Circular No. 127/2014/TT-BTC guiding financial handling and determining the value of enterprises when implementing the transfer of 100% state-owned enterprises to joint-stock companies

CIRCULAR

Hguiding the financial handling and determining the value of enterprises when implementing

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

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Pursuant to the Enterprise Law No. 60/2005/QH11 dated November 29, 2005;

Pursuant to Decree No. 215/2013/ND-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government on the transformation of state-owned enterprises with 100% state capital into joint-stock companies (hereinafter referred to as Decree No. 59/2011/ND-CP);

Pursuant to Decree No. 189/2013/ND-CP dated November 20, 2013 of the Government amending and supplementing certain articles of Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government on the transformation of state-owned enterprises with 100% state capital into joint-stock companies (hereinafter referred to as Decree No. 189/2013/ND-CP);

Pursuant to Decree No. 44/2014/ND-CP dated May 15, 2014 of the Government on land prices;

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).

The Minister of Finance issues this Circular guiding the financial handling and determining the value of enterprises when implementing the transformation of state-owned enterprises with 100% state capital into joint-stock companies,

PART I

GENERAL PROVISIONS

Article 1. Scope of Application and Regulatory Scope

Article 1. Scope of Regulation: This Circular guides the financial handling and determining the value of enterprises when implementing the transformation of state-owned enterprises with 100% state capital into joint-stock companies (hereinafter referred to as the privatization of enterprises).

Article 2. Applicability: This Circular applies to enterprises that are privatization objects as prescribed in Article 2 of Decree No. 59/2011/ND-CP (hereinafter referred to as privatized enterprises), owners of enterprises implementing privatization (including provincial People's Committees, centrally-administered municipal People's Committees, Ministries, and sectors), and agencies, organizations, and individuals related to the process of transforming state-owned enterprises with 100% state capital into joint-stock companies.

Article 2. Interpretation of Terms

Some terms in this Circular are understood as follows:

Point 1. "Time of decision to privatize" means the time when the competent authority deciding to privatize the enterprise issues the decision to implement the privatization of the enterprise.

Point 2. "Time of determination of the value of the privatized enterprise" means the time of closing the accounting books and preparing the quarterly or annual financial report chosen by the privatization decision-making body to be suitable for the method of determining the enterprise value, specifically:

a. In the case of determining the value of the privatized enterprise according to the asset-based method, the time of determining the value of the enterprise is the time of closing the accounting books and preparing the most recent quarterly or annual financial report closest to the time of the privatization decision.

b. In the case of determining the value of the enterprise according to the discounted cash flow method or other methods, the time of determining the value of the enterprise is the time of closing the books and preparing the most recent annual financial report closest to the time of the privatization decision.

Point 3. "Time of organizing the determination of the value of the enterprise" is the time when consulting units or enterprises begin the process of determining the value of the enterprise for privatization.

Point 4. "Time of announcing the value of the enterprise" is the time when the competent authority deciding to privatize the enterprise issues the decision to announce the value of the privatized enterprise.

Point 5. "Time of the privatized enterprise transitioning to a Joint-Stock Company" is the time when the privatized enterprise first receives the business registration certificate of a joint-stock company.

Article 3. Some principles when implementing corporate shareholding of enterprises:

1. When implementing corporate shareholding of the parent company, the subsidiary company which is wholly owned by the parent company must implement the determination of enterprise value according to the provisions of this Circular. The time for determining the value of the subsidiary company must coincide with the time for determining the value of the parent company.

2. The competent authority deciding on the implementation of corporate shareholding of the enterprise, deciding on the publication of the enterprise value, approving the corporate shareholding plan of the enterprise, approving the restructuring plan of the enterprise, approving the financial settlement, settlement of shareholding costs, settlement of support funds for redundant workers, settlement of proceeds from corporate shareholding, and publication of the actual state-owned capital value at the time the joint-stock company is first issued a registration certificate according to the provisions of Clause 1 and Clause 2, Article 49 of Decree No. 59/2011/ND-CP (hereinafter referred to as the competent authority deciding on corporate shareholding of the enterprise).

3. The competent authority deciding on corporate shareholding approves the shareholding costs of the enterprise according to the provisions of Circular No. 196/2011/TT-BTC dated December 26, 2011 of the Ministry of Finance guiding the initial sale of shares and management and use of proceeds from corporate shareholding of state-owned enterprises that convert to joint-stock companies. In cases where the shareholding costs of limited liability companies wholly owned by parent companies of economic groups, state-owned corporations, or parent companies in conglomerates exceed the limits stipulated in Clause 4, Article 12 of Circular No. 196/2011/TT-BTC, the Corporate Shareholding Steering Committee directs the shareholding enterprise to prepare a budget for shareholding costs, report to the competent authority for consideration and approval in the shareholding plan, and send to the Ministry of Finance (Enterprise Financial Department) for supervision.

4. Prior to implementing corporate shareholding, the shareholding enterprise must conduct asset inventory, financial processing, and re-determine the enterprise value and the state-owned capital value in the enterprise according to current laws. The State will not provide additional capital for corporate shareholding, including enterprises under the Prime Minister's regulations on issuing criteria, lists, and classifications of state-owned enterprises when implementing corporate shareholding, where the State holds more than 50% of the total shares.

5. After financial processing and determining the enterprise value, if there is no state-owned capital in the enterprise or the actual enterprise value is lower than the debts owed, the competent authority deciding on corporate shareholding directs the enterprise to cooperate with Vietnam Asset Management Company and the creditors of the enterprise to develop a restructuring plan to transform the enterprise into a joint-stock company. If the restructuring plan is not feasible or effective, then dissolution, bankruptcy, or other appropriate arrangements according to the law shall be applied.

6. During the process of financial processing and determining the value of the shareholding enterprise, it must ensure strictness, transparency, and clarity, without causing loss of state assets or capital. Organizations and individuals involved in financial processing and determining the enterprise value who fail to comply with the prescribed regulations, causing losses or loss of state assets, shall bear administrative responsibility, compensate material losses, or be held criminally responsible according to the law.

7. The results of determining the value of the shareholding enterprise and the actual state-owned capital value approved by the competent authority serve as the basis for the shareholding enterprise to determine the registered capital, develop the shareholding plan, organize the initial sale of shares, convene the shareholders' meeting, continue to address remaining financial issues until officially becoming a joint-stock company, settle financial accounts with the state during the shareholding process, and transfer to the joint-stock company.

8. The person authorized according to Article 49 of Decree No. 59/2011/ND-CP establishes a Corporate Shareholding Steering Committee to assist in organizing the shareholding work according to the prescribed regulations. The Corporate Shareholding Steering Committee is dissolved after the shareholding enterprise has completed the transfer to the joint-stock company. Any financial issues arising after the shareholding enterprise officially becomes a joint-stock company but related to the shareholding process shall be handled by the competent authority deciding on corporate shareholding of the enterprise.

The Enterprise Reform and Development Steering Committee and the Ministry of Finance appoint members to participate in the Corporate Shareholding Steering Committee of large-scale enterprises with state-owned capital over 500 billion VND operating in special sectors (Insurance, banking, postal and telecommunications, aviation, coal mining, oil and gas extraction, rare mineral mining), and parent companies of economic groups and state-owned corporations according to point b, Clause 4, Article 49 of Decree No. 59/2011/ND-CP.

9. The steps and procedures for converting a 100% state-owned enterprise into a joint-stock company are carried out according to the annex attached to Decree No. 59/2011/ND-CP. In cases where the shareholding enterprise does not follow this procedure, it shall be implemented according to the Prime Minister's decision.

Chapter II

FINANCIAL HANDLING DURING SHAREHOLDING REFORM

PART I

INVENTORY AND VERIFICATION OF ASSETS AND LIABILITIES

Article 4. Inventory and classification of assets.

1. Upon receiving the decision on equitization from the competent authority, the equitized enterprise shall be responsible for inventorying and classifying assets, sources of capital, and funds under its management and use at the time of determining the enterprise's value. The equitization working group, the equitized enterprise, and the consulting organization (if any) shall cooperate to conduct the inventory and classification of assets.

2. Prepare an inventory list accurately identifying the quantity, quality, and value of current assets managed and used by the enterprise; check cash balances, reconcile bank account balances; identify excess or shortage of assets and cash compared to accounting records, clearly analyze the causes of excess or shortage and the responsibility of those involved, and determine compensation according to the provisions of the law.

3. Assets that have been inventoried shall be classified into the following groups:

a) Assets required for the enterprise's use.

b) Unused assets, surplus assets, and assets awaiting liquidation.

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

d) Leased, borrowed assets, goods received for storage, processing, agency, consignment, joint venture investment assets, and other assets not belonging to the enterprise.

đ) Assets attached to land that must be handled according to the plan for reorganization and disposal of state-owned real estate facilities as decided by the Prime Minister regarding the reorganization and disposal of state-owned real estate.

e) Assets of revenue-generating public service units (hospitals, schools, research institutes), and assets used for public services.

g) Assets awaiting decisions on handling by competent authorities.

h) Financial investments (joint venture investments, investments in limited liability companies, and other investment activities) valued at the value of land use rights.

Article 5. Verification and classification of liabilities.

The equitized enterprise shall verify, confirm, and classify liabilities; prepare detailed lists for each debtor and creditor as follows:

1. Receivables:

a) Verify and confirm all receivables according to each debtor, including:

- Receivables not yet due and overdue receivables.

- Clearly analyze difficult-to-collect receivables as overdue receivables recorded in economic contracts. Receivables not yet due but the economic organizations (companies, private enterprises, cooperatives, financial institutions) have entered bankruptcy or dissolution procedures; debtors who are missing, fugitives, under prosecution, detention, trial, serving sentences, or deceased. Clearly determine the responsibility for receivables without confirmation from debtors.

Non-recoverable receivables must be supported by sufficient evidence proving they cannot be recovered.

b) Review economic contracts to determine prepayments made to suppliers that have been fully recorded as business expenses such as rent, land lease payments, purchase payments, long-term insurance payments, salaries, wages...

2. Payables include loans, taxes, and other payments to the state budget:

a) Based on contracts and debt notices, prepare detailed lists of loans according to each creditor; determine tax debts and other payments to the state budget; specifically analyze loan debts according to contracts (domestic loans, foreign loans), guaranteed loans, bond issuance loans; loans within term, loans not yet due, overdue loans, principal debts, unpaid interest debts, payable debts but not required to be paid.

b) Payable debts but not required to be paid are debts of creditors of the equitized enterprise when verifying and confirming debts in the following cases:

- Debts of enterprises that have been dissolved or declared bankrupt but no successor entity or individual has been identified according to the dissolution and asset disposal plan of the dissolved or bankrupt enterprise approved by the competent authority.

- Debts of individuals who have died but no heir has been identified.

- Debts of other creditors that have been overdue for many years but the creditors have not come to verify and confirm. In this case, the equitized enterprise must send a written notice directly to the creditor and simultaneously announce it through mass media ten working days before the inventory date.

Article 6. Verification and confirmation of financial investments; shares received; capital contributions received

The enterprise undergoing shareholding transformation shall verify and confirm the detailed list for financial investments and shares received by the enterprise, including joint venture and associated company capital contributions with other enterprises and organizations; share capital contributions to establish limited liability companies; investment capital to establish wholly-owned limited liability companies by the enterprise undergoing shareholding transformation as the owner; profits distributed from investment activities (with resolutions of the Shareholders' Meeting, Board of Directors at the receiving entity) but not yet actually received; analyze the results of profitable investment activities and unprocessed loss-making investment activities.

Determine the quantity and value of various securities (stocks, bonds, etc.) purchased; the number of additional stocks received by the enterprise undergoing shareholding transformation without payment due to the joint-stock company using surplus share capital, funds belonging to shareholders' equity, post-tax retained earnings to increase the registered capital (increase the investment of the owner in the joint-stock company with the participation of the enterprise undergoing shareholding transformation).

For joint venture and associated company capital contributions received by the enterprise undergoing shareholding transformation, based on the joint venture and association contracts, prepare a detailed list according to each partner who has contributed capital to the enterprise undergoing shareholding transformation and notify the contributing partners so that they can jointly continue the inherited contracts previously signed or liquidate the contracts.

Article 7. Inventory, verification, confirmation, and classification of assets and debts when transforming state-owned commercial banks into shareholding companies

The inventory, evaluation, and classification of monetary assets, financial lease assets, and receivables and payables at State-Owned Commercial Banks during the process of shareholding transformation shall be carried out as follows:

1. Inventory and verification of customer deposits, deposit certificates (bills, promissory notes, bonds) as follows:

a) Detail each item on the accounting books.

b) Verify and confirm the balance of corporate customer deposits.

c) Savings deposits, individual deposits, and deposit certificates may not be verified directly with customers, but must be verified against the storage card. In specific cases (where there is a large deposit balance or discrepancies between accounting records and the storage card), direct verification with customers must be conducted.

2. Verification of credit balances (including off-balance sheet items) as follows:

a) Based on the credit files of each customer at the commercial bank, compile a list of customers with outstanding credit balances and the amount of each customer's credit balance, detailed by each credit contract.

b) Compare the data determined from the credit files with the accounting records of the commercial bank; compare the credit balance with each customer to obtain the customer's confirmation of the credit balance.

For individual customers, if direct verification with the customer cannot be organized, the commercial bank must verify against the storage card.

c) In case of discrepancies in data between the credit files and the accounting records and the customer's confirmation, the commercial bank must clarify the reasons for the discrepancies and determine the responsibility of related organizations and individuals to handle according to current regulations of the State.

3. Classify overdue receivables meeting the conditions for handling according to the guidelines of the State Bank of Vietnam.

4. For financial lease assets: verification must be conducted with each customer, clearly determining the remaining debt of each financial lease asset.

Article 8. Responsibilities in inventorying assets, verifying asset values, and various types of capital to implement corporate shareholding reform

During the process of inventorying assets, verifying receivables and payables, and various types of capital, if any items are omitted resulting in a reduction in the value of the enterprise and state capital in the enterprise undergoing shareholding reform, the General Director, Chief Accountant, and related organizations and individuals shall be responsible for compensating and paying the full value of the omitted assets and capital into the state budget according to the provisions of the law.

PART II

 FINANCIAL HANDLING WHEN DETERMINING THE VALUE OF THE ENTERPRISE

AND AT THE TIME OF TRANSITION TO A JOINT STOCK COMPANY

Article 9. Financial handling when determining the value of the enterprise

1. At the time of determining the enterprise's value, the enterprise undergoing shareholding reform does not need to establish provisions for reduced inventory valuation, financial investment losses, difficult-to-collect receivables, product warranties, goods, and construction projects; it also does not need to pre-provision for fixed asset repair costs.

2. Asset handling:

Based on the results of inventorying and classifying assets, the enterprise handles assets according to the provisions of Article 14 of Decree No. 59/2011/ND-CP and Clause 1 of Article 1 of Decree No. 189/2013/ND-CP, including:

a) For excess or missing assets, the cause must be analyzed clearly and handled as follows:

- Missing assets must determine the responsibility of organizations and individuals to compensate material losses according to current regulations; the value of missing assets, after deducting compensation from organizations and individuals (if any), can be recorded as production and business expenses.

- Excess assets, if the cause cannot be determined or the owner cannot be found, will be handled by increasing the actual value of state capital.

b) For unused assets, stagnant assets, and assets awaiting liquidation:

- The General Director of the enterprise undergoing shareholding reform is responsible for directing the organization of asset liquidation and sale. Liquidation and sale of assets must be conducted through public auction methods according to current state regulations.

- Revenue and expenses from asset liquidation and sale activities are recorded as income and expenses of the enterprise.

- By the time the enterprise's value is determined, unused assets, stagnant assets, and assets awaiting liquidation that have not been handled, except for cases where assets are not allowed to be excluded as specified in Clause 3 of Article 14 of Decree No. 59/2011/ND-CP, the competent authority deciding on the enterprise's value may consider and decide to exclude them from the enterprise's value and transfer them to relevant agencies according to Clause 2 of Article 14 of Decree No. 59/2011/ND-CP. Specifically:

Vietnam Asset Management Corporation to handle according to the law for enterprises as stipulated in Article 2 of Decree No. 59/2011/ND-CP.

Parent company of State Economic Groups, State-owned Corporations, and Parent Company in a parent-subsidiary group to handle according to the regulations for limited liability companies held 100% by these enterprises.

c) For assets of revenue-generating public institutions (hospitals, schools, research institutes) when implementing shareholding reform by the parent company of State Economic Groups, State-owned Corporations, and Parent Company in a parent-subsidiary group; assets for public services are handled specifically as follows:

- In the case where the enterprise continues to inherit, it must organize financial handling and valuation into the shareholding enterprise's value according to this Circular. The shareholding enterprise needs to determine the accounting model (independent or dependent) of revenue-generating public institutions to apply financial mechanisms according to the law.

- In the case where the enterprise does not continue to inherit, it reports to the Prime Minister for consideration and decision to transfer to relevant Ministries, sectors, or provincial People's Committees to implement socialization according to the law. During the period before transfer, the Ministries, sectors, and provincial People's Committees currently representing the ownership rights of State Economic Groups, State-owned Corporations, and Parent Company in a parent-subsidiary group continue to manage and exercise the representative ownership rights of state capital at these units.

d) Assets awaiting decisions on handling by the competent authority until the time of organizing the determination of the enterprise's value without a decision on handling are excluded from the enterprise's value and transferred to relevant units according to Clause 2 of Article 14 of Decree No. 59/2011/ND-CP.

đ) When determining the enterprise's value, the shareholding enterprise can exclude financial investments (joint ventures, establishing limited liability companies, other forms of capital contribution) valued at land use rights if all parties agree to transfer to another state-owned enterprise holding 100% of the capital.

If such a transfer is not possible, the enterprise continues to inherit and include it in the shareholding enterprise's value according to the principles set out in Article 33 of Decree No. 59/2011/ND-CP.

e) The shareholding enterprise cannot exclude from the shareholding enterprise's value assets that have been used as collateral for loans, even those that the enterprise does not need to use.

g) Shareholding enterprises are responsible for handling assets that are not permitted to be excluded according to Clause 3 of Article 14 of Decree No. 59/2011/ND-CP.

h) The shareholding enterprise develops a plan for restructuring and handling real estate properties for approval by the competent authority according to the Prime Minister's regulations to definitively resolve property ownership and land use rights of the enterprise before determining its value for shareholding reform.

For assets attached to land not under the management and use of the enterprise, the shareholding enterprise bases its handling on the approved plan for restructuring and disposing of real estate properties according to the Prime Minister's regulations to definitively resolve property ownership and land use rights of the enterprise before determining its value for shareholding reform.

i) Assets are welfare facilities: kindergartens, health stations, and other welfare assets invested from the welfare fund and award fund; housing for officials, workers, and employees invested from the welfare fund and state budget capital shall be handled in accordance with the provisions of Clause 4, Article 14 of Decree No. 59/2011/NĐ-CP.

k) For assets used in production and business invested from the award fund and welfare fund of enterprises undergoing corporatization, they shall be included in the enterprise value and the joint-stock company shall continue to use them in production and business. The corresponding capital amounting to the value of these assets shall be the responsibility of the corporatized enterprise to repay the award fund and welfare fund to distribute to the employees working at the enterprise at the time of determining the enterprise value based on the number of years worked at the corporatized enterprise.

3. Handling receivables.

The handling of receivables of enterprises shall be carried out in accordance with the provisions of Article 15 of Decree No. 59/2011/NĐ-CP, including:

a) Based on the results of reconciling and confirming receivable debts, the corporatized enterprise shall be responsible for recovering receivable debts when due; actively urging and applying all measures to recover overdue receivable debts that are recoverable before determining the value of the corporatized enterprise.

b) Receivable debts shall be determined as unrecoverable receivables when there is sufficient documentation proving so, specifically as follows:

- The receivable debt must have original vouchers, confirmed by the debtor regarding the outstanding amount such as economic contracts, loan agreements, contract settlement certificates, debt commitment letters, reconciliation statements of accounts receivable, and other objective documents proving the outstanding debt.

- Accounting books, vouchers, and documents proving the unrecovered receivable debt up to the time of handling the debt, which the enterprise is currently recording as receivable debt on its accounting books.

- In the case of economic organizations:

The debtor has been dissolved or declared bankrupt: there must be a court decision declaring bankruptcy of the enterprise according to the Bankruptcy Law or a decision by the competent authority regarding dissolution of the enterprise debtor, in cases of self-dissolution, there must be a notification from the unit or confirmation by the authority deciding the establishment of the unit or organization.

The debtor has ceased operations and is unable to pay: there must be confirmation by the authority deciding the establishment of the enterprise or organization registered for business or the direct tax authority regarding the cessation of operations of the enterprise or organization and their inability to pay.

For receivable debts where the debtor has been decided by the competent authority to have the debt waived according to the law; the difference in loss accepted by the competent authority due to selling receivable debts: this is the decision of the competent authority waiving the debt.

For receivable debts that have existed for more than three years but the debtor still exists but is unable to repay, and the enterprise has applied many solutions but cannot recover, the enterprise must provide evidence such as: Reconciliation statements of accounts with the debtor, demand letters, letters requesting the court to declare bankruptcy according to the law. Receivable debts where the estimated cost of collection exceeds the value of the receivable debt.

- In the case of individuals:

Death certificate (certified copy or copy from the original book) or confirmation by local authorities for debtors who have died but have no inheritable property to repay the debt.

Confirmation by local authorities for debtors who are alive or missing but are unable to repay the debt.

Warrant or confirmation by law enforcement agencies for debtors who have fled or are being prosecuted, serving sentences, or confirmation by local authorities that the debtor or heir is unable to repay the debt.

- At the time of determining the enterprise value, receivable debts that have sufficient documentation proving they are unrecoverable according to the regulations (regardless of whether the debts have been provisioned or not), the enterprise shall use the bad debt reserve to offset, and the shortfall shall be recorded as production and business expenses of the enterprise.

c) Receivable debts that do not have sufficient legal documentation proving that the debtor still owes or are unrecoverable according to the regulations shall not be excluded from the enterprise value; the enterprise must clarify the reasons for handling as follows:

- For receivable debts without sufficient documentation proving that the debtor still owes, the enterprise must determine the cause and handle the responsibility for compensation of related collectives and individuals; the loss after handling the responsibility for compensation of organizations and individuals (if any) shall be recorded as production and business expenses of the corporatized enterprise.

- For receivable debts without documentation as required to prove they are unrecoverable, the corporatized enterprise and the subsequent joint-stock company shall be responsible for completing the documentation in accordance with the regulations and handling according to current laws.

d) Enterprises may exclude from the value of the corporatized enterprise receivable debts that have sufficient documentation proving they are unrecoverable according to the regulations.

The corporatized enterprise shall be responsible for transferring receivable debts not included in the value of the corporatized enterprise (including difficult-to-collect debts already processed using reserves within five consecutive years prior to corporatization) along with complete documentation and related materials to the authority specified in Clause 2, Article 14 of Decree No. 59/2011/NĐ-CP.

For receivable debts that have been processed but the debtor still exists, the receiving authorities shall be responsible for continuing to monitor and organize recovery.

During the period before transfer, before officially becoming a joint-stock company, the corporatized enterprise shall still be responsible for continuing to monitor and organize recovery of receivable debts excluded from the value of the corporatized enterprise.

d) For advance payments made by the enterprise to suppliers for goods and services such as rent for premises, land lease, long-term insurance purchases, purchase of goods, and labor costs already recorded as business expenses, the enterprise shall base its accounting entries to reduce costs (corresponding to undelivered goods or unprovided services or uncompleted rental periods) and increase prepaid expenses when determining the value of the enterprise for equitization, according to the sales contracts, service provision agreements, and debt reconciliation.

4. Debt settlement with organizations and individuals:

Based on the results of debt classification reconciliation, the enterprise shall handle debts payable in accordance with Article 16 of Decree No. 59/2011/NĐ-CP and point a, Clause 4, Article 28 amended and supplemented at Clause 5, Article 1 of Decree No. 189/2013/NĐ-CP, including:

a) Debts payable but not required to be settled upon completion of documentation and procedures for creditors as stipulated in point b, Clause 2, Article 5 of this Circular shall be recorded as an increase in state capital in the equitized enterprise.

b) For tax debts and other amounts payable to the State budget: the equitized enterprise shall have the responsibility to declare and pay all tax debts and obligations to the State budget, and submit a report on tax settlement at the time of determining the enterprise's value along with a request to the directly managing tax authority for inspection and determination of outstanding taxes according to regulations. Within thirty days from the date of receipt of the enterprise's request, the tax authority shall be responsible for assigning staff to inspect the equitized enterprises in accordance with the announced enterprise valuation time.

In cases where tax settlement inspections have not been completed during the process of determining the enterprise's value, the equitized enterprise may use the prepared financial statements and declared tax data as the basis for determining the enterprise's value (including tax liabilities and profit distribution), but must include this in the Minutes of Enterprise Value Determination, the decision on announcing the enterprise's value, and the equitization plan, publicly disclosing the incomplete tax settlement inspection when announcing information for selling shares to investors.

Any discrepancies in tax liabilities to the State (if any) will be adjusted when preparing the financial statements at the time the enterprise receives the first registration certificate for a joint-stock company.

c) For loans from commercial banks and Vietnam Development Bank (collectively referred to as lending banks) and other organizations and individuals, the equitized enterprise shall have the responsibility to mobilize legitimate sources of funds to settle due loan installments before determining the enterprise's value.

d) During the financial processing prior to determining the enterprise's value, if the equitized enterprise encounters difficulties in settling overdue bank loans or has accumulated losses, it shall cooperate with the lending bank to handle the loan as follows:

- The equitized enterprise shall prepare and submit procedures and documents requesting the lending bank to consider and decide on debt write-offs, extensions, and interest waivers in accordance with current laws.

- Within a maximum of twenty working days from the date of receiving the enterprise's documents, the lending bank shall provide a written response to the enterprise.

- In addition to the measures of debt write-offs, extensions, and interest waivers mentioned above, the enterprise shall cooperate with the lending bank to resolve the remaining overdue principal through the sale of debt to Vietnam Asset Management Corporation at an agreed price. Based on the debt purchase agreement, the equitized enterprise shall assume the debt with the Vietnam Asset Management Corporation; simultaneously, it shall cooperate with the Vietnam Asset Management Corporation to develop a debt restructuring plan for financial resolution to be reviewed and agreed upon by the equitization decision-making body with the Vietnam Asset Management Corporation regarding the plan to convert the enterprise into a joint-stock company.

- Negotiate with the lending bank to convert the loan into equity contribution. The conversion of the loan into equity contribution shall be carried out based on the successful auction result of the lending bank or the lowest successful auction price. If the selected strategic investor is the lending bank, the conversion of debt into equity shall be determined according to the provisions of point d, Clause 3, Article 6 of Decree No. 59/2011/NĐ-CP.

- The handling of converting debts payable from organizations and individuals (excluding banks) into equity contributions shall be carried out in accordance with the current provisions of Clause 1, Article 16 of Decree No. 59/2011/NĐ-CP.

d) For overdue foreign loans (with and without guarantees), the enterprise and guarantors must negotiate with creditors to develop a resolution plan in accordance with the legal regulations on foreign borrowing and repayment management.

e) For social insurance debts and employee debts, the enterprise shall have the responsibility to settle them completely before transferring to a joint-stock company to ensure workers' rights. For special-purpose expenditures for military personnel and defense civil servants (retirement preparation period salaries) at equitized enterprises under the Ministry of Defense, if any, they can be recorded as production and business expenses before finalizing financial settlement and transferring the equitized enterprise to a joint-stock company.

5. Provisions, Losses, or Profits

The handling of provisions, risk reserve funds of banks, insurance business provisions, exchange rate differences, financial reserve funds, and enterprise profits or losses shall be carried out in accordance with Article 17 of Decree No. 59/2011/NĐ-CP. Specifically:

The interest arrears generated by the enterprise after being used to offset losses (if any) in accordance with the Law on Corporate Income Tax, to compensate for losses from unused assets awaiting liquidation, asset depreciation due to revaluation for shareholding reform, unrecoverable debts, the remainder shall be distributed in accordance with current regulations to serve as the basis for determining the value of the enterprise undergoing shareholding reform. In cases where the time point for determining the enterprise's value does not coincide with the financial report year-end, the distribution and establishment of reserves by the enterprise shall be carried out in accordance with Clause 3, Article 10 of this Circular.

In cases where the enterprise undergoing shareholding reform still has losses and outstanding debts from credit organizations (including the Vietnam Development Bank) after processing losses according to the regulations up to the time point for determining the enterprise's value, the enterprise undergoing shareholding reform shall be responsible for preparing procedures and documents to request the bank for loans to consider handling the write-off of interest-bearing debts in accordance with the current State regulations on handling overdue debts.

After applying the above measures, if the business results still show losses, the enterprise undergoing shareholding reform must report the reasons for the losses to the authority deciding on the shareholding reform to handle collective and individual responsibilities related to the losses, and the remaining losses shall be deducted from the state capital portion when determining the actual value of state capital at the enterprise.

6. Long-term investment capital in other enterprises such as joint venture contributions, joint stock contributions, limited liability company formation contributions, and other long-term investment forms shall be handled in accordance with the provisions of Article 18 of Decree No. 59/2011/NĐ-CP.

7. Reward Fund and Welfare Fund:

The balance in cash of the Reward Fund and Welfare Fund after compensating for excess expenditures for employees (if any) shall be used to distribute to employees working at the time of determining the enterprise's value based on years of service at the shareholding reform enterprise.

The General Director of the enterprise shall cooperate with the trade union organization at the shareholding reform enterprise to develop a plan and decide on the distribution of the cash balance and the corresponding value of assets invested using the Reward Fund and Welfare Fund that the company continues to use in production and business operations for employees. The amount distributed from the Welfare Fund and Reward Fund and the list of employees entitled to receive benefits according to the enterprise's decision must be publicly announced so that employees are aware.

In cases where the enterprise has expended more than the source of the Reward Fund and Welfare Fund, the enterprise must review the responsibility of the organization and individuals who decided to expend the Reward Fund and Welfare Fund without a source and handle it as follows:

- For amounts directly expended to employees listed in the regular roster at the time of the shareholding reform decision and expended for members of the management board, these amounts cannot be deducted from the state capital portion at the enterprise. The General Director of the enterprise shall cooperate with the enterprise's trade union organization to handle this by recovering the funds or converting them into receivables for the shareholding company to continue handling.

- For expenditures exceeding the source of the Reward Fund and Welfare Fund that cannot be identified for recovery (such as expenditures for employees who have lost their jobs or resigned before the shareholding reform decision), the Shareholding Reform Steering Committee shall report to the authority deciding the enterprise's value to handle it as an uncollectible receivable debt.

8. Management Staff Reward Fund

The cash balance of the Management Staff Reward Fund shall be reported to the owner to decide on rewards for the designated recipients in accordance with the regulations prior to the organization's determination of the enterprise's value.

9. Enterprises that form a Science and Technology Development Fund shall transfer the fund balance to the joint-stock company upon implementing shareholding reform. The joint-stock company shall be responsible for managing and utilizing the Fund in accordance with Circular No. 15/2011/TT-BTC dated February 9, 2011, issued by the Ministry of Finance.

10. The balance of the Enterprise Restructuring Support Fund at the shareholding reform enterprise (if any) shall be processed to increase the state capital portion at the enterprise in accordance with Article 20 of Decree No. 59/2011/NĐ-CP.

Article 10. Financial treatment at the time when the enterprise officially transforms into a joint-stock company.

1. At the time of officially transforming into a joint-stock company, the enterprise undergoing shareholding transformation shall not establish provisions for inventory write-downs, financial investment losses, bad debts, product warranties, goods, construction projects; nor shall it pre-provision for repair costs of fixed assets.

2. Based on the decision to announce the enterprise value by the competent authority, the enterprise undergoing shareholding transformation shall adjust the accounting records according to the announced enterprise value. Transfer assets and receivables not included in the enterprise value to relevant agencies as stipulated in Clause 2, Article 14 of Decree No. 59/2011/NĐ-CP within thirty days from the date of the competent authority's decision to announce the enterprise value.

3. During the period from the time of determining the enterprise value to the time of officially transforming into a joint-stock company, the enterprise undergoing shareholding transformation continues to handle existing financial issues as prescribed in Article 21 of Decree No. 59/2011/NĐ-CP and prepares financial statements at the time of officially transforming into a joint-stock company. In which:

a) For fixed asset investments and ongoing construction projects when determining the enterprise value, but completed and approved by the competent authority at the time of officially transforming into a joint-stock company, if there are discrepancies compared to the time of determining the enterprise value, they will be adjusted according to the approved settlement.

b) The depreciation rate of fixed assets is determined based on the depreciation method registered with the tax authority before the enterprise value determination.

Profit distribution and reserve establishment shall be carried out according to current regulations applicable to state-owned limited liability companies.

If the time of determining the enterprise value and the time of officially transforming into a joint-stock company do not coincide with the year-end financial statement preparation period, making it impossible to classify the enterprise as a basis for establishing reserves; the enterprise undergoing shareholding transformation shall establish the Employee Management Reward Fund and two incentive and welfare funds at these times according to the following principles:

- Based on the classification results of the previous year before the enterprise value determination.

- The enterprise bases its profit sources according to the regulations to establish reserves for distribution.

- If the period from the time of determining the enterprise value to the time of officially transforming into a joint-stock company is twelve months or more, the reserve contribution rate is the maximum rate under the profit distribution regulations; if less than twelve months, the rate is calculated by dividing the annual rate by twelve and multiplying by the number of months from the time of determining the enterprise value to the time of officially transforming into a joint-stock company.

4. Within thirty days from the date of issuance of the first business registration certificate for the joint-stock company, the Shareholding Transformation Steering Committee directs the working group and the enterprise undergoing shareholding transformation to complete the preparation of financial statements at the time of receiving the joint-stock company business registration certificate, conduct an audit of the financial statements; request the tax authority to prioritize the examination of tax settlements and budget payments; re-evaluate the state capital value at the time of officially transforming into a joint-stock company; prepare settlement reports: proceeds from shareholding transformation, payments for surplus labor benefits, transformation costs.

If the time of determining the enterprise value is the previous year and the time of officially transforming into a joint-stock company is the subsequent year, only one financial report covering the entire period shall be prepared, without separating two reports at December 31 and at the time of officially transforming into a joint-stock company. The financial report must be submitted to relevant agencies and units as prescribed by the accounting system.

Audited financial reports, settlement documents during the shareholding transformation process (proceeds from shareholding transformation, payments for surplus labor benefits, transformation costs), and related documents of the enterprise shall be sent to the agency deciding on the shareholding transformation of the enterprise and relevant agencies for coordination in inspecting and handling financial issues and approving the financial report and the settlement of the shareholding transformation process.

a) At the time the enterprise undergoing shareholding transformation receives its first business registration certificate, when preparing financial statements for transferring 100% state capital from the enterprise to the joint-stock company, the enterprise shall revalue financial investments and securities already included in the enterprise value; any increase or decrease in the total value of financial investments and securities compared to the recorded value on the accounting books shall be recognized in the income statement according to regulations.

b) During the period from the time of determining the enterprise value to the time of officially transforming into a joint-stock company, enterprises undergoing shareholding transformation shall transfer, sell, or liquidate assets, financial investments, and securities according to regulations.

The difference between the value received and the recorded value on the accounting books shall be recognized in the income statement and determined as follows:

- For assets, financial investments, and securities transferred or liquidated before the announcement of the enterprise value, the book value is the unadjusted value.

- For assets and financial investments transferred or liquidated after the announcement of the enterprise value, the book value is the adjusted value according to the announced enterprise value.

c) For debts that the enterprise has processed to be reconciled but cannot identify the creditor, the new joint-stock company shall record an increase in state capital and assume responsibility for storing files, continuing to inherit and monitor to fulfill debt repayment obligations when requested by the creditor. Based on relevant legal documents and creditor requests, the new joint-stock company shall settle the debt and record it as an expense for the period.

d) For receivables that the enterprise has processed to be reconciled but still cannot reconcile, the responsibility for compensation must be considered and handled against the relevant collectives and individuals. The remaining value of the receivable (after deducting the compensation from individuals, collectives, and the bad-debt reserve fund) shall be recorded as production and business expenses of the shareholding enterprise. The new joint-stock company shall assume responsibility for storing files, continuing to inherit and monitor to urge the collection of receivables. When receivables are collected, the joint-stock company shall record them as income for the period.

đ) For post-tax profits and dividends distributed from financial investment activities (based on the Resolution of the Shareholders' Meeting, Board of Directors at the receiving entity), if the funds have not been received by the time the enterprise officially transfers to the joint-stock company, the enterprise shall record an increase in financial activity revenue while recording an increase in receivables. If used to increase investment in another enterprise, it shall be recorded as an increase in the value of financial investments.

e) For shares received by the shareholding enterprise without payment, when preparing financial statements at the time of transferring to the joint-stock company, the enterprise must track and record them in the accounting books of the enterprise, specifically:

Shares received due to dividend distribution (dividends paid in shares), shares received without payment (shares not received due to dividend distribution), the enterprise shall record an increase in financial activity revenue based on the number of shares received (at par value) while recording an increase in the value of financial investments.

When settling the transfer from the state-owned enterprise to the joint-stock company, the quantity of these shares is transferred to the ownership of the joint-stock company.

g) In cases where the period from the expiration date of the investor's payment for purchasing shares to the date the company receives the business registration certificate exceeds three months, the enterprise may calculate interest expenses to pay investors according to the principle:

- Interest is only calculated from the fourth month onwards on the total par value of purchased shares. For shares purchased by employees with preferential discounts, if the purchase price is below par value, interest is only calculated on the actual amount paid.

- The interest rate does not exceed the short-term borrowing rate of the commercial bank where the shareholding enterprise maintains an account at the time of calculating interest.

- The amount of interest paid to investors by the shareholding enterprise shall be recorded as production and business expenses but must ensure that it does not exceed the prescribed amount and that the shareholding enterprise does not incur losses when preparing financial statements for transfer to the joint-stock company.

h) From the date of receipt of the request from the shareholding enterprise until the deadline for approving the financial statements for transfer, the tax authority is responsible for prioritizing staff to conduct tax settlement inspections and other payments to the state budget in accordance with the time frame for the shareholding enterprise to transfer to the joint-stock company.

In cases where the deadline for approving the financial statements for transfer has passed but the tax settlement inspection has not been completed, the shareholding enterprise may use the prepared financial statements and declared tax figures as the basis for transfer to the joint-stock company. The joint-stock company shall assume responsibility for inheriting and paying all outstanding taxes and other state budget payments at the time of transfer.

After officially becoming a joint-stock company, if losses occur due to the failure to conduct tax settlement inspections, they shall be handled according to Clause 3, Article 52 of Decree No. 59/2011/NĐ-CP.

5. Within thirty days from the date of receipt of the audited financial statements of the enterprise, and the tax settlement report (if any), the competent authority deciding on the shareholding reform of the enterprise shall coordinate with relevant agencies to inspect and handle financial issues of the enterprise and issue decisions approving the financial settlement, settlement of proceeds from shareholding reform, settlement of shareholding reform costs, settlement of support funds for surplus labor, and determining the actual value of the state capital at the time the enterprise officially transfers to become a joint-stock company as the basis for transfer between the shareholding enterprise and the joint-stock company.

For enterprises undergoing shareholding reform approved by the Prime Minister, the Minister managing the sector shall approve the financial settlement reports and settlement reports on proceeds from shareholding reform, payments for surplus labor benefits, and shareholding reform costs.

The Board of Directors of the parent company of the Economic Group; the Special State-Owned Enterprise established by the Prime Minister's decision shall approve the financial settlement reports and settlement reports on proceeds from shareholding reform, payments for surplus labor benefits, and shareholding reform costs of enterprises authorized by the Prime Minister to determine the enterprise value and approve the shareholding reform plan.

The General Director and Chief Accountant of the shareholding enterprise are responsible for preparing and signing the financial statements, the report on determining the value of state capital at the time of transfer to the joint-stock company, settlement reports on proceeds from shareholding reform, payments for surplus labor benefits, and shareholding reform costs, and are responsible for the truthfulness and accuracy of the reports.

The new Board of Directors of the joint-stock company shall be responsible for creating conditions to enable the leadership of the state-owned enterprise undergoing shareholding reform to complete their tasks and sign, affix seals to confirm signatures of the relevant positions on the financial reports and related settlements during the shareholding reform process.

In cases where the General Director and Chief Accountant of the state-owned enterprise undergoing shareholding reform have not completed the aforementioned tasks and the state-owned enterprise has not yet transferred management to the joint-stock company, they shall not be allowed to transfer jobs or retire according to regulations.

6. The increase discrepancy between the actual value of the state capital at the time when the state-owned enterprise transfers to the joint-stock company and the actual value of the state capital at the time of determining the enterprise's value, the discrepancy between the actual value of the state capital at the state-owned enterprise undergoing shareholding reform and the value of the state capital remaining invested in the joint-stock company (if any) shall be submitted in accordance with Clause 3, Article 21 of Decree No. 59/2011/NĐ-CP.

7. In cases where a decrease discrepancy arises (including those due to business losses), the objective and subjective causes must be clarified before handling, including:

a) Decrease discrepancies due to objective reasons include losses caused by natural disasters, enemy attacks, changes in state policies, fluctuations in the international market, and other force majeure factors, but the state-owned enterprise does not have negative state capital at the time of transferring to the joint-stock company. The competent authority deciding the shareholding reform plan shall consider through the Shareholders' Meeting to adjust the scale and structure of the registered capital of the joint-stock company.

In cases where a decrease discrepancy leads to negative state capital value at the state-owned enterprise at the time of transferring to the joint-stock company, the enterprise shall report to the competent authority deciding the shareholding reform plan to examine and decide on the use of proceeds from selling shares (after paying severance pay to redundant employees and shareholding reform costs) and insurance compensation (if any) to offset; after offsetting, if the state capital value remains negative and the state-owned enterprise has been issued the first business registration certificate of the joint-stock company, the Board of Directors shall convene an extraordinary shareholders' meeting to vote on loss treatment and maintain the operation of the enterprise.

b) Cases of reduced capital determined to be due to subjective reasons shall be handled in accordance with Point b, Clause 4, Article 21 of Decree No. 59/2011/NĐ-CP. The shareholding reform decision-making body shall not select and recommend individuals responsible for business losses leading to reduced capital to represent state capital contributions in the joint-stock company.

Article 11. Transfer between the state-owned enterprise undergoing shareholding reform and the joint-stock company

Based on the decision approving the financial settlement; the settlement of proceeds from shareholding reform; the settlement of shareholding reform costs; the settlement of support funds for redundant employees; and the decision announcing the actual value of the state capital at the time the state-owned enterprise officially becomes a joint-stock company by the shareholding reform decision-making body, the Steering Committee for Shareholding Reform shall direct the state-owned enterprise undergoing shareholding reform to adjust accounting records, prepare transfer files, and organize the transfer between the state-owned enterprise undergoing shareholding reform and the joint-stock company. The transfer completion time shall not exceed 30 days from the date of approval of the financial settlement at the time the state-owned enterprise transfers to the joint-stock company.

The joint-stock company may use all assets (tangible and intangible) received from the transfer to organize production and business activities; inherit all rights, obligations, and responsibilities of the state-owned enterprise that has been transferred and have other rights and obligations as prescribed by law.

The obligations and responsibilities of the state-owned enterprise determined to be supplementary after settlement and transfer to the joint-stock company do not fall under the responsibility of the joint-stock company. In cases where the transfer is incomplete, leading to the joint-stock company not assuming the responsibility to inherit the debt repayment obligation of the state-owned enterprise, the General Director, Chief Accountant of the state-owned enterprise and related organizations and individuals shall bear full responsibility for debt repayment.

Within 60 days from the date of signing the Transfer Minutes, the joint-stock company must complete property and land-related documents and submit them to competent authorities as prescribed to implement the transfer of property management and usage rights from the state-owned enterprise to the ownership of the joint-stock company; carry out land allocation, payment of land use fees, issuance or replacement of land use right certificates in accordance with the Land Law and guiding documents implementing the Land Law.

1. The transfer file from the state-owned enterprise to the joint-stock company includes:

- Documents determining the enterprise's value and the decision announcing the enterprise's value.

- Financial reports at the time of officially becoming a joint-stock company, which have been audited and approved by the competent authority.

- Decision determining the value of state capital at the time of becoming a joint-stock company by the competent authority.

- Transfer minutes of assets and capital established at the time of transfer (with detailed lists of receivables and payables handed over to the joint-stock company to continue inheriting and financial issues needing continued resolution - if any).

- Reports on labor situation and land use of the enterprise.

2. The transfer parties include:

- Representatives of Ministries, agencies equivalent to ministries, or People's Committees of provinces and centrally-administered cities and representatives of the Ministry of Finance (in cases of shareholding reform of economic groups, holding companies, parent companies).

- Representatives of economic groups, holding companies, parent companies (in cases of shareholding reform of member enterprises of economic groups, holding companies, subsidiaries), the General Director and Chief Accountant of the state-owned enterprise representing the transferring party.

- Chairman of the Board of Directors, General Director, Chief Accountant, and representative of the company's trade union representing the receiving party.

- Representatives of the State Capital Investment Corporation for state-owned enterprises undergoing shareholding reform that are subject to transferring the state capital ownership representation rights to the State Capital Investment Corporation.

3. The handover record must contain signatures of all parties involved in the handover and must clearly state:

- The financial situation, assets, capital, and labor present at the time of handover.

- The rights and obligations that the joint-stock company will continue to inherit.

- Any outstanding issues for which the joint-stock company will be responsible to resolve.

Chapter III

DETERMINATION OF THE VALUE OF JOINT-STOCK ENTERPRISE

PART I

ORGANIZATION TO DETERMINE THE VALUE OF THE ENTERPRISE

Article 12. Consulting on the determination of enterprise value

1. Joint-stock enterprises with total asset values according to accounting books of 30 billion VND or more, or state capital values according to accounting books of 10 billion VND or more, must hire organizations with valuation functions to provide consulting services for determining enterprise value in accordance with Article 22 of Decree No. 59/2011/NĐ-CP.

2. Organizations with valuation functions include auditing companies, securities companies, domestic and foreign appraisal enterprises (hereinafter referred to as valuation consulting organizations). When registering to provide consulting services for determining the value of joint-stock enterprises, they must meet the conditions stipulated in Clause 5 of Article 22 of Decree No. 59/2011/NĐ-CP and be included in the list of enterprises with the necessary qualifications to perform valuation functions announced annually by the Ministry of Finance.

3. The authority deciding on the joint-stock conversion selects the valuation consulting organization to provide consulting services for determining enterprise value based on the following principles:

a) For tender packages for valuation consulting valued at not more than 500 million VND, the competent authority deciding on the joint-stock conversion plan may choose the direct assignment method to select a valuation consulting organization from the list published by the Ministry of Finance; if it deems necessary to organize a bidding process, it shall conduct the bidding in accordance with the laws on bidding.

b) For tender packages for valuation consulting valued between 500 million VND and up to 3 billion VND, the authority deciding on the joint-stock conversion plan may choose the direct assignment method to select a valuation consulting organization from the list published by the Ministry of Finance after obtaining the Prime Minister's approval.

c) For tender packages for valuation consulting not covered by points a and b of this Clause, the competent authority deciding on the joint-stock conversion plan decides to organize a bidding process to select the unit to carry out valuation consulting services in accordance with regulations.

4. Based on the decision to select the valuation consulting organization made by the authority deciding on the joint-stock conversion, the General Director of the joint-stock conversion enterprise signs a contract with the valuation consulting organization. The contract for consulting on determining enterprise value must fully reflect the responsibilities of the joint-stock conversion enterprise and the valuation consulting organization, as well as the following contents:

a) The valuation methods used by the consulting organization to determine the enterprise value.

b) Timeframe for completion: a maximum of 60 days from the date full information related to the determination of the joint-stock conversion enterprise value is provided for economic groups, holding companies, parent companies; a maximum of 30 days for other entities.

In cases where the joint-stock conversion enterprise has a large scale and special characteristics (multiple branches, complex financial processing...), the timeframe may be extended with the approval of the authority deciding on the joint-stock conversion.

c) Responsibilities of the joint-stock conversion enterprise: the joint-stock conversion enterprise is responsible for carrying out tasks related to valuation such as inventory, classification of assets, financial processing, production and business plans, provision of relevant documents, and bears legal responsibility for the accuracy and legality of the provided documents.

d) Responsibilities of the valuation consulting organization: the valuation consulting organization is responsible for selecting appropriate methods to determine enterprise value, complying with regulations on determining enterprise value; explaining clearly any cases where the determined asset value is lower than the recorded value on accounting books and providing explanations on other issues related to the determination of enterprise value as required by the competent authority; completing within the agreed timeframe; bearing responsibility for the results of determining enterprise value.

If the result of determining enterprise value does not comply with State regulations, the authority deciding on the joint-stock conversion will issue a notice refusing payment of service fees and consider removing the organization from the list of qualified organizations to participate in valuation consulting. If damage is caused to the State, the valuation consulting organization must compensate according to the law.

e) Valuation consulting costs and payment, settlement:

Valuation consulting costs are agreed upon by the joint-stock conversion enterprise and the consulting organization based on the bidding results. In the absence of a bidding process, the Joint Stock Conversion Steering Committee negotiates with the valuation consulting organization regarding costs and submits to the authority deciding on the joint-stock conversion for approval. The level of joint-stock conversion costs is implemented in accordance with Circular No. 196/2011/TT-BTC dated December 26, 2011, issued by the Ministry of Finance.

Payment of valuation consulting costs: Upon issuance of the enterprise value announcement decision, the joint-stock conversion enterprise pays 80% of the value stated in the contract. Upon issuance of the joint-stock conversion plan approval decision, the joint-stock conversion enterprise pays the remaining amount to the valuation consulting organization according to the contract.

5. During the implementation of the joint-stock conversion plan, the valuation consulting organization is responsible for coordinating with the enterprise to explain matters related to valuation.

6. Joint-stock enterprises not subject to hiring valuation consulting organizations as stipulated in Clause 1 of Article 22 of Decree No. 59/2011/NĐ-CP shall self-determine the enterprise value and report to the competent authority deciding on the enterprise value. If these enterprises hire valuation consulting organizations to determine the enterprise value, they can directly select the consulting organization without having to bid. Other provisions concerning the valuation consulting organization and the joint-stock conversion enterprise in the process of hiring valuation consulting services to determine enterprise value are carried out in accordance with the provisions of this Article.

Article 13. Methods for determining enterprise value

The valuation consulting organization selects methods to determine the enterprise value:

1. Asset method: This is a method to determine the enterprise value based on the actual value of all tangible and intangible assets of the enterprise at the time of determining the enterprise value.

The basis for determining the enterprise value according to the asset method as stipulated in Article 30 of Decree No. 59/2011/ND-CP includes:

- Financial statements, accounting records of the enterprise at the time of determining the enterprise value.

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

- Market price of assets at the time of organizing the valuation.

- Value of land use rights granted, re-evaluated land rent value in cases where the enterprise has paid once for the entire lease period and the business advantage value of the enterprise.

2. Discounted cash flow method: This is a method to determine the enterprise value based on the future profitability of the enterprise, independent of the value of the enterprise's assets.

The basis for determining the enterprise value according to the discounted cash flow method as stipulated in Article 35 of Decree No. 59/2011/ND-CP includes:

- Financial statements of the enterprise for the five consecutive years immediately preceding the time of determining the enterprise value.

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

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

- Value of land use rights granted, re-evaluated land rent value in cases where the enterprise has paid once for the entire lease period.

3. The valuation consulting organization may choose other methods (other than the two above methods) to determine the enterprise value. Other methods must ensure scientific validity, accurately reflect the enterprise value, be widely applied internationally, and be easily understandable for use in calculating the determination of enterprise value.

Article 14. State Audit for Enterprises undergoing Joint Stock Transformation

For enterprises undergoing joint stock transformation that are required to undergo state audit according to Article 27 of Decree No. 59/2011/ND-CP and Clause 4, Article 1 of Decree No. 189/2013/ND-CP:

1. Based on the decision approving the restructuring and modernization plan of the enterprise already approved by the Prime Minister, the authority deciding the joint stock transformation of the enterprise sends a list notifying the time (schedule) for implementing the joint stock transformation of the enterprises to the State Audit Office so that the State Audit Office can have a program and plan to audit the results of the enterprise value determination by the valuation consulting organization and handle financial issues before officially announcing the joint stock transformation enterprise value.

2. After the valuation consulting organization completes the result file of the enterprise value determination according to regulations, the authority deciding the joint stock transformation sends a document to the State Audit Office along with the enterprise value determination file for the joint stock transformation enterprise for the State Audit Office to conduct the audit of the valuation consulting organization's enterprise value determination results.

The joint stock transformation steering committee, the joint stock transformation enterprise, and the valuation consulting organization are responsible for providing documents and explaining contents related to financial handling and enterprise value determination by the valuation organization according to the requirements of the State Audit Office.

3. Within fifteen days from the date of receiving the request from the competent authority deciding the joint stock transformation enterprise value, the State Audit Office is responsible for organizing the audit of the valuation consulting organization's results and financial handling of the joint stock transformation enterprise. The completion and announcement of the audit results shall not exceed sixty days from the date of conducting the audit. The State Audit Office is responsible for the audit results according to the provisions of the law.

In case the time for auditing the enterprise value determination results of the valuation consulting organization needs to be extended according to Article 27 of Decree No. 59/2011/ND-CP, the State Audit Office shall send a document to the competent authority deciding the enterprise value announcement to coordinate and ensure the announcement time of the enterprise value according to Article 15 of this Circular.

4. Based on the enterprise value determination results for joint stock transformation already determined by the consulting organization and the opinion of the competent authority deciding the enterprise value, the State Audit Office shall conduct the audit of the enterprise valuation results and handle financial issues before valuation for the following enterprises:

- Parent companies belonging to state-owned economic groups.

- Parent companies belonging to state-owned corporations and other limited liability companies with one member when requested by the Prime Minister.

Article 15. Announcement of Enterprise Value

1. The consulting organization together with the enterprise being equitized shall prepare the documentation to determine the enterprise value, including:

a) Financial statements of the equitized enterprise prepared at the time of determining the enterprise value.

The equitized enterprise is responsible for conducting annual financial statement audits in accordance with state regulations for use when determining the enterprise value. In cases where the time of determining the enterprise value does not coincide with the year-end financial report period, the enterprise may use quarterly financial reports or financial statements prepared at the time of determining the enterprise value (as per regulations that do not require auditing), to determine the enterprise value according to the decision of the authority deciding on the equitization of the enterprise.

b) Report on asset classification results and financial surplus handling of the enterprise.

c) Minutes on determining the enterprise value, Minutes on reviewing the determination of the enterprise value (in accordance with Appendix No. 1, 1a, 1b, 2, 2a, 2b attached hereto).

d) Copies of detailed files of issues requiring resolution when determining the enterprise value.

đ) Other necessary documents as stipulated in Article 30, Article 35 of Decree No. 59/2011/ND-CP of the Government (depending on the application of different methods when determining the enterprise value).

2. Decision on Announcing the Enterprise Value

The competent authority's decision to announce the value of the equitized enterprise must be reviewed by the Equitization Steering Committee regarding the procedures, formalities, and compliance with legal provisions on determining the enterprise value as prescribed in Article 24 of Decree No. 59/2011/ND-CP.

a) For enterprises being equitized whose determination of enterprise value does not fall under the category required to undergo auditing as stipulated in Clause 4, Article 1 of Decree No. 189/2013/ND-CP, within no more than 10 days from the date of receiving the report of the Equitization Steering Committee and the documentation to determine the enterprise value, the competent authority deciding the enterprise value shall issue a decision announcing the value of the equitized enterprise.

b) For enterprises being equitized whose determination of enterprise value falls under the category required to undergo auditing as stipulated in Clause 4, Article 1 of Decree No. 189/2013/ND-CP, within no more than 10 days from the date of receiving the State Audit Agency's audit results, the Equitization Steering Committee must report to the authority deciding the enterprise value. If they agree with the State Audit Agency's results, within no more than 10 days from the date of receiving the report of the Equitization Steering Committee, the authority deciding the enterprise value shall issue a decision announcing the value of the equitized enterprise.

In case the competent authority deciding the enterprise value of the equitized enterprise disagrees with the State Audit Agency's results, the organization shall exchange views to reach agreement or report to the Prime Minister for consideration and decision before announcing the enterprise value within their authority.

3. The timing of the announcement of the value of the equitized enterprise by the competent authority ensures that the announcement time is not more than six months from the determination time for the enterprise value determined by the asset method, and not more than nine months for the enterprise value determined by the discounted cash flow method and other methods.

In case the value of the equitized enterprise cannot be announced within the above time limit, the equitization decision-making authority shall consider extending the announcement time but must ensure that the announcement of the enterprise value and the organization of the first public offering of shares of the equitized enterprise are not more than eighteen months from the determination time of the enterprise value, except for special cases decided by the Prime Minister.

4. For economic groups, state-owned corporations, and enterprises operating in special sectors such as insurance, banking, telecommunications, aviation, coal mining, oil and gas, rare mineral mining, if approved by the Prime Minister, the Equitization Steering Committee shall submit the report and documentation to determine the enterprise value to the Ministry managing the sector, People's Committees of centrally governed cities and provinces for the decision to announce the enterprise value, while also submitting to the Ministry of Finance for supervision.

5. The Board of Members of joint-stock companies with 100% state capital, which are parent companies of economic groups; and special corporations established by the Prime Minister's decision are authorized by the Prime Minister to decide on announcing the enterprise value and approving the equitization plan of member enterprises. After making the decision, the Boards of Members of economic groups and special corporations shall report to the Central Steering Committee for Enterprise Renewal and Development and the Ministry of Finance for inspection and supervision to ensure compliance with the law.

Model of the decision to announce the enterprise value as per Appendix No. 04 attached hereto.

Article 16. Adjustment of Enterprise Value

1. Joint-stock enterprises must adjust the announced enterprise value in accordance with the provisions of Article 26 of Decree No. 59/2011/NĐ-CP; Clause 3, Article 1 of Decree No. 189/2013/NĐ-CP.

2. Responsibilities of joint-stock enterprises and competent authorities deciding on joint-stock conversion when adjusting enterprise value:

a) In cases where external factors affect the enterprise value, the joint-stock enterprise must proactively organize an inventory, determine the extent of loss, and promptly report in writing to the competent authority deciding on joint-stock conversion for review and decision to adjust the enterprise value.

Within fifteen days from the date of receipt of the report from the joint-stock enterprise, the competent authority deciding on joint-stock conversion shall be responsible for organizing a revaluation of the joint-stock enterprise's value and directing the Joint Stock Conversion Steering Committee to cooperate with the enterprise to adjust the joint-stock conversion plan.

b) If eighteen months have passed since the valuation date and the enterprise has not implemented the sale of shares, the authority deciding on joint-stock conversion must require the enterprise to suspend the implementation steps of the approved joint-stock conversion plan, clarify the reasons, handle responsibility for related collectives and individuals, and direct the Joint Stock Conversion Steering Committee to organize a revaluation of the enterprise's value and adjustment of the joint-stock conversion plan (if necessary). The costs for revaluation of the enterprise's value and adjustment of the joint-stock conversion plan (after deducting compensation payments to related individuals) shall be deducted from the proceeds from the joint-stock conversion of the enterprise.

PART II

DETERMINATION OF THE VALUE OF JOINT-STOCK ENTERPRISES

BY ASSET METHOD

Article 17. Actual Value of Joint-Stock Enterprises

1. The enterprise value according to accounting records is the total asset value reflected in the Balance Sheet of the enterprise.

2. The actual value of joint-stock enterprises is the value of all current assets of the enterprise at the time of joint-stock conversion, taking into account the profitability that both buyers and sellers of shares can accept.

3. The actual value of joint-stock enterprises does not include amounts excluded from the enterprise value for joint-stock conversion as decided by the competent authority determining the enterprise value, who bears legal responsibility for their decision in accordance with Article 29 of Decree No. 59/2011/NĐ-CP and point b, Clause 1, Article 1 of Decree No. 189/2013/NĐ-CP.

4. The actual value of joint-stock enterprises includes land use rights value as stipulated in Clause 6, Article 1 of Decree No. 189/2013/NĐ-CP and business advantage value as stipulated in Article 32 of Decree No. 59/2011/NĐ-CP.

5. For financial and credit organizations, when determining the enterprise value by the asset method, the results of auditing the financial statements are used to determine monetary capital, receivables and payables, but a re-inventory and reassessment must be conducted for fixed assets, long-term investments, work-in-progress costs related to compensation, relocation, land leveling, and land use rights value according to state regulations.

Article 18. Determination of the actual value of various types of assets of enterprises.

The actual value of assets is determined in Vietnamese Dong. Assets recorded in foreign currency shall be converted into Vietnamese Dong at the average exchange rate on the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of determining the enterprise's value.

1. For tangible assets:

a) Only revalue those assets that the joint-stock company continues to use.

b) The actual value of the asset equals the original cost calculated based on the market price at the time of valuation multiplied by the remaining quality of the asset at the time of valuation.

Where:

- Market price is:

The price of new similar assets being bought or sold on the market includes transportation and installation costs (if any). If it is a special asset not available on the market, the purchase price is calculated based on the new purchase price of a comparable asset from the same country of production with the same capacity or equivalent features. In cases where there is no comparable asset, the price is calculated based on the asset's book value.

Basic construction unit prices and investment rates are prescribed by competent authorities at the time closest to the valuation date for basic construction products. In cases where there are no regulations, they are calculated based on the book value, taking into account inflation factors in basic construction.

Specifically, for newly completed investment construction projects within three years before the determination of the enterprise's value: use the final settlement value of the project approved by the competent authority. In exceptional cases, if the project has been put into use but not yet approved by the competent authority, temporarily calculate based on the book value.

- The quality of the asset is determined as a percentage compared to the quality of newly purchased or newly constructed similar assets, in accordance with state regulations on safety conditions for using and operating assets; ensuring product quality; environmental hygiene according to guidelines from economic and technical management ministries. If there are no state regulations, the quality of machinery and equipment, transport means is reassessed not lower than 20% of the quality of newly purchased similar assets; for factories and architectural structures, not lower than 30% of the quality of newly constructed similar assets.

c) Fixed assets that have been fully depreciated; tools and management equipment that have been fully allocated to business expenses but continue to be used by the joint-stock company must be reassessed to include in the enterprise's value according to the principle of not being less than 20% of the value of newly purchased assets, tools, and equipment.

d) For joint-stock enterprises undergoing privatization with tangible assets such as rubber plantations, when determining the value of the joint-stock enterprise, the value of the rubber plantation is determined according to Circular No. 132/2011/TT-BTC dated September 28, 2011, issued by the Ministry of Finance.

2. Monetary assets including cash, deposits, and securities (bills, bonds, etc.) of the enterprise are determined as follows:

a) Cash on hand is determined based on the inventory reconciliation report.

b) Deposits are determined based on the confirmed balance with the bank where the enterprise maintains its account.

c) Securities are valued based on market transaction prices. If there are no transactions, they are valued based on their face value.

3. Accounts receivable included in the enterprise's value are determined based on the actual balance on the accounting books and after reconciliation and processing as stipulated in Clause 3, Article 9 of this Circular.

4. Uncompleted production and business costs, uncompleted basic construction costs, and uncompleted costs related to compensation, resettlement, and land leveling are determined based on the actual occurrence and accounting entries on the accounting books.

5. The value of collateral and short-term and long-term guarantees is determined based on the actual balance on the accounting books after verification and confirmation.

6. The value of intangible assets (if any) is determined based on the remaining value recorded on the accounting books.

7. Business advantage value

The business advantage value included in the value of the joint-stock enterprise is determined according to Article 32 of Decree No. 59/2011/NĐ-CP, including brand value and development potential, as follows:

a) Brand value is determined based on actual costs incurred for establishing and protecting trademarks and trade names during the enterprise's operations five years prior to the valuation date, including costs for establishing the enterprise, employee training costs, advertising and promotional costs both domestically and internationally to promote products and introduce the company; building websites...

b) Development potential value included in the value of the joint-stock enterprise is assessed based on the enterprise's future profitability when comparing its profit margin to the government bond interest rate as follows:

Where:

- The actual value of state capital according to the accounting books at the valuation date (the valuation date of the enterprise) is determined by subtracting the accounts payable according to the accounting books at the valuation date from the enterprise's value according to the accounting books (which is the total asset value reflected in the enterprise's Balance Sheet as stipulated in Clause 1, Article 17 of this Circular).

- Shareholders' equity is determined to include the balances: Owner Investment Capital - Account 411; Development Fund - Account 414 and Basic Construction Investment Capital - Account 441 pursuant to Decision No. 15/2006/QĐ-BTC dated March 20, 2006, issued by the Minister of Finance on the issuance of the enterprise accounting system. The determination of shareholders' equity of joint-stock enterprises that are credit organizations is guided by the State Bank of Vietnam.

- The post-tax profit margin is determined as follows:

8. The value of long-term investments of the enterprise in other enterprises is determined according to Article 33 of Decree No. 59/2011/NĐ-CP. Among them:

- When determining the value of the equity capital of other enterprises to determine the long-term investment value of the enterprise being listed, the undistributed profit (if any) used to establish incentive funds, welfare funds, executive bonus funds, and distribute profits to shareholders according to the resolution of the Board of Members or the Shareholders' Meeting of the other enterprise shall be excluded if such resolutions have taken effect.

- The portion of profit distributed from another enterprise to the enterprise being listed (according to the resolution of the Board of Members or the Shareholders' Meeting of the other enterprise) shall be accounted for as part of the business results of the enterprise at the time of determining the enterprise's value.

- In cases where the enterprise being listed has short-term investments (investments with a term of less than one year) in other enterprises, the determination of the value of these short-term investments shall be carried out in the same manner as for long-term investments.

- The value of the contribution of the enterprise being listed in a publicly traded joint-stock company shall be determined based on the closing price of the shares traded on the stock market at the nearest point in time to when the organization carries out the valuation of the enterprise. For the value of the contribution in a non-publicly traded joint-stock company, the basis shall be the result of the determination by the consulting agency as stipulated in Clause 1, Article 33 of Decree No. 59/2011/NĐ-CP, which the State Capitalization Steering Committee shall consider and submit to the competent authority for decision-making on the enterprise's value.

9. Value of land use rights

a) The determination of the value of land use rights to be included in the enterprise's value shall be carried out in accordance with Clause 6, Article 1 of Government Decree No. 189/2013/NĐ-CP dated November 20, 2013.

The land price for determining the value of land use rights to be included in the value of the enterprise being listed is the specific land price prescribed in Article 15 and Article 16 of Government Decree No. 44/2014/NĐ-CP dated May 15, 2014, concerning land prices.

b) For enterprises that have completed the listing process or are currently undergoing listing (and whose enterprise value has been announced by the competent authority) before the effective date of Government Decree No. 189/2013/NĐ-CP, they shall continue to implement land transfer and lease and calculate the value of land use rights according to the approved plan, without implementing adjustments in accordance with the provisions of Clauses 2, 3, 4, 5, and 6 of Article 31, as amended and supplemented in Clause 6 of Article 1 of Government Decree No. 189/2013/NĐ-CP.

10. When determining the enterprise's value using the asset method, the entire value constituting the total asset value of the enterprise and included in the actual value of the enterprise being listed shall be realized through the purchase of shares of the enterprise being listed, thereby becoming assets of the invested joint-stock company. The joint-stock company shall amortize the value of fixed assets increased in accordance with current regulations and include it in operating expenses; other increased asset values, including the value of land use rights and business advantage value, shall be gradually allocated to operating expenses deductible when calculating corporate income tax over a period not exceeding ten years from the date the enterprise being listed transitions to a joint-stock company.

Article 19. The actual value of state capital at the enterprise.

1. The actual value of state capital at the enterprise equals the actual value of the enterprise minus (-) the actual debts payable and the surplus of operating funds (if any). Among these, actual debts payable are the total value of the enterprise's debts payable minus (-) the debts that do not need to be paid.

2. When implementing the shareholding transformation of the parent company within an Economic Group, State Corporation, or Parent Company - Subsidiary Enterprise Complex (hereinafter referred to collectively as the Parent Company), then:

- Subsidiaries owned 100% by the parent company (the company undergoing shareholding transformation) must conduct the determination of the enterprise value according to the provisions of this circular as for the company undergoing shareholding transformation, to determine the actual value of the parent company's capital at the subsidiary.

- The actual value of the company undergoing shareholding transformation (parent company) is the value of the parent company and the value of the dependent enterprises calculated according to the provisions of this circular.

- The actual value of state capital at the parent company equals the actual value of the parent company determined as above minus the actual debts payable and the surplus of operating funds (if any) as generally provided.

Chapter III

 DETERMINATION OF ENTERPRISE VALUE FOR SHAREHOLDING TRANSFORMATION BY DISCOUNTED CASH FLOW METHOD

Article 20. Enterprise value by discounted cash flow method

1. Determining the enterprise value by the discounted cash flow method is a method of determining the enterprise value based on the profitability of the company undergoing shareholding transformation in the future, independent of the value of the company's assets.

2. Companies undergoing shareholding transformation that determine their enterprise value by the discounted cash flow method are those with a minimum of five years of operation before the valuation, having an average post-tax profit rate on state capital over the five consecutive years immediately preceding the shareholding transformation higher than the interest rate of government bonds with a five-year term issued at the time closest to the valuation date.

3. Under this method, data on profits and state capital of the company undergoing shareholding transformation from past years are used for calculations when determining the enterprise value, based on the profit and state capital data stipulated in the financial regulations for companies undergoing shareholding transformation.

In cases where the company undergoing shareholding transformation invests capital in other enterprises, the profit generated from such investment serves as the basis for determining the enterprise value of the company undergoing shareholding transformation.

4. According to the discounted cash flow method, the determination of future annual post-tax profit figures and the use of these figures to calculate indicators (profit/capital ratio; dividend growth rate) to convert future dividends and capital values to the current year (valuation year) is as follows:

- Based on the average growth rate of post-tax profits in past years to determine the post-tax profits of future years. If the company uses future annual post-tax profit figures as planned targets, the company must prove that the planned target profit figures are feasible.

- The distribution of future annual post-tax profits is uniformly assumed to allocate 50% for dividends and 30% for capital replenishment (regardless of whether the future annual profits used for calculation are based on past year profit figures or planned target profit figures).

The actual value of the enterprise includes the actual value of state capital, debts payable, and surplus of operating funds (if any).

Article 21. Actual value of state capital in enterprises according to the discounted cash flow method

The actual value of state capital according to the discounted cash flow method is determined based on the following formula:

Where:

1. Indicators and determination of indicators

: is the present value of dividend year i

: is the present value of state capital year n

i: the order of subsequent years from the year determining the enterprise value (i:1→n).

D_{ANNEX I.A[31]}: Profit after tax used to distribute dividends in year i.

n: Number of future years selected (3-5 years).

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_n: Value of state capital year n and is determined according to the formula:

D_n+1: Post-tax profit used for anticipated dividend distribution in year n+1

K: Discount rate or required rate of return for investors when purchasing shares and is determined by the formula:

K = R_P + R_t,

||| R_P: Rate of return obtained from risk-free investments, this indicator is calculated based on the interest rate of government bonds with a term of 5 years issued at the time closest to the time of determining the enterprise value.

||| R_t,: Risk premium rate when investing in purchasing shares of companies in Vietnam, this indicator is determined according to the international stock risk premium index in the valuation yearbook or determined by valuation companies for each enterprise but not exceeding the rate of return obtained from risk-free investments (R_P).

g: Annual growth rate of dividends and is determined as follows:

g = b x R

Where: b is the post-tax profit retention ratio to replenish capital.

R is the average post-tax profit rate on equity of future years.

2. The difference in land use right value is determined in accordance with the provisions of Clause 9, Article 18 of this Circular.

An illustrative example of determining the enterprise value according to the discounted cash flow method is provided in Appendix 3, 3a, 3b attached to this Circular.

Article 22. Determining the actual value of enterprises according to the discounted cash flow method

1. The actual value of the enterprise at the time of determining the enterprise value according to the discounted cash flow method is determined as follows:

Where:

Actual debt payable = Total debt payable on accounting books minus (-) Value of non-payable debts plus (+) Land use right value payable to the state budget of the area of land received and transferred for different purposes determined in accordance with the provisions of Clause 9, Article 18 of this Circular.

2. The increase in the actual value of state capital according to the discounted cash flow method compared to the book value of state capital at the time of determining the enterprise value is included in the value of the enterprise being privatized through the purchase of shares of the privatized enterprise converted into assets of the joint-stock company invested by shareholders. The joint-stock company is accounted for and allocated gradually to business expenses deductible when determining corporate income tax within a period not exceeding 10 years from the date the privatized enterprise officially becomes a joint-stock company.

SECTION IV

DETERMINATION OF THE VALUE OF JOINT-STOCK ENTERPRISES

BY OTHER METHODS

Article 23. Determining the enterprise value by other methods

In addition to the two methods of determining the enterprise value specified in Section II and Section III of Chapter III of this Circular, the consulting organization for valuation may apply other valuation methods to determine the value of the enterprise being privatized. These valuation methods must ensure scientific accuracy, reflect the true value of the enterprise, and be widely applied internationally, easy to understand and use in calculations; the time point for determining the enterprise value according to other methods must be the end of the quarter or year closest to the decision-making date for privatization.

Article 24. Selection and use of results to determine enterprise value

1. The results of determining enterprise value using the discounted cash flow method or another method must be compared with the results of determining enterprise value using the asset-based method at the same time point for selection according to the principle: The enterprise value determined and announced shall not be lower than the enterprise value determined using the asset-based method.

2. The files and results of determining enterprise value that are determined and selected in accordance with the provisions of Decree No. 59/2011/ND-CP, Decree No. 189/2013/ND-CP, and this Circular shall serve as the basis for the competent authority to decide on announcing the enterprise value for shareholding reform, determining the registered capital scale, the initial share issuance structure, and the starting price for conducting auction sales of shares.

PART V

DEDUCTION OF THE VALUE OF LOCATION ADVANTAGE

Article 25. Principles for deducting the value of location advantage.

1. For enterprises that have included the value of location advantage of leased land in the enterprise value and recorded an increase in state capital at the enterprise when determining the enterprise value for shareholding reform, and which were approved by the competent authority to announce the enterprise value according to the regulations before the effective date of Decree No. 59/2011/ND-CP, may deduct the value of location advantage from the land rent payable by the shareholding enterprise. For enterprises undergoing shareholding reform under Decree No. 109/2007/ND-CP that have not calculated the value of location advantage, Decree No. 59/2011/ND-CP shall apply without requiring supplementary calculation of the value of location advantage and adjustment of state capital at the enterprise.

2. The total amount of land rent deductible shall not exceed the value of location advantage decided by the competent authority deciding the enterprise value.

3. In cases where the value of location advantage exceeds the land rent payable in the year at the local level, the difference will be deducted from the land rent payable in subsequent years (For the portion of location advantage that the enterprise has allocated to expenses up to December 31, 2013, deduction shall not be implemented).

4. In cases where the enterprise has paid the land rent in full for the entire lease period, the enterprise shall be exempted from all land rent or shall not need to pay land rent:

a) As of the effective date of this Circular, if the shareholding reform enterprise has not completed the settlement of shareholding reform, the value of location advantage shall be deducted from the state capital at the enterprise when performing the settlement, determining the state capital value at the official transfer to joint-stock company status (For the portion of location advantage that the enterprise has allocated to expenses up to December 31, 2013, reduction shall not be allowed).

b) As of the effective date of this Circular, if the shareholding reform enterprise has completed the settlement of shareholding reform, the shareholding enterprise shall be responsible for convening a shareholders' meeting to decide on reducing the state investment capital in the joint-stock company corresponding to the value of location advantage included in the state capital (For the portion of location advantage that the enterprise has allocated to expenses up to December 31, 2013, reduction shall not be allowed).

Article 26. Documents for Deducting Geographic Location Advantage.

1. The joint-stock company shall send a letter to the agency responsible for determining the value of the state-owned enterprise for shareholding conversion requesting confirmation of the value of the geographic location advantage of each plot of land according to each locality (based on the data in the documents to determine the value of the state-owned enterprise for shareholding conversion) so that the state-owned enterprise for shareholding conversion can submit it to the local tax authority as the basis for deducting land lease payments due from January 1, 2014 at the locality.

2. The documents for implementing the deduction of land lease payments include:

a) A letter sent to the local tax authority (where the land location has been calculated with geographic location advantage) requesting the deduction of the geographic location advantage value from annual land lease payments (original).

b) A letter confirming the value of the geographic location advantage issued by the agency responsible for determining the value of the state-owned enterprise (original).

c) Decisions determining the value of the state-owned enterprise for shareholding conversion, minutes determining the value of the state-owned enterprise for shareholding conversion, detailed tables determining the geographic location advantage value of the enterprise (Original or certified copy).

d) Receipts or invoices for land lease payments made in one lump sum for the entire period (certified copy).

3. Procedure for deducting the geographic location advantage value from land lease payments.

Upon receiving the joint-stock company's application for deducting the geographic location advantage value from land lease payments, within 15 days, the tax authority is responsible for reviewing the documents (regarding the reasonableness of the documents, the accuracy of the data). If the documents meet the conditions for deduction, the tax authority is responsible for deducting the geographic location advantage value from the land lease payments due by the enterprise.

Chapter IV

EFFECTIVE DATE OF IMPLEMENTATION

Article 27. Effective Date

1. This Circular takes effect from October 20, 2014 and replaces Circular No. 202/2011/TT-BTC dated December 30, 2011 of the Ministry of Finance guiding Decree No. 59/2011/NĐ-CP dated July 18, 2011 of the Government on converting state-owned enterprises with 100% state capital into joint-stock companies.

2. As of the effective date of this Circular, state-owned enterprises that have completed the determination of enterprise value and have decisions announcing the enterprise value issued by competent authorities may retain the announced enterprise value and adjust it according to the content of this Circular when finalizing accounts and determining the state capital value at the time the enterprise officially converts into a joint-stock company.

3. In the course of implementation, if there are difficulties, agencies and enterprises are requested to report to the Ministry of Finance for research and amendment./.