Decree No. 132/2005/ND-CP On the Implementation of Rights and Obligations of State Owners towards State-Owned Enterprises

DECREE

On the exercise of rights and obligations of the State owner

towards state-owned enterprises

THE GOVERNMENT

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

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

The Prime Minister issues this Decision on principles, criteria, and allocation standards for state budget investment capital development phase 2016-2020.

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates on the exercise of rights and obligations of the State owner towards state-owned enterprises, including independent state-owned enterprises and state-owned holding corporations, as provided for in the Law on State-Owned Enterprises.

Article 2. Exercise of rights and obligations of the State owner towards state-owned enterprises

1. The State is the owner of state-owned enterprises. The Government uniformly manages and organizes the implementation of the rights and obligations of the State owner towards state-owned enterprises. The Government directly implements, or delegates to Ministries, ministerial-level agencies, and governmental agencies (hereinafter referred to collectively as "Ministries"); decentralizes to Provincial People's Committees (hereinafter referred to as "Provincial People's Committee"); entrusts the Board of Directors of state-owned holding corporations and independent state-owned enterprises with Boards of Directors (hereinafter referred to as "Board of Directors") to implement the rights and obligations of the State owner.

2. The Prime Minister directly implements or delegates relevant Ministries to implement certain rights and obligations of the State owner towards state-owned holding corporations and particularly important independent state-owned enterprises established by decision of the Prime Minister.

3. Ministries and Provincial People's Committees are representatives of the State owner for state-owned enterprises established by decisions of Ministries and Provincial People's Committees; implement certain rights and obligations of the State owner towards state-owned holding corporations and particularly important independent state-owned enterprises established by decision of the Prime Minister according to delegation from the Prime Minister.

4. The Ministry of Finance and functional Ministries implement certain rights and obligations of the State owner towards state-owned enterprises within their assigned fields.

5. The Board of Directors is the direct representative of the State owner at state-owned enterprises with a Board of Directors and represents the State owner for wholly-owned enterprises.

Chapter II

RIGHTS AND OBLIGATIONS OF THE STATE OWNER

TOWARDS STATE-OWNED ENTERPRISES

Article 3. Rights of the State owner towards state-owned enterprises

1. Decide on the establishment, organizational structure, management mechanism, restructuring, dissolution, and ownership conversion of state-owned enterprises.

2. Decide on the objectives, strategies, long-term plans, and business sectors and industries of state-owned enterprises.

3. Approve the Articles of Association and approve amendments and supplements to the Articles of Association of state-owned enterprises.

4. Decide on capital investment to form the registered capital and adjust the registered capital of state-owned enterprises.

5. Decide on investment, capital contribution, joint ventures, and joint operations within the scope of authority; approve policies on borrowing, lending, leasing, and subleasing of state-owned enterprises.

6. Establish financial systems for state-owned enterprises, income distribution, reserve fund establishment and utilization.

7. Decide on the appointment, dismissal, removal, commendation, and disciplinary action against the Chairman of the Board of Directors, Board members, General Director or Director of state-owned enterprises.

8. Establish wage and allowance systems, bonuses in state-owned enterprises; decide on salary and allowance levels for the Chairman of the Board of Directors, Board members, General Director or Director of state-owned enterprises.

9. Establish ordering, bidding, or assignment systems, selling prices, and price subsidies for the production and supply of public goods and services.

10. Organize inspections and supervision of the implementation of objectives and tasks, compliance with owner decisions, and evaluate the operational effectiveness of state-owned enterprises.

Article 4. Obligations of the State Owner towards State Enterprises

1. Invest sufficient registered capital for state enterprises.

2. Comply with the provisions related to the owner in the Charter of State Enterprises.

3. Be responsible for the debts and other property obligations of state enterprises within the scope of the company's registered capital.

4. Bear legal responsibility when deciding on investment projects; approving policies on buying, selling, borrowing, lending, leasing, and subleasing according to their authority.

5. Ensure the autonomy in business operations and legal responsibility of state enterprises; refrain from illegal interference in the business activities of state enterprises.

6. Fulfill other obligations as prescribed by law.

Chapter III

ASSIGNMENT AND GRADATION OF RIGHTS AND OBLIGATIONS

OF THE STATE OWNER TOWARDS STATE ENTERPRISES

Section 1

RIGHTS OF THE STATE OWNER

TOWARDS STATE-OWNED ENTERPRISES

Article 5. Decision on establishment, restructuring, dissolution, and ownership conversion of state enterprises

1. The Government shall issue regulations on new establishment; sectors, fields, and areas eligible for new establishment; restructuring; dissolution; and ownership conversion of state enterprises.

2. The Prime Minister:

a) Approves the plan for establishing new state enterprises in accordance with Decree No. 180/2004/NĐ-CP dated October 28, 2004 of the Government on the establishment of new enterprises, restructuring, and dissolution of state enterprises.

b) Approves plans for restructuring, dissolution, and ownership conversion of state enterprises across the entire national economy upon the proposal of Ministries, Provincial People's Committees for independent state enterprises and state corporations established by Ministries, Provincial People's Committees, and independent state enterprises established by the Prime Minister; upon the proposal of the Board of Directors for state corporations established by the Prime Minister, after obtaining opinions from the Ministry of Planning and Investment, the Ministry of Finance, and the sector management ministry.

c) Decides on the establishment of new special state corporations and special independent state enterprises based on proposals from sector management ministries.

d) Decides on restructuring, dissolution, and ownership conversion of special state corporations established by the Prime Minister based on proposals from the Board of Directors.

đ) Decides on restructuring and dissolution of important state enterprises directly serving national defense and security.

3. Ministers, Chairmen of Provincial People's Committees:

a) Decide on the establishment of new state enterprises (excluding those established by the Prime Minister) after the approval of the establishment plan by the Prime Minister.

b) Review and submit plans for restructuring, dissolution, and ownership conversion of state corporations they have established to the Prime Minister based on proposals from the Board of Directors of the corporation.

c) Develop plans for restructuring, dissolution, and ownership conversion of independent state enterprises they have established and those established by the Prime Minister for submission to the Prime Minister for approval.

d) Decide on restructuring, dissolution, and ownership conversion of state enterprises (excluding those mentioned in points d and đ of Clause 2 of this Article) based on approved plans and organize their implementation.

4. Board of Directors of State Corporations:

a) Develop plans for new establishment, restructuring, dissolution, and ownership conversion within the corporation for submission to the entity that established the corporation; implement according to the approved plan.

b) Accept businesses voluntarily joining as members of the corporation after obtaining approval from the entity that established the corporation.

Article 6. Determining Objectives, Strategies, Long-term Plans, and Business Sectors of State-owned Enterprises

1. The Prime Minister shall approve the objectives, strategies, long-term plans, and business sectors of state-owned enterprises with a Board of Directors established by the Prime Minister's decision upon the proposal of the Board of Directors and some particularly important state-owned enterprises upon the proposal of the sectoral management ministry, after obtaining the opinion of the sectoral management ministry (in cases proposed by the Board of Directors) and the Ministry of Planning and Investment.

The list of such state-owned enterprises shall be decided by the Prime Minister.

2. Ministries, Provincial People's Committees:

a) Approve the objectives, strategies, long-term plans, and business sectors of state-owned enterprises with a Board of Directors established by their own decision upon the proposal of the Board of Directors.

b) Decide on the objectives, strategies, long-term plans, and business sectors of independent state-owned enterprises without a Board of Directors established by the Prime Minister's decision after being approved by the Prime Minister, and of independent state-owned enterprises without a Board of Directors established by their own decision.

3. The Board of Directors shall decide on the objectives, strategies, long-term plans, and business sectors of the company after being approved by the competent authority and of enterprises wholly owned by the company.

Article 7. Approving the Articles of Association, Amending and Supplementing the Articles of Association of State-owned Enterprises

1. The Prime Minister shall approve the Articles of Association and amendments and supplements to the Articles of Association of state-owned enterprises established by the Prime Minister's decision upon the proposal of the Board of Directors and the opinions of the sectoral management ministry, the Ministry of Finance, and the Ministry of Planning and Investment.

Depending on specific circumstances, the Prime Minister may delegate the sectoral management ministry or the Provincial People's Committee to approve amendments and supplements to the Articles of Association of state-owned enterprises established by the Prime Minister's decision.

2. Ministries, Provincial People's Committees shall approve the Articles of Association and amendments and supplements to the Articles of Association of state-owned enterprises established by their own decision and of state-owned enterprises without a Board of Directors established by the Prime Minister's decision.

3. The Board of Directors shall approve the Articles of Association and amendments and supplements to the Articles of Association of member companies wholly owned by the holding company.

Article 8. Deciding on Capital Investment to Form and Adjust the Registered Capital of State-owned Enterprises

1. The Prime Minister shall decide on capital investment to form and adjust the registered capital during operation for state-owned enterprises established by the Prime Minister's decision upon the proposal of the Board of Directors, the sectoral management ministry, and the Provincial People's Committee after obtaining the opinion of the sectoral management ministry (if the proposer is the Board of Directors or the Provincial People's Committee), the Ministry of Finance, and the Ministry of Planning and Investment.

The Ministry of Finance shall implement the investment of sufficient registered capital according to the Prime Minister's decision.

2. Ministries, Provincial People's Committees shall take the lead and coordinate with the Ministry of Finance to determine the level of registered capital for state-owned enterprises established by their own decision.

The Ministry of Finance shall implement the investment of sufficient registered capital for state-owned enterprises established by the sectoral management ministry's decision upon the proposal of the sectoral management ministry.

The Provincial People's Committee shall implement the investment of sufficient registered capital for state-owned enterprises established by the Provincial People's Committee's decision.

3. The Board of Directors of the holding company shall decide on the use, investment, and adjustment of capital and other resources invested by the holding company for member companies, but must ensure the required level of registered capital when establishing a business or the statutory capital for certain industries and professions as prescribed by law.

Article 9. Decisions on investment, capital contribution for investment, joint ventures, and joint operations according to the分级授权；批准借款、贷款、租赁和出租。

1. The Prime Minister decides on state-owned company investment projects and state-owned company investment projects outside the state-owned company within the authority granted by law on investment.

2. Ministries, Provincial People's Committees:

a) Decide on state-owned company investment projects as stipulated in Clause 4, Article 66 of the State-Owned Enterprise Law and in accordance with the provisions of the law on investment.

b) Approve the capital contribution plan of state-owned companies established by itself to newly establish state-owned joint-stock companies, state-owned limited liability companies with one member, and state-owned limited liability companies with two or more members outside the industries, fields, and areas specified in Article 6 of the State-Owned Enterprise Law.

c) Decide on state-owned company investment projects involving capital contributions, purchasing shares of other companies, joint venture capital contributions with foreign investors, and overseas investment projects as stipulated in Clause 5, Article 66 of the State-Owned Enterprise Law.

d) Decide on the sale of assets, borrowing, lending, leasing, and subleasing of state-owned companies as stipulated in Clause 6, Article 66 of the State-Owned Enterprise Law.

e) Approve the plan for state-owned companies to purchase companies belonging to other economic sectors.

3. Board of Directors:

a) Decide or authorize the General Director to decide on investment projects, capital contributions, purchasing shares of other companies, selling company assets, loan contracts, lending contracts, lease contracts, sublease contracts, and other economic contracts as stipulated in Point b, Clause 2, Article 30 of the State-Owned Enterprise Law and in accordance with the provisions of the law on investment.

b) Decide on the use of total company funds to invest in establishing subsidiary units fully owned by the total company but not exceeding the investment amount within the authority of the Board of Directors and after obtaining approval from the entity that established the total company.

Approve the capital contribution plan of wholly-owned subsidiaries to newly establish state-owned joint-stock companies, state-owned limited liability companies with one member, and state-owned limited liability companies with two or more members outside the industries, fields, and areas specified in Article 6 of the State-Owned Enterprise Law.

Decide or authorize the General Director to decide on joint venture capital contribution projects with foreign investors and overseas investment projects of wholly-owned subsidiaries.

Article 10. Financial system regulations for state-owned companies, income distribution, establishment and use of funds of state-owned companies

1. The Government shall regulate the financial system for state-owned companies, income distribution, establishment and use of funds of state-owned companies, financial reporting and disclosure systems of state-owned companies, consolidated financial reports of total companies, and inspection mechanisms.

2. The Ministry of Finance shall submit to the Government for issuance and implementation of financial systems and reporting regulations as stipulated in Clause 1 of this Article.

3. The Board of Directors of state-owned companies shall establish financial management rules applicable within the company; approve the annual financial report of the company; approve the plan for using post-tax profits or handling losses during the business process of the company.

Article 11. Decisions on appointment, removal, dismissal, commendation, and disciplinary action for the Chairman of the Board of Directors, members of the Board of Directors, General Director or Director of state-owned enterprises

1. The Prime Minister:

a) The Prime Minister decides on the appointment, removal, dismissal, commendation, and disciplinary action for the Chairman and members of the Board of Directors of state-owned enterprises with a Board of Directors established by the Prime Minister upon the proposal of the sectoral management ministry and the assessment of the Ministry of Home Affairs.

b) Approves the Board of Directors to decide on the appointment, removal, dismissal, signing of contracts, commendation, and disciplinary action for the General Director of state-owned enterprises with a Board of Directors established by the Prime Minister.

c) Approves the Minister of the sectoral management ministry to appoint, remove, dismiss, commend, and discipline the General Director (Director) of state-owned enterprises without a Board of Directors established by the Prime Minister.

2. Ministries, Provincial People's Committees:

a) Decides on the appointment, removal, dismissal, commendation, and disciplinary action for the Chairman and members of the Board of Directors of state-owned enterprises with a Board of Directors established by itself.

b) Approves the Board of Directors to decide on the appointment, removal, dismissal, signing of contracts, commendation, and disciplinary action for the General Director or Director of state-owned enterprises with a Board of Directors established by itself.

c) Decides on the appointment, removal, dismissal, signing of contracts, commendation, and disciplinary action for the Director, Deputy Director, Chief Accountant of independent state-owned enterprises without a Board of Directors established by itself and of independent state-owned enterprises without a Board of Directors established by the Prime Minister.

3. Board of Directors:

a) Decides on the appointment, removal, dismissal, signing of contracts, commendation, and disciplinary action for the General Director of state-owned enterprises after receiving approval from the person who established the company.

b) Decides on the appointment, removal, dismissal, signing of contracts, commendation, and disciplinary action for the Deputy General Director, Chief Accountant of state-owned enterprises based on the proposal of the General Director.

c) Approves the General Director of state-owned enterprises to decide on the appointment, removal, dismissal, signing of contracts, commendation, and disciplinary action for the directors, chief accountants of member companies and units under full ownership of the capital stock and for other key managerial positions specified in the Company Charter.

d) Decides on the dispatch of representatives of the company's shareholding in other businesses based on the proposal of the General Director.

4. The Ministry of Home Affairs shall guide the procedures and formalities for the appointment, removal, dismissal, commendation, and disciplinary action for the Chairman of the Board of Directors, members of the Board of Directors, General Director or Director, Deputy General Director or Deputy Director, Chief Accountant, and other key managerial positions in state-owned enterprises.

Article 12. Regulations on salary, allowances, and bonuses in state-owned enterprises; decisions on salary and allowance levels for the Chairman of the Board of Directors, members of the Board of Directors, General Director or Director of state-owned enterprises

1. The Government shall establish regulations on salary, allowances, and bonuses in state-owned enterprises; establish regulations on salary, bonuses, allowances, and other benefits for the Chairman, members of the Board of Directors, General Director or Director of state-owned enterprises.

2. The person deciding on personnel appointments as stipulated in Article 11 of this Decree shall decide on the classification, promotion, and allowance levels for such personnel.

Article 13. Provisions on tendering, ordering, or assigning tasks to implement the production and supply of public goods and services

1. The Government shall specify the list of public goods and public services for economic and social purposes; state-owned companies established and registered to operate with the main, regular, and stable goal of providing public goods and public services; state-owned companies directly serving national defense and security.

The Prime Minister shall stipulate the mechanism for tendering, ordering, or assigning tasks to implement the production and supply of public goods and public services.

2. Ministries managing sectors and provincial People's Committees managing public goods and public services shall organize the assignment of tasks to holding companies or independent state-owned companies that have the necessary conditions to undertake such tasks or organize tenders and orders.

State-owned holding companies implementing the task of producing and supplying public goods and public services shall organize the assignment of tasks to member companies that have the necessary conditions to undertake such tasks.

Article 14. Organization of inspection and supervision of the implementation of objectives, tasks, execution of decisions of the owner, and evaluation of the operational effectiveness of state-owned companies

1. The Prime Minister shall stipulate the system for inspecting and supervising state-owned companies in their implementation of assigned objectives and tasks; the system for inspecting and supervising the use of capital at state-owned companies; criteria for evaluating the business operation effectiveness of the company, management activities of the Board of Directors, and the operations of the General Director or Director.

2. Ministries managing sectors and provincial People's Committees shall establish regulations for organizing inspections and supervision of state-owned companies within their authority; take the lead and coordinate with the Ministry of Finance to evaluate the operational effectiveness and management and operations of the Board of Directors and General Director or Director of the company according to the provisions of the Prime Minister; review and assess annual financial reports; evaluate the financial situation, labor, production and business capacity, and operational effectiveness of the company at the end of the fiscal year.

3. The Ministry of Finance shall organize inspections and supervision of the management and use of capital, income distribution, reserve fund establishment and use of state-owned companies.

4. The Board of Directors shall inspect and supervise the General Director and Director of constituent units in the implementation of functions and tasks as prescribed by the Law on State-Owned Enterprises and the Company Charter.

Section 2

OBLIGATIONS OF THE STATE OWNER

TOWARDS STATE-OWNED ENTERPRISES

Article 15. Obligation to invest sufficient charter capital from the state owner for state-owned companies

1. Ministries managing sectors shall take the lead and coordinate with the Ministry of Finance to accurately determine the appropriate level of charter capital to ensure the operational effectiveness of state-owned companies established by themselves.

2. The Ministry of Finance shall be responsible for investing and supplementing the charter capital for state-owned companies specified in Clauses 1 and 2 of Article 8 of this Decree and other legal provisions.

3. Provincial People's Committees:

a) Shall take the lead and coordinate with the Ministry of Finance to accurately determine the appropriate level of charter capital to ensure the operational effectiveness of state-owned companies established by themselves.

b) Invest sufficient capital to establish new state-owned companies established by themselves.

c) Supplement sufficient charter capital according to the level of charter capital determined by the provincial People's Committee for state-owned companies established by themselves.

Article 16. Obligation to comply with the provisions of the State-owned Enterprise Charter related to the owner

1. The Minister, Chairman of the People's Committee at provincial level, and the Board of Directors shall be responsible for organizing the implementation in accordance with their authority of the provisions set forth in the State-owned Enterprise Charter.

2. For issues not covered by the State-owned Enterprise Charter, the Minister, Chairman of the People's Committee at provincial level shall decide on implementation in accordance with the law and subsequently require the enterprise to amend and supplement the Charter as soon as possible for approval in compliance with the regulations.

3. The Minister, Chairman of the People's Committee at provincial level, and the Board of Directors shall be liable under the law for decisions or approvals that are incorrect or beyond their authority, causing the enterprise to incur losses, lose state capital, or operate ineffectively.

Article 17. Responsibilities of the owner regarding debts and other property obligations

1. The owner shall be responsible for debts and other property obligations within the scope of the registered capital of the enterprise.

2. The Minister, Chairman of the People's Committee at provincial level, and the Board of Directors shall periodically or unexpectedly organize inspections and evaluations of the enterprise's debts and other property obligations; if it is found that the company's ability to pay off its debts and other property obligations is low, they shall require the company to develop a remediation plan and report to the owner for approval.

3. When the company fails to fully repay its debts and other property obligations due, the Minister, Chairman of the People's Committee at provincial level, and the Board of Directors must instruct the General Director or Director of the company to inform all creditors of the company's financial situation; they shall require the General Director or Director to file for bankruptcy proceedings or submit a request for such proceedings according to Article 16 of the Bankruptcy Law dated June 15, 2004.

4. The Minister, Chairman of the People's Committee at provincial level, and the Board of Directors shall be liable under the law for failing to comply with the requirements stipulated in Clauses 2 and 3 of this Article.

Article 18. Responsibilities of the owner when deciding on investment; guaranteeing loans; approving policies on buying, selling, borrowing, lending, leasing, and subleasing within their authority

1. The Minister, Chairman of the People's Committee at provincial level shall be responsible in accordance with their authority and the law when deciding on investment projects, guaranteeing loans, approving policies on buying, selling, borrowing, lending, leasing, subleasing, investing capital, joint ventures, joint operations, and approving plans for state-owned enterprises to purchase companies belonging to other economic sectors; they shall also be responsible for supervising the implementation of their decisions and approvals.

2. The Board of Directors and the General Director of state-owned enterprises shall be responsible in accordance with their authority and the law and for effectiveness when deciding on investment projects, guaranteeing loans, approving policies on buying, selling, borrowing, lending, leasing, subleasing, investing capital, joint ventures, joint operations, and approving plans for state-owned enterprises to purchase companies belonging to other economic sectors; they shall also be responsible for supervising the implementation of their decisions and approvals.

3. In cases where the above requirements are not met without timely corrective measures, leading to ineffective investment projects and activities involving buying, selling, borrowing, lending, leasing, subleasing, investing capital, joint ventures, joint operations, resulting in unrecovered investment funds, inability to repay debts, damage to the company's assets, and operating losses, the Minister, Chairman of the People's Committee at provincial level, and the Board of Directors shall jointly bear responsibility.

Article 19. Obligation to ensure the company's autonomy in business operations and its responsibility for such operations; not to intervene illegally in the company's business activities.

The head of the agency exercising the rights of the state owner shall establish regulations to implement the rights delegated, decentralized, or entrusted to the state owner, ensuring the company's autonomy in business operations and its responsibility during the course of operation.

The agency exercising the rights of the state owner shall not intervene illegally in the affairs of the Board of Directors, General Director, or Director of the state-owned company.

Chapter IV

IMPLEMENTING PROVISIONS

Article 20. Effective Date

This Decree takes effect fifteen days from the date of publication in the Official Gazette. Previous provisions that conflict with this Decree are hereby abolished.

Article 21. Responsibility for Implementation

The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decree./.