Circular No. 242/2009/TT-BTC guiding the implementation of certain provisions of the Financial Management Regulation for State-owned Enterprises and State Capital Investment in Other Enterprises issued together with Decree No. 09/2009/NĐ-CP dated February 5, 2009 of the Government.

  Where:

- Total asset value: Code 270 on the balance sheet.

 - Debt payable: Code 300 on the balance sheet.

- State capital: Investment capital of the owner (Code 411 on the balance sheet); development fund (Code 417 on the balance sheet), basic construction investment source (Code 421 on the balance sheet).

If the coefficient H > 1, capital has been developed; H = 1, capital has been preserved; and if H < 1, capital has not been preserved.

For cases where the company has not preserved state capital, the Board of Directors, General Director of the company (for companies without a Board of Directors) must submit a report to the representative of the owner and the Ministry of Finance in accordance with Circular No. 42/2008/TT-BTC dated May 22, 2008 of the Ministry of Finance guiding certain provisions of the Supervision Regulation for State-Owned Enterprises Operating at a Loss and Without Effectiveness issued together with Decision No. 169/2007/QĐ-TTg dated November 8, 2007 of the Prime Minister and bear responsibility as stipulated in Articles 32 and 34 of the Financial Regulation.

2. The establishment and use of provisions for inventory write-downs, doubtful debts, losses on financial investments, bad debts, and product warranties, goods, and construction projects at enterprises shall be carried out in accordance with Circular No. 228/2009/TT-BTC dated December 7, 2009 of the Ministry of Finance.

3. The transfer of losses shall be carried out in accordance with the current regulations of the Law on Corporate Income Tax.

Article 5. Investment of Capital Outside State-Owned Enterprises

The enterprise shall implement according to Article 12 of the Financial Regulation. Among which:

1. In addition to the cases not allowed to participate in capital contribution as prescribed in Clause 5, Article 12 of the Financial Regulation, state-owned enterprises must also limit investment forms as follows:

- Subsidiaries are not allowed to invest in contributing capital to parent companies. - Subsidiaries and dependent businesses of parent companies are not allowed to contribute capital to purchase shares when units within the same group, corporation, or parent-child combination are being equitized.

2. Annually, based on reports on the situation and effectiveness of financial investment of state-owned enterprises, the Ministry of Finance will coordinate with relevant Ministries, People's Committees of centrally governed cities and provinces to inspect and supervise the management and use of state capital invested in state-owned enterprises in accordance with the Financial Regulation; In case state-owned enterprises conduct investments outside beyond the regulations or not in the correct target but do not adjust their investment structure as prescribed in Clause 3 and Clause 6, Article 12 of the Financial Regulation, the Ministry of Finance will report to the Prime Minister for consideration and decision on transferring the right to represent excess investment capital or not in the correct target to the State Capital Investment Corporation in accordance with the principle of increasing or decreasing capital between parties.

The enterprise whose capital is transferred has the responsibility to cooperate with the State Capital Investment Corporation and economic organizations with the enterprise's contributed capital to complete necessary procedures to implement the transfer of the right to represent contributed capital according to the Prime Minister's decision within no more than 30 working days from the date of the Prime Minister's decision.

Article 6. Management and Use of Assets

The enterprise implements fixed asset investment, manages and uses assets in accordance with Section 2, Chapter II of the Financial Regulation. Among which:

1. Depreciation of fixed assets is implemented in accordance with Circular No. 203/2009/TT-BTC dated October 20, 2009 of the Ministry of Finance.

2. Regarding liquidation and sale of fixed assets.

The enterprise has the right and responsibility to liquidate unused assets, damaged assets that cannot be restored, obsolete technology assets that are not needed or used inefficiently; sell assets on the principle of transparency, preservation of capital in accordance with Clause 2 and Clause 3, Article 16 of the Financial Regulation. Among which:

a) In the event that the plan for selling fixed assets of the enterprise does not have the ability to recover sufficient capital, the enterprise must report to the representative of the owner and the same-level finance authority before selling fixed assets to carry out supervision.

b) Specifically, in the case of newly invested fixed assets that do not generate economic efficiency as initially approved, if the enterprise does not need to continue exploiting and using them and the sale of such assets does not have the ability to recover sufficient investment capital leading to the enterprise being unable to repay loans according to loan agreements or borrowing contracts, then the responsibilities of those involved must be clarified and reported to the representative of the owner for handling in accordance with the law.

c) For the sale and liquidation of assets of certain special industries (tobacco production, shipping, aviation...), in addition to complying with the provisions of the Financial Regulation and this Circular, they must also comply with the provisions of specialized legal documents.

3. Sale of financial investments:

Regarding the method of sale and the authority to decide on the sale of financial investments is carried out in accordance with Clause 4, Article 16 of the Financial Regulation. Among which:

a) Regarding the method of sale:

Depending on the form of capital contribution, the company may transfer financial investments in compliance with the law, the articles of association of the business with the company's capital, and commitments in joint venture and cooperation contracts.

- For the transfer of financial investments at listed joint-stock companies on the stock market or registered for trading on the UPCOM exchange, the company can proactively implement through matching orders, auctions, negotiations, or competitive bidding but not lower than the market value at the time of sale.

- For the transfer of financial investments at unlisted joint-stock companies, the company actively chooses auction or direct negotiation methods to transfer on the principle of transparency, preservation of capital, and not lower than the market price. Among which:

+ For the transfer of financial investments valued at over 10 billion VND, the company must conduct an auction through the Stock Exchange. For financial investments valued under 10 billion VND, the company may hire intermediary financial organizations (securities companies) to auction, or organize an auction within the company, or conduct an auction through the Stock Exchange.

+ Negotiated sales can only be conducted after a public auction but only if there is one buyer registered and must ensure the sale price is close to the market price at the time of sale; In this case, the market price at the time of sale should be based on quotations from at least three securities companies that have traded the securities of the business with the company's capital, and if there is no trade, the sale price should not be lower than the book value recorded in the accounting books of the unit with the company's capital.

b) Revenue from selling off or selling the remaining state capital portion at a limited liability company or joint-stock company converted from a member company or a subsidiary of a state-owned company (in accordance with the decision on restructuring and converting state-owned enterprises into joint-stock companies, obtaining the initial business registration license), including non-refundable deposits from investors, after deducting the recorded state capital investment value in accounting books, issuance guarantee fees, sales costs, and any incurred taxes (if applicable) which are increased to the state capital at state-owned companies representing state ownership in these enterprises. In cases where the state capital exceeds the registered capital after supplementation, the excess amount shall be handled according to the provisions of Clause 5, Article 2 of this Circular.

Article 7. Management of Receivables and Payables

The company is responsible for managing receivables and payables in accordance with Articles 10 and 18 of the Financial Regulations. Specifically:

- The company has the right to sell receivables in accordance with the law, including both current receivables and difficult-to-collect receivables, unrecoverable receivables to recover capital. The sale of debts can only be carried out with economic organizations that have the function of buying and selling debts, and cannot be sold directly to debtors. The selling price of receivables is agreed upon by the parties involved and they bear responsibility for the decision to sell receivables. If selling debts leads to the company suffering losses, losing capital, or losing its ability to pay, leading to the dissolution or bankruptcy of the company, the Board of Directors, General Director of the company (for companies without a Board of Directors), and those directly related to the generation of difficult-to-collect receivables must compensate according to the law and the company's charter.

- The revaluation of foreign currency receivables and the handling of exchange rate differences shall be carried out in accordance with the guidance provided in Circular No. 177/2009/TT-BTC dated September 10, 2009, and Circular No. 201/2009/TT-BTC dated October 15, 2009, issued by the Ministry of Finance.

PART II

MANAGEMENT OF REVENUE, EXPENSES AND BUSINESS RESULTS

Article 8. Management of Revenue

The company's revenue is implemented in accordance with Article 22 of the Financial Regulations.

Conditions and timing for determining revenue.

1. Conditions.

- Revenue generated during the period must be accepted for payment by customers with valid invoices and supporting documents in accordance with current regulations.

- Revenue must be recorded in Vietnamese Dong; in cases where revenue is received in foreign currencies, it must be converted into Vietnamese Dong according to the law.

2. Timing for Determining Revenue

- It is the time when the company transfers ownership of goods or products; completes service provision to the buyer; completes the contract or issues a sales invoice.

- For goods or products sold through agents, revenue is determined when the goods sent to the agent have been sold.

- For financial activities, the timing for determining revenue is as follows:

+ Interest from loans, interest from deposits, interest from bond investments, bills, interest from deferred or installment sales, royalties... is determined according to the loan, lease, or sales contract period or interest receipt period.

+ Dividends and profits distributed are determined when there is a resolution or decision to distribute profits by the competent authority.

+ Capital gains (except for capital transfers specified in Point c, Clause 4, Article 16 of the Financial Regulations), foreign exchange gains, and exchange rate differences arising from business operations during the period are determined when transactions or operations are completed.

Article 9. Management of expenses

The management of expenses is carried out in accordance with the provisions of Article 24 of the Financial Regulations, specifically:

For companies operating in monopoly sectors, in addition to financial statements prepared and submitted in accordance with current regulations, at the end of the fiscal year, the company must prepare a Report on the Implementation of Production and Business Expenses in the format prescribed in Appendix 2 attached to this Circular and submit it to the representative of the owner and the financial authority (Department of Finance for enterprises managed by localities; Ministry of Finance for enterprises managed by the central government).

Article 10. Product cost, service consumption expenses

1. The total product cost for goods and service consumption expenses for the period as prescribed in Article 25 of the Financial Regulation.

2. Principles and methods for determining product costs and service expenses are stipulated as follows:

a) Production costs for products and services include:

- Costs for raw materials, materials, fuel, and power directly used in producing products and services.

- Wages and allowances paid to direct production workers such as: salaries, wages, and allowances with the nature of salary, mid-shift meal expenses, social insurance, health insurance, and trade union fees.

- Common production costs: common costs incurred in workshops and business departments such as: salaries, allowances, mid-shift meals, material costs, tools and equipment, depreciation of fixed assets, external service costs, and other monetary costs.

b) Total costs for consumed products and services include:

- Production costs for products and services as specified in Point a Clause 2 of this Article.

- Sales expenses including costs incurred during the process of consuming products, goods, and services such as: salaries, allowances payable to sales staff, commission for agents, brokerage commission, marketing, packaging, transportation, storage ..., depreciation of fixed assets, material costs, packaging, tools and equipment, external service costs, and other monetary costs.

- Corporate management costs: business management costs, administrative management costs, and other common costs related to corporate activities.

All sales expenses and corporate management costs are transferred to the consumed products and services for the year to determine the business results.

For products with a production time exceeding one year, corporate management costs incurred in the year are allocated to unfinished products.

3. Accounting for costs of goods and services subject to value-added tax shall be carried out in accordance with current tax laws.

Article 11. Distribution of profit

1. The company shall comply with Article 27 of the Financial Regulation and the guidance provided in Circular No. 155/2009/TT-BTC dated July 31, 2009, issued by the Ministry of Finance.

2. The supplementation of registered capital from distributed profits according to state capital shall be implemented in accordance with Clause 4 of Article 2 of this Circular.

PART III

FINANCIAL PLAN, ACCOUNTING SYSTEM, STATISTICS AND AUDIT

Article 12. Financial Plan

The company shall comply with the provisions of Article 29 of the Financial Regulation.

1. Annually, the representative of the owner must hand over the profit rate plan on state capital for the following year to the company; At the same time, send it to the financial authority at the same level as the basis for supervision and evaluation of the company's business management activities.

2. Annually, based on the profit rate plan on state capital handed over by the representative of the owner, the company shall conduct an assessment of the production and business situation of the reporting year and prepare a financial plan for the next year (according to Appendix No. 3 attached to this circular) to be sent to the representative of the owner and the financial authority (Ministry of Finance for companies under the Prime Minister or specialized ministries as owners; Department of Finance for companies under provincial or municipal People's Committees as owners) before July 31.

Article 13. Financial reports and other reports

1. The company shall comply with the provisions set forth in Article 30 of the Financial Regulation and current laws and regulations on auditing and accounting to publicly disclose financial information. Specifically, the annual financial report shall be prepared in accordance with Decision No. 15/2006/QĐ-BTC dated March 20, 2006, of the Minister of Finance, which supplements Model Form 2b-DN "Payments to the State Budget" as Appendix 4 attached hereto.

2. In addition, the company has the responsibility to prepare and submit the following reports to the representative of the owner and the financial authority (the Ministry of Finance for companies owned by the Prime Minister or specialized ministries acting as owners; the Department of Finance for companies owned by provincial or municipal People's Committees acting as owners):

a) Prepare and submit the Supervision and Evaluation Report on the effectiveness of the company's operations in accordance with Circular No. 115/2007/TT-BTC dated September 25, 2007, of the Ministry of Finance guiding certain contents regarding supervision and evaluation of the effectiveness of state-owned enterprises' operations pursuant to Decision No. 224/2006/QĐ-TTg dated October 6, 2006,

b) Annually, along with the financial report, the company must also prepare and submit the following reports: Financial Investment Status Report (Appendix 5 attached hereto); Capital Raising and Utilization Status Report (Appendix 6 attached hereto); Post-Tax Profit Distribution Status Report (Appendix 1 attached hereto).

Chapter III

MANAGEMENT OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES

Article 14. Management of state capital invested in other enterprises

The management of state capital invested in other enterprises shall be carried out in accordance with the provisions of Chapter IV of the Financial Regulation.

Article 15. Salary, Allowances, Bonuses, and Benefits of Representatives

1. Salary, allowances, bonuses, and benefits of representatives shall be implemented in accordance with Article 46 of the Financial Regulation and the regulations of the Ministry of Home Affairs, the Ministry of Labor, Invalids and Social Affairs.

2. In cases where the representative is concurrently serving as a member without being fully dedicated to the management and operation of another enterprise and receives remuneration from that enterprise, the representative is responsible for notifying the enterprise to which the representative is assigned to represent state capital so that the enterprise can directly transfer the remuneration to the owner representative for management and payment in accordance with the regulations. Among these:

- In the case where the owner representative is a state-owned company:

+ All income from remuneration received from the enterprise with the concurrent representative shall be recorded as other income of the company.

+ All expenses for allowances paid to the representative shall be recorded as other expenses of the company.

- In the case where the owner representative is a state management agency, the income from remuneration of the representative shall be separately monitored to implement the payment of allowances to the representative according to the prescribed regulations.

3. Annually, based on the results of classifying and evaluating the management and operation of other enterprises and the performance of the representative, the owner representative decides the level of allowance payment to individuals appointed as representatives of state capital in other enterprises according to the regulations.

4. Other benefits of representatives: Implemented in accordance with Clause 3 of Article 46 of the Financial Regulation. Among these:

When a representative of state capital at another enterprise is granted the right to purchase additional shares or convertible bonds by the decision of a joint-stock company (except when purchased under the rights of existing shareholders), the representative must report in writing to the owner representative of state capital.

If the representative is appointed to represent multiple units, annually the representative may choose to exercise the right to purchase at one unit.

Within five working days from the date of receipt of the report, the owner representative of state capital must decide in writing on the number of additional shares or convertible bonds that the representative is entitled to purchase. If the number of shares the representative is entitled to purchase according to the decision of the owner representative of state capital is less than the number of shares the representative is entitled to purchase according to the decision of the joint-stock company, the difference belongs to the right to purchase of the owner representative of state capital. Accordingly, the representative must report in writing to the joint-stock company while transferring the right to purchase shares to the owner representative of state capital. Any related costs (if any) will be borne by the owner representative of state capital corresponding to the number of shares transferred by the representative. If the owner representative of state capital does not have a need to purchase the aforementioned shares, they have the right to transfer the right to purchase shares in accordance with current regulations.

5. Reporting system of representatives of state capital at other enterprises is as follows:

The representative is responsible for:

a) Based on the financial statements and other reports of the enterprise, periodically every quarter and annually, compile financial indicators according to Appendix 7 attached hereto; analyze and evaluate business results, management and utilization of capital at the enterprise, solvency, profit distribution, and other benefits, propose measures to resolve difficulties and obstacles to enhance the efficiency of state capital investment in other enterprises.

The report must be submitted to the owner representative within fifteen days after the other enterprise submits its financial report (quarterly, annually) in accordance with current regulations.

b) In addition to the periodic reports mentioned above, the representative must report to the owner representative about the situation of the enterprise in cases where significant issues arise affecting the business results of the other enterprise or issues requiring guidance from the owner representative, or when requested by the owner representative.

Chapter IV

ORGANIZATION AND IMPLEMENTATION

Article 16. Effective Date

This Circular takes effect forty-five days from the date of signature and applies to handle occurrences from the fiscal year 2009 onwards.

2. REPEAL Circular No. 33/2005/TT-BTC dated April 29, 2005, issued by the Ministry of Finance, guiding certain provisions of the financial management regulations for state-owned companies and state capital investment in other enterprises; Circular No. 87/2006/TT-BTC dated September 27, 2006, issued by the Ministry of Finance, amending and supplementing Circular No. 33/2005/TT-BTC dated April 29, 2005, issued by the Ministry of Finance, guiding certain provisions of the financial management regulations for state-owned companies and state capital investment in other enterprises; The contents of financial management guidance for state-owned companies issued by the Ministry of Finance and relevant sectors that are inconsistent with the guidance provided in this Circular./.