Circular No. 24/1998/TT-BTC guides the management and use of investment capital in state-owned enterprises.

CIRCULAR

Guidelines for the management and use of reinvestment capital in state-owned enterprises

Implementing Decree No. 59/CP dated October 3, 1996 of the Government on the "Financial Management Regulations and Business Accounting for State-Owned Enterprises" and Decree No. 56/CP dated October 2, 1996 of the Government on state-owned enterprises engaged in public services; the Ministry of Finance guides the management and use of reinvestment capital of state-owned enterprises as follows:

I. GENERAL PROVISIONS

The subjects to which this Circular applies are state-owned enterprises engaged in production and business activities under Article 1 of Decree No. 59/CP dated October 3, 1996 and state-owned enterprises engaged in public services under Article 1 of Decree No. 56/CP dated October 2, 1996 of the Government (hereinafter referred to as state-owned enterprises).

State capital used for reinvestment in state-owned enterprises is the amount of capital used to maintain and enhance the production and business capacity of the enterprise. State capital used for reinvestment in state-owned enterprises includes:

Depreciation of fixed assets of the enterprise from state capital sources (including depreciation funds for fixed assets invested with raised capital but have been repaid using state capital).

The residual value recovered from the liquidation or sale of assets of the enterprise from state capital sources.

A portion or all of the development investment fund.

Amounts that enterprises must pay to the state budget but are allowed by the state to retain within the enterprise to supplement business capital and enhance the production and business capacity of the enterprise.

(All the above sources of capital hereinafter referred to as reinvestment capital of state-owned enterprises).

For State Corporations established according to Decision No. 90/TTg and Decision No. 91/TTg dated March 7, 1994 of the Prime Minister, a portion of the reinvestment capital (depreciation of fixed assets, development investment fund) of member enterprises of the Corporation used for common reinvestment purposes of the entire Corporation shall also be subject to the provisions of this Circular.

State-owned enterprises are responsible for using reinvestment capital properly, managing it strictly, and utilizing it effectively.

II. SPECIFIC PROVISIONS

1. Reinvestment capital of state-owned enterprises is used for:

Purchasing and replacing fixed assets to maintain the current production capacity of the enterprise.

Modernizing and completing production technology chains, purchasing new equipment to improve working conditions.

Participating in investment capital belonging to programs and projects for developing production and business operations of the enterprise approved by competent authorities.

Expanding production and business operations.

2. Management and use of reinvestment capital in state-owned enterprises:

2.1. Annually, based on the production and business tasks of the unit, enterprises build plans for reinvestment capital sources and plans for using reinvestment capital in the year.

For state-owned enterprises that are member enterprises of State Corporations established according to Decision No. 90/TTg and No. 91/TTg dated March 7, 1994 of the Prime Minister, the plan for using reinvestment capital of the enterprise must be approved by the Board of Directors.

For independent state-owned enterprises with a Board of Directors, the plan for using reinvestment capital of the enterprise must be approved by the Board of Directors.

For independent state-owned enterprises without a Board of Directors, the plan for using reinvestment capital of the enterprise is approved by the General Director of the enterprise and bears full responsibility for the accuracy and effectiveness of the use of reinvestment capital.

In cases where reinvestment capital of the enterprise is used in programs and projects, the preparation and approval of the plan are carried out according to the current regulations on the management of investment capital and construction.

After the plan for using reinvestment capital of the enterprise has been approved by competent authorities, the enterprise registers with the state capital and asset management agency at the enterprise for inspection and supervision.

2.2. The person responsible for approving the plan for using reinvestment capital of the enterprise who makes mistakes leading to ineffective investment projects, equipment purchases, and other investments, failing to meet the time frame for capital recovery, resulting in losses and capital loss, will be subject to administrative disciplinary action and must bear material compensation liability. The level of compensation is determined according to the relevant laws.

2.3. Construction projects and the purchase of machinery and equipment using reinvestment capital must prepare economic and technical justifications and project budgets. The review and approval of economic and technical justifications and project budgets are carried out according to the current regulations on the management of investment capital and construction.

2.4. During the process of using reinvestment capital of the enterprise, if: - The reinvestment capital of the enterprise is within programs and projects approved by competent authorities, the implementation of investment must comply with the current regulations on the management of investment capital and construction.

For basic construction projects and the purchase of fixed assets not included in programs and projects, the enterprise must organize bidding.

2.5. During the planning year when using reinvestment capital of the enterprise for basic construction projects, the purchase of machinery and equipment, and other investments, if there are changes in development goals and business plans, the state-owned enterprise is responsible for preparing supplementary plans and budgets and submitting them to competent authorities for approval.

2.6. State-owned enterprises organize accounting books and record accurately and promptly all increases and decreases, and the situation of reinvestment capital usage of the enterprise according to the current state accounting and statistical regulations.

2.7. At the end of the planning year, state-owned enterprises are responsible for preparing final reports on the implementation of reinvestment capital of the enterprise and sending them to the investment decision-making agency (if the reinvestment capital is within programs and projects) or the agency that approved the plan for using reinvestment capital of the enterprise.

In cases where the reinvestment capital of enterprises is within investment programs and projects for construction, the settlement and approval of the investment capital settlement shall be carried out in accordance with the provisions of Circular No. 66/TC/ĐTPT dated November 2, 1996, issued by the Ministry of Finance, guiding the settlement of basic construction investment capital.

In cases where the reinvestment capital of enterprises is used for basic construction, purchasing machinery and equipment (not included in programs and projects), and investing in other business activities of the enterprise, the preparation of financial statements must comply with Decision No. 1141 TC/QĐ/CĐKT dated November 1, 1995, issued by the Ministry of Finance, establishing the reporting system for enterprises. At the same time, the report must analyze and evaluate the implementation situation, difficulties, remaining issues, and propose solutions.

2.8. Each year, the report on the use of reinvestment capital of state-owned enterprises must be submitted to the state capital and asset management agency at the enterprise.

2.9. State-owned enterprises during the process of implementing and preparing the final account report on reinvestment capital of the enterprise, if they fail to comply with the purpose, deviate from the approved reinvestment capital usage plan by competent authorities; fail to comply with basic construction investment plans; fail to comply with economic and technical norms, labor norms; prepare inaccurate final accounts reports that do not truthfully reflect the situation and results of reinvestment capital usage... leading to business losses, asset damage, and loss of capital, in addition to administrative disciplinary actions, they must also compensate for material losses. The amount of compensation shall be in accordance with the provisions of the law.

IV. IMPLEMENTATION PROVISIONS

This Circular takes effect fifteen days after the date of signature. All previous regulations concerning the management and use of enterprise reinvestment capital that conflict with this Circular are hereby abolished.

During the implementation process, if there are any difficulties, ministries, sectors, and enterprises are requested to report them to the Ministry of Finance for study and amendment./.