Circular No. 111/2020/TT-BTC guiding certain contents on financial handling, determining the value of public service units, initial public offerings, and managing and using proceeds from converting public service units into joint-stock companies.

CIRCULAR

GUIDANCE ON CERTAIN ASPECTS OF FINANCIAL HANDLING, DETERMINING THE VALUE OF PUBLIC SERVICE UNITS, FIRST-TIME SHARE ISSUANCE, AND MANAGEMENT AND USE OF FUNDS FROM CONVERTING PUBLIC SERVICE UNITS INTO JOINT-STOCK COMPANIES

On the basis of Law on Management and Use of State Property June 21, 2017;

On the basis of Enterprise Law November 26, 2014;

On the basis of Law on State Management and Use of State Investment in Business Operations at Enterprises capital dated November 15, 2010; November 26, 2014;

On the basis of Law on Civil Servants Decision No. 150/2020/NĐ-CP Law Amending and Supplementing Certain Provisions of the Law on Public Officials and Civil Servants and the Law on Civil Servants dated December 7, 2023 of the Government amending and supplementing certain articles of Decree No. 115/2020/NĐ-CP dated September 25, 2020 on recruitment, utilization, and management of public service staff;

Decree No. 87/2017/NĐ-CP dated December 25, 2020 of the Government on converting public service units into joint-stock companies;

Decree No. Decree No. 151/2017/NĐ-CP Government Decree No. 150/2020/NĐ-CP

Decree No. dated December 25, 2020 of the Government on converting public service units into joint-stock companies; Government Decree No. 150/2020/NĐ-CP

The Minister of Finance hereby issues this Circular amending and supplementing certain Articles of Circular No. 133/2015/TT-BTC dated August 31, 2015, issued by the Minister of Finance guiding the financial management mechanism for the Vietnam Chamber of Commerce and Industry (hereinafter referred to as Circular No. 133/2015/TT-BTC).

dated December 25, 2020 of the Government on converting public service units into joint-stock companies; The Minister of Finance issues this Circular to guide certain aspects of financial handling, determining the value of public service units, first-time share issuance, and management and use of funds from converting public service units into joint-stock companies, according to the provisions of Government Decree No. 150/2020/NĐ-CP dated December 25, 2020 on converting public service units into joint-stock companies.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides certain aspects of financial handling, determining the value of public service units, first-time share issuance, and management and use of funds from converting public service units into joint-stock companies, pursuant to Government Decree No. 150/2020/NĐ-CP dated December 25, 2020 on converting public service units into joint-stock companies.

Article 2. Applicability

1. Public service units specified in Clause 1, Article 2 of Government Decree No. 150/2020/NĐ-CP dated December 25, 2020 on converting public service units into joint-stock companies (hereinafter referred to as public service units for conversion).

2. Ministries, ministerial-level agencies, government agencies, provincial People's Committees, the Hanoi National University, the Ho Chi Minh City National University, and other relevant organizations, entities, and individuals involved in the conversion of public service units into joint-stock companies.

Chapter II

FINANCIAL HANDLING WHEN CONVERTING PUBLIC SERVICE UNITS INTO JOINT-STOCK COMPANIES

Article 3. Principles for Financial Handling and Determining the Value of Public Service Units When Converting into Joint-Stock Companies

1. Based on the list of public service units to be converted into joint-stock companies approved by the competent authority, public service units for conversion shall handle financial matters in accordance with current regulations on converting public service units into joint-stock companies.

The process of financial handling and determining the value of public service units must ensure strictness, transparency, and compliance with state regulations. Any organization or individual involved in financial handling and determining the value of public service units who fails to comply with prescribed procedures, causing loss or waste of state assets, shall bear administrative responsibility, compensate material losses, or be held criminally liable under the law.

2. Public service units for conversion shall implement the financial mechanism applicable to public service units up to the point when they officially become joint-stock companies (the date of obtaining the business registration certificate for the first time as a joint-stock company).

3. Public service units for conversion must submit reports and proposals for restructuring plans and asset disposal, and have these plans approved by the competent authority before the decision to convert public service units into joint-stock companies is issued by the competent authority, in accordance with the Government's regulations on restructuring and disposing of state assets.

Public service units for conversion must obtain approval for their land use plan in accordance with the law on land before the competent authority decides to publish the value of the public service unit.

4. Public service units for conversion shall organize inventory, classify assets and capital, and handle financial issues at the valuation date (hereinafter referred to as the valuation date) in accordance with Article 10 of Government Decree No. 150/2020/NĐ-CP and the contents provided in Chapter II of this Circular to serve as the basis for preparing a financial situation report modeled after a business enterprise at the valuation date.

The inventory and classification of assets must identify: State assets included in the capital of public service units for conversion; State assets transferred to enterprises converted from public service units for management, not included in the capital of public service units for conversion. The determination of state assets transferred to enterprises converted from public service units for management, not counted as capital of the enterprise, must comply with the law on the management and use of state assets.

5. The financial situation report of public service units for conversion modeled after a business enterprise at the valuation date is one of the documents published along with the prospectus.

The financial situation report of public service units for conversion modeled after a business enterprise prepared at the time of the first registration of a joint-stock company serves as the basis for transferring to the joint-stock company.

6. In cases where, after financial handling and revaluation of public service units for conversion in accordance with the regulations, there is no remaining state capital or the financial handling leads to negative state capital, it shall be handled in accordance with Clause 5, Article 8 and Clause 1, Article 28 of Government Decree No. 150/2020/NĐ-CP on converting public service units into joint-stock companies.

7. In case the competent authority discovers that assets or debts have been under-reported or omitted during the inventory process and debt verification leading to a reduction in the value of the public service unit and state capital at the public service unit being converted, the public service unit being converted and related organizations and individuals must bear responsibility for compensating and submitting the full value of the under-reported or omitted assets and debts to the state budget within one year from the date of discovery of such under-reporting or omission; in cases of intentional under-reporting or intentional omission, they will be held responsible according to the provisions of the law.

8. All monetary items with foreign currency origins at the time of valuation and the time when the public service unit officially converts into a joint-stock company shall be revalued in accordance with the provisions of Clause 5, Article 7 and Clause 3, Article 8 of this Circular.

9. Ministries, ministerial-level agencies, agencies under the Government, provincial People's Committees, Hanoi National University, Ho Chi Minh City National University are responsible for resolving financial issues during the conversion of public service units into joint-stock companies in accordance with Decree No. 150/2020/ND-CP, and any newly arising financial issues related to the conversion process of public service units after the public service units officially convert into joint-stock companies.

Article 4. Inventory and Classification of Assets

1. The public service unit being converted is responsible for conducting an inventory and classifying assets, sources of funds, and funds it manages and uses at the time of valuation.

2. At the time of valuation, the public service unit being converted must prepare an inventory list accurately identifying the type, quantity, actual condition, quality, and value of existing assets managed and used by the unit; checking cash on hand, reconciling bank account balances with the treasury; determining excess or shortage of assets and cash compared to accounting records; clearly analyzing the reasons for excess or shortage and the responsibilities of those involved, and determining compensation levels in accordance with the law.

3. Inventoried assets are classified into the following groups:

a) State assets transferred to the business entity converted from the public service unit for management, not included in the state capital component at the public service unit, including: Special assets, specialized assets serving national defense and security tasks; Infrastructure assets serving national interests and public benefits; Assets serving state project activities; Natural resources and other types of assets as prescribed by laws on state assets;

b) Assets not intended for continued use and to be handed over to the state asset management agency for disposal;

c) Assets used in public service activities and production and business operations;

d) Assets formed from welfare funds and development activity funds;

đ) Leased, borrowed assets, goods received for safekeeping, processing, agency sales, consignment, assets contributed to joint ventures and associated assets not belonging to the public service unit being converted;

e) Assets attached to land subject to restructuring and disposal plans for state-owned real estate facilities in accordance with decisions approved by competent authorities in compliance with laws on the restructuring and disposal of state-owned real estate;

g) Assets awaiting disposal decisions from competent authorities;

h) Financial investments (investments in joint ventures and associations with businesses and organizations; equity contributions, establishment of limited liability companies, and other investment activities);

i) Other assets (if any).

4. The public service unit being converted must inventory the balance of the Development Activity Fund, Award and Welfare Fund, Supplementary Income Fund, Special Fund, Other Funds, and the balance of the salary reform fund as the basis for handling these funds in accordance with Articles 14 and 18 of Decree No. 150/2020/ND-CP.

For the balance of the Special Fund and Other Funds, the public service unit being converted must identify the source of funding forming the Fund, which includes: Funding from the state budget or revenue of the unit; Funding formed from the surplus of income and expenditure of the public service unit being converted; Funding sponsored by organizations and individuals. If the source of funding cannot be identified, the public service unit must report specific reasons to the Steering Committee for the Conversion of Public Service Units for inventory, classification, and handling in accordance with Clause 4, Article 14 of Decree No. 150/2020/ND-CP.

Article 5. Matching, Confirmation, and Classification of Accounts Receivable and Payable

Public Service Units undergoing conversion shall match, confirm, and classify accounts receivable and payable in accordance with Articles 15 and 16 of Decree No. 150/2020/NĐ-CP, and prepare detailed lists for each debtor and creditor at the time of valuation, including the following specific contents:

1. Accounts Receivable:

a. Match and confirm accounts receivable for each debtor, including: All overdue, current, and past-due receivables, and uncollectible receivables.

Uncollectible receivables must be supported by sufficient documentation proving their uncollectibility in accordance with Clause 3, Article 7 of this Circular.

b. In cases where some receivables have complete files but have not been matched and confirmed by the time of valuation, the Public Service Unit undergoing conversion shall be responsible for reporting to the competent authority for consideration and decision-making on handling in accordance with Clause 2, Article 15 of Decree No. 150/2020/NĐ-CP.

a. Based on contracts, debt notices, debt matching, and other relevant documents (if any), the Public Service Unit undergoing conversion shall perform: Prepare detailed lists of loans owed to each creditor; Determine tax debts, fees, and other payments due to the state budget; Analyze loans according to contracts (domestic loans, foreign loans), guaranteed loans, non-guaranteed loans, bond issuance loans, payable within term, due, and past-due, principal, interest, and payable but not required to be paid.

b. Accounts payable but not required to be paid by the Public Service Unit undergoing conversion include:

- Debts from creditors of the Public Service Unit undergoing conversion when matching and confirming debts fall under one of the following situations: Debts from enterprises that have been dissolved or declared bankrupt without identifying the successor entity or individual according to the dissolution or bankruptcy plan approved by the competent authority; Debts from individuals who have died without identifying the heir according to the law on inheritance; Debts from other creditors that are overdue but the creditors did not come to match and confirm.

In such cases, the Public Service Unit undergoing conversion must issue a direct notification to the creditor and simultaneously announce it through mass media at least 10 working days before the valuation date.

- State budget funds allocated;

- Non-repayable foreign aid and loans;

- Fees and charges allowed to remain for expenditure as prescribed by the Law on Fees and Charges;

- The portion of Special Fund, Other Funds not formed from state budget funds or surplus of income over expenditure of the Public Service Unit undergoing conversion;

- Other debts not required to be paid.

Article 6. Matching, Confirmation of Financial Investments, Dividends, and Capital Contributions Received

1. The Public Service Unit undergoing conversion shall prepare detailed lists to match and confirm financial investments and dividends received, including: Joint venture and joint operation capital contributions to enterprises and organizations; Share capital contributions and establishment of limited liability companies; Dividends received from investment activities.

2. Determine the quantity and value of securities (stocks, bonds, etc.) purchased, and the number of stocks distributed to the Public Service Unit undergoing conversion.

3. For joint venture and joint operation capital contributions received, the Public Service Unit undergoing conversion shall base on joint venture and joint operation contracts to prepare detailed lists for each partner and notify the capital contributors to be aware so they can either take over previous contracts or terminate them with the successor company.

Article 7. Financial Treatment at the Time of Determining the Value of Public Service Units

1\. Public service units undergoing conversion shall implement financial treatment at the time of determining value in accordance with the provisions from Article 10 to Article 18 of Decree No. 150/2020/NĐ-CP and the contents guided in Clause 2, Clause 3, and Clause 4 of this Article.

2\. Based on the results of inventory and classification of assets:

a\. For missing assets, responsibility must be determined for organizations and individuals to handle and compensate material losses according to current regulations. In cases where missing assets are due to objective reasons (natural disasters, fires, and other force majeure causes), the unit shall report to the competent authority (as stipulated in Article 34 of Decree No. 151/2017/NĐ-CP dated December 26, 2017 of the Government detailing certain provisions of the Law on Management and Use of State Assets and subsequent amendments and supplements, if any) to decide on reducing assets according to the law, and the amount of compensation for discovered missing assets (if any) shall be supplemented to the Development Fund for Public Service Activities of the converted public service unit.

b\. For excess assets, if the cause cannot be identified or the owner cannot be found, at the time of determining value, the asset shall be increased, and state capital at the converted public service unit shall be increased according to the re-evaluated asset value.

c\. For unused, surplus, or pending liquidation assets: The converted public service unit shall carry out procedures for recovery, transfer, sale, liquidation, and destruction of state assets according to the Law on Management and Use of State Assets and detailed implementing regulations of the Law on Management and Use of State Assets. If the company has not completed the disposal of assets when officially converting to a joint-stock company, the unit shall continue to store and report to the competent authority according to the law on management and use of state assets to decide on disposal and assign the organization responsible for disposal.

d\. For special assets, dedicated assets in the fields of national defense and security, infrastructure assets, and other state assets managed and used by public service units that are not included in the state capital value when converting to a joint-stock company: The converted public service unit shall prepare a project for exploiting and managing state assets to be handed over to the enterprise converted from the public service unit to manage without being considered part of the state capital in the enterprise according to the law on management and use of state assets. The project is an inseparable component of the plan for converting public service units.

3\. Debts that cannot be recovered shall be excluded from the value of the public service unit.

a\. Debts that cannot be recovered are debts that have exceeded the payment deadline or have not yet reached the payment deadline and fall under one of the following situations:

- The debtor is a business or organization that has completed bankruptcy proceedings according to the law;

- The debtor is a business or organization that has ceased operations or been dissolved;

- The debtor has been decided by the competent authority to write off the debt according to the law;

- The debtor is an individual who has died or is currently being prosecuted, detained, tried, or serving a sentence;

- The remaining difference of unrecovered debts after handling the responsibility of individuals or groups to compensate for material losses;

b\. Unrecoverable debts as specified in Point a Clause 3 of this Article shall be excluded from the value of the public service unit when there are sufficient documents to prove, specifically as follows:

- Accounting books, vouchers, and documents proving the unrecovered debt up to the time of debt processing, which the converted public service unit still records as receivables in accounting such as economic contracts, loan agreements, debt commitments, contract settlement certificates (if any), account reconciliation statements (if any), demand letters sent by businesses (with postmark or confirmation from the delivery unit); account reconciliation lists and other related vouchers.

- In the case of economic organizations:

+ Bankrupt debtor: There is a court decision declaring bankruptcy of the business according to the Bankruptcy Law.

+ Debtor that has ceased operations or been dissolved: There is a confirmation letter or a written announcement on the official website of the authority deciding to establish the business or registered economic organization or the tax authority directly managing the business or organization about the cessation of operations or dissolution of the business or organization; or the debt has been initiated by the business or organization to the court according to the law, with a judgment or decision of the court and a confirmation opinion from the enforcement agency regarding the debtor's lack of assets for enforcement.

+ For receivable debts but the debtor has been decided by the competent authority to write off the debt according to the law; the loss difference is decided by the competent authority to sell the debt.

- In the case of individuals:

+ Death certificate (certified copy or copy from the original book) or confirmation from local authorities for deceased debtors.

+ Warrant for arrest or confirmation from law enforcement agencies for debtors who have fled, or are being prosecuted, or are serving a sentence.

4\. Debts that do not need to be paid by the converted public service unit as specified in Point b Clause 2 of Article 5 of this Circular shall be included in the value of the state capital at the converted public service unit.

5\. Exchange rate differences arising from revaluation of foreign currency items at the time of determining value shall be implemented according to the provisions of Clause 2 of Article 18 of Decree No. 150/2020/NĐ-CP. Exchange rate differences arising from revaluation of monetary items denominated in foreign currencies in business activities shall be recorded in financial income (if exchange rate gains) or operating expenses (if exchange rate losses).

The foreign exchange rate shall be determined based on the buying foreign currency rate of the commercial bank where the public service institution undergoing conversion has the largest transaction value at the time of valuation. In case the public service institution undergoing conversion does not have foreign currency transactions at the time of determining the value, it shall be determined according to the central rate published by the State Bank applicable at the time of valuation. Information about foreign currency monetary items and the results of revaluation of foreign currency monetary items at the time of determining the value is information disclosed in the prospectus.

6. Based on the value of the public service institution undergoing conversion decided by the competent authority, the public service institution undergoing conversion shall prepare financial statements of the unit according to the enterprise model as prescribed in the Circular of the Ministry of Finance guiding accounting work when implementing the conversion of public service institutions into joint-stock companies.

Article 8. Financial treatment at the official time of becoming a joint-stock company

1. The public service institution undergoing conversion continues to implement financial mechanism regulations, distribution of financial results, and preparation of financial reports according to the regime prescribed for public service institutions from the time of determining the value until the official time of becoming a joint-stock company.

2. The public service institution undergoing conversion shall implement financial treatment at the official time of becoming a joint-stock company in accordance with the provisions of Clause 19 of Decree No. 150/2020/ND-CP and the contents guided in Clauses 3, 4, and 5 of this Article.

3. Exchange rate differences arising from the revaluation of foreign currency monetary items at the official time of becoming a joint-stock company shall be implemented in accordance with Point c, Clause 2 of Article 19 of Decree No. 150/2020/ND-CP. Exchange rate differences arising from the revaluation of foreign currency monetary items related to business operations shall be recorded in financial income (if there is a gain from exchange rate differences) or financial expenses (if there is a loss from exchange rate differences).

The foreign exchange rate shall be determined based on the buying foreign currency rate of the commercial bank where the public service institution undergoing conversion has the largest transaction value at the official time of becoming a joint-stock company. In case the public service institution does not have foreign currency transactions at the official time of becoming a joint-stock company, it shall be determined according to the central rate published by the State Bank applicable at the official time of becoming a joint-stock company.

4. For the balance of the Reward Fund and Welfare Fund at the official time of becoming a joint-stock company (if any), the joint-stock company shall inherit and continue to use them.

5. Within ninety days from the date of issuance of the first Certificate of Enterprise Registration for a joint-stock company, the enterprise converted from a public service institution shall prepare financial statements according to the enterprise model at the time of the first registration for a joint-stock company and handle financial issues in accordance with Article 19 of Decree No. 150/2020/ND-CP.

Chapter III

DETERMINATION OF THE VALUE OF PUBLIC SERVICE INSTITUTIONS BY ASSET METHOD

Article 9. Determining the Actual Value of Various Types of Assets of Public Service Units

The determination of the value of public service units according to the asset method shall be carried out in accordance with the provisions of Chapter III of Decree No. 150/2020/NĐ-CP and shall be specifically guided as follows:

1. The actual value of each asset under the ownership and use of the converting public service unit shall be determined in Vietnamese dong based on the list of assets recorded in the accounting books of the converting public service unit.

For assets recorded in foreign currency: The foreign exchange rate shall be determined based on the buying foreign exchange rate of the commercial bank where the converting public service unit has the largest foreign currency transaction volume at the time of valuation. In case the converting public service unit does not have foreign currency transactions at the time of valuation, it shall be determined based on the central exchange rate published by the State Bank applicable at the time of valuation.

2. For assets in kind:

a. Revaluation shall not be conducted for state-owned assets that are not included in the value of the converting public service unit and are transferred to the management and use of the enterprise converted from the public service unit.

b. Revaluation shall only be conducted for assets that the joint-stock company continues to use.

c. The actual value of the asset equals the original cost calculated based on the market price of a new asset of the same type at the time of valuation multiplied by the remaining quality of the asset at the time of valuation. Wherein:

- The market price of a new asset is the price of a new asset of the same type currently being bought and sold on the market including transportation and installation costs (if any). If it is a special asset not available on the market, the purchase price shall be calculated based on the purchase price of a similar new asset from the same country of production with the same capacity or equivalent features. In case there is no similar asset, it shall be calculated based on the asset price recorded in the accounting books (including assets invested or purchased in foreign currency).

For assets such as houses and structures: The market price is the basic construction unit price or investment quota prescribed by the competent authority at the time closest to the time of valuation. In case there is no regulation, it shall be calculated based on the book value, taking into account the inflation factor in basic construction.

For assets such as houses and structures completed within three years before the time of valuation, the final settlement value of the project approved by the competent authority shall be used. In case the project has not been approved by the competent authority but has been put into use, it shall be temporarily calculated based on the accounting book value as stipulated in Circular No. 45/2018/TT-BTC dated May 7, 2018 of the Ministry of Finance guiding the management system, depreciation, and amortization of fixed assets at agencies, organizations, and units and fixed assets entrusted to enterprises for management without being counted as state capital in enterprises and any amendments, supplements, or replacements (if any).

For special projects where the scale of the project or construction unit price, investment quota cannot be determined: It shall be calculated based on the book value in the accounting records considering the inflation factor minus the depreciation value at the time of valuation.

- The remaining quality of the asset shall be determined as a percentage compared to the quality of a newly purchased or newly constructed asset of the same type, in compliance with the national regulations on safety conditions for using and operating assets, ensuring product quality and environmental hygiene as guided by the relevant ministries managing economic and technical sectors; however, it shall not be lower than 20% of the value of a newly purchased or newly constructed asset of the same type as stipulated in Clause 2, Article 24 of Decree No. 150/2020/NĐ-CP.

d. Fixed assets that have fully depreciated and amortized, tools, and management equipment that have been fully distributed into operational costs but continue to be used by the joint-stock company must be revalued to include in the value of the converting public service unit according to the principle of not being less than 20% of the value of newly purchased assets, tools, and equipment.

đ. For converting public service units with planted forests and orchards as assets in kind, when determining the value of the public service unit, the value of the planted forests and orchards shall be determined in accordance with the provisions of Joint Circular No. 17/2015/TTLT-BNNPTNT-BTC dated April 22, 2015 of the Ministry of Agriculture and Rural Development - Ministry of Finance and any amendments, supplements, or replacements (if any).

3. Financial assets including cash, deposits, and securities (bills, bonds, etc.) of the converting public service unit shall be determined as follows:

a. Cash shall be determined based on the inventory record at the time of valuation.

b. Deposits shall be determined based on the confirmed balance or subsidiary ledger with the bank or treasury where the public service unit maintains its account.

c. Foreign currency cash and deposits shall be determined based on the principle set forth in Clause 1 of this Article.

d. Securities shall be determined based on the market transaction price at the time of valuation. If there is no transaction, it shall be determined based on the face value of the security.

4. Accounts receivable and payable shall be determined based on the actual balance on the accounting books and after reconciliation and processing as stipulated in Article 15 and Article 16 of Decree No. 150/2020/NĐ-CP.

5. Uncompleted expenses related to production and business activities, basic construction investments, compensation, resettlement, and land leveling costs shall be determined based on the actual occurrence recorded in the accounting books.

6. The value of financial investments of the converting public service unit shall be determined in accordance with the provisions of Article 26 of Decree No. 150/2020/NĐ-CP.

7. The value of collateral and short-term and long-term guarantees shall be determined based on the actual balance on the accounting books after confirmation.

8. The value of the brand asset of the public service unit (if any) shall be determined in accordance with Vietnamese valuation standards, laws on the management and use of state assets, intellectual property laws, and related laws.

Article 10. Value of public service units converted through the asset method

1. The actual value of public service units converted through the asset method shall be determined in accordance with Clause 1 of Article 23 of Decree No. 150/2020/NĐ-CP and the guidance provided in this Circular.

2. The actual value of state capital at public service units converted equals the actual value of the public service unit converted as stipulated in Clause 1 of this Article minus (-) actual debts payable, bonus and welfare funds, surplus balance of income supplementation funds left for employees of the converted public service unit, and contributions from organizations and individuals. Among these, actual debts payable are the total value of debts payable minus (-) debts that do not need to be paid. Debts payable that do not need to be paid of the converted public service unit are specified in Point b, Clause 2 of Article 5 of this Circular.

Chapter IV

ANNOUNCEMENT OF INFORMATION ON THE PROCESS OF CONVERTING PUBLIC SERVICE UNITS INTO JOINT STOCK COMPANIES

Public service units converting must publicly disclose information on the process of converting into joint stock companies in accordance with Clause 1 of Article 42 of Decree No. 150/2020/NĐ-CP and the following specific contents:

1. Within the latest 10 working days from the date of receiving decisions and documents from competent authorities regarding financial, labor, and land issues related to the process of converting into joint stock companies as prescribed by Decree No. 150/2020/NĐ-CP, the converted public service units must publicly disclose such information on their own public service unit's website (if available) and send it to the Government's electronic portal, while also sending a written report to the Ministry of Finance, the Steering Committee for Enterprise Reform and Development, and the State Steering Committee for Reforming the Operation Mechanism of Public Service Units.

2. Quarterly (before the 5th day of the first month of each quarter), the converted public service units are responsible for reporting on the situation and progress of implementing the conversion into joint stock companies according to the approved plan by the competent authority (in the form of the template attached as Appendix 3 of this Circular) and publicly disclosing such information on their own public service unit's website (if available), and sending it to the supervising agency, the Ministry of Finance, the Steering Committee for Enterprise Reform and Development, and the State Steering Committee for Reforming the Operation Mechanism of Public Service Units.

Chapter V

SALE OF INITIAL SHARES AND MANAGEMENT AND USE OF FUNDS FROM CONVERTING PUBLIC SERVICE UNITS INTO JOINT STOCK COMPANIES, HANDOVER BETWEEN CONVERTED PUBLIC SERVICE UNITS AND JOINT STOCK COMPANIES

Article 12. Shareholders

1. Domestic and foreign investors as stipulated in Clause 1 and Clause 2 of Article 6 of Decree No. 150/2020/NĐ-CP, including organizations and individuals (including employees of the converted public service unit).

2. Strategic investors are domestic and foreign investors who meet the conditions set out in Point b, Clause 3 of Article 6 of Decree No. 150/2020/NĐ-CP.

3. The subjects as stipulated in Article 37 of Decree No. 150/2020/NĐ-CP.

4. Trade unions at converted public service units as stipulated in Point b, Clause 2 of Article 31 of Decree No. 150/2020/NĐ-CP. Trade unions authorize persons with authority to carry out procedures related to purchasing shares.

5. Organizations and individuals who are not allowed to purchase initial issued shares of converted public service units as stipulated in Clause 4 of Article 6 of Decree No. 150/2020/NĐ-CP.

Article 13. Initial Public Offering Price

1. The price for selling shares to investors through auction is the purchase price offered by the investor at the auction and determined as the successful bid according to the methods of share auction sale prescribed in Clause 2, Article 7 of Decree No. 150/2020/NĐ-CP.

2. The preferential price for selling shares to the subjects specified in Clause 1, Article 37 of Decree No. 150/2020/NĐ-CP shall be as follows:

a. The price for selling shares to the subject specified in Point a, Clause 1, Article 37 of Decree No. 150/2020/NĐ-CP is determined at sixty percent (60%) of the par value of one (01) share (10,000 VND/share).

b. The price for selling shares to the subject specified in Point a, Clause 2, Article 37 of Decree No. 150/2020/NĐ-CP is the starting price approved by the competent authority in the privatization plan.

3. The preferential price for selling shares to trade unions at public service units being converted is at par value (10,000 VND/share).

4. The price for selling shares to strategic investors.

a. In the case of auction among strategic investors: The selling price is the purchase price of the strategic investor determined as the successful bidder in the auction among strategic investors but not lower than the average successful auction price in the public auction to the general public or not lower than the agreed price with the investor in the case where the public auction only has one investor registering to buy shares or not lower than the starting price of the public auction in the case where the public auction does not succeed and ensuring the principle of selecting investors with the highest bidding price from high to low until the number of shares sold is sufficient.

b. In the case where there are two (02) or more strategic investors registering to buy shares with the quantity registered to buy equal to or less than the number of shares planned to sell to strategic investors in the approved privatization plan or only one (01) strategic investor registers to buy shares: The selling price is negotiated by the Steering Committee for the conversion of public service units with each investor but not lower than the average successful auction price in the public auction to the general public or not lower than the agreed price with the investor in the case where the public auction only has one investor registering to buy shares or not lower than the starting price of the public auction in the case where the public auction does not succeed.

Article 14. Organization of Initial Public Offering

1. Based on the plan for converting public service units into joint-stock companies approved by the competent authority (Annex 1 issued together with this Circular), the Steering Committee for the conversion of public service units implements the initial public offering plan according to the methods already approved in the conversion plan, including:

a. The method of public auction to the general public is applied when selling shares initially, including the number of shares that strategic investors do not register to buy up to the number of shares offered for sale in the approved conversion plan.

b. The direct negotiation method is applied in the following cases:

- Selling to strategic investors in the following cases: Strategic investors register to buy shares with quantities equal to or less than the number of shares planned to sell to strategic investors in the approved conversion plan; or only one strategic investor registers to buy shares.

- Selling to investors the remaining shares not sold according to Clause 4, Clause 6, Article 32 of Decree No. 150/2020/NĐ-CP.

- Selling to employees and trade unions.

c. The underwriting issuance method is applied when selling shares initially of public service units being converted.

2. The implementation of organizing the initial public offering to the subjects according to the methods of public auction, the underwriting issuance method, and the direct negotiation method is carried out in accordance with the provisions of Article 7, Article 8, and Article 9 of Circular No. 40/2018/TT-BTC dated May 4, 2018, guiding the initial public offering and management and use of proceeds from the privatization of state-owned enterprises and limited liability companies with 100% state capital and any amendments, supplements, or replacements thereof (if any).

3. The sale of shares to strategic investors is implemented in accordance with Clause 3, Article 6 of Decree No. 150/2020/NĐ-CP.

4. Within four (04) months from the date the conversion plan is approved, the public service unit being converted must complete the sale of shares according to the methods already approved. In the case of adjusting the conversion plan of public service units as stipulated in Clause 1 of this Article, the time limit for the public service unit being converted to complete the sale of shares is calculated from the date the decision to adjust the privatization plan is approved by the competent authority.

Article 15. Management of Deposit Money and Payment for Share Purchase

The management of deposit money and payment for share purchase of public service units undergoing conversion shall be carried out in accordance with the provisions of Article 11 of Circular No. 40/2018/TT-BTC dated May 4, 2018, issued by the Ministry of Finance on the initial public offering and management and utilization of proceeds from state-owned enterprise equitization and joint-stock limited companies wholly owned by the State, as well as any subsequent amendments, supplements, or replacements thereof (if any).

Article 16. Proceeds from Share Sale

The determination of proceeds from the conversion of public service units into joint-stock companies shall be carried out in accordance with the provisions of Clause 1, Article 34 of Decree No. 150/2020/NĐ-CP, and shall be handled as follows:

1. Public Auction:

Within five (05) working days from the expiration date of investors' payment for participation in the public auction, the organization implementing the public auction shall be responsible for:

a. Transferring the proceeds from the sale of shares to the converted public service unit as follows: Transfer the proceeds from the sale of shares corresponding to the labor redundancy policy resolution expenses and conversion costs according to the budget determined in the conversion plan of the public service unit.

b. Submitting the entire remaining proceeds from the sale of shares in accordance with the laws on revenue collection and utilization from the equitization of state-owned enterprises and the conversion of public service units (including any non-refundable deposit money if applicable).

2. Guarantee Issuance:

Within ten (10) days from the completion of share purchases under the guarantee issuance contract, the guarantor organization shall be responsible for:

a. Transferring the proceeds from the sale of shares to the converted public service unit as follows: Transfer the proceeds from the sale of shares corresponding to the labor redundancy policy resolution expenses and conversion costs according to the budget determined in the conversion plan of the public service unit.

b. Submitting the entire remaining proceeds from the sale of shares in accordance with the laws on revenue collection and utilization from the equitization of state-owned enterprises and the conversion of public service units.

3. In cases of negotiated sales to investors, preferential share sales to trade unions and employees, the converted public service unit shall be responsible for submitting the proceeds from the sale of shares in accordance with the laws on revenue collection and utilization from the equitization of state-owned enterprises and the conversion of public service units within five (05) working days from the expiration date of investors' payments.

4. If the total proceeds from the sale of shares specified in Clauses 1, 2, and 3 of this Article are lower than the total expenditures stipulated for each category as specified in Point a, Clause 1 of this Article, the converted public service unit may retain the entire proceeds to cover the expenditures according to the approved budget and complete the final settlement at the time when the enterprise receives its first Business Registration Certificate.

Article 17. Handling of Proceeds from the Conversion of Public Service Units at the Time of Official Conversion into Joint-Stock Companies

1. The proceeds from the conversion of public service units at the time of official conversion into joint-stock companies include:

a. The difference between the value of the state capital recorded in the accounting books at the valuation date and the registered capital amount determined in the approved conversion plan of the public service unit.

b. Proceeds from the sale of shares, including non-refundable deposits to investors as stipulated in this Circular.

c. The increase in state capital value from the valuation date to the official conversion date into a joint-stock company.

2. The proceeds from the conversion of public service units at the time of official conversion into joint-stock companies shall be handled in accordance with the provisions of Clause 2, Article 34 of Decree No. 150/2020/NĐ-CP, wherein:

a. In cases where the state capital remains unchanged and additional shares are issued to increase the registered capital, the proceeds from the conversion of public service units shall be handled as follows:

- Retaining the converted public service unit's portion equivalent to the nominal value of the additional shares issued.

- Using the surplus capital from the additional shares issued to cover conversion costs and labor redundancy policies. Any remaining surplus capital (if any) shall be retained by the joint-stock company in proportion to the additional shares issued in the registered capital structure and submitted in accordance with the laws on revenue collection and utilization from the equitization of state-owned enterprises and the conversion of public service units. Specifically:

+ The surplus capital from the additional shares issued is regulated in Clause 2, Article 34 of Decree No. 150/2020/NĐ-CP.

+ The amount retained by the joint-stock company is determined as follows:

b. In cases where part of the state capital is sold:

The proceeds from the conversion of public service units shall be used to cover conversion costs and labor redundancy policies as stipulated, and the remainder (including the price difference from selling shares) shall be submitted in accordance with the laws on revenue collection and utilization from the equitization of state-owned enterprises and the conversion of public service units.

c. In cases where part of the state capital is sold in conjunction with issuing additional shares, the proceeds from the conversion of public service units shall be handled as follows:

- Submitting the value of the sold state shares (including the price difference from selling shares) in accordance with the laws on revenue collection and utilization from the equitization of state-owned enterprises and the conversion of public service units.

- Handling the remaining amount as stipulated in Point a, Clause 2 of this Article.

3. At the time when the converted public service unit officially becomes a joint-stock company, if there is a discrepancy between the actual value of the state capital and the valuation date, such discrepancy shall be handled in accordance with Point m, Clause 2, Article 19 of Decree No. 150/2020/NĐ-CP.

4. In the case where the actual revenue from selling preferential shares to employees, trade unions, strategic investors, and other investors is insufficient to cover related costs (including conversion costs, support expenses for surplus labor policies, and employee benefits) as approved by the competent authority through settlement, the provisions at point d, Clause 2, Article 34 of Decree No. 150/2020/NĐ-CP shall be implemented.

Article 18. Handover between public service units undergoing transformation and joint-stock companies

1. The handover between public service units undergoing transformation and joint-stock companies and the handover documents shall be carried out in accordance with Article 35 of Decree No. 150/2020/NĐ-CP.

2. The handover documents specified in points b and e, Clause 2, Article 35 of Decree No. 150/2020/NĐ-CP are detailed as follows:

a) Financial statements audited at the time the unit officially transforms into a joint-stock company, including: Financial statements of the public service unit undergoing transformation according to the accounting system of public service units; Financial statements prepared according to the enterprise accounting system as prescribed in the Circular guiding accounting work when transforming public service units into joint-stock companies.

b) Other documents for handover include:

- Documents and materials related to state assets handed over to the joint-stock company but not included in the state capital portion of the enterprise;

- Plan for exploitation and management of state assets not included in the state capital portion of the enterprise, approved by the competent authority;

- Documents of programs, projects, plans, and topics funded by state budget funds that are ongoing at the time of handover.

Chapter VI

IMPLEMENTATION

Article 19. Responsibilities of organizations and individuals involved in the transformation of public service units into joint-stock companies

1. Ministries, ministerial-level agencies, government agencies, provincial People's Committees, Hanoi National University, Ho Chi Minh City National University, public service units undergoing transformation, Steering Committee for the transformation of public service units, and relevant units shall perform their rights and responsibilities in the transformation of public service units into joint-stock companies as stipulated in Article 39 of Decree No. 150/2020/NĐ-CP.

2. Responsibilities of the organization implementing the auction of shares:

a) Requesting the public service unit undergoing transformation to provide complete documents and information on the transformation into a joint-stock company as prescribed;

b) Establishing and issuing the Decision to establish the Auction Share Selling Council and the Auction Share Selling Regulations;

c) Notifying the Steering Committee and the public service unit undergoing transformation about the time and place of the auction;

d) Publicly announcing at the public service unit undergoing transformation, the auction site, and on mass media (on three consecutive issues of a national newspaper and one local newspaper where the public service unit undergoing transformation has its headquarters) the information related to the share sale at least thirty (30) working days before the auction date (Annex 2 attached to this Circular, including the English translation);

đ) Providing investors with:

- Information related to the public service unit undergoing transformation (according to the Model Form at Annex 2 issued together with this Circular, including the English translation);

- Transformation plan of the public service unit, draft charter of the joint-stock company, and registration form for participating in the auction;

- Other information related to the auction as prescribed;

In the event that the announced information is inaccurate or misrepresents the information and figures provided by the Steering Committee for the transformation of public service units and the public service unit undergoing transformation, the organization implementing the share sale shall bear responsibility for compensation in accordance with the law.

e) Receiving registration forms for participation in the auction, checking the conditions for participation in the auction, and issuing participation certificates to investors who meet the conditions.

If an investor does not meet the conditions for participation in the auction, the organization implementing the share sale must notify and refund the deposit to the investor (if the investor has made a deposit).

g) Cooperating with relevant organizations and individuals to establish and jointly sign the Minutes of the Public Auction Result Determination, Minutes of the Strategic Investor Auction Result Determination, announce the auction results, and collect payment for purchased shares as prescribed;

h) Keeping confidential the purchase prices of investors until the official announcement of the results. Being responsible for determining the auction results as prescribed;

i) Forms for publicly disclosing information on the auction of shares on mass media, Minutes of the Public Auction Result Determination, Minutes of the Strategic Investor Auction Result Determination, Registration Form for Auction Share Purchase and Listing on the Upcom Trading System, and Registration Form for Participation in Share Purchase: Implement the forms prescribed in Circular No. 40/2018/TT-BTC dated May 4, 2018, of the Ministry of Finance guiding the initial public offering of state-owned enterprises and joint-stock limited companies wholly owned by the state, and any subsequent amendments, supplements, or replacements (if any).

3. Responsibilities of the Vietnam Securities Depository Center:

To issue share codes for auctioned shares, register, custody, and settle transactions for the auctioned shares paid by the public service unit undergoing transformation. This share code will be uniformly used for auctions, registrations, custody, and listing.

4. Responsibilities of the Hanoi Stock Exchange:

To organize trading of auctioned shares of the public service unit undergoing transformation that have completed payment obligations as prescribed in this Circular.

5. Responsibilities of investors:

Investors participating in purchasing shares (including strategic investors) shall fulfill their responsibilities in accordance with regulations on the right to purchase shares, Auction Share Selling Regulations, and the provisions of this Circular.

Article 20. Effective Date

1. This Circular takes effect from February 15, 2021.

2. During the implementation process, if there are any difficulties, they should be promptly reported to the Ministry of Finance for consideration and resolution./.