Decree No. 109/2007/NĐ-CP On converting state-owned enterprises with 100% state capital into joint-stock companies

DECREE

On the conversion of state-owned enterprises with 100% state capital into joint-stock companies

THE GOVERNMENT

Based on the Law on the Organization of the Government dated December 25, 2001;

Pursuant to the State Enterprise Law dated November 26, 2003;

Pursuant to the Enterprise Law dated November 29, 2005;

Pursuant to the Securities Law dated June 29, 2006;

Considering the proposal of the Minister of Finance,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Objectives and requirements for converting state-owned enterprises with 100% state capital into joint-stock companies (hereinafter referred to as privatization)

1. Convert enterprises where the State does not need to retain 100% capital into enterprises with multiple owners; raise capital from domestic and foreign investors to enhance financial capacity, modernize technology, and improve management methods to increase efficiency and competitiveness of the economy.

2. Ensure harmonious interests of the State, enterprises, investors, and workers within the enterprise.

3. Implement transparency according to market principles; address the issue of closed privatization within enterprises; link with the development of capital markets and securities markets.

Article 2. Objects of privatization

1. Independent state-owned companies under Ministries, sectors, and localities.

2. Parent companies of Economic Groups (hereinafter referred to as groups) and State-owned Corporations (including State-owned Commercial Banks).

3. Parent companies in parent company-subcompany complexes.

4. Independent accounting subsidiaries of State-owned Corporations established by the State's decision to invest and set up.

5. Dependent accounting units of independent state-owned companies, groups, state-owned corporations, parent companies, and independent accounting subsidiaries of state-owned corporations.

6. Limited liability companies where the State holds 100% of the charter capital.

Article 3. Conditions for privatization

1. Enterprises specified in Article 2 of this Decree shall implement privatization when meeting the following two conditions:

a) Not falling within the category of enterprises where the State holds 100% of the charter capital. The list of enterprises where the State holds 100% of the charter capital is decided by the Prime Minister during each period.

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

2. For dependent accounting units, in addition to the conditions stipulated in Clause 1 of this Article, they must also meet the following conditions:

a) Having sufficient conditions for independent accounting;

b) Privatizing dependent accounting units will not cause difficulties or affect the production and business efficiency of the enterprise or other parts of the enterprise;

c) Being identified in the overall restructuring plan of the enterprise approved by the Prime Minister.

3. In cases where, after financial treatment and reassessment of the enterprise value according to Chapters II and III of this Decree, the actual enterprise value is lower than the liabilities, it shall be transferred to sell or liquidate bankruptcy.

Article 4. Forms of privatization

1. Maintain existing state capital at the enterprise, issue additional shares to increase the charter capital.

2. Sell part of the existing state capital at the enterprise or combine selling part of the state capital with issuing additional shares to increase the charter capital.

3. Sell all existing state capital at the enterprise or combine selling all state capital with issuing additional shares to increase the charter capital.

Article 5. Methods of initial public offering

1. Initial public offerings shall be conducted through open auction, underwriting issuance, and direct negotiation as prescribed in Chapter IV of this Decree.

2. Depending on the object and conditions for purchasing initial shares, the authority deciding on privatization shall determine appropriate share sale methods.

3. The Ministry of Finance shall provide detailed guidance on the methods of initial share sales according to this Decree.

Article 6. Objects and conditions for purchasing shares

1. Domestic investors:

a) Domestic investors are Vietnamese individuals, economic organizations, and social organizations established and operating under Vietnamese law;

b) Domestic investors have the right to purchase shares of privatized enterprises without limitation on quantity, except as provided in Clause 4 of this Article.

2. Foreign investors:

a) Foreign investors are foreign organizations and individuals investing capital in Vietnam;

b) Foreign investors may purchase shares of privatized enterprises according to this Decree and related legal regulations;

c) Foreign investors wishing to purchase shares must open a deposit account at a service provider operating in Vietnam and comply with Vietnamese law. All activities of buying and selling shares, receiving and using dividends, and other income and expenses from share purchases must be conducted through this account.

3. Strategic investors:

a) Strategic investors are domestic and foreign investors with financial strength, corporate management capabilities; transferring new technologies, supplying raw materials, developing product consumption markets; having long-term interests tied to the enterprise;

b) Based on the scale of charter capital, industry characteristics, and the need to expand and develop the enterprise, the Steering Committee for Enterprise Privatization shall submit to the authority deciding on privatization the proposal for selling initial shares to strategic investors and criteria for selecting strategic investors;

c) Strategic investors may purchase shares at a price no less than the average successful bid price. For State-owned Groups and Corporations (including State-owned Commercial Banks), if it is necessary to select strategic investors, the authority deciding on privatization shall report to the Prime Minister to decide on organizing separate bidding among strategic investors;

d) Strategic investors are not allowed to transfer the shares purchased within a minimum period of three years from the date the joint-stock company is issued a Business Registration Certificate. In special cases requiring the transfer of these shares before the deadline, approval from the General Shareholders' Meeting is required.

4. In cases where enterprises privatize and simultaneously list on the Stock Exchange/Securities Trading Center, the competent authority approving the privatization plan shall specify the maximum and minimum quantities of shares to be sold to the public in the first share issuance plan so that the enterprise after privatization meets the listing conditions. The provisions on the maximum and minimum quantities in the first share issuance plan shall not discriminate against investors from all economic sectors.

5. Members of the State Steering Committee for Corporate Shareholding Reform (excluding members who are representatives of the enterprise), financial intermediaries, individuals performing advisory, valuation, and auction sale of shares of the shareholding reform enterprise shall not participate in the auction to purchase the initial issuance of shares of that enterprise.

Article 7. Payment currency for purchasing shares

Domestic and foreign investors purchase shares of the enterprise in Vietnamese dong.

Article 8. Costs of implementing corporate shareholding reform

Costs of implementing corporate shareholding reform are deducted from state capital or revenue from corporate shareholding reform at the enterprise. The Ministry of Finance shall guide the contents and levels of shareholding reform costs.

Article 9. Shares, stocks

1. Registered capital is divided into equal parts called shares. The par value of one (01) share is ten thousand (10,000) dong.

2. Stock certificates are issued by joint-stock companies or recorded in accounting books to confirm ownership of one or more shares by shareholders in such companies. Stocks may be registered or unregistered but must contain all essential contents prescribed in Article 85 of the Enterprise Law (2005).

Article 10. Principles of succession of rights and obligations of joint-stock companies converted from wholly state-owned enterprises

1. The shareholding reform enterprise has the responsibility to arrange and utilize the maximum number of employees at the time of the decision to implement shareholding reform and resolve employee benefits for those who stop working according to current regulations.

The joint-stock company has the obligation to succeed all responsibilities towards employees transferred from the shareholding reform enterprise; it has the right to select, arrange, and use labor and cooperate with relevant agencies to resolve employee benefits according to the law.

2. The shareholding reform enterprise has the responsibility to coordinate with relevant agencies to inspect and handle financial issues to determine the value of state capital at the time of officially becoming a joint-stock company.

3. The joint-stock company can use all assets and sources of funds received upon transfer to organize production and business; it succeeds all rights, obligations, and responsibilities of the transferred shareholding reform enterprise and has other rights and obligations as prescribed by law.

Any obligations and responsibilities of the shareholding reform enterprise determined after settlement and transfer to the joint-stock company do not belong to the joint-stock company.

Article 11. Implementing transparency and listing on the securities market

1. The shareholding reform enterprise must publicly disclose information about the enterprise, the shareholding reform plan, land management and usage, and labor conditions in accordance with the provisions of the Enterprise Law and other laws.

2. If the shareholding reform enterprise meets the financial conditions required for listing under securities law, it must develop a shareholding reform plan to ensure the shareholder structure for listing on the Stock Exchange or Securities Trading Center.

The authority deciding on shareholding reform specifies the simultaneous implementation of shareholding reform and listing on the securities market in the shareholding reform plan to inform investors before selling the first batch of shares. The representative of state capital at the enterprise is responsible for voting at the first General Meeting of Shareholders to approve the Resolution on listing.

Article 12. Consulting on shareholding reform

1. The shareholding reform enterprise may hire consulting organizations to determine the value of the enterprise; develop a shareholding reform plan and sell the first batch of shares.

2. The authority deciding on shareholding reform selects consulting organizations for shareholding reform in accordance with the law and guidelines of the Ministry of Finance.

3. Costs of hiring shareholding reform consultants are included in shareholding reform costs.

Chapter II
FINANCIAL HANDLING WHEN TRANSFORMING INTO SHAREHOLDING BANKS

Article 13. Inventory, classification of assets, and handling financial discrepancies

1. Upon receiving the decision to implement shareholding reform from the competent authority, the enterprise has the responsibility to organize inventory and classification of assets managed and used by the enterprise at the time of determining the enterprise's value.

2. The shareholding reform enterprise has the responsibility to conduct annual financial statement audits in accordance with the state regulations. In cases where the time of determining the enterprise's value does not coincide with the end of the fiscal year, the shareholding reform enterprise has the responsibility to prepare financial statements at the time of determining the enterprise's value.

3. Based on the results of inventory and annual financial statement audit, the shareholding reform enterprise has the responsibility to proactively handle financial discrepancies within its authority and in accordance with the law before determining the value of the shareholding reform enterprise.

In cases of difficulties or exceeding authority, the shareholding reform enterprise must promptly report to the competent authority for consideration and resolution.

In cases where reports have been made to the competent authorities but not resolved, these discrepancies must be clearly recorded in the Minutes of Determination of the Value of the Shareholding Reform Enterprise to serve as grounds for continued resolution during the period from the determination of the enterprise's value to the time of officially becoming a joint-stock company.

Article 14. Handling leased, borrowed, joint venture, associated assets, unused assets, and assets invested with Reward Fund, Welfare Fund

1. For assets leased, borrowed, received as joint venture contributions, associated contributions, and other assets not belonging to the enterprise, they are not included in the enterprise's value for shareholding reform. Before transferring to the joint-stock company, the shareholding reform enterprise must reach an agreement with the asset owner for the joint-stock company to succeed previous contracts or terminate them.

2. For unused, stagnant, pending liquidation assets, the shareholding reform enterprise has the responsibility to handle them according to the current financial management system (liquidation, sale). In cases where the enterprise has not yet handled these assets by the time of determining the enterprise's value, they are excluded from the enterprise's value and transferred to the following agencies:

a) The Company for Debt and Idle Asset Management shall handle according to the provisions of the law for enterprises specified in Clauses 1, 2, and 3 of Article 2 of this Decree and state-owned limited liability companies under Ministries, ministerial-level agencies, government agencies, provincial People's Committees, and centrally-administered municipal People's Committees.

b) State-owned corporations, state-owned holding companies, and independent state-owned companies shall handle according to the provisions for enterprises specified in Clauses 4 and 5 of Article 2 of this Decree and state-owned limited liability companies held 100% by state-owned corporations, state-owned holding companies, and parent companies.

3. For welfare facilities such as kindergartens, health stations, and other welfare assets invested with funds from the Reward Fund and Welfare Fund, they shall be transferred to a joint-stock company for management and use to serve the collective workforce in the enterprise undergoing shareholding reform.

For housing for cadres, workers, and employees invested with funds from the enterprise’s Welfare Fund, including housing invested with state budget capital, it shall be transferred to the local land administration agency for management.

4. For production and business assets invested with funds from the Reward Fund and Welfare Fund of the enterprise undergoing shareholding reform, these assets shall be included in the enterprise value and the joint-stock company shall continue to use them in production and business. The corresponding capital equivalent to the value of these assets shall be the responsibility of the enterprise undergoing shareholding reform to repay the Reward Fund and Welfare Fund to distribute among the employees working at the enterprise at the time of determining the enterprise value.

Article 15. Accounts receivable

1. The enterprise undergoing shareholding reform shall be responsible for reconciling, confirming, and recovering accounts receivable due before the shareholding reform. Any overdue accounts receivable that remain outstanding at the time of determining the enterprise value shall be handled according to the current regulations of the State on handling overdue debts.

2. The enterprise undergoing shareholding reform shall be responsible for transferring non-recoverable accounts receivable that have been excluded from the enterprise value (accompanied by relevant documentation) to the relevant agencies as stipulated in Clause 2 of Article 14 of this Decree.

3. For advance payments made to suppliers for goods and services such as rent for premises, rent for land, purchase of goods, and labor costs, these amounts shall be reconciled with the contracts and the quantity of goods and services provided to be included in the enterprise value of the shareholding reform.

Article 16. Accounts payable

1. Accounts payable to organizations and individuals:

The enterprise undergoing shareholding reform must mobilize legitimate sources of capital to settle accounts payable due before the shareholding reform or negotiate with creditors to resolve or convert into equity contributions.

The conversion of accounts payable due at the time of determining the enterprise value into equity contributions shall be carried out based on the successful auction results of the creditors.

2. Tax arrears and other payments to the state budget: the enterprise undergoing shareholding reform shall be responsible for paying taxes and other state budget debts before the transition; if the enterprise has not completed its tax obligations, the joint-stock company shall assume full responsibility.

3. During the shareholding reform process, if the enterprise undergoing shareholding reform encounters difficulties in settling overdue debts (loans from State Commercial Banks, Vietnam Development Bank) due to operating losses, the debts shall be handled according to the current regulations of the State on handling overdue debts.

Article 17. Provisions, losses, or profits

1. Provisions: reductions in inventory valuation, difficult-to-collect accounts receivable, reductions in securities valuation, exchange rate differences shall be used to offset losses according to current regulations; any remaining amount shall be recorded as an increase in state capital.

2. Provision for severance pay: the enterprise undergoing shareholding reform shall be responsible for fully setting aside according to the State's regulations and can be used to provide severance pay to redundant workers during the shareholding reform process; at the formal transfer to a joint-stock company, any remaining amount shall be recorded as an increase in state capital at the time of transfer.

3. Risk reserve funds and operational reserve funds of banking and insurance systems, after offsetting losses according to regulations, shall be retained by the enterprise undergoing shareholding reform but must be included in the initial price when issuing shares for the first time.

4. Financial reserves to cover losses (if any), to offset asset losses, and uncollectible debts after compensating for individual responsibility (if any), the remaining amount shall be included in the value of state capital at the enterprise undergoing shareholding reform.

5. Profits generated to offset previous year losses (if any) according to the Law on Corporate Income Tax, to offset losses from unused assets awaiting liquidation, reduction in asset values, and uncollectible debts, the remaining amount shall be distributed according to current regulations before determining the enterprise value.

6. Losses calculated up to the time of determining the enterprise value of the shareholding reform, after handling according to the above regulations, if there are still losses and no remaining state capital, the enterprise undergoing shareholding reform shall cooperate with the Vietnam Development Bank (formerly the Development Support Fund) and State Commercial Banks to write off interest on loans according to the current regulations of the State on handling overdue debts.

Article 18. Long-term investments in other enterprises such as joint ventures, joint operations, equity investments, establishment of limited liability companies, and other long-term investment forms

1. In cases where the enterprise undergoing shareholding reform inherits long-term investments in other enterprises, the entire amount of this investment shall be included in the enterprise value for shareholding reform according to the principles stipulated in Article 32 of this Decree.

2. In cases where the enterprise undergoing shareholding reform does not inherit long-term investments in other enterprises, it shall report to the competent authority for handling as follows:

a) Transfer to another state-owned enterprise holding 100% of the capital as a partner;

b) If transfer is not possible, the enterprise undergoing shareholding reform must inherit and include it in the enterprise value of the shareholding reform as stipulated in Clause 1 of this provision.

Article 19. Balance of the Reward Fund and Welfare Fund in cash

The balance of the Reward Fund and Welfare Fund shall be distributed to employees working at the enterprise at the time of determining the enterprise's value according to the years of service at the shareholding enterprise.

Article 20. Balance of the Enterprise Restructuring Support Fund at the enterprise

The balance of the Enterprise Restructuring Support Fund at the shareholding enterprise (if any) shall be recorded as an increase in state capital at the enterprise.

Article 21. Financial settlement at the time when the enterprise officially becomes a joint-stock company

1. Based on the value of the shareholding enterprise decided by the competent authority, the enterprise is responsible for adjusting the figures in the accounting books; preserving and transferring debts and assets excluded when determining the enterprise's value as stipulated in Clause 2, Article 14 and Clause 2, Article 15 of this Decree; preparing financial statements of the enterprise from the time of determining the enterprise's value to the time the enterprise officially becomes a joint-stock company.

2. Within one month from the date of issuance of the Business Registration Certificate, the shareholding enterprise must complete the preparation of financial statements at the time of business registration, determine the value of state capital at the time of officially becoming a joint-stock company, and identify any remaining financial issues that need to be resolved.

3. The difference in increase between the actual value of state capital at the time the enterprise transitions to a joint-stock company and the actual value of state capital at the time of determining the enterprise's value shall be handled as follows:

a) Deposited into the Enterprise Restructuring Support Fund at the State-owned Group, State-owned Corporation, or Parent Company when the member enterprise, subsidiary, or dependent unit is being shareholding; deposited into the independent state-owned company or independent subsidiary when the part of the company is being shareholding;

b) Deposited into the Enterprise Restructuring Support Fund at the State Capital Investment and Business Corporation when the entire independent state-owned company, entire State-owned Group, or State-owned Corporation, or Parent Company is being shareholding.

4. In case of a decrease in difference, the shareholding enterprise is responsible for reporting to the competent authority deciding on shareholding to coordinate with relevant agencies to organize inspections, clarify causes, determine collective and individual responsibilities, and handle as follows:

a) If due to objective reasons (natural disasters; enemy attacks; changes in state policy or international market fluctuations and other force majeure reasons), the shareholding enterprise reports to the competent authority deciding on shareholding for consideration and decision on using proceeds from selling shares to offset losses after deducting insurance compensation (if any). If the proceeds from selling shares are insufficient to cover the losses, the shareholding decision-making authority considers and adjusts the scale and structure of the registered capital of the joint-stock company;

b) If the cause is due to subjective reasons:

- If the loss is due to not properly addressing existing financial issues according to current state regulations when determining the enterprise's value, the responsibility of related agencies: the enterprise, valuation consulting organizations, and the shareholding decision-making authority must be clearly identified for material compensation;

- If the loss is due to production and business management, the managers of the enterprise are responsible for compensating the full loss caused by their own negligence according to current regulations;

- In cases where the person responsible for compensation cannot fulfill the compensation according to the decision of the competent authority due to force majeure, the remaining loss will be handled as in the case of objective reasons as stipulated in point a of this clause.

c) After handling according to the above provisions but still insufficient to offset the decrease, the joint-stock company is responsible for inheriting this loss.

Chapter III

DETERMINING THE VALUE OF SHAREHOLDING ENTERPRISES

Section 1

ORGANIZING THE DETERMINATION OF ENTERPRISE VALUE

Article 22. Valuation Consulting for Determining Enterprise Value

1. Shareholding enterprises with total asset values of VND 30 billion or more according to accounting records, or state capital values of VND 10 billion or more according to accounting records, or having advantageous geographical locations must hire valuation organizations such as auditing companies, securities companies, appraisal organizations, domestic and foreign investment banks with valuation functions (hereinafter referred to as valuation consulting organizations) to provide consultancy services for determining enterprise value.

2. Shareholding enterprises not falling under the scope specified in Clause 1 of this Article are not necessarily required to hire valuation consulting organizations to determine enterprise value. In cases where they do not hire valuation consulting organizations, the enterprises themselves determine the enterprise value and report it to the competent authority deciding on the enterprise value.

3. The shareholding decision-making authority selects valuation consulting organizations from the list published by the Ministry of Finance. Where there are two or more valuation consulting organizations registering to participate in providing valuation consultancy services, a tender must be organized to select the organization to perform the valuation consultancy services according to current regulations.

4. The selected valuation consulting organizations may choose appropriate methods to determine the enterprise value, ensuring the principles stipulated in this Decree, and must complete within the agreed timeframe and commitments in the signed contract. The shareholding enterprise has the responsibility to provide all relevant information about the enterprise truthfully for the valuation consulting organization to use during the valuation process.

The valuation consulting organization is responsible for the results of determining the enterprise value. If the determined enterprise value does not comply with state regulations, the shareholding decision-making authority may refuse to pay the service fee; if causing damage to the state, they must compensate and be removed from the list of eligible organizations to participate in valuation consultancy.

5. Domestic and foreign valuation consulting organizations wishing to participate in providing valuation consultancy services for shareholding enterprises must meet the standards set forth by the Ministry of Finance.

Article 23. Methods for Determining Enterprise Value

The methods for determining the enterprise value include: the asset method, the discounted cash flow method, and other methods.

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

Article 24. Announcing the enterprise value

1. Based on the enterprise value determination dossier established by the valuation consulting organization (or by the enterprise being privatized itself), the Steering Committee for Enterprise Privatization shall be responsible for reviewing the procedures, formalities, and compliance with legal regulations on enterprise value determination, and submitting it to the competent authority for deciding the enterprise value.

2. The competent authority for deciding the enterprise value shall be responsible for examining, deciding, and announcing the enterprise value within no more than ten days from the date of receiving all necessary documents.

Article 25. Utilizing the results of enterprise value determination

The announcement result of the enterprise value by the competent authority serves as the basis for determining the registered capital scale, the initial share structure, and the starting price for conducting the auction sale of shares.

Article 26. Adjusting the enterprise value

1. The enterprise being privatized may adjust the announced enterprise value in the following cases:

a) There are objective reasons (natural disasters, enemy attacks, changes in state policies, or other force majeure reasons) affecting the value of the enterprise's assets;

b) Within twelve months from the date of determining the enterprise value, the enterprise has not yet implemented the sale of shares.

2. The provisions of Clause 1 of this Article only apply in the case where the enterprise being privatized has not yet implemented the sale of shares.

3. The competent authority for deciding the privatization of the enterprise shall be responsible for examining, deciding, adjusting, and re-announcing the enterprise value of the privatized enterprise. The decision to adjust the enterprise value serves as the basis for developing the privatization plan.

Section 2

DETERMINATION OF ENTERPRISE VALUE

BY ASSET METHOD

Article 27. Enterprise value according to the asset method

1. The actual value of the privatized enterprise is the total value of the current assets of the enterprise at the time of privatization, taking into account the profitability that both the buyer and seller of shares can accept.

The actual value of state capital in the privatized enterprise is the actual value of the enterprise after deducting liabilities payable, surplus of the reward fund, welfare fund, and surplus of operating funds (if any).

2. When privatizing the entire state group or corporation, the state capital value is the actual value of state capital determined at the group or corporation level.

3. In the case of privatizing the parent company in a parent-subsidiary complex, the state capital value is the actual value of state capital at the parent company.

4. For financial and credit organizations, when determining the enterprise value according to the asset method, the audit results of the financial statements shall be used to determine monetary assets, receivables and payables, but a physical inventory and evaluation must be conducted for fixed assets, long-term investments, and land use rights according to the state regulations.

Article 28. The following items shall not be included in the enterprise value for privatization

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

2. Receivables that have no possibility of recovery.

3. Construction-in-progress costs of projects that have been decided to be suspended by the competent authority before the date of determining the enterprise value.

4. Long-term investments in other enterprises as stipulated in point a, Clause 2 of Article 18 of this Decree.

5. The person authorized to decide the enterprise value shall examine and decide not to include the items specified in Clauses 1, 2, 3, and 4 of this Article in the enterprise value for privatization and bear legal responsibility for their decision.

Article 29. Bases for determining the actual value of the enterprise

1. Accounting records of the enterprise at the time of determining the enterprise value.

2. Inventory, classification, and quality assessment documents of the enterprise's assets at the time of determining the enterprise value.

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

4. The value of allocated land use rights, leased land use rights, and the business advantage value of the enterprise.

Article 30. The value of the right to use land

1. For the land area used by the privatized enterprise for construction of headquarters, transaction offices; production bases, business premises; agricultural, forestry, aquaculture, salt production (including land already allocated by the State with or without payment of land use fees), the privatized enterprise shall be responsible for formulating a land use plan to submit to the competent authority for examination and decision. The enterprise may choose the land lease or allocation form according to the Land Law.

If the enterprise has been allocated land and now chooses the land lease form, it must complete the land lease transfer procedures and submit them to the privatization decision-making body and local land management agency before officially becoming a joint-stock company.

2. In the case where the privatized enterprise has been allocated land (including land areas allocated by the State for the enterprise to build houses for sale or rent for hotel business, commercial service business; infrastructure construction for transfer or lease), the value of land use rights must be included in the enterprise value according to the land price defined and published by the People's Committee of the province or centrally administered city (where the enterprise has the allocated land area).

3. In the case where the privatized enterprise chooses the land lease form:

a) For enterprises paying annual land lease fees, the land lease fee is not included in the enterprise value;

b) For enterprises paying the full land lease fee for the entire lease period, the land lease fee is included in the enterprise value according to the market price at the time of valuation defined and published by the provincial or centrally administered city People's Committees.

4. In case the land price serving as the basis for determining the value of land use rights and land rental fees is not in line with the actual market transfer prices of land use rights under normal conditions at the time of corporatization, the People's Committee of the province or centrally governed city shall decide on the specific land price to be appropriate.

Within thirty days from the date of submitting complete documents, if the enterprise has not received a document from the People's Committee of the province or centrally governed city regarding the land price, the competent authority deciding the enterprise's value may calculate the value of land use rights and land rental fees into the enterprise's value according to the proposal made by the enterprise but not lower than the value of land use rights and land rental fees calculated based on the announced land price and inform the People's Committee of the province or centrally governed city.

5. The People's Committee of the province or centrally governed city is responsible for directing relevant agencies to guide enterprises undergoing corporatization to fully implement procedures to obtain Land Use Right Certificates or sign land lease contracts in accordance with current laws on land before officially transitioning to joint-stock companies.

Article 31. Value of business advantages of the enterprise

1. The value of business advantages of a joint-stock enterprise includes the value of geographical location advantages, brand value, and development potential.

2. The value of business advantages of a joint-stock enterprise shall be decided by the competent authority responsible for the corporatization of the enterprise after considering it, but it must not be lower than the value of business advantages determined according to the guidelines issued by the Ministry of Finance.

Article 32. Determining the long-term investment capital value of the joint-stock enterprise in other enterprises

1. The long-term investment capital value of the joint-stock enterprise in other enterprises is determined based on:

a) The ratio of the joint-stock enterprise's investment capital to the charter capital or total contributed capital in other enterprises;

b) The equity value in other enterprises according to audited financial statements. If there is no audit, then the equity value is determined based on the financial statement at the nearest point in time of that enterprise;

c) In cases where the investment capital is in foreign currency, it shall be converted into Vietnamese Dong based on the average inter-bank foreign exchange trading rate published by the State Bank of Vietnam at the valuation time;

d) In cases where the long-term investment capital value of the joint-stock enterprise in another enterprise is determined to be lower than the recorded value in the accounting books, the long-term investment capital value shall be determined based on the recorded value in the joint-stock enterprise's accounting books.

2. The contribution value of the joint-stock enterprise in a listed joint-stock company shall be determined based on the stock price traded on the securities market at the time of determining the enterprise's value.

Section 3

DETERMINATION OF ENTERPRISE VALUE

BY THE DISCOUNTED CASH FLOW METHOD

Article 33. Enterprise value of the joint-stock enterprise determined by the discounted cash flow method

1. The actual value of state-owned capital in the enterprise is determined by the discounted cash flow method based on the future profitability of the enterprise.

In cases where the enterprise value of the entire holding company is determined by this method, the profitability of the holding company is determined based on the profit of the state-owned holding company as stipulated in the financial management regulations of state-owned enterprises.

In cases where the enterprise invests capital in another enterprise, the profit generated from such investment is also a basis for determining the enterprise value.

2. The actual value of the enterprise includes the actual value of state-owned capital, liabilities, balances of Reward Fund and Welfare Fund, and operating expenses surplus (if any).

In cases where the enterprise chooses the form of transferring land or leasing land with payment in one lump sum, the value of land use rights and land rental fees must be added to the enterprise value according to Article 30 of this Decree.

Article 34. Basis for determining enterprise value by the discounted cash flow method

1. Financial statements of the enterprise for five consecutive years prior to the determination of the enterprise value.

2. Business operation plan of the enterprise for three to five years after becoming a joint-stock company.

3. Interest rate of government bonds with a term of five years at the nearest time point before organizing the determination of the enterprise value and the discount factor of the enterprise being valued.

Chapter IV

SALE OF FIRST ROUND SHARES AND MANAGEMENT,

USE OF FUNDS FROM CORPORATIZATION

Article 35. Determination of registered capital and initial share structure

1. Based on the announced value of state-owned capital in the joint-stock enterprise and the production and business plans for the years following the transition to a joint-stock company, the authority deciding corporatization determines the scale and structure of the registered capital:

a) In cases where part of the state-owned capital in the enterprise is sold off, the registered capital must not be less than the actual value of the state-owned capital in the enterprise;

b) In cases of issuing additional shares, the registered capital shall be determined based on the actual value of the state-owned capital at the enterprise and the value of the additional issued shares calculated at their par value.

2. On the basis of the determined registered capital, the authority deciding corporatization decides the initial share structure, including:

a) State-held shares: the proportion of state-held shares is implemented according to the classification criteria for state-owned enterprises published by the Prime Minister during each period. For enterprises not falling within the scope of state control, the authority deciding corporatization considers and decides the proportion of state-held shares appropriately;

b) Shares sold to strategic investors and other investors must not be less than 25% of the registered capital (except in cases provided for in point b, Clause 3 of this Article). The number of shares sold to other investors must not be less than 50% of the aforementioned shares;

For large-scale enterprises with state-owned capital over 500 billion VND or operating in special sectors (insurance, banking, postal and telecommunications, aviation, rare mineral extraction), the proportion of shares auctioned to investors is determined specifically by the competent authority;

c) Shares sold to trade unions in the joint-stock enterprise:

Trade unions at joint-stock enterprises undergoing shareholding reform may use their legitimate funds (of the trade union) at such enterprises (without raising funds or borrowing) to purchase shares but not exceeding 3% of the registered capital. These shares shall be held by the trade union but shall not be transferred. The Ministry of Finance and the General Confederation of Labor of Vietnam shall provide guidance on the use of legitimate funds to purchase shares based on the principle of ensuring the rights of workers at the enterprise.

d) Shares sold preferentially to employees in the enterprise in accordance with the provisions of Clause 1, Article 51 of this Decree.

3. In cases where the number of preferential shares sold to employees in the enterprise (calculated based on the maximum preferential rate) exceeds the remaining number of shares planned for issuance (after deducting the number of shares held by the State and the number of shares sold to strategic investors and trade unions in accordance with Points a, b, and c of Clause 2 of this Article), the following measures shall be taken:

a) If the enterprise does not fall under the category of the State holding controlling shares, the authority deciding the shareholding reform shall consider and decide to adjust the number of State-held shares to increase the number of preferential shares sold to employees.

b) If the enterprise falls under the category of the State holding controlling shares, the authority deciding the shareholding reform shall consider and decide to adjust the scale of the registered capital to reasonably increase the number of preferential shares sold to employees in the enterprise or reduce the shares sold to strategic investors and ordinary investors, but must ensure that the shares sold to strategic investors and ordinary investors are not less than 20% of the registered capital.

Article 36. Disclosure of Information

1. At least 20 days before the first sale of shares, the Steering Committee for Shareholding Reform of the enterprise must disclose information at the enterprise, at the auction site, and through mass media regarding:

a) Information about the joint-stock enterprise (including the results of determining the enterprise's value);

b) The main contents of the approved shareholding reform plan;

c) Information related to the sale of shares (including information about selling shares to strategic investors);

d) A draft charter for the organization and operation of the joint-stock company constructed in accordance with the Enterprise Law.

2. The Ministry of Finance shall specify the details of the disclosure of information.

Article 37. Price of First Sale of Shares

1. The price sold through public auction is the successful bid price of each investor. Under this method, investors who win bids at which prices will buy shares at those prices.

2. The preferential price is the price of selling shares to employees in the enterprise at 60% of the average successful bid price specified in Clause 1 of this Article.

For particularly difficult enterprises located in remote areas, the preferential price of selling shares to employees may be lower according to the Prime Minister's decision.

3. The price sold through guaranteed issuance or direct negotiation is the price of selling shares to investors based on the results of negotiations between the Steering Committee for Shareholding Reform of the enterprise and the guarantor organization or directly negotiated with the investor. The price sold through guaranteed issuance or direct negotiation must ensure the principle of not being lower than the average successful bid price of the public auction specified in Clause 1 of this Article.

4. The price of shares sold to trade unions at joint-stock enterprises is the preferential price for employees specified in Clause 2 of this Article.

Article 38. Auction Method

1. The auction method is applied in cases of public auction without distinguishing between organizational and individual investors, domestic and foreign investors;

2. Public auction organization:

a) Auction at financial intermediaries if the volume of shares offered is below 10 billion VND;

In cases where there is no financial intermediary willing to conduct the share auction, the Steering Committee for Shareholding Reform of the enterprise shall directly organize the share auction at the enterprise;

b) Auction at the Stock Exchange, Securities Trading Center, if the volume of shares offered is 10 billion VND or more;

In cases where joint-stock enterprises have a volume of shares offered below 10 billion VND and wish to conduct the auction at the Stock Exchange, Securities Trading Center, the authority deciding the shareholding reform shall decide;

c) The authority deciding the shareholding reform shall decide on the selection of the Stock Exchange, Securities Trading Center or hiring a financial intermediary to conduct the auction; registering the auction plan with the Stock Exchange, Securities Trading Center, and simultaneously reporting to the Ministry of Finance to decide on the auction plan on the securities market.

Article 39. Procedure for Organizing the First Sale of Shares Auction

1. The organization of the first sale of shares auction shall be carried out according to the following procedure:

a) The authorized representative of the joint-stock enterprise signs a contract for organizing the auction sale with the financial intermediary, Stock Exchange, Securities Trading Center;

b) Implement the disclosure of information as stipulated in Article 36 of this Decree;

c) Organize presentations for investors (if necessary);

d) The financial intermediary, Stock Exchange, Securities Trading Center, and the Steering Committee for Shareholding Reform of the enterprise shall organize the auction.

2. The Ministry of Finance shall specify the detailed procedures for organizing the auction and the responsibilities of relevant agencies in organizing the auction.

Article 40. Handling of the Number of Shares Refused by Investors in the First Sale of Shares Auction

1. In cases where the winning bidder does not purchase or does not purchase all the shares they are entitled to purchase according to the announced auction results, they shall not be refunded the corresponding deposit for the refused shares.

2. If the number of refused shares is less than 30% of the total number of shares offered, the Steering Committee for Shareholding Reform of the enterprise shall consider and decide to sell the refused shares to participating investors according to Clause 3, Article 42 of this Decree.

3. If the number of refused shares is equal to or greater than 30% of the total number of shares offered, the Steering Committee for Shareholding Reform of the enterprise shall organize another auction to sell the refused shares.

4. In case the sale is still incomplete, the State Steering Committee for Corporate Shareholding shall report to the authority deciding corporate shareholding to handle according to the provisions of Article 43 of this Decree.

Article 41. Guarantee method for issuance

1. The method of underwriting issuance shall be applied in cases where shares are sold initially to a certain number of investors under specific conditions after organizing a public auction as stipulated in Clause 1, Article 38 of this Decree.

2. The organization providing underwriting issuance must ensure the following conditions:

a) Having the function of underwriting share issuance, which has been permitted by competent state authorities.

b) Committing to sell all the shares underwritten. In case of unsold shares, the organizations providing underwriting issuance shall have the responsibility to purchase all remaining shares at the underwriting price.

3. Obligations and rights of the organization providing underwriting shall be implemented according to the laws on securities and the securities market and the Underwriting Agreement for Share Issuance signed between the organization providing underwriting and the authorized representative of the enterprise undergoing corporate shareholding.

Article 42. Direct negotiation method

1. The direct negotiation method shall be applied in the following cases:

a) Selling to strategic investors after public auction;

b) Selling to investors who participated in the auction and wish to purchase additional shares that other investors refused to buy.

2. Selling to strategic investors after public auction:

a) The State Steering Committee for Corporate Shareholding selects strategic investors based on criteria approved by the competent authority. If there are multiple investors meeting the conditions to become strategic investors, the State Steering Committee for Corporate Shareholding may select a strategic investor through competitive bidding;

b) Based on the results of selecting strategic investors, the State Steering Committee for Corporate Shareholding negotiates with the strategic investor regarding the share selling price according to the principles set out in Clause 3, Article 37 of this Decree;

c) Strategic investors must immediately deposit 10% of the value of the shares they intend to purchase at the initial price determined by the State Steering Committee for Corporate Shareholding. If they renounce their right to purchase, they will not receive back the deposit.

3. Selling to investors who participated in the auction and wish to purchase additional shares that other investors refused to buy:

a) The State Steering Committee for Corporate Shareholding and the organization implementing the share auction must publicly announce the quantity of shares refused by other investors so that participating investors can register to purchase more;

b) Based on the quantity of shares registered for purchase, the State Steering Committee for Corporate Shareholding shall sell according to the descending order of bid prices according to the principles set out in Clause 3, Article 37 of this Decree.

Article 43. Handling unsold shares

1. If the quantity of unsold shares remains below 50% of the issued share quantity (excluding shares guaranteed for issuance), then adjust the scale and capital structure (increase the state-owned contribution in the enterprise) to convert the enterprise into a joint-stock company.

2. If the quantity of unsold shares remains at 50% or more of the issued share quantity (excluding shares guaranteed for issuance), then the authority deciding corporate shareholding shall consider and reduce the initial price (maximum equal to the nominal value of the shares) and organize another auction to sell the remaining shares.

3. In case the initial price has been reduced to the nominal value of the shares but no investor registers to participate in the auction or the remaining shares cannot be sold completely, the authority deciding corporate shareholding shall handle according to the provisions of Clause 1 of this Article.

Article 44. Time limit for completing the sale of shares

Within three months from the date of the decision approving the privatization plan, the enterprise must complete the sale of shares (including the sale of shares through underwriting and direct negotiated sale).

Article 45. Management and utilization of funds from privatization

1. In the case of selling state-owned capital in the enterprise:

a) The proceeds from the privatization of the enterprise shall be used to pay for the costs of privatization and to resolve policies for surplus labor when implementing the privatization of the enterprise according to the regulations of the State and the decision of the competent authority. The remaining amount shall be handled as provided in point c of this clause;

b) In cases where the proceeds from the privatization of the enterprise are insufficient to resolve policies for surplus labor, they shall be supplemented from:

- The Enterprise Restructuring Support Fund of the Group, State Corporation, or Parent Company (in the case of privatizing member enterprises, subsidiaries, or dependent units of the group, corporation, or parent company). If insufficient, it shall be supplemented from the Enterprise Restructuring Support Fund at the State Capital Investment Corporation;

- The Reserve Fund for Unemployment Benefits of independent state-owned companies, member companies with independent accounting (in the case of privatizing parts of the enterprise);

- The Enterprise Restructuring Support Fund at the State Capital Investment Corporation (in the case of privatizing independent state-owned companies, wholly state-owned limited liability companies under Ministries, ministerial-level agencies, government agencies, provincial People's Committees, centrally governed municipalities; all state corporations; all groups, parent companies organized and operating under the parent company - subsidiary model and wholly state-owned limited liability companies under Ministries, ministerial-level agencies, government agencies, provincial People's Committees, centrally governed municipalities).

c) The remaining proceeds from the sale of state-owned capital (including the difference in share prices) after deducting the expenses as stipulated in point a of this clause shall be remitted to:

- The Enterprise Restructuring Support Fund of the Group or State Corporation in the case of privatizing member enterprises, subsidiaries, or dependent accounting units of the group or corporation;

- The Enterprise Restructuring Support Fund of the Parent Company in the case of privatizing wholly owned subsidiaries or dependent accounting units of the parent company;

- Independent state-owned companies or member companies with independent accounting in the case of privatizing dependent accounting units of these companies;

- The Enterprise Restructuring Support Fund at the State Capital Investment Corporation in the case of privatizing all independent state-owned companies; all state corporations; all groups, parent companies organized and operating under the parent company - subsidiary model and wholly state-owned limited liability companies under Ministries, ministerial-level agencies, government agencies, provincial People's Committees, centrally governed municipalities.

2. In the case of issuing additional shares to increase the registered capital:

a) The proceeds from the privatization left with the enterprise corresponding to the value of the additional shares issued at par value; the surplus capital (the difference between the proceeds from privatization and the total par value of the additional shares issued) shall be used to pay for the costs of privatization and to resolve policies for surplus labor, if insufficient, it shall be handled as provided in point b of Clause 1 of this Article;

b) The remaining amount (if any) left with the joint-stock company in proportion to the additional shares issued in the registered capital structure shall be handled as provided in point c of Clause 1 of this Article. The Ministry of Finance shall guide the management and utilization of the funds left with the joint-stock company.

3. In the case of selling state-owned capital combined with issuing additional shares:

a) The proceeds from the privatization left with the enterprise corresponding to the value of the additional shares issued at par value; the surplus capital shall be used to pay for the costs of privatization and to resolve policies for surplus labor, if insufficient, it shall be handled as provided in point b of Clause 1 of this Article;

b) Any remaining amounts (if any) shall be handled as follows:

- Remit to the beneficiary units as provided in point c of Clause 1 of this Article the value of the state-owned shares sold at par value;

- The remaining amount (if any) shall be distributed as provided in point b of Clause 2 of this Article.

4. Proceeds from privatization used to resolve policies for surplus labor in privatized enterprises shall be considered as revenue of the Enterprise Restructuring Support Fund.

5. The authority deciding on privatization shall have the responsibility to report fully and promptly on the management and utilization of proceeds from privatization to the State Capital Investment Corporation for consolidation and reporting to the Ministry of Finance and the Prime Minister.

Article 46. Management and utilization of the Enterprise Restructuring Support Fund.

1. Establish the Enterprise Restructuring Support Fund at the State Capital Investment Corporation to:

a) Support enterprises in restructuring and ownership conversion (including enterprises implementing mergers, consolidations, dissolutions, bankruptcies, privatizations, transfers, sales, conversions to single-member limited liability companies, conversions to income-generating public service units...) in resolving policies for surplus labor and handling financial issues according to the law;

b) Supplement the registered capital of the State Capital Investment Corporation according to the decision of the Prime Minister;

c) Invest in important projects including infrastructure projects with return on investment according to the decision of the Prime Minister.

2. The Enterprise Restructuring Support Fund at State Groups, State Corporations, and Parent Companies shall be used for:

a) Supporting member enterprises, directly affiliated business units in restructuring and ownership conversion (including enterprises implementing mergers, consolidations, dissolutions, bankruptcies, privatizations, transfers, sales, conversions to single-member limited liability companies, conversions to income-generating public service units...); resolving policies for surplus labor and handling financial issues according to the law;

b) Supplementing the registered capital according to the approval of the competent authority;

c) The remaining portion, State Groups, State Corporations, and Parent Companies may invest in developing enterprises according to the Decision of the Prime Minister.

3. The Prime Minister decides:

To establish, issue management and usage regulations for the Enterprise Restructuring Support Fund at the State Capital Investment Corporation; to coordinate the Fund among State Groups, State Corporations, including the State Capital Investment Corporation, Parent Companies; to invest in key state projects based on the proposal of the Ministry of Finance.

4. The Ministry of Finance shall stipulate the management and usage mechanisms for the Enterprise Restructuring Support Fund at State Groups, State Corporations, Parent Companies; to inspect and supervise the management and usage of proceeds from equitization to support enterprise restructuring and develop enterprises in accordance with the law.

Article 47. Articles of Association of Joint Stock Company

1. The Joint Stock Company's Articles of Association shall be drafted by the Steering Committee for Corporate Equitization and published to investors before selling shares. The draft Articles of Association must not contravene the provisions of the Enterprise Law and related laws.

2. The Articles of Association of a Joint Stock Company shall be approved by the first General Meeting of Shareholders when at least 65% of the total number of voting shares of participating investors agree.

Article 48. First General Meeting of Shareholders and Business Registration

1. Within one month from the completion of share sales, the enterprise must organize its first General Meeting of Shareholders to transform the equitized enterprise into a joint stock company and register business operations in accordance with the law.

The business registration dossier must include the decision to convert into a joint stock company issued by the authority deciding on equitization; the Articles of Association of the Joint Stock Company signed by the legal representative of the Joint Stock Company.

2. Within a maximum of fifteen working days after receiving the financial report at the time of officially becoming a joint stock company, the competent authority deciding on enterprise value shall cooperate with the finance department to conduct financial checks and handle matters at the time of officially becoming a joint stock company in accordance with Clause 21 of this Decree; to re-determine the value of state capital, the amount of income and expenditure arising during the equitization process, and to decide on adjusting state capital in the enterprise; to organize the handover between the enterprise and the joint stock company; to send the results of the re-determined enterprise value to the Ministry of Finance.

Article 49. Appointing State Capital Representatives in Equitized Enterprises

1. State Groups, State Corporations, Parent Companies have the responsibility to appoint persons to represent state capital in equitized enterprises that are subsidiaries or affiliated business units and bear responsibility for exercising the rights and obligations of the state capital owner in accordance with the law.

2. Ministries, ministerial-level agencies, government agencies, provincial People's Committees, municipal People's Committees directly under the central government:

- Report to the Prime Minister to decide on the appointment of state capital representatives in cases of full equitization of State Groups, State Corporations;

- Decide on the appointment of state capital representatives in joint stock companies. For equitized enterprises that transfer the right to represent state capital to the State Capital Investment Corporation, ministries, ministerial-level agencies, government agencies, provincial People's Committees, municipal People's Committees directly under the central government shall cooperate with the State Capital Investment Corporation in appointing persons to represent state capital in enterprises.

State capital representatives are responsible for coordinating with the Steering Committee for Corporate Equitization, the State Capital Investment Corporation to organize the General Meeting of Shareholders and handle related matters before the enterprise becomes a joint stock company.

Chapter V
POLICIES FOR ENTERPRISES

AND WORKERS DURING EQUITIZATION

Article 50. Enterprises after shareholding reform shall enjoy the following incentives:

1. Exemption from stamp duty for the transfer of assets under the management and use of the shareholding enterprise to become the property of the joint-stock company.

2. Exemption from business registration certificate issuance fees when transferring from a 100% state-owned enterprise to a joint-stock company.

3. Signing new land lease contracts, house lease contracts, and architectural structure leases with state agencies on terms similar to those applicable to the enterprise before shareholding reform, or being given priority to purchase at market prices at the time of shareholding reform to stabilize production and business activities.

4. Enjoying land use rights according to the provisions of the Law on Land.

5. Maintaining and developing the welfare fund in the form of tangible assets such as cultural facilities, clubs, clinics, convalescent homes, kindergartens to ensure welfare for workers in the joint-stock company. These assets belong to the collective ownership of the workers managed by the joint-stock company.

Article 51. Workers in enterprises undergoing shareholding reform shall enjoy the following preferential policies:

1. Workers whose names are on the regular list of the enterprise at the time of announcing the value of the shareholding enterprise may purchase up to 100 shares per year of actual work in the state sector at the price specified in Clause 2, Article 37 of this Decree.

2. Dividing the surplus cash balance of the Reward Fund and Welfare Fund (including the value of assets used in production and business invested using the Reward Fund and Welfare Fund) according to the provisions of Articles 14 and 19 of this Decree to purchase shares.

3. Continuing to participate and enjoy social insurance benefits according to the current system if they transfer to work at the joint-stock company.

4. Enjoying retirement benefits and other benefits according to the current system if they have met the conditions at the time of announcing the enterprise value.

If they lose their job or resign at the time of announcing the enterprise value, they shall be paid unemployment compensation according to the law.

Chapter VI
COMPLAINTS, REPORTS AND VIOLATION HANDLING

Article 52. Complaints and Reports

1. Complaints and reports and the resolution of complaints and reports related to the shareholding process shall be carried out in accordance with the provisions of this Decree and other laws on complaints and reports.

2. Within the complaint and report period, organizations and individuals must still comply with administrative decisions issued by competent state authorities. When there is an effective legal decision resolving the complaint or report by the competent state authority, it shall be implemented according to that decision.

3. Ministries, ministerial-level agencies, government-affiliated agencies, provincial People's Committees, and municipal People's Committees directly under the central government shall be responsible for accepting complaints and reports from organizations and individuals, resolving them within their jurisdiction, and informing the complainants and reporters in writing.

4. Within thirty days from the expiration date of the complaint resolution period or from the date of receiving the first decision resolving the complaint issued by the Minister, the head of a ministerial-level agency, a government-affiliated agency, or the Chairman of a provincial or municipal People's Committee directly under the central government, if the complainant disagrees, they have the right to initiate litigation at court according to the law.

Article 53. Handling violations during the shareholding process

1. Organizations and individuals who violate the provisions of this Decree and other relevant laws concerning shareholding shall be subject to disciplinary action, administrative penalties, or criminal prosecution depending on the nature and severity of the violation; if damage is caused, they must compensate according to the law.

2. Any person who abuses their position or power to obstruct the shareholding process; engages in harassment or causing inconvenience to organizations and individuals during the shareholding process; fails to promptly address requests from organizations and individuals as stipulated; or fails to perform other duties prescribed by law shall be subject to disciplinary action or criminal prosecution depending on the nature and severity of the violation.

3. Administrative penalty enforcement shall be carried out according to the law on handling administrative violations and other relevant laws such as administrative penalties in accounting and securities fields.

Chapter VII

IMPLEMENTATION

Article 54. Powers and responsibilities in organizing the implementation of corporatization.

1. The Prime Minister:

a) Approve the plan for corporatizing enterprises as specified in Article 2 of this Decree;

b) Decide to approve the corporatization schemes of State-owned Groups, Corporations, and certain enterprises operating in special fields such as insurance, banking, telecommunications, aviation, rare mineral exploitation; decide on the agency representing the State's ownership interest in these enterprises;

c) Delegate to the Boards of Directors of State-owned Groups and Special Corporations established by decision of the Prime Minister (Annex issued together with Decree No. 86/2006/NĐ-CP dated August 21, 2006 of the Government amending and supplementing some articles of Decree No. 132/2005/NĐ-CP dated October 20, 2005 of the Government on exercising the rights and obligations of State ownership towards state-owned companies) the authority to announce enterprise value and approve the corporatization schemes of member enterprises and subordinate business units. After making the decision, the Boards of Directors of State-owned Economic Groups and Special State Corporations shall report to the Ministry of Finance for inspection and supervision to ensure compliance with the law.

2. Ministers of Ministries, Heads of agencies at ministerial level, Heads of agencies under the Government, Chairmen of People's Committees of provinces and centrally-run cities shall base on the enterprise restructuring plans approved by the Prime Minister:

a) Establish Steering Committees for corporatization to assist the Ministers, Heads of agencies at ministerial level, Heads of agencies under the Government, and Chairmen of People's Committees of provinces and centrally-run cities in implementing corporatization work according to this Decree;

b) Guide, inspect, and supervise the corporatization process of units under their management according to the contents stipulated in this Decree;

c) Decide to announce enterprise value and submit the corporatization scheme of enterprises as specified in point b Clause 1 of this Article to the Prime Minister for approval;

d) Decide to announce enterprise value, decide on the corporatization scheme of enterprises under their management accompanied by a draft charter of joint-stock companies consistent with the provisions of the Enterprise Law and related laws;

đ) Take the initiative to transfer enterprises listed for corporatization but not meeting the conditions to other forms such as transferring, selling, dissolving, or liquidating the enterprise;

e) Negotiate with the Company for Debt Purchase and Remaining Assets of Enterprises to decide on the conversion of ownership for loss-making state-owned companies that have been processed financially by the Company for Debt Purchase and Remaining Assets of Enterprises according to regulations;

g) Approve financial settlement; settle costs of corporatization; settle support funds for redundant workers; settle the amount of money received from corporatization and announce the actual value of the State's capital at the time the joint-stock company was first granted a Business Registration Certificate;

h) Resolve difficulties, complaints, and denunciations of corporatized enterprises within their authority within a maximum period of 15 days from the date of receipt of complete complaint and denunciation documents. In cases exceeding their authority, they must promptly report to the Prime Minister for consideration and decision;

i) Report to the Prime Minister for consideration and decision on the agency representing the State's ownership interest when corporatizing State-owned Groups and State-owned Corporations;

k) For enterprises listed for corporatization that fall under the category of transferring the right to represent State ownership capital to the State Capital Investment Corporation, Ministers, Heads of agencies at ministerial level, Heads of agencies under the Government, and Chairmen of People's Committees of provinces and centrally-run cities are responsible for coordinating with the State Capital Investment Corporation in selecting representatives of State capital contributions to joint-stock companies and implementing the transfer of the right to represent State ownership capital in enterprises immediately after announcing the actual value of the State's capital at the time the joint-stock company was first granted a Business Registration Certificate.

3. The Boards of Directors of economic groups and state corporations mentioned in point c Clause 1 of this Article shall be responsible for:

a) Implementing the corporatization plan of enterprises under the group and corporation according to the enterprise restructuring project approved by the Prime Minister;

b) Establish Steering Committees for corporatization to assist the Boards of Directors of State-owned Economic Groups and State Corporations in implementing corporatization work according to this Decree;

c) Guide, inspect, and supervise the corporatization process of units under their management according to the contents stipulated in this Decree;

d) Direct member units: handle financial issues according to Chapter II of this Decree, organize the determination of enterprise value, prepare the corporatization scheme for approval by the Board of Directors of the Group or Corporation; implement the approved scheme;

đ) Handle financial issues of enterprises under their management within their authority;

e) Decide to announce enterprise value and approve the corporatization scheme of member enterprises and business units within the Group or Corporation accompanied by a draft charter of joint-stock companies consistent with relevant laws;

g) Direct member units to cooperate with relevant agencies in implementing financial settlement, settling costs of corporatization, settling support funds for redundant workers, settling the amount of money received from corporatization and announcing the actual value of the State's capital at the time the joint-stock company was first granted a Business Registration Certificate.

4. In addition to the powers and responsibilities stipulated in Clause 3 of this Article, the Board of Directors of the State Capital Investment Corporation also has the responsibility:

a) Coordinate with ministries, sectors, People's Committees of provinces and centrally-run cities:

- Organize the implementation of corporatization of enterprises falling under the transfer category;

- Appoint representatives to manage state capital at enterprises belonging to the transfer object;

- Inspect and urge enterprises to remit proceeds from shareholding reform to the Enterprise Restructuring Support Fund at the State Capital Investment Corporation;

b) Implement investments in projects as decided by the Prime Minister;

c) Assist state-owned enterprises and forestry and logging farms in restructuring, resolving policies for surplus labor, and addressing financial issues;

d) Regularly compile and report to the Prime Minister and the Ministry of Finance on the management and use of the Enterprise Restructuring Support Fund;

5. Powers, responsibilities, and composition of the Shareholding Reform Steering Committee:

a) The Shareholding Reform Steering Committee has the following powers and responsibilities:

- Assist the authority deciding on shareholding reform in directing and organizing the implementation of shareholding reform for one or more enterprises as stipulated in this Decree;

- Be authorized to use the seal of the competent authority while performing its tasks;

- Establish a Working Group to implement shareholding reform activities at the enterprise;

- Report to the authority deciding on shareholding reform on the selection of methods for the initial public offering of shares;

- Direct the drafting of the shareholding reform plan and the draft Articles of Association of the joint-stock company;

- Review and submit to the competent authority for decision on announcing the enterprise value and approving the shareholding reform plan;

- Direct the shareholding reform enterprise to cooperate with intermediary financial organizations to organize the auction sale of shares;

- Compile and report to the competent authority on the results of the share sale;

- Compile and submit to the competent authority for decision on adjusting the shareholding reform plan and the enterprise value after conversion into a joint-stock company;

- Examine, select, propose, and coordinate with the competent authority to appoint representatives of state capital at the shareholding reform enterprise;

b) The composition of the Shareholding Reform Steering Committee is determined by the Minister, Head of a ministry-level agency, agency under the Government, Chairman of the People's Committee of provinces and centrally-run cities, Board of Directors of State-owned Corporations and Groups;

For enterprises undergoing shareholding reform where the rights of the state owner are transferred to the State Capital Investment Corporation, members of the Shareholding Reform Steering Committee shall include representatives with authority from the State Capital Investment Corporation;

6. Trade unions at shareholding reform enterprises have the responsibility to coordinate with the Shareholding Reform Steering Committee:

a) Propagate and mobilize cadres, workers, and employees at shareholding reform enterprises to implement the state's shareholding reform policy;

b) Participate in supervising the shareholding reform process at the enterprise;

c) Nominate representatives of trade union capital to run for election to the Board of Directors and Supervisory Board of the joint-stock company in accordance with the law;

d) Utilize legitimate trade union funds to purchase shares at the enterprise and organize the distribution of benefits obtained to workers;

Article 55. Reporting and supervision system

1. The Minister, Head of a ministry-level agency, agency under the Government, Chairman of the People's Committee of provinces and centrally-run cities, Board of Directors of economic groups and state-owned corporations have the responsibility to promptly report to the Steering Committee for Enterprise Renewal and Development, the Ministry of Finance on relevant contents during the shareholding reform process: results of handling financial issues, valuation results, decisions on announcing enterprise value and adjusting enterprise value, shareholding reform plans, results of share sales, settlement of shareholding reform costs, settlement of handover from state-owned enterprises to joint-stock companies;

The Ministry of Finance will provide detailed guidance on the reporting system stipulated in this clause;

2. The Ministry of Finance is responsible for inspecting, supervising, and urging ministries, ministry-level agencies, agencies under the Government, provincial People's Committees, centrally-run city People's Committees, economic groups, and state-owned corporations to implement shareholding reform work according to the enterprise restructuring plan approved by the Prime Minister and the provisions of the law, regularly reporting to the Prime Minister on the situation and results of implementing shareholding reform of enterprises;

Chapter VIII
IMPLEMENTING PROVISIONS

Article 56. Implementation Provisions

1. This Decree takes effect 15 days after being published in the Official Gazette and replaces Government Decree No. 187/2004/NĐ-CP dated November 16, 2004, on converting state-owned companies into joint-stock companies. Previous regulations on shareholding reform that conflict with this Decree are no longer effective;

2. Enterprises that have received approval decisions on shareholding reform plans from competent authorities before this Decree takes effect shall continue to implement according to the approved plan and the provisions of this Decree;

3. Enterprises that have registered to convert into joint-stock companies before this Decree takes effect shall continue to enjoy incentives as provided by related laws;

4. The shareholding reform of state-owned commercial banks shall be carried out in accordance with the provisions of this Decree, relevant regulations on banking management, and specific contents in each shareholding reform proposal approved by the Prime Minister.

Article 57. The Ministry of Finance, the Ministry of Labor, 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 Security, and other relevant agencies shall be responsible for guiding the implementation of this Decree.

Article 58. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Committees of provinces and centrally governed cities, Boards of Directors of State-owned Economic Groups, and State-owned Joint Stock Companies established by decision of the Prime Minister shall be responsible for enforcing this Decree./.