Decree No. 36/2021/NĐ-CP Issuing the Financial Management Regulation of the Parent Company - Vietnam Oil and Gas Group

DECREE

ISSUING REGULATIONS ON FINANCIAL MANAGEMENT

 OF THE PARENT COMPANY - VIETNAM OIL AND GAS CORPORATION GROUP

On the basis of Law on Government Organization dated June 19, 2015; Law Amending and Supplementing Certain Provisions of the Law on Government Organization and the Law on Local Administration dated November 22, 2019;

On the basis of Law on Management and Use of State Capital for Investment in Production and Business Activities of Enterprises dated November 26, 2014;

On the basis of The Government promulgates this Decree amending and supplementing certain articles and appendices of Decree No. 58/2021/NĐ-CP dated June 10, 2021 of the Government on the operation of credit information service provision (hereinafter referred to as Decree No. 58/2021/NĐ-CP).

On the basis of Petroleum Law on July 6, 1993; Law amending and supplementing certain articles of the Petroleum Law on June 9, 2000 and June 3, 2008;

At the proposal of the Minister of Finance;

The Government issues the Decree on Regulations on Financial Management of the Parent Company - Vietnam Oil and Gas Corporation Group.

Article 1. Attached to this Decree are the Regulations on Financial Management of the Parent Company - Vietnam Oil and Gas Corporation Group.

Article 2. This Decree takes effect from May 15, 2021, applicable from the fiscal year 2021, replacing Decree No. 06/2015/NĐ-CP dated January 13, 2015 issued by the Government on Financial Regulations of the Parent Company - Vietnam Oil and Gas Corporation Group.

From January 1, 2016 until the date this Decree takes effect, the Parent Company shall implement the provisions of Decree No. 06/2015/NĐ-CP. For matters not covered by Decree No. 06/2015/NĐ-CP, they shall be implemented according to the relevant laws at the time from January 1, 2016 to the date this Decree takes effect.

Article 3. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under central city administrations; Chairpersons of the Board of Directors, General Directors of the Vietnam Oil and Gas Corporation Group are responsible for implementing this Decree.

REGULATIONS

FINANCIAL MANAGEMENT OF THE PARENT COMPANY - VIETNAM OIL AND GAS CORPORATION GROUP
(Attached to Decree No. 36/2021/NĐ-CP

dated March 29, 2021 of the Government)

PART I
GENERAL PROVISIONS

Article 1. Scope and Applicability

Article 1. These regulations govern financial management for the Parent Company - Vietnam Oil and Gas Corporation Group, including the management of capital invested by the Parent Company in other enterprises established and operating in accordance with Vietnamese law or the law of the place where the enterprise is established.

Article 2. The Parent Company - Vietnam Oil and Gas Corporation Group (including representatives of the Parent Company's capital in other enterprises) is responsible for implementing financial management and investment regulations in other enterprises as stipulated in the Law on State Capital Investment Management and Usage in Enterprises and these regulations. For matters not covered by these regulations, they shall be implemented according to relevant legal documents.

Article 3. Based on the regulations on state capital investment in enterprises and financial management of enterprises wholly owned by the state in the Law on State Capital Investment Management and Usage in Enterprises, government regulations, other related legal regulations, and these regulations, the Parent Company is responsible for developing and issuing financial management regulations for wholly-owned subsidiaries.

Article 2. Interpretation of Terms

Point 1. "Vietnam National Oil and Gas Group" refers to a group of enterprises without legal personality (hereinafter referred to as the Group), including: the Parent Company; member enterprises of the Group; associated enterprises of the Group.

Point 2. "Parent Company - Vietnam Oil and Gas Corporation Group" is a first-tier enterprise within the Vietnam National Oil and Gas Group, established pursuant to Decision No. 199/2006/QĐ-TTg dated August 29, 2006, and converted into a limited liability company wholly owned by the state pursuant to Decision No. 924/QĐ-TTg dated June 18, 2010 of the Prime Minister, having legal personality, being financially autonomous in business operations, and having rights and obligations as prescribed by law (hereinafter referred to as the Parent Company).

Point 3. "Host country oil and gas profit" refers to the portion of profit after tax distribution to the host country from oil and gas contracts, excluding profits from free-of-charge transferred associated gas.

Point 4. "Oil and gas contractor profit share" refers to the post-tax profit distributed to the contractor from oil and gas contracts.

Point 5. "Oil and gas recovery costs" refer to the expenses that the Parent Company is permitted to recover from oil and gas contracts to offset production costs.

Point 6. "Signature fee" is the amount that the contractor must pay to the host country upon signing oil and gas contracts.

Point 7. "Commercial discovery bonus" is the amount that the contractor must pay to the host country after the audit results show that the field has commercial value and the contractor declares a commercial discovery.

Point 8. "Production bonus" is the amount that the contractor must pay to the host country corresponding to each specified production level in the oil and gas contract.

Point 9. "Reading and using oil and gas data fee" is the amount that the contractor must pay to the Parent Company to read and use existing oil and gas data and the usage fee for oil and gas data obtained/shared from non-exclusive seismic contracts.

Point 10. "Training commitment" is the amount committed by the contractor in the oil and gas contract for the purpose of training oil and gas staff.

Point 11. "Minimum obligation breach penalty" is the amount that the contractor must pay to the host country if the contractor terminates the oil and gas contract before fulfilling all minimum obligations stipulated in the contract.

Point 12. "Host country" refers to the Socialist Republic of Vietnam.

Point 13. "Contractor" refers to organizations or individuals, either domestic or foreign, permitted to conduct oil and gas activities based on oil and gas contracts.

Chapter II
FINANCIAL MANAGEMENT OF THE PARENT COMPANY

Section 1. MANAGEMENT AND USE OF CAPITAL AT THE PARENT COMPANY

Article 3. Capital of the Parent Company

The capital of the Parent Company includes state capital at the Parent Company, capital raised by the Parent Company itself, and other sources of capital as prescribed by law. The Parent Company is responsible for organizing accounting and monitoring each source of capital separately in accordance with current regulations.

Article 4. Registered Capital of the Parent Company

1. The registered capital of the Parent Company is approved by the Prime Minister in accordance with the provisions of the Law on Management and Use of State Capital for Investment in Business Operations at Enterprises and is recorded in the Charter of the Vietnam Oil and Gas Group (hereinafter referred to as the Charter of the Parent Company).

2. During the course of business operations, depending on the development requirements at different periods, the Prime Minister decides on adjustments to the registered capital of the Parent Company based on the proposal of the State Capital Management Agency (hereinafter referred to as the Representative Owner Entity), opinions from the Ministry of Finance and the Ministry of Planning and Investment. In cases where additional registered capital is invested at a level equivalent to that of a national key project, the Prime Minister decides on the additional investment after the National Assembly approves the investment policy.

The procedures for preparing, approving, and implementing additional registered capital investments for the Parent Company shall be carried out in accordance with current regulations.

When adjusting the registered capital, the Parent Company registers with the business registration authority and announces the adjusted registered capital.

3. In cases where the Parent Company does not have a need to supplement registered capital or does not develop a plan for supplementary registered capital investment in accordance with the laws on management and use of state capital for investment in business operations at enterprises and Article 19 of this Regulation, and if the equity capital (including owner investment capital, development fund, and construction investment capital) reported in the annual financial statement of the Parent Company exceeds the approved registered capital level of the previous year, the Representative Owner Entity is responsible for reviewing, deciding, and directing the Parent Company to remit the difference between equity capital and registered capital to the state budget.

Article 5. Rights and Obligations of the Parent Company in the Use of Capital and Funds Managed by the Parent Company

1. The Parent Company has the right to manage and use the capital invested by the State and other lawful sources of capital for production and business activities within the scope and industries as prescribed by law and stipulated in the Charter of the Parent Company with the goal of generating profits; it is responsible before the owner for the preservation and development of capital, the effectiveness of capital use; and it ensures the rights of those related to the Parent Company such as creditors, customers, and employees according to contracts concluded.

2. The use of capital and funds for construction investment must comply with the legal regulations on investment management and construction.

3. The Parent Company directly manages and accounts for all the capital contribution of the Government of Vietnam in the Vietnam-Russia Joint Venture "Vietsovpetro" pursuant to the Inter-Government Agreement signed on December 27, 2010 and Vietnamese law. The Parent Company is responsible for managing and supervising the effective operation of the Vietnam-Russia Joint Venture "Vietsovpetro" in accordance with current legal regulations.

4. The Parent Company is responsible for preserving state capital at the Parent Company through measures prescribed by the Government regarding state capital investment in enterprises and financial management for enterprises owned by the State specifically:

a) Implementing the system of capital and asset management, profit distribution, other financial management systems, and accounting systems as prescribed by law.

b) Purchasing insurance for assets in accordance with the law.

c) Promptly handling the value of lost assets, unrecoverable debts, and setting aside risk reserves as prescribed by current regulations, including:

- Inventory write-down reserve;

- Reserve for doubtful receivables;

- Reserve for long-term financial investment write-down;

- Warranty reserve for products, goods, and construction projects.

d) Other measures for preserving equity capital at enterprises as prescribed by law.

5. The Parent Company must report all changes in equity capital to the Representative Owner Entity and the financial authority for monitoring and supervision. Every six months and annually, the Parent Company must evaluate the effectiveness of capital use through the capital preservation ratio as prescribed.

6. When evaluating the degree of capital preservation and operational efficiency, the Parent Company may exclude the influence of the following factors:

a) Due to the State's transfer of equity capital;

b) Due to objective reasons such as natural disasters, epidemics, wars, and other force majeure causes;

c) Due to expanding production development according to approved planning and plans, affecting profits in the first two years after the investment project is put into use;

d) Due to the State's adjustment of prices (for products with state-set prices) affecting enterprise revenue or having to implement economic and social goals as directed by the Government and the Prime Minister.

Article 6. Capital Mobilization

1. The Parent Company has the right to borrow capital from credit organizations, financial institutions; borrow from domestic organizations, individuals outside enterprises, and employees; issue corporate bonds and other forms of capital raising in accordance with the law.

2. Principles of capital raising:

a) Based on the five-year investment and development strategy and annual production and business plans, and investment plans of the Parent Company;

b) The capital-raising plan must ensure the ability to repay debt;

c) The person approving the capital-raising plan must be responsible for supervising and ensuring that the raised capital is used for its intended purpose and is effective;

d) For the raising of capital from domestic economic organizations and individuals, the Parent Company must implement through a loan agreement with the lending organization or individual in accordance with the law.

In cases where capital is borrowed from the State's development investment credit fund, it shall be implemented in accordance with the laws on development investment credit and other relevant laws.

d) For the mobilization of capital from foreign organizations and individuals, borrowing or issuing government-guaranteed bonds, the Parent Company shall implement in accordance with the laws on public debt management and other relevant laws;

e) For the self-borrowing and self-repayment of foreign capital by the Parent Company, it shall be implemented in accordance with the laws on the management and repayment of foreign debts by enterprises not guaranteed by the Government, laws on the management and use of state capital for production and business operations at enterprises, and other related laws, among which, the Organizational Body of the Owner shall approve the loan proposal to submit to the Ministry of Finance for comments in accordance with the provisions of Government Decree No. 10/2019/NĐ-CP dated January 30, 2019 on the exercise of rights and responsibilities of state-owned enterprise owners and other amending, supplementing, and replacing documents;

The mobilization of capital through the issuance of corporate bonds shall be carried out in accordance with the laws;

The Parent Company shall use borrowed funds for their intended purposes, bear all risks itself, ensure the effective use of raised capital, not change the ownership form of the Parent Company, and be responsible under the law during the process of raising, managing, using borrowed funds, and repaying debts on time;

3. The authority to approve loan contracts shall be implemented in accordance with the Charter of the Parent Company;

In cases where the total capital mobilization needs of the Parent Company exceed the authorized level; or mobilizing capital from foreign organizations and individuals, the Board of Members of the Parent Company must report to the Organizational Body of the Owner for examination and approval;

The Organizational Body of the Owner has the responsibility to notify the Ministry of Finance to coordinate in monitoring and supervising;

4. The Parent Company may guarantee loans for its subsidiaries from credit and financial institutions according to the following principles:

a) The enterprise receiving the guarantee must have sound financial conditions, without overdue debts; the guarantee for borrowing to implement investment projects must be based on the assessment of the project's effectiveness and must include a commitment to repay the guaranteed loan on schedule;

b) The total value of guaranteed loans for a subsidiary held 100% by the Parent Company shall not exceed the equity value of the subsidiary as reported in the most recent quarterly or annual financial statement at the time of guarantee;

c) The total value of guaranteed loans for subsidiaries held more than 50% by the Parent Company shall not exceed the actual contribution value of the Parent Company at the time of guarantee;

5. The total amount of capital raised to serve the production and business operations of the Parent Company (including guaranteed loans for subsidiaries conducted by the Parent Company) must ensure that the debt-to-equity ratio does not exceed three times the equity value recorded in the most recent quarterly or annual financial statement of the Parent Company at the time of capital raising, as stipulated by the authority. Among these:

a) The equity value recorded on the Balance Sheet in the quarterly or annual financial statement of the Parent Company is determined to exclude the "Other Operating Funds and Reserves" item;

b) The liabilities recorded on the Balance Sheet in the quarterly or annual financial statement of the Parent Company are determined to exclude the items: "Reward and Welfare Fund", "Price Stabilization Fund" (if any), "Science and Technology Development Fund".

Article 7. Transfer of loan debt when transferring projects

1. In cases where credit contracts are borrowed by the Parent Company for investment in construction/projects which are then transferred to subsidiaries according to the decision/approval of the competent authority, the Parent Company must negotiate with lending organizations and guarantors to change the borrower subject of the loan contract to the companies receiving the projects from the Parent Company.

2. If lending organizations and guarantors do not agree to change the borrower subject, the Parent Company will continue to be listed as the borrower subject to repay the loan debts to financial institutions and sign an agreement to transfer the loan debts to the companies receiving the projects in accordance with the provisions of the law, with the following main contents:

- The companies receiving the projects transferred by the Parent Company have the responsibility to manage, record the increase in fixed assets, and implement depreciation in accordance with regulations.

- The terms of the loan transfer agreement must ensure the interests of the Parent Company compared to the loan contract between the Parent Company and financial institutions.

- Periodically, the companies receiving the projects/machinery must transfer to the Parent Company an amount corresponding to the debt (including principal and interest) that the Parent Company has to pay to the lending organizations and the expenses that the Parent Company has to bear to serve the borrowing and repayment of the loan for the project transferred by the Parent Company to the management company.

- For the transfer of loan debts under the form of signing a loan transfer agreement with the companies receiving the projects, the Parent Company has the responsibility to supervise and evaluate the ability to repay debts of the companies receiving the projects to ensure solutions to guarantee payment of debts.

Article 8. Investment and Transfer of Capital Outside the Parent Company

1. Principles of investing capital outside the Parent Company:

a) The Parent Company is permitted to use its capital, assets, and land use rights to invest outside in accordance with the Law on Management and Use of State Capital for Production and Business at Enterprises, investment laws, land laws, and other relevant laws;

b) The Parent Company's external investments must comply with the law, the Articles of Association of the Parent Company approved by the Government; be consistent with the strategy, planning, five-year investment development plan, annual production and business plan of the Parent Company, and be consistent with the main business sector without affecting the production and business activities of the Parent Company, ensuring effectiveness, preservation, and development of investment capital;

c) The Parent Company shall not contribute capital or invest in real estate sectors, nor shall it contribute capital or purchase shares in banks, insurance companies, securities companies, venture capital funds, stock investment funds, or securities investment companies, except in special cases decided by the Prime Minister;

For capital contributions and investments in the aforementioned sectors that do not fall under the special permission granted by the Prime Minister, the Parent Company shall be responsible for formulating restructuring plans and fully withdrawing the invested capital in accordance with regulations;

d) The Parent Company shall not contribute capital, purchase shares, or acquire entire enterprises where the managers or representatives of those enterprises are spouses, biological or adopted parents, biological or adopted children, full brothers or sisters, half-brothers or sisters, brothers-in-law, sisters-in-law, or sisters-in-law of the Chairman and members of the Board of Members, Supervisors, General Director, Deputy General Director, or Chief Accountant of the Parent Company;

đ) The Parent Company shall not contribute capital together with subsidiaries to establish joint-stock companies or limited liability companies, or enter into business cooperation contracts, except for exploration and exploitation oil and gas contracts as stipulated by the Petroleum Law;

2. Forms of investment outside the Parent Company:

a) Establishing a single-member limited liability company;

b) Contributing capital to establish a joint-stock company or a limited liability company; contributing capital through a business cooperation contract that does not form a new legal entity, including capital contribution through calls for capital by the project manager or the managing legal entity of the oil and gas project;

c) Purchasing shares in joint-stock companies, purchasing equity or contributing capital in limited liability companies or partnership companies;

d) Acquiring entire enterprises;

đ) Purchasing treasury bills, bonds;

e) Other forms of investment as prescribed by law;

3. Authority to decide on investment outside the Parent Company shall be implemented in accordance with the Articles of Association of the Parent Company and the law on management and use of state capital for production and business at enterprises;

In cases where the value of the investment project outside the enterprise exceeds the limit set for the Board of Members, joint venture investment projects of the enterprise with foreign investors in Vietnam, or investment projects in other enterprises to provide public goods and services, the Board of Members of the Parent Company shall report to the Representative Body of the Owner for examination and approval before making a decision;

4. The Representative Body of the Owner shall take the lead and coordinate with relevant ministries and sectors to inspect and supervise the management and use of capital invested outside the parent company in accordance with regulations. In cases where the Parent Company engages in external investment activities that do not meet the specified criteria but fails to adjust the investment structure as stipulated in Clause 1 of this Article, the Representative Body of the Owner shall take the lead and coordinate with the Ministry of Finance to report to the Prime Minister for examination and decision, and handle the responsibility of the Board of Members of the Parent Company in accordance with current laws;

5. Transfer of Investments Outside the Parent Company:

The transfer of investments outside the Parent Company (including the transfer of rights to purchase shares, rights to contribute capital to joint-stock companies, and limited liability companies with two or more shareholders) shall be carried out in accordance with the Law on Management and Use of State Capital for Production and Business at Enterprises, the Enterprise Law, the Securities Law, and other current laws, and must adhere to the following principles:

- Compliance with laws on enterprises, securities, and other relevant laws;

- Fully reflecting the actual value of the enterprise, including the value of land use rights in accordance with the law on land.

- Ensuring the principles of market, transparency, and fairness;

- The determination of the initial price for the parent company's capital before organizing public auction, competitive bidding, or negotiation shall be carried out through an appraisal organization with appraisal functions as prescribed by the law on appraisal to ensure the full determination of the actual value of the parent company's capital at the enterprise, including the value created by the right to use land transferred or legally received under the provisions of the law on land and the value of intellectual property rights (if any) of the enterprise according to the law at the time of transferring capital.

6. In the case of using the parent company's capital to invest abroad, it must comply with the provisions of the Law on Management and Use of State Capital for Production and Business at Enterprises, the provisions of the law on investment, the law on foreign exchange management, and other relevant laws on overseas investment.

Article 9. Management of Accounts Payable

The parent company has the responsibility to organize and implement the provisions of the law on accounts payable management; including:

1. Establishing, issuing, and implementing regulations on accounts payable management. The accounts payable management regulation stipulates the responsibilities of collectives and individuals in tracking, reconciling, confirming, and paying off debts.

2. Maintaining complete records of all accounts payable, including interest payable.

3. Tracking accounts payable by debtor category, regularly classifying debts; developing plans to pay off debts, balancing cash flow to ensure debt payment; paying off debts according to the agreed deadlines. Regularly reviewing, evaluating, and analyzing debt repayment capacity, identifying early signs of difficulties in debt repayment to promptly address them, preventing overdue debts from arising; accounts payable that do not need to be paid or have no debtor shall be recorded as other income of the parent company.

4. In cases where management leads to the occurrence of overdue accounts payable or debts without repayment capability, depending on the nature and degree of violation, the Board of Members of the parent company and related parties must compensate for losses and be subject to legal and charter provisions of the parent company.

Section 2

MANAGEMENT AND USE OF THE PARENT COMPANY'S ASSETS

Article 10. Assets of the Parent Company

1. The assets of the parent company are formed from state capital invested in the parent company, borrowed capital, and other lawful sources directly managed and used by the parent company. The assets of the parent company include:

a) Fixed assets, real estate investments, long-term receivables, other long-term assets, and short-term assets of the parent company's office, dependent accounting units, project management boards, and public service units;

b) Long-term financial investments including: capital of the parent company invested in a limited liability company wholly owned by the parent company; contributions in joint-stock companies, joint ventures, and other enterprises; contributions in business cooperation contracts; long-term bond and bill investments, and other long-term investments;

c) The parent company represents the host country in signing oil and gas contracts under the Oil Law, reviews, and transfers subjects in gas purchase contracts from fields to the parent company.

2. The assets of the parent company do not include the assets of a limited liability company wholly owned by the parent company, and the assets of a joint-stock company in which the parent company holds controlling shares.

3. For oil and gas assets left behind by contractors for the host country that have not been recovered, they shall be handled according to the decision of the competent authority.

Article 11. Fixed Assets, Investment in Fixed Assets, Depreciation of Fixed Assets

1. The criteria for determining fixed assets shall be implemented in accordance with the current regulations of the Ministry of Finance on the establishment, management, and utilization of depreciation of fixed assets.

2. The authority to decide on investment projects, construction, procurement of fixed assets shall be carried out in accordance with the Charter of the Parent Company.

3. The procedures for investment shall be carried out in accordance with the laws on project management and construction.

a) For investments and procurements of fixed assets conducted by the Parent Company, the investment and construction process must comply with the laws on construction, laws on bidding, and other relevant laws.

b) For investments and procurements of fixed assets from outside sources for use, the Parent Company must comply with the laws on bidding and other relevant laws.

c) For investments, procurements, and usage of transportation means (cars) serving the work of leadership positions and general work, the Parent Company must ensure compliance with the standards and quotas for procurement and usage set by the Government to ensure transparency, thrift, and efficiency.

4. The person deciding on investment projects, construction, purchase, and sale of fixed assets shall bear responsibility under the law if the decision is made beyond their authority or if the fixed assets invested in, purchased, or sold cannot be utilized or are not utilized effectively.

5. The Parent Company may lease assets (including financial leasing) to serve production and business activities in accordance with its needs and ensure effective business operations. The leasing and use of leased assets must comply strictly with the Civil Code and other relevant laws.

Article 12. Leasing, Pledging, and Hypothecation of Assets

1. The Parent Company has the right to lease, pledge, and hypothecate its assets according to the principle of effectiveness, capital preservation, and development in accordance with the law.

2. The authority to decide on leasing, pledging, and hypothecating assets shall be carried out in accordance with the Charter of the Parent Company.

3. The use of assets for leasing, pledging, and hypothecation must comply strictly with the provisions of the Civil Code and other relevant laws.

Article 13. Liquidation and Sale of Fixed Assets

1. The Parent Company has the right and responsibility to actively liquidate and sell obsolete, technologically outdated, or unused fixed assets to recover capital in accordance with the principles of transparency, capital preservation, and current laws.

The liquidation and sale of fixed assets attached to land must be carried out in accordance with the laws on land.

2. The authority to decide on the liquidation and sale of fixed assets shall be carried out in accordance with the Charter of the Parent Company.

3. Principles of liquidation and sale of fixed assets:

a) In cases where the Parent Company is unable to recover sufficient capital from the sale of fixed assets, the Parent Company must clearly explain the reasons for the inability to recover capital and report to the Representative Body of Shareholders and the Ministry of Finance before selling the fixed assets to ensure supervision.

b) Specifically, in cases where newly invested or purchased fixed assets have been put into use within three years but have not achieved economic efficiency as approved by the competent authority, and the Parent Company does not wish to continue using them, leading to insufficient capital recovery from the sale of assets, resulting in the Parent Company being unable to repay loans according to loan agreements, then the responsibilities of those involved must be clarified and reported to the Representative Body of Shareholders for handling in accordance with the law.

c) For the sale and liquidation of fixed assets with special characteristics of the oil and gas industry, in addition to complying with this Decree, they must also follow the relevant laws.

4. Methods of liquidation and sale of fixed assets:

The liquidation and sale of fixed assets shall be carried out through public auction through an organization with the function of auctioning assets or organized publicly by the Parent Company in accordance with the procedures and formalities stipulated by the laws on asset auctions. In cases where the remaining value of fixed assets recorded in accounting books is less than 100 million VND, the General Director decides to choose between auction or negotiation sales without being lower than market prices. If there is no transaction of such fixed assets on the market, the Parent Company can hire an organization with the function of valuation to determine the price as the basis for selling the assets through the above methods. In cases of transferring fixed assets attached to land, it must be carried out in accordance with the laws on land.

5. Procedures and formalities for liquidation and sale of assets:

a) The Chairman of the Board of Directors of the Parent Company decides to establish a liquidation and sale committee at the Parent Company. The committee consists of: the General Director, the Chief Accountant, heads of related departments; representatives of the Trade Union Committee at the Parent Company, and some experts familiar with the technical features of fixed assets (if necessary). The tasks of the liquidation and sale committee of the Parent Company include:

- Determining the technical condition and residual value of the assets to be liquidated and sold;

- Determining the causes and responsibilities of collectives and individuals related to the situation where newly invested fixed assets do not generate economic efficiency and must be sold but cannot recover sufficient investment capital, or fixed assets that have not been fully depreciated are damaged and cannot be repaired and must be liquidated and sold to report to the owner for handling in accordance with the law;

- Organizing the determination or hiring an organization with the function of valuation to determine the value that can be obtained from the liquidation and sale of assets;

- Organizing public auctions or hiring organizations with the function of auctioning various types of assets to be liquidated and sold in accordance with relevant laws;

- The liquidation and sale committee will conclude its activities after completing the liquidation and sale of fixed assets of the Parent Company.

b) In the case where the Parent Company implements an investment construction project approved by the competent authority, if the Parent Company must dismantle or cancel old fixed assets, the liquidation and accounting of old fixed assets when dismantling or canceling shall be carried out as stipulated for the liquidation of fixed assets under this Article.

Article 14. Management of Inventory Goods

1. Inventory goods include goods purchased for sale that remain in stock, raw materials, materials, tools, equipment in stock, or goods that have been purchased but are still in transit, unfinished products in the production process, completed products not yet warehoused, finished products in stock, and finished products awaiting sale.

2. The Parent Company has the right and is responsible for promptly handling inventory goods that are substandard, deteriorated, technologically obsolete, stagnant, or slow-moving to recover capital. The authority to decide on handling such goods is governed by Clause 2 of Article 13 of this Charter.

3. At the end of the accounting period, if the original cost of inventory goods recorded in the accounting books exceeds their realizable value, the Parent Company must establish a provision for the reduction in value of inventory goods according to the regulations.

Article 15. Management of Receivables

The Parent Company is responsible for:

1. Establishing and promulgating management regulations for receivables, assigning and clearly defining the responsibilities of collectives and individuals in tracking and recovering receivables.

2. Maintaining ledgers to track receivables by debtor category; regularly classifying receivables (current receivables, difficult-to-collect receivables, unrecoverable receivables), urging the recovery of receivables.

3. Having the right to sell receivables, including overdue receivables, difficult-to-collect receivables, and unrecoverable receivables, to recover capital, in accordance with the provisions of the law. The Parent Company may only sell receivables to economic organizations with the function of buying and selling receivables, and may not directly sell receivables 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 receivables leads to losses, capital loss, or loss of solvency resulting in dissolution or bankruptcy, the Board of Members, General Director of the Parent Company, and those directly related to the generation of receivables must compensate for damages according to the law, the Charter of the Parent Company, and will be subject to legal and charter sanctions based on the nature and severity of the violation.

4. Difficult-to-collect receivables are receivables that have been overdue for more than six months (based on the initial repayment period, excluding extended repayment periods), and despite measures taken by the Parent Company such as reconciliation and urging payment, they remain unrecovered; or receivables that are not yet due but the debtor is an economic organization facing bankruptcy, undergoing dissolution procedures, the debtor is missing, has fled, is being prosecuted, detained, tried, or has died. The Parent Company must establish a provision for difficult-to-collect receivables according to current financial regulations.

5. The Parent Company is responsible for handling unrecoverable receivables. The amount of unrecoverable receivables, after deducting compensation from related individuals and collectives, is offset against the provision for difficult-to-collect receivables. Any shortfall is accounted for as business expenses of the Parent Company.

For unrecoverable receivables handled as described above, the Parent Company must monitor them within its management system, disclose them in the notes to the Financial Statements, and organize their recovery. Recovered amounts are recorded as other income of the Parent Company.

6. The Board of Members and General Director of the Parent Company are responsible for promptly handling and reporting difficult-to-collect receivables and unrecoverable receivables.

Article 16. Inventory of Assets

1. The parent company must organize regular or extraordinary inventory to determine the quantity of assets (fixed assets and long-term investments, current assets and short-term investments), reconcile accounts payable and receivable when closing the accounting books to prepare financial statements as prescribed; when implementing decisions on division, separation, merger, consolidation, or ownership conversion; after natural disasters, enemy attacks, or for other reasons causing asset fluctuations of the parent company; or as prescribed by the State. For excess, missing assets, and uncollectible debts, the causes, responsibilities of those involved, and material compensation levels must be clearly determined according to regulations.

2. Handling Asset Losses

a) Handling asset losses after inventory:

Asset loss refers to lost, missing, damaged, deteriorated, obsolete, or surplus assets identified during regular and extraordinary inventories. The parent company must determine the value of the loss, the cause, responsibility, and handle it as follows:

- If the cause is subjective, the person responsible for the loss must compensate. The Board of Members decides the level of compensation according to the law and bears responsibility for the decision made;

- Insured assets, if lost, will be handled according to the insurance contract;

- The value of the asset loss, after compensating with personal or collective compensation, or insurance organization compensation if insufficient, shall be recorded as expenses for the period. In cases where the compensation amount cannot be immediately determined at the time of the accounting period when the asset loss occurs, it will be recognized as other income for the accounting period when the compensation amount is determined;

- In special cases caused by natural disasters or force majeure resulting in severe damage that the parent company cannot self-repair, the Board of Members of the parent company develops a loss handling plan to submit to the Prime Minister and send to the Owner's Representative Agency and the Ministry of Finance. After receiving opinions from the Owner's Representative Agency and the Ministry of Finance, the Prime Minister will decide on the handling of the loss within their authority;

- The parent company has the responsibility to promptly handle asset loss items; if asset loss items are not handled, the Board of Members and General Director of the parent company will bear responsibility before the Owner's Representative Agency as in the case of non-truthful reporting of the parent company's financial situation.

b) Excess assets after inventory:

Excess assets after inventory refer to the difference between the actual inventory assets and the recorded assets in the accounting books. In cases where the cause of excess assets is not clearly determined, the value of the excess assets will be recorded as other payables or payments. If the cause of the excess assets is determined and there is a processing record, the accounting will be based on the processing decision.

Article 17. Revaluation of Assets

1. The parent company must revalue assets in the following situations:

a) Pursuant to the decision of a competent state agency;

b) Implementing business restructuring, ownership conversion, or business form conversion as prescribed by law;

c) Using assets for investment outside the parent company;

d) Other cases as prescribed by law.

2. The revaluation of assets must comply with the State's regulations. Any increases or decreases in value due to the revaluation of assets as stipulated in Clause 1 of this Article shall be implemented according to the State's regulations for each specific case.

Section 3.

FINANCIAL INCOME AND EXPENSE REGIME

Article 18. State revenues

1. Taxes and budget revenues must be paid according to the provisions of the law.

2. Price differential revenue from gas pursuant to the Prime Minister's decision; revenue from associated gas at the White Tiger field and other fields according to current regulations.

3. Revenue into the state budget of 100% interest on oil and gas from the host country's share from product-sharing contracts (after deducting 1.5% for the parent company to cover management and supervision costs of oil and gas contracts), interest on oil and gas and other shares from the Vietnam-Russia Joint Venture "Vietsovpetro", and fees for reading and using oil and gas documents.

4. Revenue into the state budget of 100% of various oil and gas commissions (signature commission, discovery commission, production commission...); compensation amounts due to the contractor's failure to fully meet minimum commitments under oil and gas contracts.

5. Annually, unless otherwise specified by the Government, the parent company must develop a plan on foreign currency expenditure needs to report to the Ministry of Finance and the State Bank of Vietnam. Based on the foreign currency expenditure needs, the parent company may use a portion of the foreign currency required to be submitted to the state budget to balance its foreign currency expenditure needs but not exceeding 30% of the parent company's foreign currency expenditure needs. The remaining amount, the parent company must self-balance. Corresponding revenues submitted to the state budget for the aforementioned foreign currency will be converted into Vietnamese dong according to the stipulated regulations.

Based on the state budget's ability to balance foreign currencies and the parent company's foreign currency expenditure needs, the Ministry of Finance shall consider, decide, and notify the parent company's ability to use a portion of the annual foreign currency required to be submitted to the state budget.

The parent company shall conduct foreign currency receipts and payments transactions in accordance with the laws on foreign exchange management.

Article 19. Management and use of funds reinvested by the State in the parent company

1. The State reinvests the host country's profit back to the parent company from the state budget in the form of additional capital contribution to the parent company according to the provisions of the State Budget Law and the Law on Management and Use of State Capital Investment in Production and Business Activities of Enterprises.

2. The process and procedures for additional capital contributions to the parent company from the host country's profit follow the legal regulations on the management and use of state capital investment in production and business activities of enterprises and the following provisions:

a) Based on the oil and gas industry development strategy, the five-year production and business development plan approved by the competent authority, the ability to mobilize and balance sources of capital, the parent company builds an additional capital contribution investment plan to report to the State Capital Management Committee for submission to the Prime Minister for consideration and decision;

b) Annually, based on the need and the approved additional capital contribution investment plan by the Prime Minister, the parent company forecasts the level of additional capital contribution to send to the State Capital Management Committee for comments, sends to the Ministry of Finance and the Ministry of Planning and Investment for consolidation into the state budget expenditure estimate (reinvestment of host country's profit), reports to the Government for submission to the National Assembly for consideration and decision.

Based on the annual state budget investment estimate for additional registered capital from development investment expenditures (reinvestment of host country's profit) decided by the National Assembly, the Prime Minister assigns, the State Capital Management Committee directs the parent company to prepare the additional registered capital investment dossier in accordance with the legal regulations on the management and use of state capital investment in production and business activities of enterprises, and the state budget law.

3. The Board of Directors of the parent company is responsible for managing, using, preserving, and developing the reinvested host country's oil and gas profit according to the legal provisions.

The additional registered capital from the reinvested host country's oil and gas profit for the parent company shall be used to participate in implementing key oil and gas projects (according to criteria and list proposed by the Ministry of Industry and Trade and approved by the Prime Minister), oil and gas exploration projects serving national defense and security purposes, and other projects approved by the Prime Minister.

Article 20. Revenue of the Parent Company

The revenue of the Parent Company includes revenue from production and business activities, financial activity revenue, and other income generated by the Parent Company and its dependent accounting units.

1. Revenue from regular production and business activities is the total amount receivable arising during the period, including:

a) Money receivable from selling products, goods, and providing services by the Parent Company, including 1.5% of the host country's oil, gas water royalties from oil and gas contracts for the Parent Company to offset management and supervision costs of oil and gas contracts;

b) Post-tax oil and gas interest revenue that the Parent Company receives as a contractor;

c) Oil and gas revenue recovered from costs obtained from oil and gas contracts as a contractor;

d) Other revenues of the Parent Company with the role of a contractor in oil and gas contracts.

2. Financial activity revenue includes:

a) Revenue arising from copyright fees; interest from lending capital; deposit interest; deferred payment sales interest, installment sales interest;

b) Exchange rate differential interest, including interest from selling foreign currency;

c) Differential interest from transferring investment in subsidiaries, associated companies, and investments outside the Parent Company;

d) Dividends, profits distributed in cash from investing capital in subsidiaries, associated companies, and investments outside the Parent Company; including profits and dividends distributed from the Parent Company's overseas investment activities but retained for investment purposes (either direct investment or project loans) or used for other projects;

For profits distributed from overseas investment activities, the Parent Company shall declare and pay taxes according to the Law on Corporate Income Tax;

đ) Interest from oil and gas and other revenues shared with Vietnam from the Vietnam-Russia Joint Venture "Vietsovpetro";

e) Other revenues from the Vietnam-Russia Joint Venture "Vietsovpetro" and from oil and gas contracts as prescribed;

g) Other revenues as prescribed.

3. Other income includes:

a) Revenue from liquidation and sale of fixed assets;

b) Compensation money from individuals, organizations, insurance organizations; debts now lost their owners; customer penalty fees due to breach of contract;

c) Other revenues recorded as increased income as prescribed.

4. Revenue and other income for determining corporate income tax obligations shall be implemented according to the Law on Corporate Income Tax and guiding documents of the Law on Corporate Income Tax.

Article 21. Expenses and Expense Management of the Parent Company

1. Expenses of the Parent Company include production and business activity expenses, other expenses of the Parent Company, dependent accounting units, and affiliated public service units under the Parent Company.

a) Production and business activity expenses:

- Raw material, fuel, power, semi-finished product, and external service purchase costs (based on actual consumption and original cost), tool and equipment depreciation costs, repair costs for fixed assets, pre-provisioned large-scale repair costs for fixed assets.

- Fixed asset depreciation costs calculated according to the current financial regulations.

- Wages and wage-like costs payable to employees decided by the Board of Directors according to the Government's regulations and guidance documents of the Ministry of Labor, War Invalids and Social Affairs.

- Wages and remuneration for enterprise managers and supervisors approved by the Ownership Representative Body after consulting the Ministry of Labor, War Invalids and Social Affairs.

- Costs for implementing employee benefits as prescribed by law, including:

+ Social insurance as prescribed by the Social Insurance Law;

+ Health insurance as prescribed by the Health Insurance Law;

+ Unemployment insurance as prescribed by the Employment Law;

+ Trade union fees as prescribed by the Trade Union Law;

+ Severance pay and job loss compensation as prescribed by the Labor Code;

+ Costs for female workers;

+ Meal allowance as prescribed by law;

+ Occupational safety and health costs as prescribed by the Occupational Safety and Health Law;

+ Other amounts allowed to be spent according to law and labor contracts, collective labor agreements of the Parent Company.

- Transaction, brokerage, hospitality, marketing, trade promotion, advertising, meeting costs calculated based on actual expenses incurred according to the Law on Corporate Income Tax.

- Oil and gas recovery costs corresponding to the oil and gas recovered according to oil and gas contracts.

In cases where, at the end of the oil and gas contract or the development and exploitation project, the contract-based cost recovery is insufficient to cover oil and gas operation costs, the remaining unrecovered costs, after the final project decision and cost settlement by the competent authority, will be allocated to enterprise costs (non-deductible costs when determining taxable income) within no more than five years.

- Non-recoverable costs of overseas oil and gas investment projects implemented according to the Government's regulations on overseas investment in oil and gas activities.

- Other monetary costs include:

+ Taxes, fees, and charges as prescribed by law included in production and business activity costs of enterprises;

+ Land rental fees;

+ Training to enhance management skills and worker expertise;

+ Medical expenses;

+ Environmental protection expenses;

+ Party and mass organization work expenses at the company (the portion of expenses outside the Party and mass organization budget funded from designated sources);

+ Other monetary expenses as prescribed.

- Costs for managing and supervising oil and gas contracts and intergovernmental agreements at the Vietnam-Russia Joint Venture "Vietsovpetro" assigned by the state to the Parent Company to implement.

- Actual value of lost assets and unrecoverable receivables as prescribed.

||| The value of provisions for inventory write-downs, doubtful debts, losses on financial investments, product warranties, construction works, and other provisions as prescribed by law for businesses operating in special sectors.

b) Financial activity expenses, including:

- Expenses or losses related to financial investment activities;

- Borrowing costs and interest expenses;

- Joint venture and associated company contributions;

- Losses from short-term securities transfers;

- Transaction costs for selling securities;

- Provisions for declines in market value of trading securities;

- Provisions for losses on investments in other entities;

- Losses arising from foreign currency sales, exchange rate differences;

- Other expenses as prescribed.

c) Other expenses, including:

- Expenses for the sale or disposal of fixed assets, including the residual value of fixed assets at disposal or sale;

- Expenses for recovering written-off accounts receivable;

- Expenses for collecting fines;

- Penalties for breach of contract after deducting liability settlements (if any);

- Other expenses as prescribed.

2. Not included in the production and business expenses of the Parent Company are items that have been guaranteed by other sources or are not related to production and business operations, including:

a) Costs for purchasing, constructing, and installing tangible and intangible fixed assets;

b) Interest expenses capitalized as part of investment and construction costs;

c) Other expenses unrelated to the Parent Company's business operations; expenses without valid supporting documentation.

3. Deductible expense items for calculating taxable income shall be implemented according to the Corporate Income Tax Law and guiding documents.

4. Handling recovery of project costs for unsuccessful oil exploration, development projects:

Project costs for unsuccessful oil exploration, development projects, after receiving the final decision and cost settlement from the competent authority, shall be allocated to corporate expenses (non-deductible expenses when determining taxable income) within a period not exceeding five years.

5. Management of Parent Company expenses: management of Parent Company expenses shall comply with current regulations for businesses and the following provisions:

a) The Board of Directors of the Parent Company shall issue regulations on managing oil and gas operation expenses after obtaining approval from the State Capital Management Committee;

b) The General Director of the Parent Company shall establish economic-technical norms suitable for the economic-technical characteristics, industry, business model, and management level, to serve as a basis for production control and expense management of the Parent Company, to be submitted for approval by the Board of Directors;

c) The Parent Company must establish labor norms based on established labor norms and state-prescribed salary systems, the General Director of the Parent Company shall establish a planned salary fund to be submitted for approval according to regulations.

Section 4

PROFIT AND ESTABLISHMENT OF FUNDS

Article 22. Profit of the Parent Company

The profit of the Parent Company includes operational production and business profit, profit distributed from capital investment activities, and other profits of the Parent Company and its subsidiaries.

1. Operational production and business profit includes:

a) The difference between revenue from selling products and services and the total cost of goods sold or service costs consumed during the period;

b) The difference between financial activity revenue and financial activity expenses incurred during the period.

2. Other activity profits are the difference between income from other activities and expenses incurred from other activities during the period.

Article 23. Distribution of Profits of the Parent Company

After covering losses from previous years as prescribed by the Law on Corporate Income Tax, setting aside funds as required by law, paying corporate income tax, and deducting other items as stipulated herein, the remaining profits shall be distributed as follows:

1. Dividing profits among capital contributors according to the economic contracts already signed (if applicable).

2. Covering losses from previous years that have exceeded the allowable period for deduction from pre-tax profits as prescribed.

3. The remaining profits after deducting the items specified in Clauses 1 and 2 of this Article shall be distributed in the following order:

a) Allocating up to 30% into the Development Investment Fund.

b) Allocating to the Reward and Welfare Fund for employees of the enterprise:

- For the parent company classified as Type A, allocate three months' salary for both the Reward and Welfare Funds;

- For the parent company classified as Type B, allocate one and a half months' salary for both the Reward and Welfare Funds;

- For the parent company classified as Type C, allocate one month's salary for both the Reward and Welfare Funds;

If the parent company does not classify its type, it shall not establish the Reward and Welfare Funds.

c) Allocating to the Management Reward Fund and Supervisor Reward Fund:

- For the parent company classified as Type A, allocate one and a half months' salary for the management and supervisor reward fund;

- For the parent company classified as Type B, allocate one month's salary for the management and supervisor reward fund;

- For the parent company classified as Type C or if the parent company does not classify its type, it shall not establish the Management Reward Fund and Supervisor Reward Fund.

d) In cases where the remaining profit after allocating to the Development Investment Fund as prescribed in Point a of this Clause is insufficient to allocate to the Reward Fund, Welfare Fund, Management Reward Fund, and Supervisor Reward Fund at the prescribed levels, the parent company may reduce the allocation to the Development Investment Fund to supplement the sources for the Reward Fund, Welfare Fund, Management Reward Fund, and Supervisor Reward Fund at the prescribed levels, but the maximum reduction shall not exceed the amount allocated to the Development Investment Fund in the fiscal year.

đ) The remaining profit after allocating as prescribed in Points a, b, and c of this Clause shall be remitted to the state budget.

4. The Board of Directors of the parent company decides on the distribution of profits and the establishment of the Funds after obtaining approval from the State Capital Representative Agency.

Article 24. Purpose of Using the Funds

1. Principles of using the Funds:

a) The use of these funds must be carried out openly in accordance with the financial transparency regulations, grassroots democracy regulations, and the provisions of the State.

b) The use of funds by the parent company must be in accordance with their intended purposes and target groups.

- The parent company must develop and promulgate internal regulations on the management and use of the funds in compliance with the law before implementation; the regulations must ensure democracy, transparency, and openness within the parent company. Specifically, the regulation on the management and use of the Reward and Welfare Fund must involve the Trade Union Executive Committee of the parent company before promulgation.

- During the fiscal year, the parent company proactively implements temporary allocations of the funds based on the results of its profitable operations and the payment of corporate income tax as prescribed to provide resources for the use of the funds according to the designated purposes.

2. Purpose of Using the Funds:

a) Development Investment Fund:

The Development Investment Fund is used to supplement the registered capital of the parent company and implement development projects serving the main production and business activities of the parent company, and to cover expenses as directed by competent authorities.

b) Research Science and Training Fund of the parent company is formed from the revenue "commitment to training obligations" in oil and gas contracts. The fund is used to maintain and develop scientific research and training for the workforce in the oil and gas industry. The annual surplus of the fund shall not exceed 1% of the registered capital; any excess will be transferred to the Development Investment Fund. In cases where the annual surplus of 1% of the registered capital is insufficient to meet training needs, the Board of Directors shall report to the State Capital Representative Agency for consideration and decision.

The use of the Research Science and Training Fund of the parent company shall be implemented in accordance with the management and use regulations approved and issued by the Board of Directors of the parent company, after obtaining the approval of the State Capital Representative Agency.

c) Scientific and Technological Development Fund is allocated up to 10% of the annual taxable income of the parent company. The Board of Directors decides the annual allocation based on the need for expenditure for this purpose.

The management, use, and settlement of this fund shall follow the guidelines of the Ministry of Finance.

d) Risk Reserve Fund and Environmental Damage Compensation Fund is allocated from the annual operating costs, service fees of the enterprise to compensate partially or fully for environmental damage caused by the enterprise's production and business activities.

The establishment, use, and settlement of this fund shall follow the guidelines of the Ministry of Finance.

đ) Reward Fund of the parent company:

- The Reward Fund of the parent company is established from the post-tax profits of the parent company and other contributions (if any); the fund is used to award end-of-year or regular bonuses based on labor productivity and work achievements of each employee, special bonuses for individuals and teams within the parent company; awards for individuals and units outside the parent company who have made significant contributions to the parent company's business operations and management.

- The recipients of the Reward Fund are all employees of the parent company - Vietnam Oil and Gas Corporation (including managerial staff working under labor contracts).

- The Reward Fund of the parent company - Vietnam Oil and Gas Corporation shall not be used to pay bonuses to appointed managerial staff and supervisors (except for bonuses prescribed by laws on commendation and rewards).

- The bonus level prescribed in this point is decided by the General Director of the parent company and recorded in the Regulation on the Management and Use of the Fund of the parent company.

e) The welfare fund concentrated is established from the post-tax profit of the Parent Company and other sources of contribution (if any). The welfare fund is used for:

- Investing in the construction or repair of welfare facilities of the Parent Company;

- Spending on welfare activities for employees of the Parent Company including managers and supervisors of the Parent Company working under labor contracts and managers and supervisors of the Parent Company appointed by the state;

- Contributing part of the capital to invest in the construction of common welfare facilities within the industry or with other units according to contracts;

- Using part of the welfare fund to provide emergency assistance to employees, including those who have retired, become disabled, fallen into difficult circumstances without support, or engaged in charitable social work;

- The level of expenditure using the fund is decided by the General Director of the Parent Company and recorded in the management and usage regulations of the Parent Company's welfare fund.

g) The bonus fund for Parent Company managers and supervisors is used for:

- Annual bonuses; bonuses at the end of term for the Chairman and members of the Board, directors, Deputy Directors, supervisors, and Chief Accountants of the Parent Company;

- The annual bonus amount and the bonus at the end of term are determined by the State Capital Representative Agency based on criteria for evaluating business managers and supervisors and the effectiveness of the Parent Company's business operations, upon the proposal of the Chairman of the Parent Company's Board of Members;

- In cases where the Chairman and members of the Board of Members, Directors, Deputy Directors, supervisors, and Chief Accountants of the Parent Company are awarded according to the legal provisions on commendation and reward, the Parent Company uses its own commendation fund to pay rewards to the above-mentioned individuals at the levels specified by the legal provisions on commendation and reward for each form of commendation and reward.

h) The financial obligation guarantee fund for oil field cleanup (the field cleanup fund) is set aside by the contractor to ensure financial obligations for field cleanup.

During the period when the field cleanup fund is not used, the Parent Company deposits the fund amount in stable commercial bank accounts. Interest generated annually after fulfilling financial obligations to the state is recorded as an increase in the field cleanup fund.

Management and use of the field cleanup fund shall be carried out in accordance with the laws governing oil and gas activities. The Parent Company is responsible for managing and preserving the field cleanup fund, ensuring its proper use as prescribed.

Section 5

FINANCIAL PLAN, ACCOUNTING REGIME,

 STATISTICS, AUDIT

Article 25. Financial Plan

1. Based on the strategic orientation and production and business development plan of the Parent Company approved by the Prime Minister, the Parent Company establishes a long-term financial plan and a production and business plan consistent with the strategic plan of the Parent Company that has been decided.

2. Annually, based on the five-year production and business plan, based on the capacity of the Parent Company and market demand, the Parent Company establishes the next year's production and business plan to be submitted to the Parent Company's Board of Members for decision.

3. Based on the production and business plan decided by the Board of Members, the Parent Company conducts an assessment of the production and business situation of the reporting year and prepares the financial plan for the following year to be sent to the Ministry of Finance and the State Capital Representative Agency before July 31 each year.

4. The State Capital Representative Agency leads and coordinates with the Ministry of Finance to review the financial plan established by the Parent Company and issue formal comments in writing to help the Parent Company complete the financial plan. The completed financial plan serves as the basis for the Ministry of Finance and the State Capital Representative Agency to supervise and evaluate the management and operation of the Parent Company's business activities.

Article 26. Accounting, Statistics, and Auditing System

The parent company must organize the implementation of accounting and statistical work in accordance with current laws; prepare, record original vouchers, update figures in accounting books to ensure full, timely, truthful, accurate, and objective reflection of economic and financial activities.

Annually, the parent company must conduct independent auditing of the annual financial report, internal auditing as prescribed, and cooperate with state auditing agencies for auditing according to the State Audit Office's work program.

The annual financial report of the enterprise must be audited before submission to state agencies and before public disclosure.

Article 27. Financial Reports and Other Reports

1. At the end of each accounting period (quarterly, annually), the parent company must prepare, present, and submit financial reports and statistical reports to state agencies as stipulated by current laws. The Board of Members is responsible for the accuracy and truthfulness of these reports.

2. In addition to the general reports submitted, the parent company must also prepare and submit to the Ministry of Finance and the agency representing the owner the following reports:

a) Before the 10th day of the next month, a monthly report on the implementation of operations and forecast for the next month regarding oil and gas exploitation, consumption, and revenue collection, detailed by each field and type of revenue.

b) Before the 10th day of January and July each year, a semi-annual report on capital allocation and investment implementation from the Development Fund and from state reinvestment from host country oil and gas profits as specified in Article 19 of this Regulation.

c) A report on the implementation of projects as required by competent authorities.

d) Before the 15th day of the first month of each quarter, a report on the previous quarter's budget revenues paid to the state treasury from host country oil and gas profits, various oil and gas commissions, and fees for reading and using oil and gas documents.

e) A report on the use, plan for income and expenditure, and need for partial use of foreign currency that must be remitted to the state treasury annually and quarterly sent to the Ministry of Finance and the State Bank of Vietnam; including:

- An annual plan report (with explanatory documents) submitted before December 15 of the reporting year;

- A report on the implementation of the quarter and the plan for the next quarter submitted no later than the 25th day of the last month of the quarter;

- A report on the use of retained foreign currency for the implementation year submitted no later than January 15 of the following year.

3. In addition to the aforementioned reports, the parent company must prepare and submit ad hoc reports when requested by relevant ministries, sectors, and state management agencies; in cases where the parent company has domestic loans and foreign loans guaranteed by the government, the parent company must prepare and submit reports in accordance with current laws on public debt management.

4. The parent company is subject to inspection, examination, and supervision by financial agencies, authorized audit and inspection bodies concerning the parent company's financial and accounting work as prescribed by law.

5. The parent company shall implement the public disclosure of its financial situation according to regulations, and the parent company's Board of Members shall bear legal responsibility for the disclosed contents.

Chapter 6

RIGHTS, OBLIGATIONS, AND RESPONSIBILITIES

OF THE BOARD OF MEMBERS, GENERAL MANAGER

IN FINANCIAL MANAGEMENT

Article 28. Powers of the Board of Members

1. The Board of Members performs the management function of the Parent Company within its scope of authority, responsible for organizing the implementation, inspecting, and supervising the financial activities of the Parent Company.

2. Receive and be responsible for preserving and developing the state capital assigned. Be accountable to the owner for the results of the Parent Company's business operations, ensuring the achievement of the state's objectives assigned to the Parent Company. Develop plans and propose the Representative Agency of the Owner to coordinate with relevant agencies to submit to the Prime Minister for adjustment of the Parent Company's registered capital.

3. Submit to the Representative Agency of the Owner for approval or submit to the Prime Minister for approval of the policy before deciding on investment and construction outside the Parent Company, contracts for transferring or selling assets exceeding the level authorized to the Board of Members; approve profit distribution schemes, reserve fund establishment and utilization.

4. In addition to the powers stipulated in the provisions of this Charter and in the Articles of Association of the Parent Company, the Board of Members decides on the following matters:

a) The ratio of reserves according to regulations applicable to limited liability companies wholly owned by the Parent Company;

b) Issuing internal regulations on financial management of the Parent Company, economic and technical standards, labor norms, labor productivity, financial cost standards, and other standards;

c) Long-term and annual financial plan indicators of the Parent Company within thirty days from the date of approval by the competent authority;

d) Appoint representatives of the invested capital in other enterprises.

5. Approve the Parent Company's annual financial report and the consolidated financial report of the Group, the profit utilization plan after tax, and handle losses after approval by the Representative Agency of the Owner; implement the annual publication and disclosure of financial reports in accordance with regulations.

6. Inspect and supervise the General Director, Directors, and member units in the use, preservation, and development of capital, fulfillment of obligations to the State, and the State's objectives assigned to the company in accordance with the law.

7. Implement the supervision and evaluation system of subsidiary company operations as prescribed by the State.

8. Approve the capital contribution scheme of the limited liability company wholly owned by the Parent Company holding 100% of the registered capital to establish new joint-stock companies and limited liability companies with two or more members.

9. Decide or authorize the General Director to decide on joint venture projects with foreign investors, overseas investment projects of subsidiaries wholly owned by the Parent Company within the Board of Members' decision-making authority as prescribed by the investment law.

10. Decide on other issues as prescribed by law.

Article 29. Obligations and Responsibilities of the Board of Members, Chairman of the Board of Members

1. Obligations of the Chairman and members of the Board of Members:

a) Faithfully and responsibly perform the assigned powers and duties for the benefit of the State and the Parent Company;

b) Shall not abuse their positions and powers to use the Parent Company's capital and assets for personal gain for themselves, their families, or others;

c) Annually must provide comprehensive, accurate, and truthful reports on the management and supervision of the Parent Company's operations as required, the ranking results of subsidiaries wholly owned by the Parent Company; promptly report contents related to the Parent Company's production and business situation as required by the competent authority;

d) Other obligations as prescribed by law.

2. Fulfill other responsibilities as prescribed by law.

Article 30. Powers of the General Director

1. Propose to the Board of Members for submission to the competent authority regarding the adjustment of the Charter Capital of the Parent Company.

2. Be responsible before the Board of Members for the preservation and development of state capital at the Parent Company.

3. Decide on investment projects, projects investing outside the Parent Company, borrowing plans, liquidation plans, sale plans of assets according to the classification of the Board of Members. Submit to the Board of Members for approval projects and plans exceeding their authority.

4. Develop and submit to the Board of Members for decision long-term financial plans and annual financial plans consistent with business plans; economic and technical norms, labor norms, financial cost standards and other costs suitable to the operating conditions of the Parent Company as a basis for managing its business activities.

5. Determine the ratio of contributions to various funds, report to the Board of Members for decision.

Article 31. Obligations and Responsibilities of the General Director

1. Faithfully and responsibly implement the powers and obligations assigned for the benefit of the State and the Parent Company.

2. Not to take advantage of position and power to use the Parent Company's capital and assets for personal gain, family gain, or others.

3. When the Parent Company cannot pay off debts and fulfill property obligations, report to the Board of Members, inform creditors, seek solutions to overcome financial difficulties of the company, and not increase salaries or bonuses for employees and company managers. If these measures are not implemented causing damage to creditors, bear individual responsibility for such damages.

4. In case of violation of the Parent Company’s Articles of Association, decisions beyond authority, incorrect authority, abuse of position and power causing damage to the Parent Company and the State, compensation must be made according to the provisions of the law and the Parent Company’s Articles of Association.

5. Be responsible before the Board of Members and the law for managing the operations of the Parent Company.

6. Bear responsibility and fulfill obligations for the Parent Company’s raised capital and other sources of capital; bear material responsibility for losses caused by their own fault to the Parent Company.

7. Prepare and submit to the Board of Members for approval the Parent Company’s financial reports. Be responsible for the accuracy and truthfulness of the financial report data and other financial information.

8. Annually, the General Director must report on the results of managing the Parent Company’s operations to the Board of Members.

9. Fulfill other responsibilities as prescribed by law.

Chapter III
MANAGEMENT OF PARENT COMPANY CAPITAL

INVESTMENT IN OTHER ENTERPRISES

Article 32. Rights and Obligations of the Owner of the Parent Company's Capital Invested in Other Enterprises

1. The Parent Company shall manage the finances of wholly-owned subsidiaries and manage the portion of capital contributed by the enterprise in joint-stock companies and limited liability companies with two or more members in accordance with the Law on Management and Use of State Capital for Production and Business Investment in Enterprises, including:

a) The Parent Company must issue financial regulations for wholly-owned subsidiaries, specifying in detail the establishment of reserves from post-tax profits, distribution of remaining post-tax profits after establishing reserves at wholly-owned subsidiaries, and transfer of the difference between equity capital and charter capital of wholly-owned subsidiaries to the Parent Company;

b) Post-tax profits and the difference between equity capital and charter capital of wholly-owned subsidiaries transferred to the Parent Company are considered financial activity revenues of the Parent Company.

In cases where the equity capital determined on the annual financial report of wholly-owned subsidiaries exceeds the approved charter capital and the subsidiaries have no need to increase their charter capital, the Parent Company shall implement the transfer of the difference according to current legal regulations;

c) In cases where the Parent Company receives shares of joint-stock companies with contributed capital from the Parent Company without payment due to the use of surplus capital, funds belonging to equity capital, or issuing dividends in the form of shares to increase charter capital, the Parent Company shall base on the number of received shares to establish accounting records, record, and reflect on the Financial Report according to the current enterprise accounting system.

2. The appointment and criteria for representatives of the Parent Company's capital in joint-stock companies and limited liability companies with two or more members shall be carried out according to the provisions of Article 46 and Article 47 of the Law on Management and Use of State Capital for Production and Business Investment in Enterprises.

3. Rights and obligations of the Parent Company as the owner of capital towards wholly-owned subsidiaries:

a) Decide on establishment (after obtaining approval from the competent authority), charter capital at establishment, objectives, tasks, and business sectors; decide on adjustments to charter capital during operation, restructuring, ownership conversion, dissolution, and bankruptcy of subsidiaries;

b) Issue financial regulations for subsidiaries;

c) Decide on the appointment, reappointment, dismissal, commendation, and disciplinary action of the Chairman and members of the Board of Members or the Chairman of the company, General Director or Director, and Auditor of the subsidiary;

d) Approve the strategy, five-year investment development plan, and annual production and business plan of the subsidiary;

đ) Approve and amend the subsidiary's articles of association;

e) Approve capital raising plans, investment projects, construction, purchase, and sale of fixed assets with a value not exceeding the Group B project level as defined in the Public Investment Law and over 50% of the subsidiary's charter capital recorded in the quarterly or annual financial report of the subsidiary at the nearest time point to the capital-raising date or another lower ratio specified in the subsidiary's articles of association. In cases exceeding this level, the Parent Company approves after obtaining consent from the State Capital Representative Agency.

g) Approve financial reports, profit distribution, annual establishment and utilization of funds of subsidiary companies;

h) Implement inspections and supervision over the management and use of capital invested by the parent company in subsidiary companies.

4. Rights and obligations of the parent company as the owner of contributed capital in joint-stock companies and limited liability companies with two or more members:

a) Decide or submit to competent authorities for decision on increasing, decreasing, recovering capital, or transferring rights to purchase, contribute investment capital in joint-stock companies and limited liability companies with two or more members in accordance with laws and the charter of the parent company;

b) Set standards, appoint, dismiss, relieve from duty, reward, discipline, decide salaries, allowances, bonuses, and other benefits of the representative of the parent company's capital according to regulations;

c) Assign tasks to the representative of the parent company's capital to protect the legitimate rights and interests of the parent company in joint-stock companies and limited liability companies with two or more members;

d) Instruct the representative of the parent company's capital to promptly transfer profits, dividends distributed or recovered investment capital back to the parent company; supervise the recovery of investment capital, profit generation, and dividend distribution;

đ) Require the representative of the parent company's capital to report on the performance of tasks, powers, and responsibilities in guiding enterprises under the parent company's control to achieve the parent company's goals and strategies;

e) Require the representative of the parent company's capital to periodically or urgently report on the financial situation, production, and business operations of joint-stock companies and limited liability companies with two or more members;

g) Inspect and supervise the activities of the representative of the parent company's capital to prevent and promptly address deficiencies and weaknesses of the representative;

Article 33. Rights and Obligations of the Representative of the Parent Company's Capital at Other Enterprises

1. Submit written reports and seek opinions from the parent company before participating in discussions, voting, and making decisions at the General Meeting of Shareholders, meetings of the Board of Directors, or Board of Members regarding the following issues:

a) Business sectors, objectives, tasks, strategies, development investment plans, production and business plans;

b) Issuing, amending, supplementing the charter; increasing or decreasing registered capital; electing, relieving from duty, dismissing, rewarding, and handling violations against members of the Board of Directors, Board of Members, General Director or Director, Deputy General Director or Deputy Director;

c) Profit distribution, annual establishment of funds of the enterprise;

d) Reorganization, dissolution, bankruptcy;

đ) Other matters within the authority of the General Meeting of Shareholders, Board of Directors, or Board of Members;

2. Report promptly on the operation of losses, inability to ensure payment capacity, failure to complete assigned tasks, and other violations of joint-stock companies and limited liability companies with two or more members;

3. Periodically every quarter and annually, and urgently upon request of the parent company, the representative of the parent company's capital shall compile and report on production and business situations, financial conditions, and propose solutions;

4. Shall not continue to serve as a representative when failing to properly perform assigned rights and responsibilities or no longer meeting the standards for representatives;

5. Shall be held legally responsible for actions causing loss of capital and assets of the enterprise;

6. Perform other rights and responsibilities according to corporate laws, the enterprise's charter, and other relevant laws.

Article 34. Responsibilities of the Board of Members in Managing Investments in Other Enterprises

The Board of Members shall inspect and supervise the use of investment capital in other enterprises, be responsible for the effectiveness, preservation, and development of capital invested outside the Parent Company; derive profits from such investments; appoint personnel to directly manage the invested capital in other enterprises.

Chapter IV
STATE MANAGEMENT IN FINANCE

 FOR THE PARENT COMPANY - VIETNAM OIL AND GAS CORPORATION GROUP

Article 35. Regarding the Government

The Government shall uniformly manage and organize the implementation of the rights and obligations of the State owner towards the Parent Company - Vietnam Oil and Gas Corporation Group, issue a Decree on the Financial Regulations of the Parent Company, and delegate the State Capital Management Committee at Enterprises and the Board of Members of the Parent Company - Vietnam Oil and Gas Corporation Group to exercise the rights of the owner in the financial field.

Article 36. Prime Minister

1. Decide on the investment of capital to form the charter capital and adjust the charter capital during the operation of the Parent Company - Vietnam Oil and Gas Corporation Group based on the proposal of the State Capital Management Committee at Enterprises after consolidating the opinions of the Ministry of Finance and the Ministry of Planning and Investment according to the laws governing the management and use of state capital invested in business operations of enterprises.

2. Decide on other issues as stipulated in the Charter of the Parent Company and relevant laws.

Article 37. Ministry of Finance

1. Coordinate with the State Owner's Representative Agency to submit to the Prime Minister the plan for additional charter capital investment during the production and business operations of the Parent Company.

Take the lead and coordinate with the State Owner's Representative Agency, the Ministry of Planning and Investment to estimate the possibility of reinvesting state-owned enterprise profits back to the Parent Company - Vietnam Oil and Gas Corporation Group for annual state budget compilation.

2. On the basis of the proposal of the State Owner's Representative Agency, submit to the Government for issuance, amendment, and supplementation of the Government's Decree on the Financial Management Regulations of the Parent Company - Vietnam Oil and Gas Corporation Group.

3. Guide the implementation of payment and settlement of revenues as stipulated in Article 18 of this Regulation.

4. Coordinate with the State Owner's Representative Agency to inspect and supervise the management and use of state capital invested in the Parent Company; inspect the implementation of the Decree on Financial Regulations for the Parent Company - Vietnam Oil and Gas Corporation Group.

5. Coordinate with the State Owner's Representative Agency to evaluate the business performance and classification of the Parent Company - Vietnam Oil and Gas Corporation Group.

6. Perform other rights and obligations as prescribed by relevant laws.

Article 38. State Capital Management Committee at Enterprises

1. Take the lead and coordinate with the Ministry of Finance and the Ministry of Planning and Investment to submit to the Prime Minister the plan to increase the charter capital of the Parent Company based on the proposal of the Board of Members of the Parent Company.

2. Approve the policy within its authority before the Board of Members of the Parent Company decides to invest and construct, invest outside the Parent Company, loan contracts, lend, transfer, sell assets exceeding the level delegated to the Board of Members of the Parent Company.

3. Agree to allow the Board of Members to approve the profit distribution plan, reserve fund establishment and usage; the Parent Company's financial statements and the consolidated financial statements of the Group.

4. Take the lead in implementing inspections and supervision over the management and use of state capital invested in the Parent Company, the amount of reinvested state-owned enterprise profits for the Parent Company as stipulated in Clause 3 of Article 19, the funds entrusted to the Parent Company's management; inspect the implementation of this Decree.

5. Take the lead in evaluating the business performance and management activities of the Board of Members of the Parent Company - Vietnam Oil and Gas Corporation Group.

6. Decide on other issues as stipulated in the Charter of the Parent Company and relevant laws.

Article 39. Ministry of Industry and Trade

Shall take the lead and coordinate with the State Capital Corporation Management Committee, the Ministry of Planning and Investment to review and update the criteria and list of key oil and gas projects using host country petroleum interest income for PetroVietnam Corporation, and report to the Prime Minister for consideration and decision.

Chapter V
IMPLEMENTING PROVISIONS

Article 40. Transitional Provisions

1. Handling residual balances of the Oil and Gas Exploration Fund:

When preparing the financial statements for the year 2020, the entire balance of the Oil and Gas Exploration Fund up to December 31, 2020, shall be transferred by the parent company into the parent company's Development Fund for continued use according to the approved plan and purpose.

2. For projects funded from the Oil and Gas Exploration Fund where the parent company and wholly-owned subsidiaries are participating as investors and are currently in the process of finalizing settlement procedures, the settlement of these projects shall be carried out in accordance with the provisions of Decision No. 143/2008/QĐ-TTg dated October 29, 2008, issued by the Prime Minister on the Regulations on Establishing, Managing, and Using the Oil and Gas Exploration Fund, and Circular No. 17/2011/TT-BTC dated February 10, 2011, issued by the Ministry of Finance guiding certain contents of the Regulations on Establishing, Managing, and Using the Oil and Gas Exploration Fund until December 31, 2023.

For projects that have been and are being implemented using funds from the Oil and Gas Exploration Fund where the parent company and wholly-owned subsidiaries are participating as investors, they may continue to use the Development Fund specified in Clause 2, Article 24 of this Decree for implementation and settlement in accordance with the law.

In cases where projects utilizing the Oil and Gas Exploration Fund are carried out by wholly-owned subsidiaries participating as investors and have discovered commercial reserves but the subsidiary does not meet the conditions to increase capital as prescribed, the subsidiary will repay the Development Fund (residual balance of the Oil and Gas Exploration Fund) from 100% of oil and gas recovered to cover the subsidiary's costs in the project.

3. Handling differences between recovery costs under oil and gas contracts and accounting costs at the time this Decree takes effect:

- For oil and gas blocks where the recoverable costs under the oil and gas contract exceed the accounting costs, the parent company shall allocate the corresponding costs in terms of oil and gas recovered under the oil and gas contract;

- For oil and gas blocks where the accounting costs exceed the recoverable costs under the oil and gas contract, the parent company shall allocate the difference according to the current mechanism (based on the actual production volume and forecasted production volume to the end of the field life according to criteria and formulas approved by the Board of Directors of the parent company).

Article 41. The Board of Directors of PetroVietnam Corporation shall direct the parent company to implement this Regulation. During the implementation process, if any difficulties arise, it is recommended to report to the State Capital Corporation Management Committee to propose the Ministry of Finance to compile and submit to the Government for amendment and supplementation.