Decree No. 145/2005/ND-CP Amending and supplementing certain articles of Decree No. 63/2001/ND-CP dated September 14, 2001 of the Government on the conversion of state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member.

DECREE

Amending and supplementing some articles of Decree No. 63/2001/NĐ-CP dated September 14, 2001

of the Government on the conversion of state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member

Amending and supplementing some articles of Decree No. 63/2001/NĐ-CP dated September 14, 2001 of the Government on the conversion of state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member as follows:

 

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;

Pursuant to the Enterprise Law dated June 12, 1999;

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

 

DECREE:

 

Article 1. 1. Amend the name of the Decree as follows:

The name of Decree No. 63/2001/NĐ-CP shall be amended to "Decree on the Conversion of State-Owned Companies, Enterprises of Political Organizations, and Political-Social Organizations into Limited Liability Companies with One Member".

2. Amend the wording as follows:

All phrases "state-owned enterprise" in Decree No. 63/2001/NĐ-CP shall be amended to "state company".

3. Amend and supplement Article 1 as follows:

1. This Decree stipulates the procedures and formalities for converting state companies; enterprises of political organizations and political-social organizations; independent accounting units of state-owned holding companies; dependent accounting units and dependent units of state-owned holding companies and state companies into limited liability companies with one member and provides regulations on the management organization of limited liability companies with one member.

"Article 1. Scope of Regulation and Applicability

2. State companies, independent accounting units of state-owned holding companies, enterprises of political organizations and political-social organizations when converted into limited liability companies with one member must belong to enterprises that the State or political organizations and political-social organizations decide to hold 100% of the charter capital.

3. Dependent accounting units and dependent units of state-owned holding companies and state companies as stipulated in Clause 1 of this Article may only be converted when the company is split and both the splitting unit and the separated unit must be within the scope where the State needs to retain 100% of the charter capital.

4. Amend and supplement Clause 2 of Article 2 as follows:

"2. The following organizations are representatives of the owners of limited liability companies with one member converted from state companies:

a) The State Capital Investment Corporation is the representative owner for limited liability companies with one member converted from independent state companies directly under ministries, provincial people's committees.

During the period before transferring the rights of the representative owner to the State Capital Investment Corporation, the ministry, agency at the level of a ministry, government agency, provincial people's committee is the representative owner for this company.

b) State holding companies are the representative owners for limited liability companies with one member converted from independent accounting units of holding companies;
c) Independent state companies, independent accounting units of state holding companies are the representative owners for limited liability companies with one member converted from dependent units of companies."
5. Amend and supplement Clause 1 of Article 6 as follows:

"1. The converting enterprise has the responsibility:

a) To inventory and determine the quantity of assets currently existing in the enterprise, dependent accounting units of the enterprise, including fixed assets and long-term investments, current assets and short-term investments, leased assets, held assets, consigned assets, entrusted assets, occupied assets;

b) To classify the current assets of the enterprise, dependent accounting units of the enterprise into types: assets the enterprise needs to use; assets the enterprise does not need, surplus assets, assets awaiting liquidation; assets formed from welfare funds (if any); leased assets, materials, goods held for others, processed for others, agency sales, entrusted storage;

c) To reconcile and classify debts; prepare a list of creditors and amounts owed, clearly distinguishing between overdue debts, principal, interest, debts that do not need to be paid; receivables, which are divided into recoverable receivables and non-recoverable receivables;

d) To prepare the most recent quarterly financial report close to the time of enterprise conversion, dependent accounting units of the enterprise; develop a plan to handle assets, finances, and debts according to the principles specified in Clause 5 of Article 7; determine the expected registered capital for the company;
đ) To develop a plan to arrange the current workforce of the company, dependent accounting units of the enterprise at the time of the decision to convert;

e) To handle assets, finances, debts, and labor according to the approved plan by the competent authority;

g) To draft the Articles of Association of the limited liability company with one member;

h) To report to the owner or the organization authorized as the representative owner of the company to approve the documents specified in points a, b, c, d, đ, g of this clause."

6. Amend and supplement Clauses 5 and 6 of Article 7 as follows:

"5. Principles for handling finances and debts:

a) For excess assets: the enterprise can record an increase in the owner's equity at the enterprise;

b) For lost assets, damage, and other losses regarding assets of the enterprise, dependent accounting units of the enterprise: it is necessary to clearly identify the cause, responsibility of collectives and individuals, and request compensation from the responsible parties according to the law. The difference between the remaining value of the damaged asset recorded in the books and the compensation amount from the responsible individuals, collectives, or insurance organizations (if any) will be covered by the financial reserve fund; if insufficient, it will be recorded in the operating results. If recording this difference in the operating results leads to a loss for the enterprise, the owner's equity can be reduced, with the maximum reduction being equal to the enterprise's loss."

b) For the loss, damage, and other property losses of the enterprise and its dependent accounting units: it is necessary to clearly identify the cause, the responsibility of collectives and individuals, and require the parties concerned to compensate according to the provisions of the law. The difference between the remaining value of the damaged asset recorded in the books and the compensation amount from the relevant individual, collective, or insurance organization (if any) shall be covered by the financial reserve fund; if insufficient, it shall be accounted for in the business results. If the enterprise incurs a loss due to recording this shortfall in the business results, then the owner's equity may be reduced, with the maximum reduction amount equal to the enterprise's loss.

c) As for receivables: the company has the responsibility to accept receivables from the enterprise and dependent accounting units of the enterprise undergoing conversion and recover overdue receivables that can be collected. For uncollectible receivables, after clearly identifying the cause and responsibility of the collective and individual and requesting compensation according to the provisions of the law, the enterprise shall use the provision for doubtful debts and financial reserve fund to offset the shortfall after deducting the compensation amount from the relevant individuals and collectives. If these funds are insufficient to cover the shortfall, the difference will be recorded in the business results. If the enterprise incurs losses due to recording this shortfall in the business results, the owner's equity may be reduced, with the maximum reduction amount equal to the enterprise's loss.

d) As for payables: the company has the responsibility to inherit payables owed to creditors according to commitments, including tax debts, budget debts, and debts to employees; settle payable debts that are due. Payables without a creditor and the value of assets whose creditor cannot be determined shall be included in the owner's equity. In cases where the enterprise encounters difficulties in paying overdue debts, it shall be handled according to the current state regulations on handling outstanding debts.

6. The enterprise undergoing conversion shall have the responsibility to arrange and utilize labor in accordance with the laws on labor and reorganize the state-owned company.

7. Supplement Clause 7 as follows:

"7. Costs incurred in implementing the company conversion shall be recorded in the company's business results. The content and level of conversion costs shall be implemented in accordance with the guidelines of the Ministry of Finance."

8. Amend and supplement Clause 4 and Point a of Clause 6 of Article 15 as follows:

"4. Appoint, dismiss, remove, enter into contracts, and determine salaries for the General Director (Director) of the company. Appoint, dismiss, and remove Deputy General Directors (Deputy Directors) of the company upon the proposal of the General Director (Director). Determine the salary scale, wage supplements as the basis for determining wages and paying wages to the company's employees as other enterprises operating under the Law on Enterprises."

"6. Recommend the owner of the company to decide on issues exceeding the authority of the Board of Management as follows:"

a) Recommend approval of the final financial report, profit distribution plan after tax according to the invested owner's equity and self-raised capital; the ratio of contributions to development funds, company reward funds, and rewards for the company's management board.

9. Supplement Clause 10 of Article 15 as follows:

"10. Require the General Director (Director) to submit a request to initiate bankruptcy proceedings when the company enters a state of insolvency."

10. Transfer Clause 10 of Article 15 to Clause 11 of Article 15:

"11. Other rights and duties as prescribed by law and the Company Charter."

11. Amend and supplement Article 16 as follows:

"Article 16. Members of the Board of Management

1. Depending on the scale of the company, the owner of the company decides the number and structure of Board of Management members.

2. Board of Management members must meet the following standards and conditions:

a) Be a Vietnamese citizen residing in Vietnam;

b) Have a university degree, management capability, and business acumen. The Chairman of the Board of Management must have at least three years of experience managing and operating businesses in the main industry of the company;

c) Be healthy, have good moral character, be honest, incorruptible, understand and comply with the law;

d) Not belong to the category prohibited from assuming managerial positions according to the law.

3. The Chairman and members of the Board of Management are appointed, dismissed, rewarded, and disciplined by the owner of the company. The term of office of Board of Management members is stipulated in the Company Charter but not exceeding five years. Board of Management members may be reappointed and replaced.

4. Board of Management members shall be dismissed in the following circumstances:

a) Being convicted by a court judgment or decision that has taken legal effect;

b) Lacking the ability and qualifications to undertake assigned tasks, losing civil capacity or being restricted in civil capacity;

c) Being dishonest in performing duties and powers or using positions and powers for personal gain or others' benefit; reporting false financial status of the company;

d) The company incurs losses for two consecutive years or fails to achieve the profit rate target on state investment capital for two consecutive years or alternates between profit and loss but cannot be rectified, except for losses or reductions in the profit rate on state investment capital approved by competent authorities; losses or reductions in the profit rate on state investment capital with objective reasons explained and accepted by competent authorities; new investments to expand production or modernize technology;

đ) The company enters a state of insolvency but the Board of Management does not require the General Director to submit a request to initiate bankruptcy proceedings.

Board of Management members may be replaced in the following circumstances:

a) Being dismissed in the circumstances mentioned in Clause 4 of this Article;

b) Resigning;

c) When there is a decision to transfer or assign other work.

6. All Board of Management members must jointly bear responsibility before the appointing authority and the law regarding decisions of the Board of Management; fulfill the obligations stipulated in Clause 2 of Article 23 of this Decree.

12. Amend and supplement Article 20 as follows:

"Article 20. Conditions for Participating in Managing Other Enterprises by the Chairman of the Board of Management and the General Director (Director)

1. The Chairman of the Board of Management and the General Director (Director) of the company may only establish another limited liability company or joint-stock company if approved in writing by the company owner.

2. The Chairman of the Board of Management and the General Director (Director) of the company may only hold management and operational positions in another limited liability company or joint-stock company if they are nominated as candidates for such positions by the company owner or act as legal representatives of the company for the contributed capital in other enterprises when appointed by the company owner.

3. The spouse, father, mother, child, brother, sister, or half-sibling of the Chairman of the Board of Directors, General Director (Director) of the company shall not hold the position of Chief Accountant or Cashier at the same company. The spouse, father, mother, child, brother, sister, or half-sibling of the Chairman of the Board of Directors shall not hold the position of General Director (Director) at the same company.

4. Contracts signed by the company with members of the Board of Directors, General Director, with the spouse, father, adoptive father, mother, adoptive mother, child, adoptive child, brother, sister, or half-sibling of members of the Board of Directors, General Director must be reported to the appointing authority of the member of the Board of Directors, General Director, and the person signing the contract to hire the General Director; if the appointing authority of the member of the Board of Directors, General Director, and the person signing the contract to hire the General Director discovers that the contract has a self-interested purpose and the contract has not yet been signed, they have the right to request the member of the Board of Directors, General Director not to sign the contract; if the contract has already been signed, it will be considered void, and the member of the Board of Directors, General Director must compensate the company for damages and be subject to legal provisions.

13. Amend and supplement Article 21 as follows:

"Article 21. General Director (Director) and supporting staff

1. Standards and conditions for selecting a Director:

a) Resident in Vietnam;

b) Possess business capability and organizational management skills for the company; have a university degree; have expertise in the main business field of the company; have at least three years of experience in managing and operating enterprises in the main business field of the company;

c) Have good health, moral character, honesty, integrity; understand laws and have a sense of compliance with the law.

2. The following individuals shall not be selected for appointment or contract signing as Director:

a) A person who has served as the Director of a state-owned enterprise but violated discipline to the extent of being dismissed, relieved of duty, or causing the enterprise to fall into a situation specified in point a, Clause 3, Article 25 of the Law on State-Owned Enterprises;

b) Belong to the category prohibited from assuming managerial and operational positions in enterprises according to legal provisions.

3. The Board of Directors decides on the selection of persons within the Board of Directors or others for appointment with a term, dismissal, or signing of contracts with a term, termination of contracts with the General Director (Director) of the company.

The General Director (Director) is responsible before the Board of Directors and the law for the daily operation of the company. In case the Company Charter does not stipulate that the Chairman of the Board of Directors is the legal representative,

The General Director (Director) is the legal representative of the company. The General Director receives an annual salary and bonuses corresponding to the company's performance.

4. Deputy General Director (Deputy Director) is selected, appointed, relieved of duty, or signed a contract with a term, termination of contract by the Board of Directors upon the proposal of the General Director (Director).

The Deputy General Director (Deputy Director) assists the General Director (Director) in managing the company according to the division of labor and delegation by the General Director (Director); is responsible before the General Director (Director) and the law for the tasks assigned or delegated.

5. The General Director (Director), Deputy General Director (Deputy Director) can be appointed or contracted for a maximum term of five years and may be reappointed or contracted again.

6. The office and specialized departments have the function of advising and assisting the Board of Directors, General Director (Director) in management and operation."

14. Amend and supplement Article 23 as follows:

"Article 23. Obligations, responsibilities, and relationships between the Board of Directors and the General Director (Director)

1. The Chairman and members of the Board of Directors must jointly bear responsibility before the appointing authority and the law for decisions made by the Board of Directors, the results, and the effectiveness of the company's operations. The General Director (Director) has obligations and is responsible before the Board of Directors and the law for the daily operation of the company, for implementing the rights and duties assigned.

2. The Chairman of the Board of Directors, members of the Board of Directors, and the General Director (Director) have the obligation:

a) To perform the rights and duties assigned in a truthful and diligent manner for the benefit of the company;

b) Not to abuse their positions and powers, use the assets of the company for personal gain or for others; not to lend the assets of the company to others; not to disclose the secrets of the company during the period of performing their duties as a member of the Board of Directors or General Director (Director) and for a minimum period of three years or as stipulated in the Company Charter after ceasing to serve as a member of the Board of Directors or General Director (Director), except with the approval of the Board of Directors;

c) When the company fails to pay its debts and other financial obligations due, the General Director (Director) must report to the Board of Directors, find ways to overcome financial difficulties, and inform all creditors of the company's financial situation; the Chairman of the Board of Directors, members of the Board of Directors, and the General Director (Director) shall not decide to increase salaries or allocate profits as bonuses for managers and employees;

d) If the company fails to pay its debts and other financial obligations due and does not comply with the provisions of point c of this clause, they shall be personally liable for damages caused to creditors;

đ) In case the Chairman of the Board of Directors, members of the Board of Directors, or the General Director (Director) violate the Company Charter, exceed their authority, or take advantage of their positions and powers to cause damage to the company and the State, they must compensate for damages according to the law and the Company Charter;

e) In cases where the management and operation of the company fail to meet the business performance targets set by the owner or agreed upon in the contract, or result in losses and capital depletion; where decisions on investment projects are ineffective, resulting in unrecovered investments and inability to repay debts; where wages and benefits for employees are not guaranteed in accordance with labor laws; or where violations occur in the management of capital, assets, accounting systems, auditing, and other systems prescribed by the State, then rewards will not be granted and penalties will be imposed according to the degree of violation as stipulated by law.

g) In the following cases, depending on the degree of violation and consequences, the Chairman of the Board of Directors and the General Director (Director) may have their salaries reduced or be dismissed, and must compensate for damages according to the provisions of the law: failing to complete tasks or targets assigned by the appointing or hiring entity or failing to fulfill obligations under the contract; being dishonest in performing duties or using positions and powers for personal gain or for others' benefit; providing false financial reports; allowing the company to enter bankruptcy without filing for bankruptcy; causing the company to incur losses for two consecutive years or failing to meet profit margin targets on invested equity for two consecutive years or being in a state of alternating profits and losses without remediation, except for losses or reductions in profit margins on state-invested equity approved by the owner; losses or reductions in profit margins on invested equity due to objective reasons that have been explained and accepted by the owner; expanding production and updating technology.

Other obligations as prescribed by law and the Company's Articles of Association.

3. The relationship between the Board of Directors and the General Director (Director) in managing and operating the company:

a) When implementing resolutions and decisions of the Board of Directors, if issues detrimental to the company are discovered, the General Director (Director) shall report to the Board of Directors for review and adjustment. The Board of Directors must consider the General Director’s (Director’s) proposal. If the Board of Directors does not adjust the resolution or decision, the General Director (Director) still has to implement it but retains the right to reserve opinions and make recommendations to the company's owner.

b) At the end of each month, quarter, and year, within the time frame specified in the Company's Articles of Association, the General Director (Director) must submit a written report on the company's business operations and future plans to the Board of Directors.

c) The Chairman of the Board of Directors participates in or appoints a representative from the Board of Directors to attend regular meetings and preparatory meetings for proposals to be presented to the Board of Directors, chaired by the General Director (Director). The Chairman of the Board of Directors or the representative attending the meeting has the right to express opinions and contribute suggestions but does not have the authority to conclude the meeting. A General Director (Director) who is not a member of the Board of Directors invited to attend a Board of Directors meeting has the right to speak but not to vote.

15. Amend and supplement Clause 2 and Clause 3 of Article 24 as follows:

"2. The Chairman of the company has the following rights and responsibilities:

a) To decide on the annual business plan of the company. To present to the owner for approval the distribution plan of post-tax profits according to the invested equity capital and self-raised capital; the ratio of contributions to development funds, bonus funds of the company, and bonuses for the company's management team;

b) To appoint, dismiss, and remove from office, and determine the salary and other benefits for the General Director (Director) after obtaining the owner's consent;

c) To appoint, dismiss, reward, and discipline Deputy General Directors based on the General Director's recommendation;

d) To decide on the organizational structure, internal management regulations, and staffing of the company's management; to determine the pay scale and wage tables as the basis for setting wages and paying wages to the company's employees in accordance with the Law on Enterprises;

đ) To require the General Director to file for bankruptcy when the company enters a state of bankruptcy.

3. The Chairman of the company must meet the criteria and fulfill the obligations prescribed in Article 16 of this Decree; comply with the conditions for participating in the management of other enterprises as stipulated in Article 20 of this Decree."

16. Amend and supplement Clause 12 and add Clause 13 of Article 26 as follows:

"12. The General Director of the company fulfills the obligations as prescribed in Article 23 of this Decree; complies with the conditions for participating in the management of other enterprises as stipulated in Article 20 of this Decree.

13. The relationship between the Chairman and the General Director in managing and operating the company:

a) When implementing decisions of the Chairman of the company, if issues detrimental to the company are discovered, the General Director shall report to the Chairman of the company for review and adjustment. The Chairman of the company must consider the General Director's proposal. If the Chairman of the company does not adjust the decision, the General Director still has to implement it but retains the right to reserve opinions and make recommendations to the company's owner;

b) At the end of each month, quarter, and year, within the time frame specified in the Company's Articles of Association, the General Director must submit a written report on the company's business operations and future plans to the Chairman of the company;

c) The Chairman of the company participates in or appoints a representative to attend regular meetings and preparatory meetings for proposals to be presented to the Chairman of the company, chaired by the General Director. The Chairman of the company or the representative attending the meeting has the right to express opinions and contribute suggestions but does not have the authority to conclude the meeting."

Article 2. Effective Date

This Decree takes effect fifteen days after its publication in the Official Gazette. Previous regulations on converting state-owned enterprises and enterprises of political organizations and socio-political organizations into single-member limited liability companies contrary to this Decree are no longer in force.

This Circular takes effect from December 25, 2025/.

1. The Ministry of Planning and Investment shall take the lead and coordinate with the Ministry of Finance, the Ministry of Labor, Invalids and Social Affairs, and relevant agencies to guide the implementation of this Decree.

2. The ministers, heads of ministerial-level agencies, heads of government agencies, chairpersons of provincial people's committees under the central government, and boards of state-owned corporation groups shall be responsible for implementing this Decree./.