Circular No. 37/2005/TT-BTC amending and supplementing Circular No. 56/2004/TT-BTC of the Ministry of Finance guiding the financial handling in restructuring production and ownership conversion for Sugar Companies and Factories.

CIRCULAR

Amending and supplementing Circular No. 56/2004/TT-BTC dated June 14, 2004

of the Ministry of Finance guiding financial treatment for restructuring production

and ownership transfer for sugar companies and factories

Implementing Decision No. 28/2004/QD-TTg dated March 4, 2004 of the Prime Minister on restructuring production and implementing certain measures to address difficulties for sugar factories and companies, and Decision No. 49/2004/QD-TTg dated March 30, 2004 of the Prime Minister supplementing Article 5 of Decision No. 28/2004/QD-TTg mentioned above, the Ministry of Finance issued Circular No. 56/2004/TT-BTC dated June 14, 2004 guiding financial treatment for restructuring production and ownership transfer for sugar companies and factories.

Pursuant to Decree No. 187/2004/NĐ-CP dated November 16, 2004 of the Government on converting state-owned enterprises into joint-stock companies; implementing the opinion of the Prime Minister in Official Letter No. 1878/CP-NN dated December 10, 2004 of the Government on implementing Decision No. 28/2004/QD-TTg dated March 4, 2004 of the Prime Minister, the Ministry of Finance guides amending and supplementing Circular No. 56/2004/TT-BTC dated June 14, 2004 of the Ministry of Finance (hereinafter referred to as Circular No. 56/2004/TT-BTC) guiding financial treatment for restructuring production and ownership transfer for sugar companies and factories as follows:

1. Replacing the first bullet point under Section 2.3 Point 2 Part B Chapter II.

- Commercial banks shall record a reduction in revenue corresponding to the amount of debt cancellation announced; in cases where the amount of debt cancellation has already been recorded as a reduction in revenue and is being monitored outside the balance sheet, it shall be removed from such accounts.

The development support fund shall record a reduction in its income corresponding to the amount of debt cancellation announced.

2. Replacing Point 5 Part B Chapter II.

5. Providing loans to settle completed construction works:

For completed construction works within the investment project of sugar factories that have been approved for final settlement by the competent authority in accordance with current regulations but have not yet received loans to pay contractors, the enterprise shall prepare a loan repayment plan and request the development support fund to consider providing further loans.

3. Replacing Part C Chapter II.

C. Financial treatment and policy resolution for employees of state-owned enterprises ceasing sugar processing production:

1. For enterprises ceasing production to relocate their factories to new locations:

1.1. The enterprise shall prepare an investment relocation project and report to the Ministry of Agriculture and Rural Development for submission to the Prime Minister for consideration and decision.

The investment relocation project must be based on a restructuring plan with financial treatment measures as stipulated in Decision No. 28/2004/QD-TTg dated March 4, 2004 of the Prime Minister to ensure that the enterprise operates effectively after relocation.

1.2. If workers are unemployed or do not move with the company/factory and wish to terminate their employment, they will receive support policies according to Decree No. 41/2002/NĐ-CP dated April 11, 2002 and Decree No. 155/2004/NĐ-CP dated August 11, 2004 of the Government regarding surplus labor due to state-owned enterprise restructuring. Procedures and processes for handling surplus labor are carried out in accordance with current national regulations.

2. For enterprises (including those not listed in the annex to Decision No. 28/2004/QD-TTg dated March 4, 2004 of the Prime Minister) decided by the relevant ministries, provincial people's committees, or municipal people's committees directly under the central government to cease sugar processing production:

2.1. Regarding financial treatment:

a. In cases where the enterprise cannot maintain operations or does not need to continue operating according to planning, restructuring, and reorganization plans of ministries, provinces, cities, or holding companies after ceasing sugar production, dissolution or bankruptcy procedures shall be implemented. Dissolution procedures and financial treatment shall follow current national regulations.

b. In cases where the enterprise continues other business activities after ceasing sugar production and is permitted by the competent authority to add business lines and implement overall restructuring plans for state-owned enterprises approved by the Prime Minister, the following financial treatment measures shall apply:

b.1. Regarding asset treatment:

- For assets used as collateral for loans, the enterprise must negotiate transfer to creditors or sell and liquidate according to current financial management regulations for state-owned enterprises. Proceeds from sales and liquidation (after deducting costs) shall be used to repay creditors with collateral.

- For assets not used as collateral for loans, the enterprise shall sell and liquidate according to current financial management regulations for state-owned enterprises. Proceeds from sales shall be recorded as other income of the enterprise. Costs of sales and liquidation (including residual value of the asset) shall be recorded as other expenses of the enterprise.

b.2. Treatment of loans for sugar production investment:

- For loans with collateral from commercial banks for sugar production investment, the enterprise shall transfer collateral to creditors to offset debts or sell and liquidate assets to repay debts.

- For loans from commercial banks without collateral, the enterprise shall handle them according to the guidance provided in Circular No. 74/2002/TT-BTC dated September 9, 2002 of the Ministry of Finance on assessing non-collateral debts of state-owned commercial banks according to Decision No. 149/2002/QD-TTg dated October 5, 2002 of the Prime Minister.

- For loans from the development support fund, they shall be handled according to Circular No. 89/2004/TT-BTC dated September 3, 2004 of the Ministry of Finance on managing state investment development credit risks.

c. Regarding loss and difficult-to-collect receivables arising before the cessation of production:

The handling of losses and uncollectible receivables shall be carried out in accordance with the provisions of Circular No. 126/2004/TT-BTC dated December 24, 2004, issued by the Ministry of Finance to guide the implementation of Decree No. 187/2004/NĐ-CP dated November 16, 2004, of the Government on converting state-owned enterprises into joint-stock companies.

d. After applying the measures for handling losses, assets, and difficult-to-collect debts as mentioned above, if the enterprise no longer has capital to carry out the shareholding conversion according to the approved plan, the ministries and provincial/municipal people's committees shall coordinate with the Ministry of Finance to consider providing financial support from the business restructuring cost fund.

2. 2 Regarding the policy for employees of enterprises that must cease sugar production:

- Employees who become redundant due to the cessation of sugar production at the enterprise shall be subject to the support policies for redundant labor as stipulated in Decree No. 41/2002/NĐ-CP dated April 11, 2002, and Decree No. 155/2004/NĐ-CP dated August 11, 2004, of the Government concerning policies for redundant labor resulting from the reorganization of state-owned enterprises.

The number of employees who have received the redundant labor benefits due to the cessation of sugar production as mentioned above shall not be included in the regular employee list of the enterprise when the enterprise undergoes transformation and shall not enjoy the rights of employees during the enterprise's shareholding conversion.

- The procedures, formalities, and process for resolving redundant labor benefits shall be implemented in accordance with the current regulations of the State.

4/ Replace Points 1, 2, 3, and 4 of Section III.

1. State-owned enterprises producing sugar that fall under the financial treatment pursuant to Decision No. 28/2004/QĐ-TTg dated March 4, 2004, of the Prime Minister and Circular No. 1878/CP-NN dated December 10, 2004, of the Government shall be responsible for coordinating with relevant agencies and organizations to prepare financial treatment files in accordance with this Circular. Based on the enterprise's file and the audit report of the National Audit Office, competent authorities shall implement financial treatment up to February 21, 2003, according to Decision No. 28/2004/QĐ-TTg dated March 4, 2004, of the Prime Minister before the enterprise implements its transformation.

2. After implementing financial support in accordance with this Circular, sugar-producing enterprises shall be responsible for basing their ownership transfer procedures on the financial treatment regulations set forth in Circular No. 126/2004/TT-BTC dated December 24, 2004, of the Ministry of Finance:

- Continue to coordinate with relevant agencies to proactively handle matters within their authority or report to competent authorities in accordance with the law for consideration and resolution of financial issues prior to the valuation date of the enterprise.

- Determine the appropriate form of transformation in compliance with current State regulations and submit it to competent authorities for approval of the enterprise transformation form.

3. Based on the decision regarding the form of enterprise transformation by the competent authority, enterprises shall proceed to carry out the steps of work and prepare the transformation file and plan in accordance with the current regulations and submit them to the competent authority for the decision on enterprise transformation.

4. For enterprises undergoing transformation through the sale to domestic organizations, individuals, and foreign-invested enterprises through auction as decided by the Prime Minister.

This Circular shall take effect fifteen days from the date of publication in the Official Gazette. During the implementation period, if there are any difficulties, please promptly reflect them to the Ministry of Finance for supplementary guidance research and issuance./.