Decree No. 187/2004/ND-CP On the conversion of state-owned enterprises into joint-stock companies

DECREE OF THE GOVERNMENT
On the transfer of state-owned companies to joint-stock companies

THE GOVERNMENT

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

Pursuant to the Enterprise Law dated June 12, 1999;

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

At the proposal of the Minister of Finance,

DECREE:

PART I
GENERAL PROVISIONS

Article 1. Objectives and requirements for transferring state-owned companies to joint-stock companies (hereinafter referred to as shareholding reform)

1. Convert state-owned companies that the State does not need to hold 100% capital into enterprises with multiple owners; mobilize capital from individuals, economic organizations, social organizations within and outside the country to enhance financial capacity, modernize technology, improve management methods to increase efficiency and competitiveness of the economy.

2. Ensure harmony of interests between the State, enterprises, investors, and workers in the enterprise.

3. Implement transparency according to market principles; address the issue of closed shareholding reform within enterprises; link with the development of the capital market and securities market.

Article 2. Objects and conditions for shareholding reform

1. This Decree applies to state-owned companies not under the category where the State holds 100% of the charter capital, including: state-owned corporations (including state-owned commercial banks and state financial organizations); independent state-owned companies; independent accounting subsidiaries of state-owned corporations established by the State's decision; dependent accounting units of state-owned companies (hereinafter referred to as shareholding reform enterprises).

The list of state-owned companies where the State holds 100% of the charter capital is decided by the Prime Minister during each period.

2. The state-owned companies specified in Clause 1 of this Article shall be subject to shareholding reform when they still have state capital (excluding land use value) after deducting unused assets, assets awaiting liquidation; losses due to losses, asset depreciation, unrecoverable debts, and shareholding reform costs.

3. The shareholding reform of dependent accounting units of state-owned companies specified in Clause 1 of this Article can only be carried out when:

a) The dependent accounting unit of the enterprise has the conditions to operate independently;

b) It does not cause difficulties or negative impacts on the production and business efficiency of the enterprise or other remaining parts of the enterprise.

Article 3. Forms of shareholding reform for state-owned companies

1. Maintain the current state capital at the enterprise, issue shares to attract additional capital, applicable to shareholding reform enterprises that need to increase their charter capital. The amount of additional capital raised depends on the scale and capital needs of the joint-stock company. The capital structure of the joint-stock company is reflected in the shareholding reform plan.

2. Sell part of the existing state capital at the enterprise or combine selling part of the state capital with issuing additional shares to attract capital.

3. Sell all existing state capital at the enterprise or combine selling all state capital with issuing additional shares to attract capital.

Article 4. Objects and conditions for purchasing shares

1. Economic organizations, social organizations operating under Vietnamese law and Vietnamese individuals residing in Vietnam (hereinafter referred to as domestic investors) have the right to purchase shares of shareholding reform enterprises without limitation on quantity.

2. Enterprises with foreign investment, foreigners legally operating in Vietnam, Vietnamese individuals residing abroad (hereinafter referred to as foreign investors) may purchase shares of shareholding reform enterprises in accordance with Vietnamese laws.

Foreign investors wishing to purchase shares in shareholding reform enterprises must open accounts at service providers operating in Vietnam and comply with Vietnamese laws. All activities related to buying and selling shares, receiving and using dividends and other income from share purchases must be conducted through this account.

Article 5. Both domestic and foreign investors purchasing shares of shareholding reform enterprises must use Vietnamese currency.

Article 6. Costs of implementing shareholding reform

Costs of implementing shareholding reform are deducted from the state capital at the shareholding reform enterprise. The content and level of shareholding reform costs are implemented in accordance with the guidelines of the Ministry of Finance.

Article 7. Shares, share certificates, and founding shareholders

1. Charter capital is divided into equal parts called shares. The face value of one share is uniformly set at 10,000 Vietnamese dong.

2. A share certificate is a document issued by a joint-stock company confirming the ownership of one or more ordinary shares by a shareholder contributing capital to the company. Share certificates may be registered or unregistered but must contain the essential contents prescribed in Article 59 of the Enterprise Law.

The Ministry of Finance guides the unified model of share certificates for enterprises to print and manage in accordance with regulations.

3. Founding shareholders of shareholding reform enterprises are those shareholders who meet the following conditions:

a) Participate in adopting the first Articles of Association of the joint-stock company;

b) Together hold at least 20% of the ordinary shares available for subscription;

c) Own the number of shares ensuring the minimum level stipulated in the Company's Articles of Association.

The number of shares of each founding shareholder and the number of founding shareholders are decided by the General Meeting of Shareholders and stipulated in the Company's Articles of Association.

Article 8. Principles of succession of rights and obligations of joint-stock companies converted from state-owned companies

1. Shareholding reform enterprises are responsible for arranging and utilizing the maximum number of employees at the time of the decision to convert to a joint-stock company and resolving employee benefits according to current regulations.

Joint-stock companies are responsible for succeeding all obligations towards employees transferred from state-owned companies; have the right to select, arrange employment, and cooperate with relevant agencies to resolve employee benefits according to the law.

2. Joint-stock companies can proactively use all assets and capital already converted into shares to organize production and business; succeed all rights, obligations, and responsibilities of state-owned companies before shareholding reform and have other rights and obligations as prescribed by law.

PART II
FINANCIAL HANDLING DURING SHAREHOLDING REFORM

Article 9. Responsibilities of shareholding reform enterprises in handling financial issues

Joint-stock enterprises undergoing shareholding transformation shall be responsible for coordinating with relevant agencies to proactively handle, within their authority and in accordance with the provisions of the law, any financial issues existing before determining the enterprise's value for joint-stock transformation and during the transformation process. In cases where there are difficulties or exceed their authority, the joint-stock enterprises must report to the competent agency for consideration and resolution.

Article 10. Handling leased assets, borrowed assets, joint venture contributions, associated contributions, unused assets, and assets invested using the Reward and Welfare Fund

1. For assets leased, borrowed, received as joint venture contributions, associated contributions, and other assets not belonging to the enterprise, these shall not be included in the enterprise's value for joint-stock transformation. Prior to transferring to a joint-stock company, the enterprise must terminate contracts or agree with the asset owners so that the joint-stock company can inherit previously signed contracts or sign new ones.

2. For unused assets, stagnant assets awaiting liquidation: the enterprise shall liquidate, sell, or report to the competent agency to reallocate them to another unit according to current regulations. At the time of determining the enterprise's value, if such assets have not been processed, they will be excluded from the calculation of the enterprise's value. During the joint-stock transformation process, the enterprise continues to process these assets; at the time of deciding on the announcement of the enterprise's value, if they have not been processed, they will be transferred to the Company for Debt Purchase and Enterprise Surplus Assets for processing in accordance with the law.

3. For welfare facilities' assets such as kindergartens, clinics, and other welfare assets invested using the Reward and Welfare Fund, they shall be transferred to the joint-stock company for management and use to serve the collective workforce of the enterprise.

Specifically, for housing for officials and employees, including housing funded by state budget capital, it shall be transferred to the local land management agency for management or sold to the current users according to current regulations.

4. For assets invested using the enterprise's Reward Fund and Welfare Fund, which continue to be used in production and business operations by the joint-stock company, they shall be included in the value of the joint-stock transforming enterprise and converted into shares to be distributed to the enterprise's workforce at the time of joint-stock transformation based on their actual working time at the enterprise.

Article 11. Debts due for collection

1. The joint-stock transforming enterprise shall be responsible for reconciling, confirming, and recovering debts due for collection before joint-stock transformation. If there are difficult-to-collect debts remaining at the time of determining the enterprise's value, they shall be handled according to the current State regulations on handling overdue debts.

2. At the time of deciding to announce the enterprise's value, the joint-stock transforming enterprise shall be responsible for transferring uncollectible debts already excluded from the joint-stock transforming enterprise's value (along with related files and documents) to the Company for Debt Purchase and Enterprise Surplus Assets for processing in accordance with the law.

3. For advance payments made to suppliers for goods and services such as rent, land lease, purchase of goods, and labor costs, these shall be reconciled and included in the value of the joint-stock transforming enterprise.

Article 12. Debts due for payment

1. The enterprise must mobilize resources to settle debts due for payment before joint-stock transformation or negotiate with creditors to resolve or convert into equity contributions.

Converting debt into equity contributions is determined through the results of the auction sale of shares or through agreement between the enterprise and the creditor to determine the participation price in the auction.

2. During the joint-stock transformation process, if the enterprise encounters difficulties in settling overdue debts due to operating losses, then the debts shall be handled according to the current State regulations on handling overdue debts.

Article 13. Provisions for Losses or Profits, or profits

1. Provisions for reduced inventory valuation, difficult-to-collect receivables, reduced securities valuation, exchange rate differences recorded in the enterprise's business results.

2. Provision for unemployment benefits: the enterprise uses this to provide assistance to surplus labor during the joint-stock transformation process; any remaining amount shall be recorded in the enterprise's business results.

3. Risk reserve funds and operational reserve funds of banking, insurance systems, and financial organizations shall be transferred to the joint-stock company for continued management.

4. Financial reserve fund to offset losses (if any), compensate for asset losses, unrecoverable debts, the remaining amount shall be included in the value of the state capital at the joint-stock transforming enterprise.

5. Any profits generated to offset previous year's losses (if any), compensate for losses from unused assets awaiting liquidation, asset write-downs, and uncollectible debts, the remaining amount shall be distributed according to current regulations before determining the value of the joint-stock transforming enterprise.

6. Losses up to the time of the joint-stock transforming enterprise becoming a joint-stock company shall be offset using the financial reserve fund and pre-tax profits up to the time of joint-stock transformation. In case of insufficiency, measures to write off state budget debts, bank debts, and Development Support Fund debts shall be implemented according to current State regulations on handling overdue debts.

After applying the above solutions, if the enterprise still incurs losses, these losses may be deducted from state capital.

Article 14. Long-term investments in other enterprises such as joint ventures, associated investments, share capital contributions, limited liability company establishment contributions, and other long-term investment forms.

1. In cases where the joint-stock transforming enterprise inherits long-term investments of state-owned companies in other enterprises, the entire amount of these investments shall be included in the enterprise's value for joint-stock transformation according to the principles stipulated in Article 20 of this Decree.

2. In cases where joint-stock transforming enterprises do not inherit long-term investments in other enterprises, they must report to the competent agency for handling as follows:

a) Agreeing to resell the investment to partners or other investors;

b) Transferring to another enterprise as a partner.

Article 15. Remaining balances of Reward Funds and Welfare Funds.

The surplus balance of the Reward Fund and Welfare Fund shall be distributed to employees currently working at the enterprise to purchase shares. Employees are not required to pay income tax on this income.

CHAPTER III
DETERMINATION OF THE VALUE OF A JOINT STOCK ENTERPRISE

PART 1
METHODS FOR DETERMINING THE VALUE OF AN ENTERPRISE

Article 16. State-owned enterprises implementing joint stockization may apply one of the following methods for determining the value of the enterprise:

1. Asset method.

2. Discounted cash flow method.

3. Other methods.

The Ministry of Finance shall provide guidance on determining the value of joint stockized enterprises according to the above methods.

PART 2
DETERMINATION OF THE VALUE OF AN ENTERPRISE BY THE ASSET METHOD

Article 17. Value of a joint stockized enterprise by the asset method

1. The actual value of a joint stockized enterprise is the total value of all assets of the enterprise at the time of joint stockization, taking into account the profitability that both the buyer and seller of shares can accept.

The actual value of state capital at the enterprise is the actual value of the enterprise after deducting liabilities, surplus balances of the Reward Fund and Welfare Fund, and surplus balances of operating funds (if any).

In cases where the entire holding company is joint stockized by a decision of the State to invest and establish, the actual value of state capital for joint stockization is the actual value of state capital of the holding company's office; of member companies and affiliated units (if any).

In cases where the entire holding company is joint stockized by companies that have invested and established themselves, the actual value of state capital for joint stockization is the actual value of state capital at the parent company.

2. The following items shall not be included in the value of the enterprise for joint stockization:

a) The value of assets as specified in Clauses 1, 2, and 3 of Article 10 of this Decree;

b) Receivables that are uncollectible;

c) Uncompleted construction costs of projects that were suspended before the valuation date;

d) Long-term investments in other enterprises as stipulated in Subparagraph b of Clause 2 of Article 14 of this Decree.

Article 18. Basis for determining the actual value of the enterprise

1. Accounting records of the enterprise at the time of joint stockization.

2. Inventory, classification, and quality assessment documents of the enterprise's assets at the time of joint stockization.

3. Market prices of assets at the time of joint stockization.

Article 19. Value of land use rights and business advantages of the enterprise

1. For land area used by the joint stockized enterprise for building headquarters, transaction offices, production facilities; agricultural, forestry, aquaculture, salt production (including land granted by the State with or without payment of land use fees), the joint stockized enterprise has the right to choose between leasing or transferring land according to the provisions of the Land Law.

a) In cases where the joint stockized enterprise chooses to lease land, the value of land use rights shall not be included in the value of the joint stockized enterprise;

b) In cases where the joint stockized enterprise chooses to transfer land, the value of land use rights must be included in the value of the joint stockized enterprise. The value of land use rights included in the value of the joint stockized enterprise is the price set by the provincial or centrally-administered municipal People's Committees closely reflecting the actual market price of land use rights transfers and announced annually on January 1st according to the Government's regulations. Procedures and formalities for land transfer, payment of land use fees, and issuance of land use certificates shall be carried out in accordance with current laws on land.

2. For land areas allocated by the State for the enterprise to build houses for sale or rent; infrastructure for transfer or rental, the value of land use rights must be included in the value of the joint stockized enterprise. The inclusion of the value of land use rights in the value of the joint stockized enterprise shall be implemented according to the provisions of Subparagraph b of Clause 1 of this Article..

3. Business advantages of the enterprise include: geographical location, brand value, development potential..

The value of business advantages of the enterprise shall be determined based on the post-tax profit margin on state capital at the enterprise before joint stockization and the prepayment interest rate of long-term government bonds at the nearest point in time before the valuation date.

Article 20. Determination of the value of long-term investment capital of the joint stockized enterprise in other enterprises

1. The value of long-term investment capital of state-owned enterprises in other enterprises is determined based on:

a) The equity value reported in the audited financial statements of the enterprise in which the state-owned enterprise has invested;

b) The proportion of long-term investment capital of the state-owned enterprise before joint stockization in other enterprises;

c) In cases where the state-owned enterprise invests capital in foreign currency, when determining the investment capital, it shall be converted into Vietnamese dong based on the average exchange rate in the inter-bank foreign exchange market published by the State Bank of Vietnam at the valuation date.

2. In cases where the value of long-term investment capital of state-owned enterprises in other enterprises is determined to be lower than the book value recorded in the accounting books, the book value recorded in the accounting books of the state-owned enterprise shall serve as the basis for determining the value of the joint stockized enterprise.

3. The value of the state-owned enterprise's contribution to listed joint stock companies shall be determined based on the trading price of shares on the securities market at the valuation date.

PART 3
DETERMINATION OF THE VALUE OF AN ENTERPRISE BY THE DISCOUNTED CASH FLOW METHOD

Article 21. Value of an enterprise by the discounted cash flow method

1. The actual value of state capital at the joint stockized enterprise is determined by the discounted cash flow method based on the future profitability of the enterprise.

In cases where the value of the enterprise of the entire state holding company is determined by this method, the profitability of the state holding company is determined based on the profits of the state holding company as stipulated in the financial regulations of the state-owned enterprise.

In the case where a state-owned company invests capital in another enterprise, the profit from such investment shall be used to determine the value of the enterprise to be equitized.

2. The actual value of the enterprise includes the actual value of state capital, payable debts, balances from the Reward and Welfare Fund, and operating expenses balances (if any).

Where the enterprise chooses the land transfer method, the value of the land use right must be added to the value of the enterprise to be equitized according to Clause 1, Article 19 of this Decree..

Article 22. Basis for determination

1. Financial reports of the enterprise in the five consecutive years immediately preceding the time point for determining the enterprise's value.

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

3. Long-term government bond interest rate at the nearest time point before the time point for determining the enterprise's value and the discount factor of the enterprise being valued.

PART 4
ORGANIZATION TO DETERMINE THE VALUE OF THE ENTERPRISE

Article 23. Method of organizing the determination of the value of the enterprise to be equitized

1. An enterprise to be equitized with total assets on accounting books of thirty billion dong or more shall have its value determined through organizations with valuation functions such as auditing companies, securities companies, appraisal organizations, domestic and foreign investment banks capable of valuing (hereinafter referred to as valuation organizations).

The competent authority deciding the value of the enterprise to be equitized selects the valuation organization from the list published by the Ministry of Finance.

In the case of selecting foreign valuation organizations that have not operated in Vietnam, approval from the Ministry of Finance is required.

When conducting the determination of the enterprise's value, the valuation organization must comply with current regulations and complete within the agreed timeframe; they are responsible for the accuracy and legality of the valuation results.

2. An enterprise to be equitized with total assets on accounting books under thirty billion dong does not necessarily need to hire a valuation organization to determine the enterprise's value. If not hiring a valuation organization, the enterprise itself determines the value and reports it to the competent authority deciding the enterprise's value.

3. The valuation documentation must be submitted to the Ministry of Finance and the competent authority deciding the enterprise's value. The competent authority deciding the enterprise's value reviews before making a decision and announcing the value of the enterprise to be equitized.

Article 24. Utilizing the result of determining the enterprise's value

The result of determining the enterprise's value according to the provisions of this Decree serves as the basis for determining the scale of the charter capital, the structure of the initial share issuance, and the starting price for selling shares through auction.

Article 25. Adjusting the value of the enterprise to be equitized

At the time when the enterprise officially becomes a joint-stock company, the competent authority deciding the enterprise's value is responsible for reviewing and handling financial issues arising from the valuation date to the date the joint-stock company receives the business registration certificate to re-determine the value of the state capital.

The difference between the actual value of the state capital at the time the enterprise transfers to a joint-stock company and the actual value of the state capital at the time of determining the enterprise's value shall be handled as follows:

1. In the case of an increase in difference:

a) To be remitted to the state-owned corporation or independent state-owned company when equitizing a member enterprise of a state-owned corporation or equitizing a part of an independent state-owned company, and used as prescribed in Article 35 of this Decree;

b) To be remitted to the Enterprise Restructuring Support Fund at the Ministry of Finance when equitizing an entire independent state-owned company or an entire state-owned corporation, and used as prescribed in Article 35 of this Decree.

2. In the case of a decrease in difference, the enterprise is responsible for reporting to the equitization decision-making authority to organize inspections, clarify causes, and handle material compensation responsibilities (if due to subjective reasons). The remaining decrease difference shall be handled as follows:

a) To be used to offset from the proceeds of equitization (including the difference in share sale prices).

b) If insufficient, then reduce the state capital contribution at the enterprise and adjust the plan for selling preferential shares to employees in the enterprise, while adjusting the scale and structure of the charter capital of the joint-stock company.

c) After handling according to sub-clause a and b, Clause 2 of this Article, if still insufficient to offset the decrease difference, then:

- The equitization decision-making authority considers and decides to switch to the sale or bankruptcy of the enterprise (for cases not yet registered under the Enterprise Law).

- The Board of Directors convenes an extraordinary shareholders' meeting (for cases already registered under the Enterprise Law) to vote on the following directions:

+ Acceptance of inheriting the remaining loss to continue operations.

+ Implementation of the sale of the enterprise with the condition that the buyer inherits the debt and loss.

+ Declaration of bankruptcy, selling assets to pay off debts.

- In the case of switching to implement the sale or bankruptcy, the enterprise is responsible for coordinating with relevant authorities to refund investors the amount paid for purchasing shares before settling other creditors.

PART IV
SALE OF SHARES AND MANAGEMENT, USE OF FUNDS FROM THE SALE OF STATE CAPITAL IN THE ENTERPRISE

PART 1
INITIAL SHARE SALE

Article 26. Initial share buyers.

1. Employees of the enterprise

2. Strategic investors are domestic investors such as: producers who regularly supply raw materials to the enterprise; those committed to long-term consumption of the enterprise's products; those with long-term strategic interests in business, financial potential, and management capability.

When formulating the equitization plan, the enterprise to be equitized selects strategic investors and submits them for approval by the equitization decision-making authority.

3. Other investors (including foreign investors).

Article 27. Initial share structure

1. State-held shares.

2. Employees of the enterprise are entitled to purchase preferential shares as stipulated in Article 37 of this Decree.

3. A strategic investor may purchase up to 20% of the shares sold at a preferential price. The amount of shares sold to each strategic investor shall be implemented according to the privatization plan approved by the competent authority.

4. Shares sold through public auction to non-strategic investors shall not be less than 20% of the registered capital (including additional shares purchased outside the preferential shares of strategic investors and employees within the enterprise).

Article 28. Initial share selling price

1. The preferential price for shares sold to employees within the enterprise shall be reduced by 40% compared to the average bidding price.

2. The preferential price for shares sold to strategic investors shall be reduced by 20% compared to the average bidding price.

3. The price for shares sold to the subjects specified in Clause 4, Article 27 of this Decree shall be implemented based on the successful bidding price of each investor.

Article 29. Value of preferential treatment for strategic investors and employees in the privatized enterprise

The total value of preferential treatment for employees in the privatized enterprise and strategic investors shall be sourced from the additional revenue generated from the public auction of shares. If there is a shortfall, it shall be deducted from the state capital in the privatized enterprise but shall not exceed the state capital remaining in the enterprise after deducting the value of the state-held shares and the privatization costs.

Article 30. Method of organizing the initial public auction of shares

1. Direct auction at the enterprise for privatized enterprises with a share sale volume of up to VND 1 billion (the enterprise organizes the share sale auction itself).

2. Auction at financial intermediaries for privatized enterprises with a share sale volume exceeding VND 1 billion.

In cases where the privatized enterprise has a share sale volume exceeding VND 10 billion, the share sale auction shall be organized at the securities trading center to attract investors.

The agency deciding on the privatization of state-owned companies selects to hire organizations to sell the auction.

3. In cases where the enterprise is located in remote areas without financial intermediaries to handle the share sale, the privatization decision-making agency shall negotiate with the Ministry of Finance regarding the method of sale..

Article 31. Procedure for organizing the initial public auction

1. At least 20 days before the auction, the organization implementing the auction (enterprise, financial intermediary, Securities Trading Center) must publicly announce at the enterprise, at the auction location, and on various media about the time, place, form, conditions for participation, the expected number of shares to be sold, and other issues related to the share sale. 2. Organize the auction for other investors according to the forms prescribed in Article 30 of this Decree.

3. Determine the average bidding price to calculate the preferential price for strategic investors and employees.

4. Organize the distribution and sale of shares to each strategic investor and employees within the enterprise.

5. Within four months from the date of the decision approving the privatization plan, the enterprise must complete the share sale. In case the shares have not been fully sold, the enterprise shall report to the competent authority deciding on privatization to adjust the scale or capital structure in the privatization plan and proceed to convert the state-owned company into a joint-stock company.

Business registration of the joint-stock company.

Article 32. After completing the share sale and organizing the General Meeting of Shareholders in accordance with the provisions of the Enterprise Law, the privatized enterprise must register its business operations in accordance with Decree No. 109/2004/NĐ-CP dated April 2, 2004, of the Government on business registration.

Public disclosure of information and listing on the stock market

Article 33. 1. Joint-stock companies must publicly report their financial status to shareholders and management authorities in accordance with the provisions of the Enterprise Law and other relevant laws.

2. The State has preferential policies for joint-stock enterprises that meet the conditions to list immediately on the stock market.

Management of state capital in joint-stock companies

Article 34. 1. State capital in joint-stock companies is managed in accordance with the laws on managing state capital invested in other enterprises.

2. For joint-stock enterprises that are not subject to state control, depending on specific conditions, the state representative body managing the state capital in the joint-stock company has the right to decide on the continued sale of state-owned shares in the joint-stock company in accordance with current laws and the Company's Charter.

Management and use of funds from the privatization of state-owned companies

Article 35. The funds obtained by the State from the privatization of state-owned companies (including proceeds from the sale of state capital and the increase in proceeds from the public auction of additional issued shares at privatized enterprises), after deducting privatization costs, shall be used for the following purposes:

1. Supporting privatized enterprises to implement policies for employees at the time of privatization. a) Supporting enterprises to pay severance benefits to employees who lose their jobs when converting state-owned companies into joint-stock companies;

b) Supporting the retraining of employees in privatized enterprises to arrange new jobs in joint-stock companies.

2. The remaining funds shall be managed and used as follows:

a) In cases where state-owned subsidiaries or independent parts of state-owned companies are privatized, the state-owned holding company or independent state-owned company may use the funds for business activities and to support privatized enterprises to continue resolving surplus labor in accordance with Clause 8, Article 36 of this Decree.

b) In cases where all of an independent state-owned company or all of a state-owned holding company is privatized, the remaining funds shall be transferred to the enterprise restructuring support fund at the Ministry of Finance to invest in companies where the State needs to hold 100% of the capital but lacks capital, and in state-controlled joint-stock companies where the state capital in the privatized enterprise is insufficient to ensure the state's shareholding and to support privatized enterprises to continue resolving surplus labor in accordance with Clause 8, Article 36 of this Decree. The remainder shall be invested in enterprises through the State Capital Investment Corporation.

a) In the case of the equitization of a member enterprise of a state-owned holding corporation or the equitization of an independent department of a state-owned company, the state-owned holding corporation or the independent state-owned company may utilize the proceeds for business operations and to support equitized enterprises in continuing to resolve surplus labor as provided for in Clause 8, Article 36 of this Decree.

b) In the case of the full equitization of an independent state-owned company or a state-owned holding corporation, the remaining funds shall be transferred to the enterprise restructuring support fund at the Ministry of Finance to invest in companies where the State needs to hold 100% of the capital but lacks sufficient capital, state-owned companies holding controlling shares but with insufficient state capital in the equitized enterprises to ensure the State's shareholding ratio, and to support equitized enterprises in continuing to resolve surplus labor as provided for in Clause 8, Article 36 of this Decree. The remainder shall be invested in enterprises through the State Capital Investment Corporation.

CHAPTER V
POLICY FOR ENTERPRISES AND WORKERS AFTER SHAREHOLDING

Article 36. Enterprises after shareholding shall enjoy the following incentives:

1. They shall enjoy incentives as for newly established enterprises under the laws on encouraging investment without having to go through procedures for obtaining investment incentives certification.

In case enterprises undergoing shareholding implement listing on the securities market, they shall also enjoy additional incentives as prescribed by the laws on securities and the securities market.

2. They shall be exempted from stamp duty for transferring assets under their management and use to become the property of joint-stock companies.

3. They shall be exempted from registration fee for business registration certificate when transitioning from state-owned enterprises to joint-stock companies..

4. They shall maintain lease contracts for houses and buildings with state agencies or have priority to purchase at market prices at the time of shareholding to stabilize production and business activities.

5. They shall enjoy land use rights according to the Land Law in cases where the value of the shareholding enterprise includes the value of land use rights.

6. They shall continue to borrow capital from commercial banks, financial companies, and other credit organizations of the State under mechanisms applicable to state-owned enterprises.

7. They shall maintain and develop welfare funds in the form of tangible assets such as cultural facilities, clubs, clinics, convalescent homes, kindergartens to ensure welfare for workers in joint-stock companies. These assets belong to the collective of workers managed by the joint-stock company.

8. After state-owned enterprises convert to joint-stock companies, if due to the need to reorganize business operations or change technology leading to workers losing their jobs or resigning, including voluntary resignation, they shall be handled as follows:

a) Within twelve months from the date the joint-stock company receives its business registration certificate, if workers lose their jobs due to restructuring of the company and fall within the category entitled to policies for surplus labor resulting from the reorganization of state-owned enterprises under Decree No. 41/2002/NĐ-CP dated April 11, 2002 of the Government, they shall be supported by the Surplus Labor Support Fund.

Other workers who lose their jobs or resign shall enjoy unemployment benefits as prescribed by current labor laws and shall be supported from the proceeds of the State from the shareholding of state-owned enterprises as stipulated in Article 35 of this Decree.

b) If workers lose their jobs or resign within the next four years, the joint-stock company shall be responsible for paying fifty percent of the total unemployment benefits as prescribed by the Labor Code, the remaining amount to be paid from the proceeds of the State from the shareholding of state-owned enterprises as stipulated in Article 35 of this Decree. Beyond this period, the joint-stock company shall be responsible for paying all unemployment benefits to workers.

Article 37. Workers in shareholding enterprises shall enjoy the following preferential policies:

1. Workers whose names appear on the regular list of the enterprise at the time of the decision to sharehold may purchase up to 100 shares per year of actual work in the state sector at a price reduced by forty percent compared to the average auction price sold to other investors.

2. They shall continue to participate and enjoy social insurance benefits under the current system if they transfer to work at a joint-stock company.

3. They shall enjoy retirement benefits and other benefits under the current system if they meet the conditions at the time of shareholding.

4. If they lose their jobs at the time of shareholding, they shall be compensated for unemployment benefits as prescribed by law.

Chapter VI
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS

Article 38. Strategic shareholders shall have the following rights and obligations:

1. Rights:

a) They shall be entitled to purchase preferred shares as prescribed in Clause 3, Article 27 and Clause 2, Article 28 of this Decree;

b) They shall be entitled to participate in managing the joint-stock company according to the laws and the Articles of Association of the joint-stock company;

c) They shall be entitled to use their shares as collateral in credit relations in Vietnam;

d) They shall be entitled to other benefits as prescribed by the laws and the Articles of Association of the joint-stock company.

2. Obligations:

a) They shall fulfill commitments when participating in purchasing shares;

b) They shall not transfer the preferred shares purchased as prescribed in Clause 3, Article 27 of this Decree within three years from the date the joint-stock company receives its business registration certificate. In special cases requiring the transfer of these shares before the deadline, approval from the Board of Directors of the joint-stock company is required;

c) Other obligations as prescribed by the laws and the Articles of Association of the joint-stock company.

Article 39. Rights and obligations of other shareholders

Other shareholders shall enjoy rights and obligations as prescribed in the Enterprise Law and the Articles of Association of the joint-stock company.

Foreign shareholders specifically shall be allowed to convert dividends and proceeds from the sale of shares in Vietnam into foreign currency for transfer abroad after fulfilling all tax obligations as prescribed by law. If the dividends obtained are reinvested in Vietnam, they shall enjoy incentives as prescribed by the Law on Encouraging Domestic Investment.

Chapter VII
IMPLEMENTATION

Article 40. Authorities and responsibilities of Ministries, provincial People's Committees, and Management Boards of State-Owned Corporations

1. The Minister, Head of an agency equivalent to a Ministry, or a member of the Government, the Chairman of the Provincial People's Committee, or the Municipal People's Committee directly under the Central Government, based on the enterprise restructuring plan approved by the Prime Minister:

a) Shall organize the determination of the value of state-owned corporations undergoing shareholding, submit the results to the Ministry of Finance for review and announcement;

b) Shall submit to the Prime Minister for approval the overall shareholding plan for all state-owned corporations;

c) Shall decide on the shareholding of enterprises under their jurisdiction; determine the value of enterprises; approve the shareholding plan to transform state-owned enterprises into joint-stock companies;

d) Shall review and proactively transfer enterprises listed for shareholding but no longer having state capital to other forms such as entrusting, selling, or liquidating the enterprise.

d) Resolve issues for enterprises undergoing shareholding reform within the maximum period of 15 days from the date of receiving complete files, according to the authority granted. In cases exceeding such authority, there is a duty to promptly report to the Prime Minister for consideration and decision;

e) Send to the Steering Committee for Enterprise Reform and Development and the Ministry of Finance decisions on announcing the results of determining enterprise value, decisions approving the privatization plans of state-owned companies, and related documents on privatization for monitoring, summarizing, and reporting to the Prime Minister;

In case the approved plan is not implemented, the heads of enterprise management agencies shall be subject to disciplinary actions as prescribed by current regulations;

2. The Board of Directors of state-owned holding corporations shall be responsible for:

a) Organizing the restructuring of enterprises under their holding corporation according to the enterprise restructuring scheme approved by the Prime Minister;

b) Directing member companies to handle financial issues as stipulated in Chapter II of this Decree, organizing the determination of enterprise value, and preparing privatization plans to submit to the competent authority for approval;

c) Handling existing financial issues of shareholding reform enterprises according to their authority;

In case the approved plan is not implemented, the Board of Directors of state-owned holding corporations shall be subject to disciplinary actions as prescribed by current regulations;

3. The Steering Committee for Enterprise Reform and Development and the Ministry of Finance shall be responsible for assisting the Prime Minister in directing, inspecting, supervising, and urging ministries, ministerial-level agencies, government-affiliated agencies, provincial people's committees under central cities, and state-owned holding corporations to implement shareholding reform work in accordance with the law and the approved enterprise restructuring plans;

Chapter VIII
IMPLEMENTING PROVISIONS

Article 41. This Decree replaces Government Decree No. 64/2002/NĐ-CP dated June 19, 2002, and takes effect 15 days after its publication in the Official Gazette. Previous provisions on shareholding reform that conflict with this Decree are no longer effective;

State-owned enterprises that have already received approval for their privatization plans before the effective date of this Decree do not need to change their plans according to this Decree;

Article 42. The Ministry of Finance, the Ministry of Labor, Invalids and Social Affairs, the State Bank of Vietnam, the Ministry of Natural Resources and Environment, and other relevant ministries and agencies shall be responsible for guiding the implementation of this Decree;

Article 43. Ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, Chairmen of People's Committees of provinces and centrally governed cities, and Boards of Directors of state-owned holding corporations established by the Prime Minister shall be responsible for implementing this Decree.