Directive No. 03/2003/CT-BXD on Rectifying and Promoting the Work of Corporate Shareholding Reform for State-Owned Enterprises.

DIRECTIVE

Regarding the rectification and acceleration of the process of equitization

of state-owned enterprises

Implementing the Resolution of the Central Committee's Third Plenum of the Ninth Congress on continuing to reorganize, renew, develop, and enhance the efficiency of state-owned enterprises, the Ministry of Construction has developed an overall plan for the reorganization and renewal of State-owned corporations and state-owned enterprises under the Ministry of Construction for the period of 2002-2005, which has been approved by the Prime Minister. In this plan, the schedule for the equitization of state-owned enterprises and parts of state-owned enterprises must be implemented urgently, firmly, and effectively.

Based on the results of equitization in 2002 and the first quarter of 2003, there still exist some issues that need to be addressed and resolved promptly, such as: the coordination between state management agencies and state-owned corporations and independent companies managed by the Ministry in implementing the equitization process is insufficient; guidance to resolve difficulties faced by state-owned enterprises has not been timely; handling of overdue debts, surplus labor, joint venture capital contributions, and inefficiently invested assets has been inadequate. The boards of directors of some state-owned corporations have lacked initiative and urgency in guiding and instructing member enterprises to develop plans and schemes for equitization; some corporations have been hesitant in determining enterprise value, registered capital, and developing equitization schemes, leading to delays in implementing the steps of the equitization process.

To rectify and accelerate the equitization process of state-owned enterprises, ensuring the goals and plans for equitization in 2003 and subsequent years, the Minister of Construction requests the Chairmen of the Boards of Directors, General Directors of state-owned corporations, and Directors of independent enterprises managed by the Ministry:

1. Based on the number of enterprises and parts of enterprises to be equitized as announced by the Ministry, develop plans to implement the steps of the equitization process monthly and quarterly, ensuring that by November 30 at the latest, the enterprise value, the value of the state-owned portion in the enterprise or part of the enterprise to be equitized, and the approval of the labor restructuring plan of the enterprise will be completed, and by January 31 of the following year, the joint-stock company will officially commence operations according to the Enterprise Law.

2. Do not proceed with the equitization of enterprises and parts of enterprises entrusted with the management of raw material mines for construction materials production.

3. For enterprises listed for equitization in the year but experiencing severe financial imbalance and prolonged losses making equitization unfeasible, immediately adopt alternative restructuring methods while selecting other enterprises and parts of enterprises meeting the conditions for equitization in the year to replace them.

4. Strictly direct the implementation of the steps of the equitization process:

4.1. Direct enterprises and parts of enterprises selected for equitization in the year to complete financial reports up to the end of the year (the valuation point of the enterprise), including asset inventory, classification, liabilities, and various funds. Work with tax authorities to request audits of the previous year's tax settlements for these enterprises. Proactively review the financial situation, particularly focusing on classifying, verifying, and confirming liabilities, urging payment of debts, and taking measures or recommending measures to handle unrecoverable debts before preparing the enterprise valuation documentation.

4.2. Regarding the determination of enterprise value for equitization:

- The Chairman of the Board of Directors of state-owned corporations under the Ministry shall organize and direct the determination of enterprise value and the value of the state-owned portion in the enterprise, and bear responsibility before the Minister and the law for the transparency and accuracy of the valuation documentation and data.

When determining enterprise value, attention should be paid to factors affecting tangible and intangible actual value, such as rapid depreciation of fixed assets, land use rights value, advantages of real estate, business advantages, enterprise brand value, etc. If unrecoverable debts are deducted from the state-owned portion in the enterprise, it must ensure compliance with regulations and sufficient legal procedures.

In the report submitted to the Ministry regarding the determination of enterprise value, the enterprise or part of the enterprise must clearly explain the situation of factories, land, etc., currently being managed and used.

- The result of the determination of enterprise value for equitization, the Chairman of the Board of Directors of state-owned corporations under the Ministry shall submit to the Minister for approval.

4.3. Regarding the equitization scheme:

- The Chairman of the Board of Directors of state-owned corporations under the Ministry shall organize and direct the development of the equitization scheme and labor restructuring plan within the enterprise, and bear responsibility for the accuracy of the documentation before submitting it to the Ministry for review and approval.

- When developing the equitization scheme, particular attention should be given to the registered capital value held by the corporation or company, including the tangible value of assets and money, and the intangible value of the enterprise (geographical location, enterprise reputation, product monopoly characteristics, design, brand, etc.), so that when selling shares of the equitized enterprise, in addition to holding controlling shares (51% of the registered capital), the corporation or company can also raise additional capital from the sale of shares of the equitized enterprise to supplement its own capital;

In cases where all the above factors have been adequately considered, but the value of the enterprise held by the corporation or company is not large, then the value of the controlling share (51% of the registered capital) should not exceed the value of the enterprise held by the corporation or company; Additional investment to increase the registered capital of the joint-stock company should not be made (except in cases where the equitized enterprise is implementing an investment project, which will be determined specifically).

- When developing a labor adjustment plan, it must ensure the maximum utilization of existing labor in the enterprise being corporatized, with plans for arranging, adjusting, and mobilizing surplus labor within the Holding Company to minimize the generation of surplus labor during corporatization; at the same time, there is a responsibility to supplement capital to support the resolution of surplus labor. The labor adjustment plan and the list of surplus labor must be publicly announced throughout the unit.

- The development of the corporatization plan should be carried out concurrently with determining the value of the enterprise so that when the decision on approving the value of the corporatized enterprise is made, the corporatization plan can be submitted immediately, ensuring that the corporatization process is completed on schedule and achieves effectiveness.

4.4. On selling shares:

- The sale of shares must be conducted openly and transparently; priority must be given to selling shares to employees of the corporatized enterprise first and then to employees of member enterprises under the Holding Company.

- Measures must be taken to ensure the rights of employees in the corporatized enterprise purchasing preferential shares; at the same time, prevent the transfer of preferential shares at a discount by employees before the stipulated period has elapsed.

4.5. On the Founding Shareholders' Meeting:

- The Founding Shareholders' Meeting shall only be held when the share sales ratio reaches and exceeds the ratio specified in the Corporate Charter.

- The Founding Shareholders' Meeting may only be organized when the number of shareholders attending the meeting represents the required ratio as stipulated by the Enterprise Law and the Corporate Charter. Representatives attending the Founding Shareholders' Meeting must own or represent the number of shares as prescribed in the Charter.

4.6. On business registration:

Within fifteen days from the date of the Founding Shareholders' Meeting, the Chairman of the Board of Directors of the Holding Company, and the director of independent companies under the Ministry shall promptly facilitate the official business registration for the joint-stock company to commence operations in accordance with the Enterprise Law.

4.7. On transferring the enterprise:

After business registration, the Chairman of the Board of Directors of the Holding Company, and the director of independent companies under the Ministry must urgently complete the necessary documentation for transferring to the Board of Directors of the joint-stock company: labor force, assets, capital (at the time of transfer); shareholder lists and all related documents concerning the transfer of state-owned enterprises or parts thereof to the joint-stock company.

4.8. On reporting procedures:

Monthly, the Chairmen of the Boards of Directors of the Holding Companies and directors of independent companies under the Ministry's management must report to the Ministry on the implementation of each step of the corporatization process for member enterprises and subordinate units.

The Steering Committee for Enterprise Reform and Development of the Ministry of Construction is responsible for directing, guiding, urging, inspecting, and compiling information on the implementation of corporatization by Holding Companies and independent companies under the Ministry's management. Propose measures for implementing corporatization to report to the Ministry for timely handling./.