds for share purchase to ensure the interests of laborers in enterprises;

d/ Shares are sold at preferential prices to laborers in enterprises under Clause 1, Article 51 of this Decree.

3. If the quantity of shares sold at preferential price to laborers in enterprises (at the most preferential price) is larger than the projected remaining quantity of issued shares (after subtracting the quantity of state-held shares and the quantity of shares sold to investors and the trade union under Points a, b and c, Clause 2 of this Article), it shall be handled as follows:

a/ If the enterprise is the one in which the State does not need to hold dominant shares, the equitization-deciding agency shall consider and decide on the reduction of the quantity of state-held shares in order to increase the quantity of shares sold at preferential price to laborers;

b/ If the enterprise is the one in which the State needs to hold dominant shares, the equitization-deciding agency shall consider and decide on the adjustment of the charter capital size in order to rationally increase the quantity of shares sold at preferential price to laborers in the enterprise or reduce the quantity of shares sold to strategic investors and ordinary investors while still ensuring that the quantity of shares sold to strategic investors and ordinary investors be at least equal to 20% of its charter capital.

Article 36.- Disclosure of information

1. At least 20 days before the initial sale of shares, the enterprise equitization steering committee shall disclose the following information at the enterprise and the auction place and on the mass media:

a/ Information on the equitized enterprise (including the determined enterprise value);

b/ Major contents of the approved equitization plan;

c/ Information relating to the share sale (including information on the initial sale of shares to strategic investors);

d/ The draft charter on the organization and operation of the joint-stock company, which has been elaborated in accordance with the Enterprise Law.

2. The Ministry of Finance shall issue specific regulations on information to be disclosed.

Article 37.- Selling prices of shares for initial sale

1. Selling price determined by the public auction method is the successful bid of each investor. By this method, investors shall purchase shares at their successful bids.

2. Preferential selling price is the price of shares sold to laborers in an equitized enterprise equal to 60% of the average successful bid mentioned in Clause 1 of this Article.

For enterprises meeting with special difficulties in deep-lying or remote areas, the preferential price of shares sold to their laborers may be lower as decided by the Prime Minister.

3. The selling price determined by the issuance underwriting or direct negotiation method is the price of shares sold to investors based on the results of negotiation between the enterprise equitization steering committee and the issuance underwriting organization or the price directly negotiated with investors. The selling price determined by the issuance underwriting or direct negotiation method must be at least equal to the average successful bid at a public auction stipulated in Clause 1 of this Article.

4. The price of shares sold to the trade union in an equitized enterprise is the preferential price applicable to laborers mentioned in Clause 2 of this Article.

Article 38.- Auction

1. Auction is applied in case of auction to the public regardless of institutional investors, individual investors, domestic investors and foreign investors.

2. Organization of public auction:

a/ Auction at an intermediary financial institution, if the quantity of shares on sale is valued at less than VND 10 billion.

If no intermediary financial institution accepts to hold an auction, the enterprise equitization steering committee shall directly hold the auction at the enterprise;

b/ Auction at the stock exchange or a securities trading center, if the quantity of shares on sale is valued at VND 10 billion or more;

If an equitized enterprise selling a quantity of shares valued at less than VND 10 billion wishes to have it auctioned at the stock exchange or a securities trading center, the equitization-deciding agency shall decide on this issue.

c/ The equitization-deciding agency shall decide to select the stock exchange or a securities trading center or hire an intermediary financial institution to conduct an auction; register the auction plan with the stock exchange or securities trading center, and at the same time report to the Ministry of Finance for decision the plan on auction on the securities market.

Article 39.- Process of organization of auction for initial sale of shares

1. Auction for the initial sale of shares shall be conducted in the following process:

a/ The authorized representative of the equitized enterprise signs an auction contract with the intermediary financial institution, the stock exchange or securities trading center;

b/ Disclosing information under the provisions of Article 36 of this Decree;

c/ Holding presentation sessions for investors (if any);

d/ The intermediary financial institution, the stock exchange or securities trading center holds the auction.

2. The Ministry of Finance shall issue specific regulations on the auction process and responsibilities of concerned agencies in conducting auction.

Article 40.- Handling of quantities of shares which investors refuse to purchase during the auction for initial sale of shares

1. If the investor offering a successful bid does not purchase or only purchases part of the quantity of shares he/she/it is entitled to purchase according to the announced auction result, he/she/it is not allowed to receive back an deposit amount in proportion to the quantity of share he/she/it refuses to purchase.

2. If the quantity of shares which investors refuse to purchase is less than 30% of the total quantity of shares on sale, the enterprise equitization steering committee shall consider and decide to further sell this quantity to investors that participated in the auction under Clause 3, Article 42 of this Decree.

3. If the quantity of shares which investors refuse to purchase is equal to or higher than 30% of the total quantity of shares on sale, the enterprise equitization steering committee shall hold an another auction for this quantity.

4. If there remain some shares unsold, the enterprise equitization steering committee shall report it to the equitization-deciding agency for handling under the provisions of Article 43 of this Decree.

Article 41.- Issuance underwriting

1. Issuance underwriting is applied in the case of initial sale of shares to a certain number of investors under certain committed conditions after a public auction is held under Clause 1, Article 38 of this Decree.

2. An issuance underwriting organization must meet the following conditions:

a/ Having a permit to underwrite issuance of shares granted by a competent state agency;

b/ Committing to sell out the underwritten quantity of shares. If failing to sell out, the issuance underwriting organization shall purchase all unsold shares at the underwritten price.

3. The obligations and powers of underwriting organizations comply with the law on securities and securities market and share issuance underwriting contracts signed between underwriting organizations and authorized representatives of equitized enterprises.

Article 42.- Direct negotiation

1. Direct negotiation is applied in the following cases:

a/ Sale to strategic investors after a public auction is held;

b/ Sale to investors that have participated in an auction and wish to purchase quantities of shares which other investors refuse to purchase.

2. Sale to strategic investors after a public auction has been held:

a/ The enterprise equitization steering committee shall select strategic investors according to criteria approved by competent authorities. If many investors are qualified as strategic investors, the enterprise equitization steering committee may select strategic investors based on their competitive bids;

b/ On the basis of results of selection of strategic investors, the enterprise equitization steering committee shall negotiate with strategic investors on the selling price of shares on the principle stipulated in Clause 3, Article 37 of this Decree;

c/ Strategic investors shall immediately pay a deposit equal to 10% of the value of purchased shares at the reserve price decided by the enterprise equitization steering committee. If refusing to purchase, investors are not allowed to receive back the deposited amount.

3. Sale to investors that have participated in an auction and wish to purchase quantities of shares which other investors refuse to purchase:

a/ The enterprise equitization steering committee and the share auction-conducting agency shall publicly announce the quantity of shares which investors refuse to purchase for investors that have participated in the auction to register for purchase of these shares;

b/ On the basis of the quantity of shares which investors have registered for purchase, the enterprise equitization steering committee shall consider and sell these shares in the order from the highest bid to the lowest bid on the principle stipulated in Clause 3, Article 37 of this Decree.

Article 43.- Handling of quantities of unsold shares

1. If the quantity of unsold shares is less than 50% of the total quantity of shares on sale (after subtracting the quantity of shares the issuance of which is underwritten), the size and structure of charter capital shall be adjusted (by increasing the contributed state capital amount at the enterprise) before transforming the enterprise into a joint-stock company.

2. If the quantity of unsold shares is equal to or higher than 50% of the total quantity of shares on sale (after subtracting the quantity of shares the issuance of which is underwritten), the equitization-deciding agency shall consider and reduce the reserve price (not lower than par value) and hold an another auction for this quantity.

3. If no investor registers for participation in the auction or there remain some shares unsold after the reserve price is reduced to be equal to the par value of shares, the equitization-deciding agency shall handle these unsold shares under the provisions of Clause 1 of this Article.

Article 44.- Time limit for completion of sale of shares

Within 3 months from the date of issuance of the decision approving the equitization plan, the enterprise must complete the sale of shares (including sale of shares by issuance underwriting and direct negotiation).

Article 45.- Management and use of proceeds from equitization

1. For the sale of state capital amounts in enterprises:

a/ The proceeds from the equitization of an enterprise shall be used to cover equitization expenses and benefits payable to laborers left redundant as a result of equitization according to the State's regulations and decisions of competent agencies. The remainder shall be handled under the provisions of Point c of this Clause;

b/ If the proceeds from the equitization of an enterprise is insufficient to pay benefits to redundant laborers according to regulations, it shall be added with:

- The enterprise reorganization assistance fund of the group, state corporation or parent company (in case of equitizing a member enterprise, subsidiary company or a dependent unit of a group, corporation or parent company). If this fund is still insufficient, additional amounts will be provided from the enterprise reorganization assistance fund of the State Capital Investment Corporation.

- The job loss allowance reserve fund of the independent state company or independent cost-accounting member company (in case of equitizing an enterprise section);

- The enterprise reorganization assistance fund of the State Capital Investment Corporation (in case of equitizing an independent state company, a limited liability company in which the State holds 100% of its charter capital under a ministry, ministerial-level agency, government-attached agency or People's Committee of a province or centrally run city; the whole state corporation, the whole group or parent company).

c/ The remaining proceeds from the sale of state capital amounts (including amounts earned from differences in the selling price of shares), after subtracting expenses mentioned at Point a of this Clause, shall be remitted to:

- The enterprise reorganization assistance fund of the group or corporation, in case of equitizing a member enterprise, subsidiary company or a dependent unit of a group or corporation;

- The enterprise reorganization assistance fund of the parent company, in case of equitizing a subsidiary company which is a limited liability with 100% of charter capital invested by the parent company, or equitizing a dependent cost-accounting unit of the parent company;

- The independent state company or the independent cost-accounting member enterprise, in case of equitizing a dependent cost-accounting unit of such enterprise;

- The enterprise reorganization assistance fund of the State Capital Investment Corporation, in case of equitizing the whole independent state company; the whole state corporation, the whole group or parent company organized and operating after the parent company-subsidiary company model, and a limited liability company in which the State holds 100% of its charter capital under a ministry, ministerial-level agency, government-attached agency or People's Committee of a province or centrally run city.

2. In case of additional issuance of shares to increase charter capital:

a/ Part of the proceeds from equitization shall be left at the enterprise in proportion to the quantity of additionally issued shares calculated based on par value; the surplus capital amount (difference between the proceeds from equitization and total par value of additionally issued shares) shall be used to cover equitization expenses and pay benefits to redundant laborers; any deficit shall be handled under Point b, Clause 1 of this Article;

b/ The remaining amount (if any) shall be left at the joint-stock company in proportion to the quantity of additionally issued shares in the charter capital structure. The rest shall be handled under Point c, Clause 1 of this Article. The Ministry of Finance shall guide the management and use of amounts left at joint-stock companies.

3. In case of sale of state capital amounts in combination with additional issuance of shares

a/ Part of the proceeds from equitization shall be left at the enterprise in proportion to the quantity of additionally issued shares calculated based on par value; the surplus capital amount shall be used to cover equitization expenses and pay benefits to redundant laborers; any deficit shall be handled under Point b, Clause 1 of this Article;

b/ The remaining amount (if any) shall be handled as follows:

- The value of state-held shares sold at par value shall be paid to beneficiary units under Point c, Clause 1 of this Article;

- The rest (if any) shall be distributed under Point b, Clause 2 of this Article.

4. Amounts collected from equitization and used to pay benefits to the equitized enterprise's redundant laborers shall be regarded as revenues of the enterprise reorganization assistance fund.

5. The equitization-deciding agency shall fully and promptly report on the management and use of amounts collected from equitization to the State Capital Investment Corporation for sum-up and reporting to the Ministry of Finance and the Prime Minister.

Article 46.- Management and use of the enterprise reorganization assistance fund

1. To set up an enterprise reorganization assistance fund under the State Capital Investment Corporation for the following purposes:

a/ Assisting enterprises undergoing reorganization and ownership transformation (including merger, consolidation, dissolution, bankruptcy, equitization, assignment, sale, conversion into one-member limited liability company, conversion into revenue-generating non-business unit, etc.) to realize policies toward redundant laborers and handle financial issues in accordance with law;

b/ Increasing the charter capital of the State Capital Investment Corporation as decided by the Prime Minister;

c/ Investing in important projects, including also infrastructure projects capable of capital recovery as decided by the Prime Minister.

2. Enterprise reorganization assistance funds at groups, state corporations and parent companies shall be used for:

a/ Assisting member enterprises or attached enterprise sections undergoing reorganization and ownership transformation (including merger, consolidation, dissolution, bankruptcy, equitization, assignment, sale, conversion into one-member limited liability company, conversion into revenue-generating non-business unit, etc.) to realize policies toward redundant laborers and handle financial issues in accordance with law;

b/ Increasing the charter capital as decided by competent authorities;

c/ Groups, state corporations and parent companies may invest the rest in enterprise development as decided by the Prime Minister.

3. The Prime Minister decides:

To set up and issue regulations on management and use of the enterprise reorganization assistance fund in the State Capital Investment Corporation; regulate the fund among groups and state corporations, including also State Capital Investment Corporation and parent companies; and invest in key projects of the State at the proposal of the Ministry of Finance.

4. The Ministry of Finance shall stipulate the mechanism of management and use of enterprise reorganization assistance funds at groups, state corporations and parent companies; supervise and monitor the management and use of revenues from equitization for supporting enterprise reorganization and development investment in accordance with law.

Article 47.- Charter of a joint-stock company

1. The charter of a joint-stock company shall be drafted and announced by the enterprise equitization steering committee to investors before the sale of shares. The draft charter must not be inconsistent with the Enterprise Law and relevant laws.

2. The charter of a joint-stock company will be adopted by the first general shareholders' meeting when it is approved with at least 65% of total votes of participating share-purchasing investors.

Article 48.- General shareholders' meetings and first-time business registration

1. Within 01 month after completing the sale of shares, the enterprise shall organize the first general shareholders' meeting to transform the equitized enterprise into a joint-stock company and make business registration in accordance with law.

A dossier of business registration must also contain the equitization-deciding agency's decision on transformation into a joint-stock company and the joint-stock company's charter with the signature of the joint-stock company's representative at law.

2. Within 15 working days after receiving the financial statement up to the time of official transformation into a joint-stock company, the agency competent to decide on enterprise value shall coordinate with the finance agency in checking and handling financial issues at the time of official transformation into a joint-stock company under the provisions of Article 21 of this Decree; re-determining the value of the state capital amount, revenues and expenses arising in the process of equitization and deciding on the adjustment of the state capital amount at the enterprise; organizing the delivery between the enterprise and the joint-stock company; and sending the re-determined value of the enterprise to the Ministry of Finance.

Article 49.- Appointment of representatives for state capital amounts in equitized enterprises

1. Groups, state corporations and parent companies shall appoint persons to act as representatives for state capital amounts in equitized enterprises which are their member units or attached enterprise sections, and take responsibility for discharging the rights and obligations of these representatives in accordance with law.

2. Ministries, ministerial-level agencies, government-attached agencies and People's Committees of provinces and centrally run cities shall:

- Report to the Prime Minister for decision the appointment of an ownership representative, in case of equitizing the whole group or state corporation;

- Decide to appoint an ownership representative for the state capital amount in the joint-stock company. For equitized enterprises with the ownership representative right of state capital amount to be transferred to the State Capital Investment Corporation, ministries, ministerial-level agencies, government-attached agencies or People's Committees of provinces and centrally run cities shall coordinate with the State Capital Investment Corporation in appointing ownership representatives for state capital amounts in enterprises.

3. Ownership representatives shall coordinate with the enterprise equitization steering committee and the State Capital Investment Corporation in organizing general shareholders' meetings and handling related issues before enterprises are transformed into joint-stock companies.

Article 50.- Post-equitization enterprises enjoy the following incentives:

1. To be exempt from registration fees for transferring the management and use of assets from the equitized enterprise to the joint-stock company.

2. To be exempt from the fee for the grant of a business registration certificate upon the transformation of an enterprise with 100% state capital into a joint-stock company.

3. To re-sign the contracts on lease of land, buildings and architectural objects of state agencies under similar terms as previously applied to pre-equitization enterprise or to have the pre-emptive right to purchase them at the market prices at the time of equitization to ensure stable production and business activities.

4. To enjoy the land use rights as prescribed by the land law.

5. To maintain and develop welfare funds in kind, such as cultural facilities, clubs, health stations, sanatoria and nurseries, to ensure welfare for laborers of joint-stock companies. These assets shall be placed under the laborers' collective ownership and the joint-stock companies' management.

Article 51.- Laborers in equitized enterprise enjoy the following incentives:

1. Laborers on the list of regular labors of the enterprise at the time of announcement of the value of the equitized enterprise may purchase no more than 100 shares per year of working in the state sector at the price stipulated in Clause 2, Article 37 of this Decree.

2. To receive a part of the cash balances of the reward and welfare funds (including the value of assets used in production and business which have been invested with the reward and welfare funds) as stipulated in Articles 14 and 19 of this Decree, for purchasing shares.

3. To continue participating in social insurance and enjoying social insurance benefits according to current regulations if they switch to work for the joint-stock company.

4. To enjoy the pension allowance and benefits according to current regulations if they are eligible therefor at the time of announcement of enterprise value.

5. If losing or giving up their jobs at the time of announcement of enterprise value, to be paid with job loss or job severance allowances in accordance with law.

Chapter VI

COMPLAINTS, DENUNCIATIONS AND HANDLING OF VIOLATIONS

Article 52.- Complaints, denunciations

1. The lodging and settlement of complaints and denunciations related to the equitization process comply with the provisions of this Decree and other provisions of law on complaints and denunciations.

2. Within the time limit for lodging complaints or denunciations, organizations and individuals shall still comply with administrative decisions already issued by competent state agencies. They shall comply with complaint or denunciation decisions issued by competent state agencies once these decisions become effective.

3. Ministries, ministerial-level agencies, government-attached agencies and People's Committees of provinces and centrally run cities shall receive written complaints and denunciations of organizations and individuals, settle them according to their respective competence and notify in writing complainants and denouncers thereof.

4. Within 30 days from the expiration of the time limit for settling complaints, if complaints are not settled, or from the date of receipt of the first-time settlement decision of a minister, the head of a ministerial-level agencies or government-attached agencies or the president of the People's Committee of a province or centrally run city, if the complainant disagree with that decision, he/she may initiate a lawsuit at the court in accordance with law.

Article 53.- Handling of violations in the course of equitization

1. Organizations and individuals that commit acts of violation of the provisions of this Decree and other provisions of law concerning equitization shall, depending on the nature and severity of their violations, be disciplined, administratively sanctioned or examined for penal liability; if causing damage, they shall pay compensations in accordance with law.

2. Those who abuse their positions and powers to obstruct the process of equitization; harass or trouble organizations and individuals in the equitization process; fail to settle promptly requests of organizations and individuals according to regulations; fail to perform other official duties prescribed by law shall, depending on the nature and severity of their violations, be disciplined or examined for penal liability.

3. Administrative violations shall be sanctioned in accordance with the provisions of law on handling of administrative violations and relevant laws such as laws on sanctioning of administrative violations in the accounting and securities domains.

Article 54.- Powers and responsibilities in the organization of equitization

1. The Prime Minister:

a/ To approve equitization plans of enterprises specified in Article 2 of this Decree;

b/ To approve equitization plans of groups, state corporations and several enterprises operating in special domains such as insurance, banking, telecommunications, aviation and exploitation of rare and precious minerals; decide on agencies to act as ownership representatives for state capital amounts in these enterprises;

c/ To authorize the management boards of groups and special state corporations established under Prime Minister decisions (see the appendix to the Government's Decree No. 86/2006/ND-CP of August21, 2006, amending and supplementing a number of articles of the Government's Decree No. 132/2005/ND-CP of October 20, 2005, on the exercise of the rights and performance of the obligations of the state-owner toward state companies) to decide on the announcement of the values of enterprises, approve equitization plans of member enterprises and attached enterprise sections. After issuing decisions, the management boards of economic groups or special state corporations shall report them to the Ministry of Finance for supervision and monitoring to ensure compliance with law.

2. Ministers, heads of ministerial-level agencies or government-attached agencies and presidents of People's Committees of provinces and centrally run cities shall base themselves on the state enterprise reorganization plan already approved by the Prime Minister:

a/ To set up enterprise equitization steering committees to assist them in performing equitization work under the provisions of this Decree;

b/ To instruct, supervise and monitor the process of equitization of units under their management regarding the contents stipulated in this Decree;

c/ To decide on the announcement of the values of enterprises and submit to the Prime Minister for approval equitization plans of enterprises specified at Point b, Clause 1 of this Article;

d/ To decide on the announcement of the values of enterprises and decide on equitization plans of these enterprises under their management, which are enclosed with the draft charters of joint-stock companies which have been elaborated in accordance with the Enterprise Law and relevant laws;

e/ To take the initiative in applying other measures, such as enterprise assignment, sale or bankruptcy, to enterprises which are on the list of to be-equitized enterprises but fail to satisfy required conditions;

f/ To reach agreement with the Debts and Assets Trading Company on the ownership transformation of loss-making state companies which have no more state capital for which the Company has settled all financial problems according to regulations;

g/ To approve financial settlement; equitization expense settlement; settlement of funds for redundant laborers; and settlement of the proceeds from equitization, and announce the actual values of state capital amounts at the time joint-stock companies are granted first-time business registration certificates;

h/ To settle problems, complaints and denunciations for equitized enterprises according to their competence within 15 days after receiving complete dossiers and written complaints and denunciations. To promptly report any problems, complaints and denunciations falling beyond their competence to the Prime Minister for consideration and decision;

i/ To report to the Prime Minister for consideration and decision agencies to act as ownership representatives for state capital amounts when equitizing groups and state corporations;

j/ For equitized enterprises with the ownership representative right of state capital amount to be transferred to the State Capital Investment Corporation, ministers, heads of ministerial-level agencies or government-attached agencies and presidents of People's Committees of provinces and centrally run cities shall reach agreement with the State Capital Investment Corporation on the selection of representatives for contributed state capital amounts in joint-stock companies and proceed with the delivery of the ownership representative right of state capital amounts in enterprises immediately after announcing the actual values of state capital amounts at the time the joint-stock companies are granted first-time business registration certificates.

3. The Management Boards of economic groups and state corporations stated at Point c, Clause 1 of this Article shall:

a/ Organize the implementation of equitization plans of enterprises in their groups or corporations according to the state enterprise reorganization scheme already approved by the Prime Minister;

b/ Set up enterprise equitization steering committees to assist the Management Boards of economic groups or state corporations in performing equitization work under the provisions of this Decree;

c/ Instruct, supervise and monitor the process of equitization of units under their management regarding the issues stipulated in this Decree;

d/ Direct member companies to handle financial matters under the provisions of Chapter II of this Decree, organize the valuation of enterprises, draw up equitization plans and submit them to the Management Boards of economic groups or state corporations for approval; implement the approved plans;

e/ Handle according to their competence financial problems of enterprises under their management;

f/ Decide on the announcement of enterprise values and approve equitization plans for member enterprises and enterprise sections in their groups or state corporations enclosed with the draft charters of joint-stock companies which have been elaborated in accordance with relevant laws;

g/ Direct member units to coordinate with concerned agencies in making financial settlement; equitization expense settlement; settlement of funds for redundant laborers; and settlement of the proceeds from equitization, and announce the actual values of state capital amounts at the time joint-stock companies are granted first-time business registration certificates.

4. Apart from the powers and responsibilities stipulated in Clause 3 of this Article, the Management Board of the State Capital Investment Corporation shall:

a/ Coordinate with ministries, branches and People's Committees of provinces and centrally run cities in:

- Organizing the equitization of enterprises transferred to it;

- Appointing representatives to manage state capital amounts in enterprises transferred to it;

- Supervising and urging enterprises to transfer the proceeds from equitization to the enterprise reorganization assistance fund at the State Capital Investment Corporation.

b/ Invest in projects as decided by the Prime Minister;

c/ Assist state enterprises, agricultural and forestry farms in rearranging and providing benefits to redundant laborers and handling financial problems;

d/ Periodically review and report to the Prime Minister and the Ministry of Finance on the management and use of the enterprise reorganization assistance fund.

5. Powers, responsibilities and composition of an enterprise equitization steering committee:

a/ An enterprise equitization steering committee has the following powers and responsibilities:

- To assist the equitization-deciding agency in directing and organizing the equitization of one or several enterprises under the provisions of this Decree;

- To use the seal of a competent agency in performing its duties;

- To set up a working team to carry out equitization work at enterprises;

- To report to the equitization-deciding agency for selection of the method of initial sale of shares;

- To direct the elaboration of the equitization plan and the first draft charter of the joint-stock company;

- To verify and submit to a competent agency for decision and announcement the enterprise value and for decision and approval the equitization plan;

- To direct the equitized enterprise to cooperate with intermediary financial institutions in holding auctions for shares;

- To sum up and report to a competent agency on the share auction results;

- To sum up and submit to a competent agency for decision adjustments to the equitization plan and for decision adjustments to the enterprise value after the enterprise is transformed into a joint-stock company;

- To examine, select, propose and coordinate with competent agencies in appointing representatives for state capital amounts in equitized enterprises.

b/ The composition of an enterprise equitization steering committee shall be decided by ministers, heads of ministerial-level agencies or government-attached agencies, presidents of People's Committees of provinces and centrally run cities and Management Boards of groups or state corporations;

For equitized enterprises with the ownership representative right of state capital amount to be transferred to the State Capital Investment Corporation, the enterprise equitization steering committee must have a representative of the Corporation.

6. The trade union at an equitized enterprise shall coordinate with the enterprise equitization steering committee in:

a/ Propagating and mobilizing cadres, employees and workers in the equitized enterprise to implement the State's equitization policy;

b/ Participating in supervising the equitization process in the enterprise;

c/ Appointing representatives for the capital amount of the trade union to stand for election to the Management Board and the Control Commission of the joint-stock company in accordance with law;

d/ Using the lawful fund of the trade union to purchase shares of the enterprise and distribute earnings to laborers.

Article 55.- Reporting regime and supervision and monitoring

1. Ministers, heads of ministerial-level agencies or government-attached agencies, presidents of People's Committees of provinces and centrally run cities and Management Boards of economic groups and state corporations shall promptly report to the Enterprise Renewal and Development Steering Committee, the Finance Ministry, on equitization-related issues: results of handling of financial problems, evaluation results, decision on the announcement of enterprise values and adjustment of enterprise value, equitization plan, results of sale of shares, settlement of equitization expenses, and settlement of the delivery from state enterprise to joint-stock company.

The Ministry of Finance shall provide specific guidance on the reporting regime stipulated in this Clause.

2. The Ministry of Finance shall supervise, monitor and urge ministries, ministerial-level agencies, government-attached agencies, People's Committees of provinces and centrally run cities and economic groups and state corporations to perform equitization work according to the state enterprise reorganization scheme already approved by the Prime Minister in accordance with law; and send periodical reports to the Prime Minister on the situation and results of enterprise equitization.

Article 56.- Implementation provisions

1. This Decree takes effect 15 days after its publication in "CONG BAO" and replaces the Government's Decree No. 187/2004/ND-CP of November 16, 2004, on transformation of state companies into joint-stock companies. All earlier regulations on equitization contrary to this Decree cease to be effective.

2. Enterprises which have obtained competent authorities' decisions approving their equitization plans before the effective date of this Decree continue implementing the approved plans and the provisions of this Decree.

3. Enterprises which have made business registration for transformation into joint-stock companies before the effective date of this Decree continue enjoying incentives stipulated by relevant laws.

4. Equitization of state-owned commercial banks complies with the provisions of this Decree, relevant regulations on banking management, and specific contents of each equitization scheme already approved by the Prime Minister.

Article 57.- The Ministry of Finance, the Ministry of Labor, War Invalids and Social Affairs, the State Bank of Vietnam, the Ministry of Natural Resources and Environment, the Ministry of Planning and Investment, the Vietnam Social Insurance and other concerned agencies shall guide the implementation of this Decree.

Article 58.- Ministers, heads of ministerial-level agencies or government-attached agencies, presidents of provincial/municipal People's Committees, Management Boards of economic groups and state corporations established under decisions of the Prime Minister shall implement this Decree.