Circular No. 104/1998/TT-BTC guides financial matters when converting state-owned enterprises into joint-stock companies (in accordance with Decree No. 44/1998/NĐ-CP dated June 29, 1998).

CIRCULAR

Guidelines on financial matters when converting state-owned enterprises into joint-stock companies
Regarding financial issues when converting state-owned enterprises into joint-stock companies

(Pursuant to Decree No. 44/1998/NĐ-CP dated June 29, 1998)

Implementing Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government on converting state-owned enterprises into joint-stock companies; the Ministry of Finance provides guidelines on financial matters as follows:

 

PART I
GENERAL PROVISIONS

Article 1. The subjects of this Circular are state-owned enterprises subject to equitization as specified in the Appendix on classification of state-owned enterprises attached to Article 1 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government.

Article 2. The terms used in this Circular shall be understood as follows:

2.1. Joint-stock company: is a business entity where shareholders contribute capital, participate in management, share profits, and bear risks corresponding to their contributed capital.

2.2. Share: is the authorized capital of a joint-stock company divided into equal parts.

2.3. Shareholder: are individuals or legal entities owning shares of a joint-stock company.

2.4. Share certificate: is a type of negotiable instrument issued by a joint-stock company to confirm ownership of shares by shareholders.

2.5. Authorized capital of a joint-stock company: is the total amount of capital contributed by shareholders and recorded in the company's charter.

2.6. Book value of the enterprise: is the total asset value reflected in the Balance Sheet of the enterprise according to the current accounting regulations.

2.7. Actual value of the enterprise: is the total actual value of assets (tangible and intangible) owned by the enterprise calculated at market prices at the time of determining the enterprise's value.

2.8. Book value of State capital at the enterprise: is the remaining amount after deducting liabilities, welfare fund balances, and bonus fund balances (if any) from the total asset value reflected in the Balance Sheet at the time of determining the enterprise's value.

2.9. Actual value of State capital at the enterprise: is the remaining amount after deducting actual liabilities, welfare fund balances, and bonus fund balances (if any) from the total actual value of the enterprise.

2.10. Dividend: is a portion of the post-tax profit of a joint-stock company distributed to shareholders.

2.11. Business advantage value of the enterprise: is the additional value created by factors such as geographical location and product reputation.

2.12. Controlling shares of the State: are types of shares meeting one of the following conditions:

Shares of the State account for more than 50% (fifty percent) of the total number of shares of the Company;

Shares of the State are at least twice the number of shares of the largest shareholder other than the State in the Company.

2.13. Special shares of the State: are shares of the State in the Company where the State does not have controlling shares but has the right to decide on certain important issues of the Company as stipulated in the Charter of the joint-stock company.

2.14. Proceeds from selling shares: is the amount of money received after selling shares of a joint-stock company.

2.15. Proceeds from selling State shares: is the actual value of State capital at the enterprise minus the value of State shares contributed to the Company.

The actual proceeds from selling State shares are the proceeds from selling State shares minus the costs of equitization and benefits for employees in the enterprise.

2.16. Costs of equitization: are actual necessary expenses required to convert a state-owned enterprise into a joint-stock company.

2.17. Direct management body of the equitized enterprise is:

The Ministry managing the industry (if it is an independent enterprise managed by a Ministry or sector);

People's Committee of province or city (if it is an independent enterprise managed by the People's Committee of province or city);

Board of Directors of State Corporation (if it is a member enterprise of State Corporation);

General Director of an independent enterprise (if it is a part of an independent enterprise separated for equitization).

2.18. Direct manager of State capital: is the person appointed directly by the competent State authority to manage State capital at the joint-stock company.

2.19. Time of equitization: is the date recorded in the decision of the competent State authority transferring the state-owned enterprise into a joint-stock company.

Article 3. After the state-owned enterprise is converted into a joint-stock company, the joint-stock company inherits all rights and fulfills all obligations of the state-owned enterprise.

Article 4. Forms of equitization

Depending on specific circumstances and requirements, state-owned enterprises may choose and apply one of the four forms of equitization below:

4.1. Maintaining the existing value of State capital at the enterprise, issuing shares, attracting additional capital for development. Under this form, the value of State shares contributed to the company equals the actual value of State capital at the enterprise minus equitization costs, employee benefits, and the value of installment payments for poor employees as prescribed by the State.

4.2. Selling part of the existing value of State capital at the enterprise. Under this form, the State uses part of the actual value of State capital at the enterprise to sell to shareholders.

4.3. Separating a part of the enterprise for equitization. Under this form, a part of the enterprise can operate independently and separately record asset values, which can be separated for equitization (production workshops, stores, service units...).

4.4. Selling the entire value of State capital at the enterprise to become a joint-stock company. Under this form, the State does not participate in shares of the joint-stock company.

 

PART TWO
SPECIFIC PROVISIONS

Chapter I. RIGHT TO PURCHASE SHARES FOR THE FIRST TIME

When a state-owned enterprise is converted into a joint-stock company, the right to purchase shares for the first time is regulated in Article 8 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government, as follows:

1. In enterprises where the State holds controlling shares or special shares, each legal entity may purchase no more than 10%, and each individual may purchase no more than 5% of the total number of shares of the enterprise.

2. In enterprises where the State does not hold controlling shares or special shares, each legal entity may purchase no more than 20%, and each individual may purchase no more than 10% of the total number of shares of the enterprise.

3. For enterprises where the State does not participate in shareholding, there shall be no restriction on legal entities or individuals purchasing shares, but they must meet the number of shareholders as stipulated by the Law on Enterprises.

4. Prior to being listed as a joint-stock company, state-owned enterprises that have borrowed capital from employees for production and business purposes may convert part or all of the loaned capital into share purchase capital if requested.

Thirty days after the commencement of share sales, if the actual number of shares sold is insufficient compared to the approved plan and individual and legal entities wish to purchase more shares than the prescribed limit, upon request from the enterprise undergoing shareholding reform, the authority responsible for shareholding reform will consider adjusting the right to purchase shares accordingly, provided it aligns with the situation of the enterprise. In cases where the State retains controlling shares, such adjustments shall not affect the State's controlling stake.

 

 

II. DETERMINATION OF ENTERPRISE VALUE

1. Principles of determination: As specified in Article 11 and Article 12 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government.

2. Inventory of assets owned by the enterprise.

The inventory of assets owned by the enterprise must include: current and short-term investment assets, fixed and long-term investment assets reflected in the balance sheet under the current accounting regulations.

Leased assets, materials, goods received for storage, processing, selling on behalf of others, and consigned items should be inventoried separately.

2.1. Asset inventory must comply with the following requirements:

2.1.1. Determine the actual quantity of assets present at the time of determining the enterprise value.

2.1.2. Categorize the existing assets owned by the enterprise:

Assets that the enterprise intends to continue using shall be assessed based on technical specifications and the current condition of each asset, type, or group of assets to determine their remaining quality. Remaining quality is expressed as a percentage relative to the quality of newly purchased or constructed assets.

Non-useful assets include those that are unnecessary or incapable of being restored for production and business activities, which should be reported separately for appropriate handling measures.

Assets formed from reward and welfare funds (if any) need to be inventoried separately for management and use by the joint-stock company. 2.1.3. Identify missing assets compared to records (if any).

2.1.4. Reconcile and categorize receivables and payables.

Difficult-to-collect receivables must be supported by valid evidence, specifically:

Debts not acknowledged by the debtor;

Legal entities as debtors that have been dissolved or declared bankrupt;

Individuals as debtors who have died, disappeared, or have no heirs responsible for debts;

Other difficult-to-collect debts due to other reasons.

2.2. Organization of asset inventory

The General Director of the state-owned enterprise undergoing shareholding reform must establish a Council to conduct the asset inventory according to the above requirements. Members of the inventory council include:

The General Director of the state-owned enterprise implementing shareholding reform serves as the Chairman of the Council;

The Chief Accountant is a member of the Council;

The Head of the Technical Department is a member of the Council;

Additionally, depending on specific circumstances, the General Director may invite technical experts familiar with the functions and quality of the assets to join the asset inventory council.

3. Handling of assets and receivables before shareholding reform

3.1. The following assets shall not be included in the enterprise value for shareholding reform:

3.1.1. Assets that the enterprise cannot continue to use and have been reflected in financial reports prior to the valuation date can be handled through one of the following methods:

The direct management agency of the enterprise reallocates them to other enterprises within its jurisdiction;

Organize public auction (or liquidation); Proceeds from the auction (or liquidation) after deducting (-) auction (or liquidation) costs, if incurred before the shareholding reform, shall be included in the enterprise value, while proceeds after the shareholding reform must be deposited into the corresponding account as stipulated in Point 2, Section V of this Circular;

If these assets are not auctioned (or liquidated) when transferring the state-owned enterprise to a joint-stock company, the shareholding reform decision-making body shall entrust the joint-stock company to manage them on its behalf. Within ninety days from the shareholding reform date, the shareholding reform decision-making body must organize the auction (or liquidation) to recover capital. The sale of assets shall be conducted in accordance with current regulations.

3.1.2. Difficult-to-collect receivables as specified in Point 2.1.4 of this section.

3.1.3. Uncompleted construction costs of projects suspended before the valuation date.

3.1.4. Long-term investments and other enterprises that the enterprise does not intend to list for shareholding reform, the shareholding reform decision-making body shall handle.

3.1.5. Financial lease assets: the portion of unpaid debt to the asset owner.

3.1.6. Leased assets: If the lessor agrees to sell and the lessee agrees to buy the leased asset, the lessee is responsible for paying according to the agreed price. If the lessor is a state-owned enterprise under the same direct management agency and agrees to transfer the asset to the joint-stock company, the direct management agency of the enterprise decides to reallocate the asset to the lessee, the transferring party reduces its capital, and the receiving party increases its capital. The receiving party (joint-stock company) must revalue the asset and include it in the enterprise value.

If the joint-stock company lessee invests, improves, and upgrades the leased asset, the remaining value of the investment, improvement, and upgrade shall be handled as follows:

If the lessor enterprise returns the asset, this enterprise shall repay the joint-stock lessee the investment value. If the lessor state-owned enterprise agrees to return the asset along with the investment value, both parties may transfer the investment value and record it according to the above principles;

If the joint-stock company continues to lease the asset, the investment cost for improvement and upgrade shall be included in the enterprise value.

3.1.7. Assets formed from reward and welfare funds (if any).

3.2. For assets under management and use but whose owners have not been identified, they shall be considered state capital assets and their value must be determined. Once the owner is identified, the Ministry of Finance will handle each case specifically.

3.3. Provisions for price reductions on inventory, provisions for doubtful debts, provisions for securities price reductions, exchange rate differences, undistributed profits (if any), must also be addressed before determining the actual value of the enterprise.

3.4. The surplus balance of the reward and welfare fund shall be distributed to employees to purchase shares.

4. Market prices used to determine the actual value of assets are defined as follows:

4.1. For assets that are traded on the market, the market price is the current buying or selling price of such assets.

4.2. For specialized assets or construction investment products, the basis is the investment cost (or investment price) at the time of determining the enterprise's value as prescribed by the competent authority.

4.3. If the asset is a special type not traded on the market, it shall be valued based on the price of similar assets with equivalent capacity and technical features. If there are no similar assets, it shall be valued based on the recorded price in the accounting books.

5. Content of the method for determining the actual value of the enterprise for shareholding reform.

5.1. For fixed assets and physical inventory that have been inventoried and determined according to the following formula:

 

Actual value of the asset

=

Actual quantity of each asset

x

Market price of the asset at the time of determining the enterprise's value

x

Remaining quality percentage of the asset

 

5.2. For monetary capital assets, the calculation is based on the verified or reconciled monetary capital balance at the time of determining the enterprise's value. If the balance is in foreign currency, it must be converted to Vietnamese Dong using the interbank exchange rate published at the nearest date.

announced at the nearest date.

5.3. For receivables, these are amounts that have been reconciled and confirmed.

5.4. For unfinished costs (including production and business expenses, public service expenses, construction investment expenses), the calculation is based on the actual unfinished cost balance on the accounting books.

5.5. For collateral and guarantees, both short-term and long-term, the calculation is based on the actual balance on the accounting books that has been reconciled and confirmed at the time of determining the enterprise's value.

5.6. For short-term and long-term investments, the calculation includes the amounts that the joint-stock company will continue to inherit.

5.7. For intangible assets (if any), the calculation is based on the remaining value recorded on the accounting books.

5.8. For enterprises with business advantages, the value of such advantages must be added to the actual value of the enterprise as follows:

In cases where the value of the advantage (such as brand reputation, geographical location) has been evaluated, the actual balance on the accounting books shall be used to calculate the enterprise's value;

In cases where the value of the business advantage cannot be determined, the average super-normal profit margin of the three consecutive years prior to the determination of the enterprise's value shall be used to calculate the advantage according to the following formula:

 

Average profit margin of the enterprise over three years

=

Total realized profit of the three consecutive years Total state capital on the accounting books over the three consecutive years

 

 

 

Super-normal profit margin

=

Average profit margin of the enterprise over three years

-

Average profit margin of state-owned enterprises in the same industry and region (province, city)

 

 

 

Value of the advantage included in the enterprise's value

=

Average state capital on the accounting books of the three consecutive years

x

Super-normal profit margin

x

30%

 

The actual value of the enterprise for shareholding reform is the total of the following items (5.1 + 5.2 + 5.3 + 5.4 + 5.5 + 5.6 + 5.7 + 5.8).

mentioned above.

5.9. Enterprises that do not comply with the accounting and statistics regulations shall have the valuation decision-making body consider hiring an independent auditing organization to determine the value. The auditing fee shall be included in the shareholding reform costs.

6. Determining the actual value of state capital in the enterprise.

The actual value of state capital in the enterprise is the remainder of the enterprise's actual value minus the actual debts payable including the surplus welfare and reward funds.

Actual debts payable: Is the total of the debts specified in Section A (Debts Payable - Code 300) of the Balance Sheet minus (-) the debts that cannot be paid.

Debts that cannot be paid: Are debts from creditors who have been dissolved, bankrupted, died, fled, or waived their right to claim debt.

7. Valuation Council

7.1. Members of the Council include:

Representative of the Financial Department as Chairman

Representative of the industry management agency (Ministry, Provincial Industry Management Agency, General Corporation 91) as members;

Representative of the leadership of the state-owned enterprise implementing shareholding reform as members;

In addition to the main members mentioned above, depending on the situation of assets in the enterprise and specific requirements, the Council may invite organizations or technical experts, economic and financial experts inside and outside the enterprise necessary for assessing the quality and determining the actual value of each type of asset.

7.2. Tasks of the Council are:

7.2.1. Review and verify the results of the enterprise's inventory as stipulated in Point 2, Section II of this Circular.

7.2.2. Organize the assessment and determination of the actual value of the enterprise and the actual value of state capital according to the guidance provided here.

7.2.3. Prepare minutes signed by all official members regarding the results of determining the actual value of the enterprise and the actual value of state capital in the enterprise.

The Council operates on the principle of collective voting. In case of equal votes, the opinion of the Chairman's vote is decisive.

Minutes of the determination of the actual value of the enterprise and the actual value of state capital in the enterprise must be sent to the following agencies:

The industry management ministry (or General Corporation 91) if the enterprise is managed by the industry management ministry (or General Corporation 91);

The Chairman of the People's Committee of the province or city if the enterprise is managed by the locality;

The Ministry of Finance.

The deadline for determining the actual value of the enterprise and the actual value of state capital in the enterprise is a maximum of 15 days from the date of establishment of the Council.

7.2.4. Re-evaluate the enterprise's value if requested by the person deciding the enterprise's value.

8. Authority to determine and adjust the actual value of the enterprise and the actual value of the state capital portion in the enterprise.

8.1 Authority to determine the actual value of the enterprise and the actual value of the state capital portion in the enterprise.

8.1.1. The Minister of the industry management ministry (for independent enterprises and members of Total Corporation 90 directly managed by the ministry); the Chairman of the People's Committee of the province or centrally governed city (for independent enterprises and members of Total Corporation 90 directly managed by the province or city); the Chairman of the Board of Directors of Total Corporation 91 (for member enterprises of Total Corporation 91) shall examine and decide on enterprises with state capital according to accounting records at the time of determining the enterprise value up to 10 billion dong.

8.1.2. The Minister of Finance shall examine and decide on enterprises with state capital according to accounting records exceeding 10 billion dong after receiving written agreement from the Minister of the industry management ministry, the Chairman of the People's Committee of the province or city, and the Chairman of the Board of Directors of Total Corporation 91.

Within no more than 10 days from the date of receipt of the record of determination of the enterprise value and the written agreement as stipulated in Point 8.1.2, the head of the authority having jurisdiction must examine and decide on the actual value of the enterprise and the actual value of the state capital portion in that enterprise.

In case the record of determination of the enterprise value lacks sufficient grounds for decision, within no more than 7 days from the date the person authorized to determine the enterprise value requests it, the Council must supplement all necessary grounds for determining the enterprise value.

8.1.3. In case the actual value of the enterprise determined for privatization is lower than the value recorded in the accounting books, it must be reported to the Minister of Finance for decision.

8.2 Adjustment of the enterprise value.

8.2.1. After three months from the date of determining the enterprise value, if the number of shares actually sold does not reach 50% of the total number of shares planned to be sold, the authority deciding the enterprise value must review and adjust the previously decided enterprise value within no more than 10 days.

8.2.2. Authority to adjust the enterprise value:

The Minister of the industry management ministry, the Chairman of the People's Committee of the province or city, and the Chairman of the Board of Directors of Total Corporation 91 may consider gradually reducing the previously decided enterprise value down to the value recorded in the accounting books of the assets put into privatization.

Any adjustment of the enterprise value below the value recorded in the accounting books of the assets put into privatization must be reviewed and decided by the Minister of Finance.

9. Handling the value of the state capital portion from the time of determining the enterprise value to the time of privatization.

Due to the difference between the time of determining the enterprise value and the time of deciding to convert the state-owned enterprise into a joint-stock company, if there is an increase in value, it will be added (+) to the actual enterprise value; if there is a decrease in value, it will be deducted (-) from the actual enterprise value for privatization according to the decision of the person authorized to determine the enterprise value.

 

III. PRIVILEGE REGIME FOR STATE ENTERPRISES AND WORKERS WHEN CONVERTED INTO JOINT-STOCK COMPANIES
AND THE WORKERS WHEN TRANSFORMING INTO A JOINT STOCK COMPANY

1. For state enterprises converted into joint-stock companies

The privilege regime for state enterprises converted into joint-stock companies shall be implemented in accordance with Article 13 of Decree No. 44/1998/ND-CP mentioned above.

2. For employees in enterprises

The privilege regime for workers in enterprises is provided for in Article 14 of Decree No. 44/1998/ND-CP mentioned above, the Ministry of Finance provides detailed guidance on some points as follows:

2.1. For each year of work for the State, workers in enterprises are entitled to purchase a maximum of 10 shares (each share valued at 100,000 dong) at a preferential price with a discount of 30% compared to other groups. According to this provision, each preferential share, workers only have to pay 70,000 dong, while 30,000 dong is the State's preferential value for each share.

2.2. The total preferential value for workers is the product of the preferential value of each share and the total number of preferential shares sold to workers, but the total preferential value for workers shall not exceed 20% of the actual value of the state capital portion in the enterprise. For enterprises with accumulated self-funded capital (self-supplemented capital) of 40% or more of the enterprise value (according to accounting records), the total preferential value for workers shall not exceed 30% of the actual value of the state capital portion in the enterprise.

2.3. Poor workers in enterprises can pay for preferential shares in installments. The maximum installment period is 10 years including a three-year deferral period. The amount paid in installments by poor workers does not accrue interest.

2.4. The number of shares paid in installments by poor workers in enterprises shall not exceed 20% of the total number of preferential shares specified in Point 2.2 of this section.

2.5. When implementing the preferential regime for workers in enterprises, the following conditions must be ensured:

If the total preferential value for workers exceeds the control limit (20% or 30% of the actual value of the state capital portion in the enterprise) based on the maximum number of preferential shares sold according to the State's regulations, the total number of preferential shares sold must be adjusted downward to ensure the preferential value does not exceed the control limit.

If the preferential value for workers and the installment value for poor workers exceed the value of the state capital shares sold (after deducting (-) privatization costs), the total number of preferential shares sold must be further reduced to meet this condition.

2.6. Procedures and authority to review preferential treatment for workers:

2.6.1. The privatized enterprise shall prepare a list of workers in the enterprise, the number of years worked, and the number of preferential shares each worker is entitled to purchase.

2.6.2. For poor workers, there must be a request for purchasing installment shares and a commitment to the payment period to the State.

2.6.3. The General Director of the privatized enterprise shall cooperate with the Party Committee and the Trade Union of the enterprise to review the list of workers, the quantity of preferential shares purchased, and the list of poor workers, the quantity of installment shares purchased. This list must be publicly posted in the enterprise and sent to the authority deciding on privatization (along with the privatization plan of the enterprise).

2.6.4. Pursuant to Decree No. 44/1998/NĐ-CP of the Government, the authority deciding on corporate transformation shall approve the level of preferential shares for employees and phased shares for poor employees in the transformed joint-stock enterprise.

 

IV. COSTS OF CORPORATE TRANSFORMATION

1. The costs of transforming state-owned enterprises into joint-stock companies include:

Printing documents, training on corporate transformation procedures;

Inventory and valuation of assets;

Preparing plans for corporate transformation and drafting the Articles of Association of the joint-stock company;

Hiring auditors (if necessary);

Extraordinary general meeting of workers and staff members to implement the corporate transformation;

Publicity and advertising regarding the corporate transformation;

Organizing the sale of shares (excluding the cost of purchasing share certificates);

First shareholders' meeting;

Other related costs of corporate transformation.

Costs for the Corporate Transformation Committees of Ministries, People's Committees of provinces and centrally-administered cities shall be regulated separately by the Ministry of Finance.

2. The level of costs for transforming state-owned enterprises into joint-stock companies is stipulated as follows:

Enterprises with actual value under three billion dong may incur up to three percent of their actual value;

Enterprises with actual value from three billion to ten billion dong may incur an additional two percent of the increased value;

Enterprises with actual value over ten billion dong may incur an additional one percent of the increased value.

The General Director of state-owned enterprises shall decide on actual necessary costs for corporate transformation within the prescribed limits according to the principle of economy. The total corporate transformation costs shall be deducted from the proceeds of the sale of state-owned shares at the enterprise.

At the end of the corporate transformation process, state-owned enterprises must settle all corporate transformation costs and report to the authority deciding on corporate transformation.

 

V. MANAGEMENT OF PROCEEDS FROM SHARE SALES

1. Joint-stock enterprises undergoing transformation must open a frozen account at the State Treasury to deposit proceeds from share sales.

When collecting money from shareholders, joint-stock enterprises must comply with regulations on cash management.

2. For the proceeds from the sale of shares belonging to the state capital

2.1. After deducting corporate transformation costs, the remaining proceeds from the sale of state-owned shares shall be transferred from the frozen account at the State Treasury to the account for share sales proceeds of:

People's Committee of provinces and centrally-administered cities (for independent accounting enterprises, including members of Total Corporation 90 managed by localities);

Ministry of Finance (for independent accounting enterprises, including members of Total Corporation 90 managed by ministries and bureaus);

Total Corporation 91 (for member enterprises of Total Corporation).

2.2. Utilization of proceeds from the sale of state-owned shares.

2.2.1. These funds shall be used for:

Training and retraining to create new jobs for workers;

Subsidies for redundant workers;

Supplementing capital for state-owned enterprises that need to be strengthened;

Additional investment in state-owned shares in profitable joint-stock companies.

2.2.2. Authority to decide on the utilization of proceeds from the sale of state-owned shares:

Based on the amount collected, the People's Committee of provinces and centrally-administered cities shall decide on utilization according to point 2.2.1 of this Section (for enterprises managed by localities);

Ministries managing industries shall decide on utilization and notify the Ministry of Finance for allocation (for enterprises managed by ministries).

3. For the proceeds from issuing shares to raise additional capital for joint-stock companies, these funds belong to the joint-stock companies.

Once the joint-stock company officially commences operations, the Chairman of the Board of Directors of the joint-stock company shall request the State Treasury to transfer the raised funds from the frozen account to the company's account.

Proceeds from the sale of shares after the joint-stock company has commenced operations:

If the shares sold belong to state capital, they must be deposited into the account for share sales proceeds as stipulated in point 2.1 of this Section.

If the shares are sold to raise capital for production and business activities of the joint-stock company, they must be deposited into the company's account.

 

VI. MANAGEMENT AND SUPPLY OF SHARE CERTIFICATES

1. The State Treasury shall unify the printing and management of blank share certificates to supply to joint-stock enterprises undergoing transformation.

2. After the Founding Shareholders' Meeting and the joint-stock company officially commences operations in accordance with the Law on Enterprises, the joint-stock company shall submit an application to purchase share certificates (attached model) to the State Treasury of the province or centrally-administered city where the joint-stock enterprise has opened a frozen account.

2.1. The total face value of the requested blank share certificates corresponds to the total value of the shares contributed to the company.

2.2. Shares held by Board of Directors members and shareholders purchasing phased state-owned shares must be registered shares without transferability.

2.3. State-owned shares must be registered shares without transferability. The name on the share certificate is the name of the direct managing agency of the joint-stock enterprise.

2.4. Each shareholder may receive one or more share certificates. The total face value of the share certificates corresponds to the amount contributed to the joint-stock company.

2.5. The Chairman of the Board of Directors of the joint-stock company shall be responsible for managing the blank share certificates after purchasing them from the State Treasury and distributing the share certificates to each shareholder corresponding to the number of shares they own.

2.6. Documents attached to the application to purchase share certificates include:

Decision on transforming state-owned enterprises into joint-stock companies by the competent authority;

Resolution of the Founding Shareholders' Meeting on electing Board of Directors members, and the Board of Directors' resolution on electing the Chairman of the Board of Directors and appointing the company's General Director.

3. Based on the application to purchase share certificates submitted above, the State Treasury of the province shall have the responsibility to sell share certificates to joint-stock companies no later than five days from receiving complete documents.

4. Within ten days from receiving the blank share certificates from the State Treasury, the joint-stock company shall have the responsibility to record fully on each share certificate and deliver to each shareholder.

5. Other provisions regarding the management of share certificates not specified in this Circular shall still apply according to Decision No. 529 TC/QĐ-TCDN dated July 31, 1997 of the Minister of Finance promulgating the Interim Regulations on Purchasing Share Certificates in Joint-Stock Companies.

 

PART THREE
IMPLEMENTATION

This Circular replaces Circular No. 50 TC/TCDN dated August 30, 1996, of the Minister of Finance and shall take effect from the date of issuance.

All guiding documents concerning financial matters when converting state-owned enterprises into joint-stock companies that conflict with this Circular are hereby abolished.

During implementation, any difficulties encountered by ministries, sectors, localities, and enterprises undergoing shareholding transformation should be reported to the Ministry of Finance for study and resolution./.