Circular No. 194/2013/TT-BTC guiding the restructuring of state-owned enterprises with 100% state capital that do not meet the conditions for shareholding according to the provisions of Government Decree No. 59/2011/NĐ-CP dated July 18, 2011 on converting state-owned enterprises with 100% state capital into joint-stock companies

CIRCULAR

Guidelines for restructuring to convert state-owned enterprises with 100% state capital that do not meet the conditions for shareholding according to Decree No. 59/2011/NĐ-CP dated July 18, 2011 of the Government on converting state-owned enterprises with 100% state capital into joint-stock companies

Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

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

The Minister of Finance issues this Circular guiding the implementation of restructuring to convert state-owned enterprises with 100% state capital that do not meet the conditions for shareholding according to Decree No. 59/2011/NĐ-CP dated July 18, 2011 of the Government as follows:

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

1. Scope of application: This Circular guides the implementation of restructuring activities through debt resolution to convert state-owned enterprises with 100% state capital into joint-stock companies.

2. Applicability: This Circular applies to the Vietnam Asset Management Company and state-owned enterprises with 100% state capital after financial treatment and revaluation of enterprise value according to Decree No. 59/2011/NĐ-CP and Decree No. 189/2013/NĐ-CP where the actual value of the enterprise is lower than the debts owed by the enterprise (hereinafter referred to as restructured enterprises).

The Minister of Finance hereby issues this Circular amending and supplementing certain Articles of Circular No. 133/2015/TT-BTC dated August 31, 2015, issued by the Minister of Finance guiding the financial management mechanism for the Vietnam Chamber of Commerce and Industry (hereinafter referred to as Circular No. 133/2015/TT-BTC).

1. "Reorganization plan" is the financial management plan and conversion plan for state-owned enterprises within the scope defined in Clause 2, Article 1 of this Circular.

PART I

GENERAL PROVISIONS

Article 1. Scope and Applicability

2. "Purchase cost of debt" is the total purchase cost of debt up to the time of debt reduction, including: the actual purchase price of the debt plus (+) reasonable and lawful expenses related to the purchase of the debt.

3. "Debt reduction" is the measure of reducing part of the debt repayment obligation for restructured enterprises approved by competent authorities in accordance with the law.

Article 2. Interpretation of Terms

In this Circular, certain terms are understood as follows:

4. "Creditor" is an organization or individual with receivables.

5. "Participating creditor" is the creditor of the restructured enterprise who participates in the reorganization process to convert the enterprise into a joint-stock company.

6. The Vietnam Asset Management Company is a limited liability company with one member owned by the State, converted from the Vietnam Asset Management and Surplus Property Company of Enterprises (hereinafter referred to as the Vietnam Asset Management Company).

Article 3. Principles for implementing enterprise restructuring through debt resolution to convert into joint-stock companies

1. State-owned enterprises with 100% state capital that implement restructuring to convert into joint-stock companies are those enterprises that do not fall under the category of enterprises requiring the State to hold 100% of the charter capital according to the law.

2. The reorganization plan is implemented based on the principle of mutual agreement between the authority approving the reorganization plan, the restructured enterprise, and the Vietnam Asset Management Company or participating creditors (a record of agreement among the parties). The Vietnam Asset Management Company has the right to negotiate the purchase of debts with creditors and propose a reorganization plan for the enterprise in compliance with the law.

3. The Vietnam Asset Management Company only decides to purchase debts for the reorganization of state-owned enterprises with 100% state capital after reaching an agreement and consensus with the authority approving the reorganization plan/shareholding plan and having results from negotiations to purchase debts with the creditors of the restructured enterprise. Purchasing debts for enterprise reorganization must ensure feasibility, effective capital recovery, and sufficient difference between the purchase cost of debt and the book value of the debt to manage finances and restructure the enterprise according to regulations.

4. In addition to the contents stipulated in this Circular, restructured enterprises, the Vietnam Asset Management Company, and relevant agencies shall comply with the provisions of Decree No. 59/2011/NĐ-CP, Decree No. 189/2013/NĐ-CP, and Circulars guiding the Ministry of Finance.

2. The restructuring plan shall be implemented on the principle of mutual agreement between the competent authority approving the restructuring plan, the enterprise undergoing restructuring, and the Debtor Purchasing Company or participating creditors (a memorandum of understanding among the parties). The Debtor Purchasing Company has the right to proactively negotiate debt purchases with creditors and propose a restructuring plan for the enterprise in compliance with the provisions of the law.

3. The Debtor Purchasing Company shall only decide to purchase debts for the purpose of restructuring state-owned enterprises after reaching an agreement and consensus with the competent authority approving the restructuring/corporatization plan and having successful negotiations to purchase debts from the creditors of the enterprise undergoing restructuring. The purchase of debts for restructuring must ensure feasibility, effective capital recovery, and sufficient surplus between the purchase cost of the debt and the book value of the debt to handle financial matters and restructure the enterprise in accordance with the regulations.

4. In addition to the contents stipulated in this Circular, the enterprise undergoing restructuring, the Debtor Purchasing Company, and related authorities shall implement in accordance with Decree No. 59/2011/ND-CP, Decree No. 189/2013/ND-CP, and the guiding Circulars of the Ministry of Finance.

Chapter II

SPECIFIC PROVISIONS

Article 4. Procedure for converting a state-owned enterprise with 100% state capital into a joint-stock company through restructuring

The procedure for restructuring a state-owned enterprise with 100% state capital to convert it into a joint-stock company is specifically provided in the Appendix attached to this Circular, including the following basic steps:

1. Implementing the plan to convert a state-owned enterprise with 100% state capital into a joint-stock company

a) Establishing the Steering Committee for Shareholding Reform/Restructuring and the Working Group.

b) Preparing necessary documents and files.

c) Organizing an inventory, addressing financial issues, and determining the enterprise's value according to Decree No. 59/2011/NĐ-CP and Decree No. 189/2013/NĐ-CP.

d) Deciding on the request for the Debt Purchase Company to participate in restructuring.

2. Developing the restructuring plan to be submitted for approval by the competent authority.

3. Implementing the restructuring plan.

4. Completing the conversion of a state-owned enterprise with 100% state capital into a joint-stock company.

a) Organizing the first General Meeting of Shareholders and registering the company.

b) Organizing the settlement and handover between the enterprise and the joint-stock company.

Article 5. Financial Handling of Restructured Enterprises

1. Financial Handling when Determining Enterprise Value

A restructured enterprise shall handle its finances when determining the enterprise's value according to Decree No. 59/2011/NĐ-CP, Decree No. 189/2013/NĐ-CP, and the Circular guiding the Ministry of Finance.

2. Financial Handling According to the Restructuring Plan

2. 1. Principles of Financial Handling:

a) The implementation of financial handling for a restructured enterprise must be linked to the approved restructuring plan by the competent authority.

b) Ensuring transparency and compliance with legal regulations. In cases where organizations or individuals involved fail to comply with the prescribed regime during financial handling, causing capital or asset losses, they will bear responsibility for compensation and liability handling according to the law.

2. 2. Content of Financial Handling

a) Reducing debt obligations for restructured enterprises:

Based on the approved restructuring plan by the competent authority:

- The Debt Purchase Company decides to reduce a portion of the debt repayment obligation for the restructured enterprise according to the commitment. The maximum reduction amount equals the negative equity value in the most recent audited financial report (adjusted according to the enterprise's determined value) minus the reduction amounts from other creditors (if any) and does not exceed the difference between the book value of purchased debt and the purchase cost of the debt at the time of the decision to reduce debt.

- Other creditors decide to reduce the debt repayment obligation for the restructured enterprise according to agreements among the parties.

b) From the time of determining the enterprise's value until the formal conversion into a joint-stock company, the restructured enterprise continues to handle finances according to regulations. Among these:

- Any profits generated are used to offset accumulated losses (if any), with the remainder transferred to the joint-stock company for management and use. - If losses occur, the restructured enterprise clarifies the reasons and responsibilities of related collectives and individuals to take corrective measures and compensate according to regulations.

- At the time of formal conversion into a joint-stock company, after offsetting any compensation payments (if any), if the restructured enterprise still has accumulated losses, the Debt Purchase Company will coordinate with participating creditors to consider further reducing the debt repayment obligation up to the accumulated loss amount. In this case, the Debt Purchase Company implements the reduction from the remaining difference (between the book value of purchased debt and the purchase cost of the debt) after deducting the difference already processed under paragraph a point 2.2 Clause 2 Article 5 of this Circular.

Article 6. Selling Shares for the First Time

1. The restructured enterprise implements the procedures, methods, and pricing for the initial public offering of shares according to Decree No. 59/2011/NĐ-CP and the Circular guiding the Ministry of Finance. In this regard, the price of shares sold to employees and trade unions within the restructured enterprise must not be lower than the par value of the shares as stipulated.

2. The Debt Purchase Company and participating creditors in the restructuring of the enterprise can convert debts into share contributions according to the principle of agreement and approval by the competent authority in the restructuring plan.

Article 7. Handling unsold shares

The restructuring enterprise shall be responsible for handling unsold shares in accordance with the provisions of Decree No. 59/2011/NĐ-CP and the guiding circulars of the Ministry of Finance. In particular:

1. When implementing subsequent public offerings through negotiation for unsold shares from auctions, the Steering Committee for Shareholding Reform/restructuring shall report to the competent authority for approval of the restructuring/shareholding reform plan to consider and decide on selling shares to investors who participated in the auction and other investors at a price not lower than the lowest successful auction price. In cases where the auction is unsuccessful (no investor registers to participate or only one investor registers to participate or the participating investor refuses to pay for all the auctioned shares), the Steering Committee for Shareholding Reform/restructuring shall report to the competent authority for approval of the restructuring/shareholding reform plan to consider and decide to adjust the initial price but not lower than the par value to sell through negotiation to investors.

2. If the shares are still not sold out, the Steering Committee for Shareholding Reform/restructuring shall consider and decide to offer them to the Company for Debt Purchase and creditors according to the principles stipulated in Clause 2, Article 6 of this Circular.

3. If the Company for Debt Purchase and creditors still do not purchase all the offered shares as stipulated in Clause 2, Article 7 of this Circular, the Steering Committee for Shareholding Reform/restructuring shall report to the competent authority for approval of the restructuring plan to adjust the charter capital structure to convert the restructuring enterprise into a joint-stock company before organizing the first General Meeting of Shareholders.

Article 8. Policy for surplus labor

1. The policy for surplus labor in restructuring enterprises shall be implemented in accordance with the current regulations of the State for state-owned enterprises when undergoing shareholding reform.

2. Source of funds:

The funding for resolving policies for surplus labor in restructuring enterprises shall follow the principle of using the surplus capital from the sale of shares (the difference between the proceeds from the sale of shares and the total par value of the sold shares) to pay for surplus labor, in cases where the surplus capital is insufficient to cover the surplus labor, it will be supplemented from:

- The Enterprise Restructuring and Development Support Fund for restructuring enterprises that are parent companies of economic groups, state-owned corporations; limited liability companies with 100% state-owned charter capital under ministries, ministerial-level agencies, government agencies, provincial people's committees, and city people's committees.

- The Enterprise Restructuring Support Fund at the parent company of economic groups, state-owned corporations; the parent company in a parent company - subsidiary group for restructuring enterprises that are subsidiaries with 100% state-owned charter capital by the parent company. In cases of shortage, it will be supplemented from the Enterprise Restructuring and Development Support Fund.

Article 9. Costs of converting restructuring enterprises into joint-stock companies

The costs of converting restructuring enterprises into joint-stock companies shall be implemented in accordance with the provisions of Decree No. 59/2011/NĐ-CP, Decree No. 189/2013/NĐ-CP, and the guiding circulars of the Ministry of Finance. In which, the source of payment for conversion costs is the surplus capital from the sale of shares (the difference between the proceeds from the sale of shares and the total par value of the sold shares). In cases of shortage, it will be supplemented from the Enterprise Restructuring and Development Support Fund or the Enterprise Restructuring Support Fund according to the principles stipulated in Clause 2, Article 8 of this Circular;

Article 10. Management and use of proceeds from selling shares

The management and use of proceeds from selling shares of enterprises undergoing restructuring shall be carried out according to current regulations applicable to state-owned enterprises implementing shareholding reform. In this regard:

1. All proceeds from selling shares, after deducting the total face value of sold shares, shall be used to address policies for surplus labor and transition costs as stipulated in Articles 8 and 9 of this Circular. Any remaining amount (if any) shall be handled in accordance with current laws.

2. Enterprises undergoing restructuring are not required to open a frozen account when selling shares.

3. After obtaining the business registration certificate to become a joint-stock company, the enterprise undergoing restructuring shall be responsible for settling expenses for surplus labor and transition costs, reporting to the Shareholding Reform Steering Committee for approval by the competent authority deciding on restructuring, and simultaneously sending to the Ministry of Finance for supervision.

Chapter III

IMPLEMENTATION

Article 11. Responsibilities of the Shareholding Reform/Restructuring Steering Committee

The Shareholding Reform/Restructuring Steering Committee shall perform rights and responsibilities as prescribed in Decree No. 59/2011/ND-CP, Decree No. 189/2013/ND-CP, and related guiding documents during the process of converting restructuring enterprises into joint-stock companies, including:

1. Assisting the competent authority approving the shareholding reform/restructuring plan in directing and organizing the conversion of restructuring enterprises into joint-stock companies.

2. Submitting to the competent authority approving the shareholding reform/restructuring plan for supplementary membership of the Steering Committee after reaching agreement with the Debts Trading Company and creditors regarding the restructuring plan. Supplementary members include representatives of the Debts Trading Company and representatives of participating creditors (if necessary).

3. Reviewing and submitting to the competent authority for decision on approval of the shareholding reform/restructuring plan as prescribed in this Circular.

4. Monitoring and supervising the implementation of the restructuring plan in accordance with this Circular and related guiding documents.

Article 12. Responsibilities of restructuring enterprises

1. Shall be responsible for providing truthful information and documents, creating conditions for the Debts Trading Company and participating creditors to study and evaluate the actual situation of the enterprise before formulating the restructuring plan.

2. Cooperating with the Debts Trading Company and participating creditors to develop the restructuring plan and submit it to the competent authority for approval as prescribed.

In cases where state-owned enterprises with 100% capital have not yet processed financial matters and revalued their enterprise's worth but have total assets lower than liabilities based on the most recent audited financial report, such enterprises shall report to the competent authority for consideration and reach agreement with the Debts Trading Company to implement steps of the restructuring process as prescribed in this Circular (if necessary).

3. Organizing the implementation of the restructuring plan, managing and using proceeds from selling shares in accordance with this Circular and related guiding documents. In case losses occur due to violations or non-compliance with provisions of this Circular, the restructuring enterprise and relevant individuals shall bear responsibility for compensation and handling liability in accordance with the law.

4. Upon completion of the restructuring process, the enterprise must settle support funds for surplus labor and transition costs, and report to the Shareholding Reform Steering Committee for approval by the competent authority.

5. Fulfilling other obligations and responsibilities as prescribed in Decree No. 59/2011/ND-CP, Decree No. 189/2013/ND-CP, and related guiding documents.

Article 13. Responsibilities of the Debts Purchase and Sale Company

1. Reaching agreement with the competent authority approving the restructuring plan and the restructuring enterprise prior to deciding to purchase debts from credit institutions and other creditors.

2. Appointing staff to participate in the Shareholding Reform Steering Committee and Working Group to implement the restructuring plan.

3. Implementing financial processing in accordance with the approved restructuring plan, consistent with the functions, tasks, and authority of the Company and legal provisions.

4. Coordinate with the enterprise during the process of organizing and implementing the restructuring plan. In case of difficulties, report to the competent authority for consideration and resolution.

5. Appoint representatives of the Company's capital contribution at the restructuring enterprise in accordance with regulations.

6. Be responsible for implementing in accordance with the provisions of this Circular and related guiding documents.

Article 14. Responsibilities of the competent authority approving the privatization/restructuring plan

The competent authority approving the privatization/restructuring plan shall perform the rights and responsibilities as prescribed in Decree No. 59/2011/ND-CP and related guiding documents, including:

1. Direct the restructuring enterprise to cooperate with the Debt Purchase Company and creditors to conduct surveys and assess the current status of the enterprise before participating in restructuring.

2. Negotiate with the Debt Purchase Company and creditors regarding the restructuring plan of the enterprise through debt handling as prescribed in this Circular.

3. Approve the value of the enterprise and the restructuring plan as prescribed in this Circular and the contents agreed upon with the Debt Purchase Company and participating creditors.

4. Inspect and supervise the Steering Committee for Corporate Shareholding/Restructuring and the enterprise in the implementation of the restructuring plan.

5. Approving the final account of support funds for surplus labor, conversion costs of the enterprise, and proceeds from selling shares, and sending them to the Ministry of Finance (Enterprise Financial Department) for supervision.

Article 15. Responsibilities of creditors participating in restructuring

1. Cooperating with the enterprise during the implementation process of the restructuring plan. Implementing financial treatment for the restructuring enterprise according to commitments and the approved restructuring plan.

2. Appointing representatives to participate in the Steering Committee for Privatization and Working Group to implement the restructuring plan (if necessary).

3. Shall appoint representatives of their capital contribution at the restructuring enterprise (if applicable) in accordance with regulations.

4. Be responsible for implementing in accordance with the provisions of this Circular and related guiding documents.

Article 16. Implementation Provisions

1. This Circular takes effect from February 10, 2014. The competent authority deciding on privatization/restructuring, the restructuring enterprise, and the Debt Purchase Company are responsible for implementing this Circular and related guiding documents for Decree No. 59/2011/ND-CP and Decree No. 189/2013/ND-CP.

2. Enterprises subject to restructuring as stipulated in Article 1 of this Circular that have had their restructuring plans approved by the competent authority before the effective date of this Circular shall continue to implement the approved restructuring plan.

3. During the implementation process, if there are difficulties, please reflect them to the Ministry of Finance for research and consideration, and resolution./.