Circular No. 155/2019/TT-BQP guides the conversion of state-owned enterprises and wholly-owned limited liability companies invested by state-owned enterprises with 100% charter capital under the Ministry of National Defense into joint-stock companies.

CIRCULAR

Guidelines for converting state-owned enterprises and limited liability companies with 100% state capital investment into joint-stock companies

under the Ministry of National Defense

 

Based on the Enterprise Law dated November 26, 2014;

Pursuant to the Law on Management and Use of State Capital for Investment in Business Operations dated November 26, 2014;

Pursuant to Decree No. 126/2017/NĐ-CP dated November 16, 2017 of the Government on converting state-owned enterprises and limited liability companies with 100% state capital investment into joint-stock companies;

Pursuant to Decree No. 10/2019/NĐ-CP dated January 30, 2019 of the Government on the exercise of rights and responsibilities of state-owned enterprise representatives;

Based on Decree No. 164/2017/NĐ-CP dated December 30, 2017, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of National Defense;

At the proposal of the Director of the Economic Department of the Ministry of National Defense;

The Minister of National Defense issues this Circular guiding the conversion of state-owned enterprises and limited liability companies with 100% state capital investment under the Ministry of National Defense into joint-stock companies in accordance with the provisions of Decree No. 126/2017/NĐ-CP dated November 16, 2017 of the Government on converting state-owned enterprises and limited liability companies with 100% state capital investment into joint-stock companies (hereinafter referred to as Decree No. 126/2017/NĐ-CP).

PART I

GENERAL PROVISIONS

This Circular guides certain contents regarding the conversion of state-owned enterprises and limited liability companies with 100% state capital investment under the Ministry of National Defense into joint-stock companies as stipulated in Decree No. 126/2017/NĐ-CP dated November 16, 2017 of the Government on converting state-owned enterprises and limited liability companies with 100% state capital investment into joint-stock companies (hereinafter referred to as Decree No. 126/2017/NĐ-CP).

Article 2.  Applicability

1. State-owned enterprises under the Ministry of National Defense (referred to as Level I enterprises), including:

a) Limited liability companies with 100% state capital investment that are the parent companies of holding companies and parent companies within groups of parent-child companies under the Ministry of National Defense;

b) Independent limited liability companies with 100% state capital investment under the Ministry of National Defense.

2. Limited liability companies with 100% capital investment from state-owned enterprises under the Ministry of National Defense (referred to as Level II enterprises).

3. Agencies, units, organizations, and individuals related to the conversion of state-owned enterprises and limited liability companies with 100% state capital investment under the Ministry of National Defense into joint-stock companies.

Article 3.  Steering Committee for Joint-Stock Conversion of Enterprises

1. Decision to establish the Steering Committee

a) The Minister of National Defense decides to establish the Steering Committee for Joint-Stock Conversion for Level I enterprises;

b) The Board of Members or the Chairman of the Holding Company decides to establish the Steering Committee for Joint-Stock Conversion for Level II enterprises.

2. Composition of the Steering Committee

a) The Steering Committee for Joint-Stock Conversion of Level I enterprises, consisting of:

Chairperson: Head of the Ministry of National Defense;

Deputy Chairperson in charge: Director of the Economic Department/Ministry of National Defense;

Deputy Chairperson: Head of the Finance Department/Ministry of National Defense;

The Economic Department/Ministry of National Defense serves as the Permanent Office of the Steering Committee for Joint-Stock Conversion of Level I enterprises;

Members include heads of the following departments: Economic Department/Ministry of National Defense; Office of the Ministry of National Defense, Cadre Department/Political General Staff, Military Affairs Department/General Staff Headquarters, Policy Department/Political General Staff, Legal Department of the Ministry of National Defense, Heads of the direct superior units of the enterprise being converted to joint-stock; Chairman of the Board of Members or Chairman of the enterprise being converted to joint-stock; General Manager (Director) of the enterprise being converted to joint-stock; Enterprise Management Division/Economic Department/Ministry of National Defense (Permanent Member); Enterprise Financial Inspection Bureau/Finance Department/Ministry of National Defense. In cases of joint-stock conversion of parent companies of holding companies, members of the Steering Committee for Joint-Stock Conversion shall include representatives of the Steering Committee for Enterprise Reform and Development and the Ministry of Finance;

The Chairperson of the Steering Committee establishes a central working group to assist the Steering Committee.

b) Members of the Steering Committee for Joint-Stock Conversion of Level II enterprises: The Board of Members or the Chairman of the company, based on the conditions and actual situation of the enterprise, establishes the Steering Committee for Joint-Stock Conversion of Level II enterprises; among which, there shall be representatives of the Economic Department/Ministry of National Defense, Finance Department/Ministry of National Defense, and representatives of economic and financial agencies and relevant agencies at higher levels than the enterprise.

Article 4. Powers and responsibilities of the Steering Committee for Corporate Shareholding

1. The Steering Committee for Corporate Shareholding of Level I enterprises shall have the following powers and responsibilities:

a) Assist the Minister of National Defense in directing and organizing the implementation of corporate shareholding of enterprises in accordance with the provisions of the State and the Ministry of National Defense;

b) Decide on the establishment of a Working Group to implement the corporate shareholding work at the enterprise;

c) Direct the development of a plan to implement corporate shareholding of the enterprise to be submitted to the Minister of National Defense for approval;

d) Be authorized to use the seal of the Ministry of National Defense while performing its tasks;

đ) Based on the Decision on Corporate Shareholding of the Minister of National Defense, direct the corporate shareholding enterprise to carry out the following contents:

- Proactively prepare legal documents regarding assets, capital sources, debts of the enterprise (including houses and land); land use plans after corporate shareholding that have been approved by competent authorities; inventory of assets and reconciliation of debts at the time of financial report preparation according to the law.

- Develop a schedule for corporate shareholding (including deadlines for each step of the work; budget for corporate shareholding costs). In cases where the corporate shareholding schedule cannot be met due to subjective reasons, the Enterprise Manager will be considered as not having completed the task.

- Handle financial issues, labor matters, and organization of enterprise valuation.

- Develop a labor utilization plan.

- Develop a corporate shareholding plan and the first Charter of the joint-stock company.

- Coordinate with organizations conducting public auctions for the sale of shares in accordance with regulations.

- Determine the amount of revenue from corporate shareholding appropriate to the form of corporate shareholding of the enterprise, prepare a final settlement report (financial settlement at the official transition to a joint-stock company, settlement of corporate shareholding costs, costs for resolving employee benefits, preferential costs for employees and trade unions).

- Timely and fully disclose the corporate shareholding process in accordance with Clause 1, Article 11 and Article 46 of Decree No. 126/2017/NĐ-CP; simultaneously publish on the Department of Military Economy's electronic portal (www.ckt.gov.vn).

e) Report to the Minister of National Defense on the selection of methods for the initial sale of shares;

g) Review and submit to the Minister of National Defense for decision: Selection of consulting organizations, enterprise valuation organizations, organizations selling shares through public auction; announcement of enterprise value; approval of labor utilization plans; approval of corporate shareholding plans. In cases of corporate shareholding of Parent Companies - Groups, the Steering Committee for Corporate Shareholding reports to the Minister of National Defense for submission to the Prime Minister for approval of the corporate shareholding plan;

h) Summarize and report to the Minister of National Defense the results of the sale of shares;

i) Summarize and submit to the Minister of National Defense for decision on adjustments to enterprise value; adjustments to corporate shareholding plans. For parent companies - groups undergoing corporate shareholding, report to the Minister of National Defense for submission to the Prime Minister to issue a decision adjusting the corporate shareholding plan;

k) Review and submit to the Minister of National Defense for decision on approval of financial settlement; settlement of corporate shareholding costs; settlement of support funds for employees; settlement of revenue from corporate shareholding and announcement of the actual state-owned capital value at the time the joint-stock company receives its first business registration certificate;

l) Participate in the dispatching of state-owned capital representatives to joint-stock companies in accordance with the Regulations on Cadre Work in the Vietnam People's Army;

m) Supervise the handover between state-owned enterprises and joint-stock companies;

n) Attend and direct the First General Meeting of Shareholders of the joint-stock company.

2. The Board of Directors or the Chairman of the Corporation (Company) decides to establish a Steering Committee to assist the Board of Directors/Chairman of the company in organizing the implementation of corporate shareholding work for Level II enterprises. The Steering Committee for Corporate Shareholding of Level II enterprises shall have corresponding responsibilities and powers as stipulated in Clause 1 of this Article.

Article 5. Working Group for Corporate Transformation

1. Members

a) Chairperson: The General Director (Director) of the corporate transformation enterprise;

b) Other members: Supervisory Board member of the enterprise; Head of the Finance-Accounting Department; Heads (or Deputy Heads) of some departments/bureaus of the corporate transformation enterprise and some members of the business units of the direct superior unit of the enterprise (if any).

2. The number of members of the Working Group shall be decided by the Chairman of the Steering Committee for Corporate Transformation.

Chapter II

PROCEDURE FOR CORPORATE TRANSFORMATION OF ENTERPRISES AND ISSUES TO BE HANDLED

AND MATTERS TO BE ADDRESSED

1. The procedure for corporate transformation of enterprises shall be carried out in accordance with the provisions of Article 47 of Decree No. 126/2017/ND-CP, detailed in Appendix I attached to this Circular.

2. The procedure for handling defense land at enterprises undergoing corporate transformation shall be carried out in accordance with the provisions of Article 13 and Article 30 of Decree No. 126/2017/ND-CP, detailed in Appendix II attached to this Circular.

Enterprises undergoing corporate transformation shall disclose information in accordance with the provisions of Article 11 of Decree No. 126/2017/ND-CP, and simultaneously post on the Ministry of Defense Economic Sector's electronic portal (www.ckt.gov.vn); report to the Steering Committee for Corporate Transformation for monitoring, guidance, and direction.

1. At the time of determining the enterprise value

a) Enterprises shall handle financial matters at the time of determining the enterprise value (prior to organizing advisory services to determine the enterprise value) in accordance with the provisions of Articles 14, 15, 16, 17, 18, 19, and Article 20 of Decree No. 126/2017/ND-CP; Clause 2, 3, and Clause 4 of Article 7 of Circular No. 41/2018/TT-BTC dated May 4, 2018, issued by the Ministry of Finance guiding certain contents regarding financial handling and determination of enterprise value when transferring state-owned enterprises and limited liability companies wholly owned by state-owned enterprises into joint-stock companies (referred to as Circular No. 41/2018/TT-BTC);

b) For areas of land under management and use within the planning for land use for national defense purposes, enterprises shall develop land usage plans, report to the Minister of National Defense for consideration and decision before the corporate transformation decision is made, and complete procedures to remove from the national defense land planning in accordance with Clause 2 of Article 6 of this Circular and relevant laws.

After completing the corporate transformation, based on approved land usage plans, enterprises shall manage and use allocated land in accordance with state regulations and the Ministry of National Defense.

Inventory, classification, and valuation of land use rights shall be conducted in accordance with Clause 1 of Article 13 and Article 30 of Decree No. 126/2017/ND-CP.

2. At the time of officially becoming a joint-stock company

a) Enterprises shall handle financial matters at the time of officially becoming joint-stock companies in accordance with Clause 1, 2, and Clause 3 of Article 8 of Circular No. 41/2018/TT-BTC;

b) Transfer and handle debts and excluded assets not included in the enterprise value in accordance with Circular No. 55/2019/TT-BTC dated August 21, 2019, issued by the Ministry of Finance guiding the transfer, acceptance, and handling of debts and excluded assets when converting state-owned enterprise ownership;

c) Handling of enterprise assets during the implementation of corporate transformation must ensure transparency and comply with state and Ministry of National Defense regulations. In cases where assets belong to military equipment, report to the General Staff for the recovery of 100% of weapons, ammunition, and special military equipment back to the superior agency/unit of the enterprise for management. For enterprises directly managed by the Ministry of National Defense, recover them to strategic warehouses of the Ministry of National Defense upon a decision by the General Staff;

d) State-owned enterprises holding 50% or more of the charter capital may use one military-registered car for command purposes; state-owned enterprises holding less than 50% of the charter capital shall not use military-registered cars from the date the joint-stock company is first registered for business.

Article 9. Methods for Determining Enterprise Value

1. The determination of enterprise value must apply at least two methods, including the asset method. The enterprise value and state capital value at the enterprise shall be determined and announced not lower than the enterprise value and state capital value determined according to the asset method.

3. The time point for determining enterprise value according to selected methods must be the end of the most recent quarter or year before the decision on equitization is made.

Article 10. Audit of Results of Enterprise Value Determination for Equitized Enterprises

1. The Ministry of National Defense assigns the Ministry of National Defense’s Audit Office to conduct an audit of the advisory valuation results and handle financial issues prior to officially announcing the value of equitized enterprises for independent companies.

2. Enterprises not falling under the scope of Clause 1 of this Article shall comply with the provisions of Clause 1 of Article 26 of Decree No. 126/2017/NĐ-CP.

Article 11. Management of Military Personnel and Policies for Employees

1. When military personnel transfer to joint-stock companies, based on the scale of state capital, equitized enterprises may retain no more than five military personnel as State Capital Representatives at the enterprise.

2. The resolution of policies for officers, professional soldiers, defense workers, and employees shall be carried out in accordance with the provisions of Circular No. 139/2018/TT-BQP dated August 30, 2018, issued by the Ministry of National Defense guiding the use and implementation of certain policies for individuals working at military enterprises undergoing equitization or dissolution and bankruptcy; joint-stock companies divesting state capital and joint-stock companies with state capital contributions managed by the Ministry of National Defense (referred to as Circular No. 139/2018/TT-BQP) and relevant laws.

Article 12. Registered Capital Structure

1. State-owned enterprises and single-member limited liability companies invested 100% by state-owned enterprises that do not fall within the category requiring state ownership of shares (based on the criteria for classifying state-owned enterprises published by the Prime Minister during each period) shall comply with the provisions of Clause 3 of Article 5 of Decree No. 126/2017/NĐ-CP.

2. Enterprises not falling under the scope of Clause 1 of this Article shall propose a reasonable registered capital amount based on their business plans, strategies, and current state capital holdings, and submit it for approval by the competent authority in the equitization plan.

Article 13. State Capital Representatives at Joint-Stock Companies

1. Authority to Appoint Representatives:

a) The appointment of representatives through delegation at joint-stock companies shall be conducted in accordance with the Law on Management and Use of State Capital for Production and Business Investment in Enterprises, other regulations of the State, and the Regulations on Cadre Work in the Vietnam People's Army;

b) Upon the proposal of the Party Committee of subordinate units under the Ministry of National Defense, the main cadre department, in coordination with functional agencies, shall review and report to the competent authority to decide on the appointment of state capital representatives at joint-stock companies with state capital held by the Ministry of National Defense as the principal owner, in accordance with the Regulations on Cadre Work in the Vietnam People's Army;

c) The Board of Directors, Chairman of the Group Company (Company) shall decide on the appointment of representatives at joint-stock companies with capital contributions according to the Regulations on Cadre Work in the Vietnam People's Army (after consulting with the Equitization Steering Committee and the cadre department);

2. Number of Representatives:

a) The maximum number of representatives appointed is five persons for state-owned enterprises holding 50% or more of the registered capital, and three persons for state-owned enterprises holding less than 50% of the registered capital.

The composition and structure of representatives at enterprises shall be in accordance with the provisions of the Enterprise Law, the Enterprise Charter, and the specific characteristics of each enterprise with state capital, based on: the scale of the enterprise's registered capital; the proportion of state investment capital at the enterprise; the industry and operational characteristics of the enterprise; the strategic and development goals of the enterprise in line with state orientation; and other relevant laws.

b) In cases where two or more representatives are appointed, the specific number of shares assigned to each representative shall be clearly defined, and one representative shall be designated to oversee all responsibilities (referred to as the Overall Representative).

3. Standards for Representatives at Joint-Stock Companies must comply with the provisions of Article 46 of the Law on Management and Use of State Capital for Production and Business Investment in Enterprises, other regulations of the State, and the Ministry of National Defense.

4. The term of appointment for representatives is five years, and they may be reappointed upon completion of the term but not more than two terms as a representative at one joint-stock company.

5. State Capital Representatives have rights and responsibilities as stipulated in Article 48 of the Law on Management and Use of State Capital for Production and Business Investment in Enterprises, Government Decree No. 10/2019/NĐ-CP dated January 30, 2019, concerning the exercise of rights and responsibilities of state capital owners, and other relevant regulations of the State and the Ministry of National Defense.

Article 14. Transfer between the shareholding enterprise and the joint-stock company

1. Within ninety days from the date of issuance of the first Certificate of Enterprise Registration for the shareholding enterprise, the shareholding enterprise must complete the tasks as prescribed in Clause 3, Article 21 of Decree No. 126/2017/NĐ-CP.

Article 15. Name of the joint-stock company and issuance of documents

1. In the application dossier for the issuance of the Certificate of Enterprise Registration, the name of the joint-stock company shall not include the phrases "Military", "Ministry of National Defense", "Military Affairs", "National Defense" or related phrases; abbreviations of these phrases or names related to the superior administrative units directly managing the enterprise.

2. In transaction documents of the joint-stock company, the unit issuing the document shall not include the name of the direct and indirect superior military unit.

3. For military personnel holding management positions in the joint-stock company, military ranks shall not be included in documents issued by the enterprise.

Chapter III

IMPLEMENTATION

Article 16. Responsibilities of Relevant Agencies and Units

1. Department of Economy/Ministry of National Defense

a) Take the lead in advising the Central Military Commission, Ministry of National Defense on the shareholding reform of military enterprises; take responsibility for advising the Head of the Ministry of National Defense to issue mechanisms and policies on the shareholding reform of military enterprises; coordinate with relevant agencies to review and submit to the Minister of National Defense for consideration and decision on land use plans, decisions on shareholding reform of enterprises, and establishment of the Shareholding Reform Steering Committee. Guide and urge enterprises to implement shareholding reform; inspect and report to the Head of the Ministry of National Defense any difficulties arising during the implementation process.

b) Take the lead and coordinate with member agencies of the Steering Committee to review and submit to the Minister of National Defense for issuance of decisions on the valuation of enterprises, labor utilization plans, approval of shareholding reform plans (or submit to the Prime Minister for approval in the case of the Parent Company - Group Corporation), approval of financial settlement and announcement of the actual value of state capital at the time of issuance of the first Certificate of Enterprise Registration for the joint-stock company; guide enterprises to organize the General Meeting of Shareholders and the transfer between the shareholding enterprise and the joint-stock company.

2. Agencies of the Ministry of National Defense

a) Department of Finance/Ministry of National Defense

Guide the shareholding enterprise to handle financial matters before, during, and after the determination of enterprise value, during the shareholding reform process.

Take the lead and coordinate with functional agencies of the Ministry of National Defense to audit the enterprise value dossier for shareholding reform and the shareholding reform settlement dossier; coordinate with the State Audit Office and the Ministry of National Defense Audit Office to audit the results of valuation consulting and financial issues prior to reporting to the Shareholding Reform Steering Committee for the Minister of National Defense's decision on announcing the enterprise value.

b) Department of Personnel/General Political Department

Advise and propose to the competent authority to decide on the dissolution of military units; transfer military and national defense tasks; establish, merge, consolidate, reorganize, and dissolve organizations for enterprises before shareholding reform.

Guide and recover 100% of weapons, ammunition, and special military equipment back to the superior agency or unit of the enterprise for management.

Coordinate with the Department of Policy/General Political Department to guide the shareholding enterprise to resolve policies for employees under military management when transferring to the joint-stock company; review the labor utilization plan dossier, resolve policies for professional military personnel, defense workers, and surplus contractual employees, and report to the Chairman of the Shareholding Reform Steering Committee.

c) Department of Cadres/General Political Department

Coordinate with the Department of Policy/General Political Department to guide the shareholding enterprise to resolve policies for employees under cadre management when transferring to the joint-stock company.

Take the lead in reviewing the labor utilization plan dossier, resolving policies for officers, professional military personnel, defense workers, and surplus contractual employees under cadre management, and report to the Chairman of the Shareholding Reform Steering Committee.

Take the lead and coordinate with relevant agencies to review and submit to the Minister of National Defense for decision on appointing representatives of state capital in the joint-stock company.

d) Department of Policy/General Political Department

Take the lead and coordinate with relevant agencies to guide the shareholding enterprise to resolve policies for employees when transferring to the joint-stock company; review the labor utilization plan dossier, resolve policies for officers, professional military personnel, defense workers, and surplus contractual employees, and report to the Chairman of the Shareholding Reform Steering Committee.

Take the lead and coordinate with relevant agencies to direct and inspect the implementation of policies for affected individuals in enterprises undergoing shareholding reform.

đ) Legal Affairs Department of the Ministry of National Defense

Advise the Minister of National Defense on supervision of law enforcement; coordinate with relevant agencies to review decisions and directive documents of the Ministry of National Defense during the process of converting state-owned enterprises and wholly-owned limited liability companies invested by state-owned enterprises with 100% capital contribution under the Ministry of National Defense into joint-stock companies.

e) Inspectorate of the Ministry of National Defense

Take the lead and coordinate with relevant agencies to conduct inspections and audits of law enforcement during the shareholding reform of enterprises.

Take the lead and coordinate with the Department of Economy/Ministry of National Defense, Department of Finance/Ministry of National Defense, and relevant agencies to report to the Minister of National Defense for approval and organization of the inspection and audit plan for the implementation of laws by state capital representatives at joint-stock companies where the Ministry of National Defense is the state capital owner according to the law and regulations of the Ministry of National Defense.

Coordinate with relevant agencies to resolve disputes and complaints during the shareholding reform process according to the law;

g) Audit Department of the Ministry of National Defense

Conduct an audit of the results to determine the enterprise value for privatization in accordance with Clause 1, Article 10 of this Circular; audit the privatization costs, report on the final settlement of support funds for employees, and report on the amount of revenue from privatization (when assigned tasks by the Head of the Ministry of National Defense).

3. Units having enterprises undergoing privatization (units above the enterprise level)

a) Coordinate with agencies under the Ministry of National Defense to direct enterprises to implement privatization in accordance with the law, ensuring progress;

b) Manage and resolve policies for military personnel working at privatized enterprises in accordance with regulations of the Ministry of National Defense;

c) Urge enterprises to complete financial settlements; settle privatization costs; settle support funds for employees; settle revenues from privatization according to state regulations, report to the Ministry of National Defense (through the Finance Department of the Ministry of National Defense and the Economic Department of the Ministry of National Defense) for approval and publication of the actual value of state capital at the time the joint-stock company is first registered.

4. Managers of privatized enterprises

The Chairman of the Board of Members or the Chairman of the General Corporation (Company), General Director (Director), Chief Accountant of the privatized enterprise are responsible for preparing and signing financial reports, reports determining the value of state capital at the time of transition to a joint-stock company, reports on final settlements of revenue from privatization, employee benefit payments, privatization costs, and are responsible for the truthfulness and accuracy of these reports. The auditor of the enterprise is responsible for reviewing and confirming the truthfulness and accuracy of the reports.

The Board of Directors of the new joint-stock company has the responsibility to create conditions for the leadership of the privatized enterprise to complete their tasks and sign, affix seals to confirm the signatures of management positions in financial reports and final settlements related to the privatization process.

5. General Corporations, parent companies with second-level companies undergoing privatization

Establish a Privatization Steering Committee for second-level companies and be responsible for implementing privatization in accordance with Decree No. 126/2017/ND-CP, this Circular, and other relevant legal documents.

Article 17. Effective Date

1. This Circular takes effect from December 1, 2019, and replaces Circular No. 56/2013/TT-BQP dated May 2, 2013, issued by the Ministry of National Defense guiding the conversion of enterprises wholly owned by the state in the military into joint-stock companies.

2. When referenced documents in this Circular are amended, supplemented, or replaced, the content referred to shall also be implemented according to the new document.

Article 18. Responsibility for Implementation

Heads of units directly subordinate to the Ministry of National Defense, Board of Members, Chairmen of companies of enterprises where the state holds 100% of the charter capital, representatives of state capital, and related organizations and individuals are responsible for implementing this Circular./.