Joint Circular No. 23/2005/TTLT-BLDTBXH-BTC guiding the ranking and salary grading for full-time members of the Board of Directors, General Director, Director, Deputy General Director, Deputy Director, and Chief Accountant of state-owned companies.

JOINT CIRCULAR

Guidelines for ranking and setting salaries for full-time members

of the Board of Directors, General Director, Director, Deputy General Director,

Deputy Director, Chief Accountant of state-owned enterprises

To implement Clause 3, Article 7, Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government on the wage scale system, wage list, and wage allowance system in state-owned enterprises, the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance jointly issue guidelines for ranking enterprises and setting salaries for full-time members of the Board of Directors, General Director, Director, Deputy General Director, Deputy Director, Chief Accountant as follows:

I. OBJECTS AND CONDITIONS FOR ENTERPRISE RANKING

1/ Objects of application:

The objects of application are enterprises established and operating under the Law on State-Owned Enterprises, including:

a) Independent state-owned enterprises;

b) Member enterprises (independent accounting and dependent accounting) of state-owned holding companies;

c) Parent companies of enterprises operating under the parent company-subcompany model pursuant to Decree No. 153/2004/NĐ-CP dated August 9, 2004 of the Government.

These enterprises are referred to as enterprises.

2/ Conditions for application:

Enterprises meeting both of the following conditions shall be ranked:

a) Enterprise ranking criteria have been issued jointly by the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance based on proposals from relevant ministries (Annex 01 attached);

b) The year of ranking does not fall within the list of ownership form conversion (shareholding, transfer, sale); management method change (contracting, leasing); restructuring (merger, consolidation, division); dissolution, bankruptcy.

II. METHODS FOR ENTERPRISE RANKING AND PROCEDURES FOR ENTERPRISE RANKING APPLICATIONS

1/ Ranking methods:

a) Based on the ranking criteria in Annex 01and the ranking guidance in Annex 02enterprises shall carry out the ranking process according to the provisions:

- For enterprises that have already been officially ranked by competent authorities, they must re-rank within one year from the date this Circular takes effect and submit to the competent authority for decision;

- For newly established enterprises that have not yet been ranked, they must immediately conduct ranking upon the effectiveness of this Circular and submit to the competent authority for decision;

- For newly established enterprises, they shall temporarily rank at Level II or Level III based on the ranking criteria issued by the competent authority and submit to the competent authority for decision. Within one year from the temporary ranking date, they must conduct a formal ranking.

b) Three years (36 months) from the date of the ranking decision, enterprises are responsible for re-ranking and submitting to the competent authority for decision.

For enterprises with temporary rankings, if the new ranking is equal to or lower than the temporary ranking, the re-ranking period will start from the temporary ranking date.

c) The ranking methods specified in points a and b above only apply to enterprises ranked at Levels I, II, and III.

For holding companies and enterprises that have been specially ranked by the Prime Minister according to the ranking criteria issued in Decision No. 185/TTg dated March 28, 1996 of the Prime Minister or have been ranked as holding companies by relevant ministries, provincial people's committees, they may retain their current ranking.

For holding companies (including enterprises) that meet the ranking criteria set forth in Decision No. 185/TTg, they should propose to the joint ministries to report to the Prime Minister for special ranking.

2/ Procedures and documents for ranking:

a) Responsibilities of enterprises: based on the provisions in Section I above, enterprises shall carry out ranking and submit a letter along with the required documents to the competent superior authority for decision (relevant ministry; provincial people's committee; board of directors of holding companies established by Decision No. 91/TTg dated March 7, 1994 of the Prime Minister). In cases where enterprises are ranked at Level I, they must report to the competent superior authority for registration with the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance. The application documents include:

- A request letter:

- A scoring table according to ranking indicators (Form 01); Summary table of actual average number of employees (Form 03); List of dependent accounting units (Form 04);

- Certified copies of establishment decisions and business registration certificates;

- Certified copies of financial statements for the two preceding years and the plan for the ranking year.

Financial statements must be prepared in accordance with Decision No. 167/2000/QĐ-BTC dated October 25, 2000 and Circular No. 23/2005/TT-BTC dated March 30, 2005 of the Ministry of Finance (if audited, attach a certified copy of the audit report).

b) Relevant ministries, provincial people's committees, boards of directors of holding companies established by Decision No. 91/TTg dated March 7, 1994 of the Prime Minister are responsible for:

- Receiving and reviewing ranking applications and issuing decisions on ranking at Levels II and III for enterprises under their management within 15 days from the date of receiving complete documents.

- Receiving and sending letters (with attached documents) to the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance for registration for enterprises applying for Level I ranking and issuing a Level I ranking decision after receiving confirmation from the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance.

- Annually in the fourth quarter, compiling the number of holding companies and enterprises ranked under their management (according to Form 05 and Form 06) and reporting to the Ministry of Labor, Invalids and Social Affairs.

c) The Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance are responsible for receiving registration documents for Level I ranking and must provide a response within one month from the date of receiving complete documents.

III. SALARY SETTING BASED ON RANK

1. Principles:

Setting salaries based on rank for full-time members of the Board of Directors, General Director, Director, Deputy General Director, Deputy Director, Chief Accountant (referred to as enterprise management officials) shall follow the principle as follows:

a) The company shall be ranked according to the position held to determine the corresponding salary grade according to the board of directors' member salary table or the general director, director, deputy general director, deputy director, chief accountant's salary table. When the company's rank changes (upgraded or downgraded), the salary grading will also change accordingly;

b) When management officials no longer hold positions under the two aforementioned salary tables, they must be graded according to their new job responsibilities, without retaining the previous salary level based on the previously assigned rank;

c) The entity that appoints the positions under the two aforementioned salary tables shall also decide on the salary grading for those positions;

2. Salary Grading:

The salary grading shall be carried out according to the following provisions:

a) When the company's rank does not change, management officials currently receiving a salary grade corresponding to a certain position shall retain that salary grade;

b) When the company is upgraded from a lower rank to a higher rank, management officials currently receiving a salary grade corresponding to a certain position shall be reclassified to that position according to the following regulations:

- Grade 1 of the lower rank shall be reclassified to Grade 1 of the higher rank, with the time for the next salary increase calculated from the date of the decision to reclassify to Grade 1 of the higher rank;

- Grade 2 of the lower rank shall be reclassified to Grade 1 of the higher rank if the time spent at Grade 2 of the lower rank is less than three years, with the time for the next salary increase calculated from the date of the decision to reclassify to Grade 2 of the lower rank;

- Grade 2 of the lower rank shall be reclassified to Grade 2 of the higher rank if the time spent at Grade 2 of the lower rank is three years or more, or if the coefficient of the position grade 2 of the lower rank plus the retention difference coefficient (if any) is higher than the coefficient of Grade 1 of the higher rank;

In cases where the coefficient of the position grade of management officials plus the retention difference coefficient (if any) is higher than the coefficient of Grade 2 of the higher rank, they shall be reclassified to Grade 2 of the higher rank and enjoy the recalculated retention difference coefficient based on the salary after reclassification to the higher rank (if applicable);

c) When the company is downgraded from a higher rank to a lower rank, management officials currently receiving a salary grade corresponding to a certain position shall be reclassified to that position according to the following regulations:

- Grade 1 of the higher rank shall be reclassified to Grade 1 of the lower rank, with the time for the next salary increase calculated from the date of reclassification to Grade 1 of the lower rank;

- Grade 2 of the higher rank shall be reclassified to Grade 2 of the lower rank;

d) For newly appointed management officials who assume a certain position, they shall be reclassified to that position according to the company's rank as follows:

- Reassigned to Grade 1 if the coefficient of the salary before appointment is equal to or lower than the coefficient of Grade 1. The time for the next salary increase shall be calculated from the date of reassignment to Grade 1. If the difference between the coefficient of the salary before appointment and the coefficient of Grade 1 is less than 70% of the difference between the coefficients of Grades 1 and 2, then the time for the next salary increase shall be calculated from the date of the previous salary assignment;

- Reassigned to Grade 2 if the coefficient of the salary before appointment is higher than the coefficient of Grade 1;

đ) For management officials no longer holding positions under the two aforementioned salary tables, they shall be reassigned to a new salary based on their new job and position, without retaining the old salary coefficient or transferring to a new equivalent salary coefficient;

Example:Mr. M, currently classified at Grade 2, Director of a Company Rank II with a salary coefficient of 6.31 (before being assigned to his position, Mr. M was classified at Grade 4, Senior Specialist Rank with a salary coefficient of 4.10 since December 1996). In October 2005, Mr. M was transferred to Head of Planning Department of the Holding Company, his salary reclassification shall be carried out as follows:

Taking the professional salary coefficient of Mr. M before being assigned to his position as a Senior Specialist, Grade 4 with a coefficient of 4.10 (as stipulated in Decree No. 26/CP dated May 23, 1993 of the Government), he shall be reclassified to a new salary coefficient of 4.99 (as stipulated in Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government). The time spent at the coefficient of 4.10 until ceasing to hold the managerial position is 8 years and 10 months (from December 1996 to October 2005), so Mr. M shall be reclassified to the Senior Specialist Rank, Grade 6 with a salary coefficient of 5.65 and enjoy the position allowance of Head of Department of the Holding Company. The remaining time not sufficient to advance to the next grade (8 years and 10 months - 6 years/2 grades = 2 years and 10 months) shall be retained until reaching 3 years (36 months) when he can advance to the next grade, with the time for the next salary increase calculated from the date of advancement;

3. Salary Grading for Management Officials of Holding Companies:

a) For Holding Companies and companies that have been decided by the Prime Minister to be ranked as special; and those that have been ranked as Holding Companies by the Ministry managing the industry or the People's Committee of the province before this Circular takes effect, management officials currently holding a certain position and classified at a certain rank shall be reclassified to a new salary grade according to the guidance provided in point 2 above;

b) For companies included in the overall plan, undergoing transformation and operating under the parent company - subsidiary model as stipulated in Decree No. 153/2004/NĐ-CP dated August 9, 2004 of the Government, which have been approved by the Prime Minister, from the date this Circular takes effect until the end of 2006, management officials shall temporarily be classified according to the provisions in Document No. 4532/VPCP-VX dated August 12, 2005 of the Office of the Government, specifically;

- For Holding Companies, independent state-owned companies, and independent accounting subsidiaries, management officials of the parent company currently holding a certain position shall be classified at the corresponding grade according to the enterprise rank assigned before transitioning to operate under the parent company - subsidiary model.

For independent state-owned enterprises and independent accounting subsidiaries of special-class holding companies currently ranked at level I, if they meet all three conditions: state capital of at least 100 billion VND, annual tax payment to the state budget of at least 30 billion VND, and profit of at least 30 billion VND, they shall report to the Ministry managing the industry, the People's Committee of the province, and the Board of Directors of the holding company established pursuant to Decision No. 91/TTg dated March 7, 1994 of the Prime Minister, along with a letter and attached documents (a copy of the overall plan for transitioning to the parent company - subsidiary model approved by the Prime Minister; the decision on ranking at level I and financial reports of the parent company for the two most recent consecutive years before consolidation with financial reports from subsidiaries) to register with the Ministry of Labor, Invalids and Social Affairs to rank salaries for management officials according to the holding company level and equivalent as stipulated in Subsection b, Point 2, Section III of this Circular.

From 2007 onwards, management officials of the aforementioned companies will be ranked according to the company level as guided by the Ministry of Labor, Invalids and Social Affairs.

IV. EFFECTIVE DATE OF IMPLEMENTATION

1. This Circular shall take effect fifteen days after its publication in the Official Gazette.

Repeal Circular Joint Circular No. 17/1998/TTLT-BLDTBXH-BTC dated December 31, 1998 and Circular Joint Circular No. 10/2000/TTLT-BLDTBXH-BTC dated April 4, 2004 of the Joint Ministries of Labor, Invalids and Social Affairs and Finance guiding the ranking of state-owned enterprises.

2. State-owned enterprises operating under the Law on Enterprises and other economic sector enterprises when applying the provisions of this Circular must strictly comply with the ranking and salary grading regulations as prescribed in this Circular. However, enterprises belonging to other economic sectors do not need to go through the registration process with the Joint Ministries of Labor, Invalids and Social Affairs and Finance or submit to state agencies for determination of their ranking as prescribed in this Circular.

During implementation, if there are any difficulties, the relevant ministries managing the industries, the People's Committees of the provinces, and the Boards of Directors of holding companies established pursuant to Decision No. 91/TTg dated March 7, 1994 of the Prime Minister are requested to reflect these issues to the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance for study and resolution./.