Decree No. 04/2024/NĐ-CP amending and supplementing certain Articles of Decree No. 118/2014/NĐ-CP dated December 17, 2014 of the Government on the reorganization, renovation, and development to enhance the operational efficiency of agricultural and forestry companies.

DECREE

AMENDING AND SUPPLEMENTING CERTAIN PROVISIONS OF THE GOVERNMENTAL DECREE NO. 118/2014/ND-CP

DATED DECEMBER 17, 2014 ON REORGANIZATION, MODERNIZATION AND DEVELOPMENT TO IMPROVE THE EFFICIENCY OF OPERATIONS OF AGRICULTURAL AND FORESTRY COMPANIES

DEVELOPMENT AND ENHANCEMENT OF THE EFFECTIVENESS OF THE OPERATIONS OF AGRICULTURAL AND FORESTRY ENTERPRISES

Pursuant to the Law on Organization of the Government dated June 19, 2015; the Law Amending and Supplementing Certain Provisions of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;

The Government issues this Decree on management and development of industrial clusters.

Pursuant to the Law on Management and Use of State Capital for Investment in Production and Business Activities at Enterprises dated November 26, 2014;

Pursuant to the State Budget Law dated June 25, 2015;

Pursuant to the Forestry Law dated November 15, 2017;

Pursuant to the Law on Enterprises dated June 17, 2020;

At the proposal of the Minister of Agriculture and Rural Development;

The Government promulgates this Decree amending and supplementing certain provisions of the Governmental Decree No. 118/2014/ND-CP dated December 17, 2014 on reorganization, modernization and development to improve the efficiency of operations of agricultural and forestry companies.

Article 1. Amending and supplementing certain provisions of the Governmental Decree No. 118/2014/ND-CP dated December 17, 2014 on reorganization, modernization and development to improve the efficiency of operations of agricultural and forestry companies

1. Amending and supplementing Clause 1 of Article 5 as follows:

"1. Convert state-owned agricultural enterprises holding 100% of the charter capital into joint-stock companies, with the state holding controlling shares of over 50% of the charter capital for agricultural enterprises having land use plans of 500 hectares or more."

2. Amending and supplementing Article 6 as follows:

"Article 6. Converting state-owned agricultural enterprises holding 100% of the charter capital into limited liability companies with two or more shareholders

1. State-owned agricultural companies holding 100% of charter capital may be converted into limited liability companies with two or more members when meeting the following conditions:

a) Having production and processing plans applying high technology, meeting domestic and international market demands according to the following criteria:

- Applying high technologies listed in the priority investment development catalog under the laws on high technology for agricultural product production;

 - Implementing environmentally friendly measures and energy-saving practices in production and managing the quality of agricultural products to meet Vietnamese technical standards and regulations; in cases where such standards and regulations do not exist, applying international industry standards;

b) Remaining state capital after financial treatment and revaluation of enterprise value.

2. Forms of conversion and state control rights

a) Form of conversion: Selling part of the current state-owned capital in a single-member limited liability company held by the state with 100% of the charter capital to investors and converting it into a limited liability company with two or more shareholders in accordance with Clause 2 of Article 33 of the Governmental Decree No. 23/2022/ND-CP dated April 5, 2022 on establishment, restructuring, ownership transfer, and transfer of representative rights of state-owned enterprises holding 100% of the charter capital (hereinafter referred to as Decree No. 23/2022/ND-CP).

b) State control: The state holds controlling equity in agricultural enterprises with land use plans of 1,000 hectares or more.

3. Selected investors must meet the following conditions:

Subpoint a. Having legal personality in accordance with the law;

b) Having minimum net assets twice the amount of the charter capital proposed for the establishment of a limited liability company with two or more shareholders;

c) Having positive financial results in the three most recent years up to the time of registration for participation in capital contribution or purchase of state-owned shares;

d) Committing in writing when registering to become a member of a limited liability company with two or more members, including the following contents:

- Maintaining the main business activities of the enterprise for at least three years from the date the limited liability company with two or more shareholders first obtains its Enterprise Registration Certificate under the Enterprise Law;

- Not transferring equity shares within five years from the date the limited liability company with two or more shareholders first obtains its Enterprise Registration Certificate under the Enterprise Law;

- Plans to support enterprises after establishing a limited liability company with two or more shareholders in technology transfer, human resource training, financial capacity enhancement, corporate management improvement, supply of raw materials, and market development for products;

- Obligations to compensate for breaches of commitments signed, with compensation amounts determined based on actual losses and the state's right to dispose of all investor equity when commitments are breached;

- Other commitments (if any).

Commitments at point d of this clause are part of the mandatory content of the share transfer contract.

4. Principles of conversion, contents of conversion plans, responsibilities for implementing conversion, management and use of proceeds from converting wholly state-owned forestry companies into limited liability companies with two or more shareholders shall be carried out in accordance with Articles 34, 35, 36, and 38 of Decree No. 23/2022/ND-CP."

"7. Directing, inspecting, and guiding the police at the commune level on registration and management of residence; guiding registration to ensure community reintegration for individuals who have completed serving prison sentences and reside in the locality; managing, operating, and utilizing the Database on Residence."

"1. Convert state-owned forestry enterprises holding 100% of the charter capital into joint-stock companies; the state holds controlling shares of over 50% of the charter capital for forestry enterprises with land use plans of 1,000 hectares or more."

4. Amend and supplement Article 10 as follows:

"Article 10. Transfer state-owned forestry companies holding 100% charter capital to joint-stock companies with two or more shareholders

1. State-owned forestry companies holding 100% of charter capital may be converted into limited liability companies with two or more members when meeting the following conditions:

a) Having production and processing plans applying high technology, meeting domestic and international market demands according to the following criteria:

- Applying high technologies listed in the priority investment development catalog under the laws on high technology for agricultural product production;

- Apply environmentally friendly measures and energy-saving practices in production and manage the quality of agricultural products to meet Vietnamese technical standards and regulations; in cases where there are no Vietnamese technical standards and regulations, apply international specialized organization standards.

b) Remaining state capital after financial treatment and revaluation of enterprise value.

2. Forms of conversion and state control rights

a) Form of conversion: Sell part of the state-owned shares currently held in a single-member limited liability company to investors and convert it into a joint-stock company with two or more shareholders according to Clause 2, Article 33 of Decree No. 23/2022/NĐ-CP.

b) State control rights: The state holds controlling equity in forestry companies with land usage plans of 1,000 hectares or more.

3. Selected investors must meet the following conditions:

Subpoint a. Having legal personality in accordance with the law;

b) Having minimum net assets twice the amount of the charter capital proposed for the establishment of a limited liability company with two or more shareholders;

c) Having positive financial results in the three most recent years up to the time of registration for participation in capital contribution or purchase of state-owned shares;

d) Committing in writing when registering to become a member of a limited liability company with two or more members, including the following contents:

- Maintaining the main business activities of the enterprise for at least three years from the date the limited liability company with two or more shareholders first obtains its Enterprise Registration Certificate under the Enterprise Law;

- Not transferring equity shares within five years from the date the limited liability company with two or more shareholders first obtains its Enterprise Registration Certificate under the Enterprise Law;

- Plans to support enterprises after establishing a limited liability company with two or more shareholders in technology transfer, human resource training, financial capacity enhancement, corporate management improvement, supply of raw materials, and market development for products;

- Obligations to compensate for breaches of commitments signed, with compensation amounts determined based on actual losses and the state's right to dispose of all investor equity when commitments are breached;

- Other commitments (if any).

Commitments at point d of this clause are part of the mandatory content of the share transfer contract.

4. Principles for conversion, contents of the conversion plan, responsibilities for implementing the conversion, management and use of proceeds from converting state-owned forestry companies into joint-stock companies with two or more shareholders shall be carried out in accordance with Articles 34, 35, 36, and 38 of Decree No. 23/2022/NĐ-CP.

5. Amend and supplement some clauses of Article 19 as follows:

a) Amend and supplement Clause 4 as follows:

"4. Continue transferring infrastructure (transportation roads, power systems, irrigation works, and other welfare facilities) of agricultural and forestry companies to local management. In special cases (kindergartens, primary schools, health centers), if necessary, they need to be retained to serve the production and business activities of the company, then the revenues collected by these facilities and the expenses for their operations (including depreciation costs of fixed assets) shall be determined as business income, expenses, revenue, and other items for tax purposes in accordance with the laws on corporate income tax."

b) Supplement Clause 8 as follows:

"8. Transfer land and property on land to local management.

a) Transfer land and assets on the land to local authorities:

- Transfer the original land management files and assets on the land according to the inventory data at the time of transfer;

- Enterprises transfer assets on the land in their original condition when transferring to local authorities;

b) Principles for determining the value of assets on the reclaimed land area when the locality transfers or leases the land to organizations, households, or individuals:

- When allocating land for lease to organizations, households, or individuals for areas that have been reclaimed, the provincial People's Committee shall instruct relevant agencies to recover the investment capital of agricultural and forestry companies for property on this area to pay to the agricultural and forestry companies transferring property;

- The value of assets on the land is determined based on the market price at the time of transfer as the basis for recovering the state's invested capital;

- For property formed from state budget funds, increase the capital for the recipient and decrease the capital for the giver when the recipient is an organization or enterprise. If the recipient is not an organization or enterprise, the receiving locality must transfer the property to appropriate agencies or units for management and use in accordance with the laws on public asset management and accounting;

- The difference between the value recovered and the book value of agricultural and forestry companies shall be recorded as an increase or decrease in state capital.

c) The recovery and transfer of land and property on land to local management shall be prioritized in accordance with Article 15 of this Decree."

6. Amend and supplement Point b of Clause 2 of Article 21 as follows:

"b) The source of funding for resolving surplus labor issues shall be implemented in accordance with Decree No. 97/2022/NĐ-CP dated November 29, 2022 of the Government on policies for surplus workers when ownership is transferred and restructured in single-member limited liability companies with 100% state capital. In cases where agricultural and forestry companies with 100% state capital are restructured through maintenance, consolidation, and development approved by competent authorities, the source of funding for resolving surplus worker policies shall be implemented in accordance with Decree No. 148/2021/NĐ-CP dated December 31, 2021 of the Government on managing and using proceeds from ownership transfers of state enterprises and public institutions, proceeds from transferring state capital, and excess capital over charter capital in enterprises."

7. Supplement Clause 7 of Article 23 as follows:

"7. Regulations on state budget support for insolvent agricultural and forestry companies; criteria for additional charter capital for agricultural and forestry companies that are single-member limited liability companies with 100% state capital shall be studied and submitted for approval by the competent authority by the Ministry of Finance in coordination with the Ministry of Agriculture and Rural Development and related ministries and sectors."

8. Supplement Clause 3 of Article 26 as follows:

"3. Merger and consolidation of agricultural and forestry companies: State-owned agricultural and forestry companies with 100% charter capital located in the same province or centrally-administered city or under the same owner are permitted to merge or consolidate. The merger and consolidation of agricultural and forestry companies shall be carried out in accordance with Articles 13, 14, 15, 16, 17, 19, and 20 of Decree No. 23/2022/NĐ-CP. After merging and consolidating, these companies must continue to be restructured, renewed, and developed in accordance with the laws on restructuring, renewal, and improving the efficiency of agricultural and forestry companies."

Article 2. Repeal Clause 2, Clause 3 of Article 2 and Clause 5 of Article 23 of Decree No. 118/2014/NĐ-CP dated December 17, 2014 of the Government on restructuring, renewal, and development to improve the efficiency of agricultural and forestry companies.

Article 3. Effectiveness

1. This Decree takes effect from March 1, 2024.

2. Transitional provisions:

a) Agricultural and forestry companies that have completed restructuring and renewal but still operate inefficiently and require further restructuring and renewal shall implement in accordance with Decree No. 118/2014/NĐ-CP dated December 17, 2014 of the Government on restructuring, renewal, and development to improve the efficiency of agricultural and forestry companies and the provisions of this Decree.

b) For agricultural and forestry companies that have not completed restructuring and renewal before the effective date of this Decree, if their restructuring and renewal plans have been approved by the Prime Minister and comply with the provisions of this Decree, they shall continue to implement the approved plan.

3. In cases where normative legal documents cited in this Decree are amended, supplemented, or replaced by other documents, the amended, supplemented, or replacing documents shall be applied.

Article 4. Responsibilities for Implementation

The Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of provincial People's Committees under the central government shall be responsible for guiding the implementation of this Decree.