Circular No. 46/2021/TT-BTC guiding certain contents on financial settlement and determination of enterprise value when transferring state-owned enterprises and wholly-owned limited liability companies invested with 100% charter capital by state-owned enterprises to joint-stock companies

 

CIRCULAR

Guidelines on certain contents regarding financial handling and determination of enterprise value when transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies

Pursuant to the Law on Enterprises dated June 17, 2020;

Pursuant to the Law on Management and Use of State Capital for Investment in Business Operations dated November 26, 2014;

Pursuant to Decree No.87/2017/NĐ-CP July 26, 2017 of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No.126/2017/NĐ-CPdated November 16, 2017 of the Government on transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies;

Pursuant to Decree No.140/2020/NĐ-CPdated November 30, 2020 of the Government amending and supplementing certain provisions of Decree No. 126/2017/NĐ-CPdated November 16, 2017 of the Government on transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies; Decree No. 91/2015/NĐ-CPdated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets in enterprises and Decree No. 32/2018/NĐ-CPdated March 8, 2018 of the Government amending and supplementing certain provisions of Decree No. 91/2015/NĐ-CP ;

The Minister of Finance hereby issues this Circular amending and supplementing certain Articles of Circular No. 133/2015/TT-BTC dated August 31, 2015, issued by the Minister of Finance guiding the financial management mechanism for the Vietnam Chamber of Commerce and Industry (hereinafter referred to as Circular No. 133/2015/TT-BTC).

The Minister of Finance issues this Circular guiding certain contents regarding financial handling and determination of enterprise value when transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

2. Applicability:

This Circular guides certain contents regarding financial handling and determination of enterprise value when transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies as prescribed in Decree No. 126/2017/NĐ-CP dated November 16, 2017 of the Government on transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies (hereinafter referred to as Decree No. 126/2017/NĐ-CP) and Decree No. 140/2020/NĐ-CP dated November 30, 2020 of the Government amending and supplementing certain provisions of Decree No. 126/2017/NĐ-CP; Decree No. 91/2015/NĐ-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets in enterprises and Decree No. 32/2018/NĐ-CP dated March 8, 2018 of the Government amending and supplementing certain provisions of Decree No. 91/2015/NĐ-CP (hereinafter referred to as Decree No. 140/2020/NĐ-CP).

第二条 组织和实施奖励工作的支出水平，如政府第152/2025/NĐ-CP号决定关于分级授权和奖励领域的分权规定

a) Enterprises specified in Clause 3, Article 2 of Decree No. 126/2017/NĐ-CP and Clause 1, Article 1 of Decree No. 140/2020/NĐ-CP (hereinafter referred to as enterprises undergoing shareholding reform), including:

- Enterprises in which the State holds 100% of the charter capital (hereinafter referred to as first-tier enterprises), including wholly state-owned limited liability companies that are parent companies of economic groups, parent companies of state-owned corporations, parent companies within a group of parent companies - subsidiary companies, and independent wholly state-owned limited liability companies in which the State holds 100% of the charter capital.

- Wholly state-owned limited liability companies invested in by first-tier enterprises with 100% of the charter capital (hereinafter referred to as second-tier enterprises).

b) Authorities representing the owner and other relevant agencies, organizations, and individuals specified in Clause 1 and Clause 4, Article 2 of Decree No. 126/2017/NĐ-CP.

Article 2. Some principles for financial handling when implementing corporatization

1. Based on the list of enterprises to be corporatized that has been approved by the competent authority, the corporatizing enterprise must proactively handle existing financial issues according to current regulations applicable to state-owned enterprises holding 100% of the charter capital. Upon receiving the decision to implement corporatization from the competent authority, the enterprise shall be responsible for organizing asset inventory, classifying assets, sources of funds, and enterprise reserves under its management and use, reconciling and confirming debts in accordance with Decree No. 126/2017/NĐ-CP, Decree No. 140/2020/NĐ-CP, and the guidance provided in this Circular to serve as the basis for determining the actual value of the enterprise for corporatization.

For land areas that the enterprise is not allowed to retain and continue using according to the restructuring plan but which the enterprise is still monitoring and using without a recovery plan from the competent authority, the corporatizing enterprise must report and explain to serve as the basis for transferring to the competent authority when officially transitioning to operate as a joint-stock company.

2. The corporatizing enterprise shall not adjust figures in accounting books and financial reports at the time of determining the enterprise's value based on the results of the enterprise value determination decided and announced by the state capital representative agency.

3. In cases where the actual value of the enterprise is lower than the liabilities after financial handling and revaluation of the enterprise's value according to the provisions, it shall be handled in accordance with point b, Clause 2, Article 1 of Decree No. 140/2020/NĐ-CP.

4. At the time the corporatizing enterprise receives the first registration certificate for a joint-stock company, the enterprise shall prepare financial statements and handle financial issues according to Article 21 of Decree No. 126/2017/NĐ-CP, Clause 5, Article 3 of Decree No. 140/2020/NĐ-CP, and the provisions of this Circular.

If the enterprise has been decided by the competent authority to reduce state capital at the time of corporatization corresponding to the generated losses according to Clause 7, Article 21 of Decree No. 126/2017/NĐ-CP, the joint-stock company shall not transfer these losses when determining taxable income for subsequent years according to the Corporate Income Tax Law and related guiding documents.

5. During the process of financial handling and determining the value of the corporatizing enterprise, market principles, transparency, and strict adherence to state regulations must be followed. Organizations and individuals involved in financial handling and determining the enterprise's value who fail to comply with prescribed procedures, causing state asset losses or embezzlement, shall bear administrative responsibility, compensate material losses, or be held criminally liable according to the law.

6. In cases where asset inventory reveals missing or omitted assets or debts leading to a reduction in the enterprise's value and state capital in the corporatizing enterprise, such situations shall be handled according to Clause 4, Article 10 of Decree No. 126/2017/NĐ-CP and Clause 2, Article 7 of this Circular.

Immediately upon discovering underreporting or omission of state budget payments after officially transitioning to a joint-stock company, the joint-stock company shall be responsible for declaring and paying these amounts into the state budget according to the law. Violation handling shall be carried out according to the laws on tax administration and related laws.

The state capital representative agency shall be responsible for resolving and handling financial issues during the corporatization process according to Decree No. 126/2017/NĐ-CP, Decree No. 140/2020/NĐ-CP, and the provisions of this Circular, as well as any newly arising financial issues related to the corporatization process after the enterprise officially transitions to a joint-stock company.

Consulting organizations for enterprise valuation must determine the enterprise's value according to the asset method specified in Section 2, Chapter III of Decree No. 126/2017/NĐ-CP, Clauses 13, 14, 15, 16, and 17 of Article 1 and Clauses 6 and 7 of Article 3 of Decree No. 140/2020/NĐ-CP, and specific guidance in this Circular; simultaneously, they may choose at least one additional valuation method according to the law on pricing and appraisal to present to the state capital representative agency for consideration and decision.

The corporatizing enterprise must explain and provide information to investors regarding the current types of assets in the enterprise (infrastructure assets; other managed and used assets; unfinished investment projects) funded by public investment and recognized as state assets.

If these assets are managed and used by the state and included in the state capital component of the enterprise according to the law, but have not been approved for final settlement of the investment project forming the asset at the time of determining the enterprise's value, then when approving the corporatization plan, the state capital representative agency must include the content of handling the final settlement of the investment project forming the asset once approved by the competent authority (in case the asset value increases or decreases compared to the time the state transferred the asset to the enterprise), ensuring consistency with the form of enterprise corporatization according to the approved plan, and publicly disclosing this handling information when selling the first batch of enterprise shares to investors so that investors and the post-transition enterprise can understand and follow the approved corporatization plan.

If these assets are being implemented according to guiding documents from the competent authority before the effective date of this Circular, they shall continue to be implemented according to those documents.

Chapter II

FINANCIAL HANDLING DURING CORPORATIZATION AND DETERMINING THE ENTERPRISE'S VALUE

 BY THE ASSET METHOD

Section 1

ASSET INVENTORY AND DEBT RECONCILIATION

Article 3. Inventory and Classification of Assets

1. The joint-stock enterprise undergoing corporatization shall be responsible for inventorying and classifying assets, sources of capital, and funds under its management and use at the time of determining the enterprise's value; coordinating with consulting organizations to carry out the inventory and classification of assets.

2. At the time of determining the enterprise's value, the enterprise must prepare an inventory list accurately stating the quantity, actual condition, quality, and value of existing assets managed and used by the enterprise; checking cash balances, reconciling bank account balances; identifying excess or shortage of assets and cash compared to accounting records, clearly analyzing the reasons for excess or shortage and the responsibility of those involved, and determining compensation according to the law.

3. Assets that have been inventoried shall be classified into the following groups:

a) Assets used in production and business activities.

b) Unused assets, stagnant assets, slow-turning assets, and assets awaiting liquidation.

c) Assets formed from reward funds and welfare funds (if any).

d) Leased, borrowed assets, goods received for storage, processing, agency, consignment, joint venture investment assets, and other assets not belonging to the enterprise.

đ) Assets attached to land that have not yet been resolved according to the restructuring and disposal plan for facilities and land of the competent authority's approved decision.

e) Assets of public service units with revenue (land and facility assets of public service units with revenue according to the law on the reorganization and disposal of state-owned land and facilities), and assets used for public services.

g) Existing assets at the enterprise (infrastructure assets; other assets being managed and used; unfinished construction project assets) invested with public investment funds and determined as public assets. Among these, it specifies: public assets transferred to the enterprise for management and use, which are counted as state capital components in the enterprise; public assets transferred to the enterprise for management and use, which are not counted as state capital components in the enterprise; public assets that the enterprise no longer manages and uses, which are handed over to other entities for management or disposed of according to the law on the management and use of public assets. These assets must be decided on the transfer and disposal plans by the competent state authorities before organizing the determination of the enterprise's value.

h) Assets awaiting disposal decisions from competent authorities.

i) Financial investments made through contributions of land use rights values, money/assets (including detailed descriptions of the handling plans for joint venture investment assets when terminating joint ventures with foreign investors).

k) Investments in joint-stock companies at the time of determining the enterprise's value, including the number of shares already received and managed, tracked in financial statements, and the number of dividend shares to be received after the valuation date according to the Shareholders' Meeting Resolution, notification of dividend rights up to the valuation date.

l) Other assets (if any).

Article 4. Matching, Confirming and Classifying Accounts Receivable and Payable

The joint-stock enterprise shall match, confirm and classify accounts receivable and payable according to the provisions of Article 15 and Article 16 of Decree No. 126/2017/NĐ-CP, Clause 9 and Clause 10 of Article 1 of Decree No. 140/2020/NĐ-CP, prepare detailed lists for each debtor and creditor at the time of determining the enterprise's value, and follow the specific guidelines below:

1. Accounts Receivable:

a) Match, confirm, analyze and determine the responsibility of related parties for accounts receivable according to each debtor, including:

- Matching, confirming all overdue, current, and non-overdue accounts receivable; for commercial banks, matching and confirming off-balance sheet accounts receivable as well.

- Clearly analyzing difficult-to-collect accounts receivable as those overdue for payment for six months or more (calculated from the original repayment term stipulated in economic contracts, loan agreements, or other debt commitments, excluding extended repayment periods between parties); the enterprise has sent confirmation requests for debts or urged payment but still failed to recover the debt, or accounts receivable that are not yet due but the enterprise has collected evidence indicating that the economic organization has gone bankrupt, initiated bankruptcy proceedings, fled from the business location; the debtor is being prosecuted, detained, tried, or serving a sentence, or suffering from a serious illness (with hospital certification) or deceased, or the debt has been requested by the enterprise through enforcement proceedings but cannot be executed due to the debtor fleeing their residence; the debt has been litigated by the enterprise but the case was suspended. Clearly identify the responsibility of organizations and individuals related to accounts receivable where the obligor cannot be determined.

Accounts receivable with no possibility of recovery must have sufficient documentation proving they cannot be recovered according to Circular No. 48/2019/TT-BTC dated August 8, 2019, issued by the Ministry of Finance guiding the establishment and handling of inventory write-down reserves, investment losses, difficult-to-collect accounts receivable, and product, goods, service, and construction project warranties at enterprises and any subsequent amendments, supplements, or replacements (if applicable).

b) Review contracts to determine prepayments made to suppliers that have been fully recorded as business expenses such as rent, land lease payments, purchase payments, long-term insurance premiums, salaries, wages...

c) In cases where, at the time of determining the value of the joint-stock enterprise, there are still some accounts receivable with complete documentation but not yet matched and confirmed, the joint-stock enterprise shall fulfill its responsibilities according to Point b, Clause 9, Article 1 of Decree No. 140/2020/NĐ-CP.

2. Accounts Payable to Organizations and Individuals (including overdue, current, and non-overdue accounts payable) at the time of determining the enterprise's value:

a) Based on contracts, debt notices, and debt matching, prepare detailed lists of loans owed to each creditor; determine tax debts and other government payments; specifically analyze loans according to contracts (domestic loans, foreign loans), guaranteed loans, bond issuance loans; accounts payable within the due date, overdue, and non-overdue; principal, interest, and accounts payable but not required to be paid.

b) Accounts payable but not required to be paid are debts where the creditor of the joint-stock enterprise, upon debt matching and confirmation, falls under one of the following situations:

- Debts of enterprises that have been dissolved or declared bankrupt but no successor agency or individual has been identified according to the dissolution or bankruptcy plan approved by the competent authority.

- Debts of individuals who have died but no heir has been identified according to the law on inheritance.

- Debts of other creditors that are overdue but the creditor did not come to match and confirm. In this case, the joint-stock enterprise must send a direct notification letter to the creditor and simultaneously announce it in the mass media at least ten working days before the valuation date of the enterprise.

Article 5. Verification and confirmation of financial investments; dividends; capital contributions received

1. The enterprise undergoing shareholding transformation shall prepare a detailed reconciliation and verification list of financial investments and dividend profits of the enterprise, including joint venture and associated company capital contributions with other enterprises and organizations; share capital contributions to establish limited liability companies, capital contributions through Business Cooperation Contracts without forming new legal entities, investment capital to establish wholly-owned limited liability companies by the shareholding enterprise; profits from investment contributions (as approved by the Shareholders' Meeting Resolution or Board of Directors Resolution at the receiving entity) but not yet actually received up to the valuation date of the enterprise.

2. Determine the quantity and value of securities (stocks, bonds...) purchased; the number of stocks distributed to the shareholding enterprise, including both the stocks currently owned by the shareholding enterprise (stocks already received and managed, reflected in the financial statement notes) and the number of dividend stocks to be received after the valuation date according to the Shareholders' Meeting Resolution up to the valuation date of the enterprise.

3. For joint venture and associated company capital contributions received, the shareholding enterprise shall base on the joint venture and association contracts to prepare a detailed list for each contributing partner and notify the contributing partners to jointly continue the inherited contracts or liquidate the contracts with the successor corporation.

Article 6. Inventory, verification, confirmation, and classification of assets and debts when transforming state-owned commercial banks into shareholding banks

The inventory, evaluation, and classification of monetary capital, financial lease assets, and receivables and payables of state-owned commercial banks shall be carried out in accordance with Articles 3, 4, and 5 of this Circular and the following specific guidelines:

1. Inventory and verify customer deposits and securities (deposit certificates, bills of exchange, promissory notes, bonds) as follows:

a) Detail each item on the accounting books.

b) Verify and confirm the balance of customer deposits and securities that are legal entities.

c) Savings deposits, personal deposits, and securities must be verified against the accounting records kept at the bank and reconciled with customers. In cases where full reconciliation with all customers cannot be organized, it shall be implemented in accordance with Clause 10, Article 1 of Decree No. 140/2020/NĐ-CP.

2. Reconcile credit assets (including off-balance-sheet credit balances) as follows:

a) Based on the credit files of each customer at the commercial bank to compile a list of customers with outstanding credit balances and the amount of each customer's credit balance, detailed by each credit contract.

b) Reconcile the data determined from the credit files with the accounting entries on the commercial bank's books; reconcile the credit balances with each customer to obtain their confirmation of the credit balance.

For individual customers, if reconciliation with the customer cannot be organized, the commercial bank must reconcile with the accounting records kept at the bank.

c) In case there is a discrepancy between the credit file data and the accounting records and customer confirmation, the commercial bank must clarify the cause of the discrepancy and determine the responsibility of related organizations and individuals to handle according to current State regulations.

3. Classify overdue receivables that meet the conditions for risk reserve utilization as stipulated by the State Bank of Vietnam.

4. For financial lease assets: reconciliation must be conducted with each customer, clearly determining the remaining debt of each financial lease asset.

Section 2

FINANCIAL HANDLING WHEN TRANSFORMING INTO SHAREHOLDING BANKS

Article 7. Financial treatment at the time of determining the enterprise value (prior to organizing advisory services for determining the enterprise value)

1. Based on the results of inventory verification and financial statement audit, settlement of amounts payable to the state budget, the enterprise being equitized shall be responsible for coordinating with relevant agencies to proactively address financial issues before determining the value of the equitized enterprise according to Articles 14, 15, 16, 17, 18, 19, and 20 of Decree No. 126/2017/ND-CP, Paragraphs 8, 9, and 10 of Article 1 of Decree No. 140/2020/ND-CP, and specific contents stipulated in Paragraphs 2, 3, 4, 5, 6, and 7 of this Article.

2. Based on the results of inventory verification and asset classification: for excess or missing assets, the enterprise must analyze and clarify the causes and handle them as follows:

a) Missing assets must identify the responsibility of organizations and individuals to compensate material losses according to current regulations; the value of missing assets, after deducting compensation from organizations and individuals (if any), shall be recorded in the business results when preparing financial statements at the time of determining the enterprise value.

b) Excess assets must clearly identify the causes and responsibilities of organizations and individuals to handle according to current regulations; the value of excess assets that do not need to be paid back shall be recorded in the business results when preparing financial statements at the time of determining the enterprise value.

3. Accounts receivable (excluding outstanding debts of state-owned commercial banks undergoing equitization) shall be financially handled according to Article 15 of Decree No. 126/2017/ND-CP, Paragraph 9 of Article 1 of Decree No. 140/2020/ND-CP, and Circular No. 48/2019/TT-BTC dated August 8, 2019, issued by the Ministry of Finance guiding the establishment and handling of provisions for inventory write-downs, investment losses, bad debt recoveries, and product warranty costs, goods, services, and construction projects at enterprises, and any amendments, supplements, or replacements (if any).

4. Accounts payable shall be financially handled according to Article 16 of Decree No. 126/2017/ND-CP, Paragraph 10 of Article 1 of Decree No. 140/2020/ND-CP.

5. For accrued interest arising from principal debts already included in the enterprise value which the post-equitization enterprise inherits and continues to monitor off-balance sheet, upon conversion to a joint-stock company, if such accrued interest is collected, after deducting related collection expenses (if any), the joint-stock company shall remit it to the state budget.

6. Domestic consulting organizations providing advisory services to determine the enterprise value must meet the criteria stipulated in Paragraph 5 of Article 12 of Decree No. 126/2017/ND-CP and point c of Paragraph 6 of Article 1 of Decree No. 140/2020/ND-CP. In cases where the equitized enterprise has organized the selection of consultants to determine the enterprise value and is currently implementing the determination of the enterprise value according to Decree No. 126/2017/ND-CP, the equitized enterprise does not need to reselect the consultant to determine the enterprise value.

7. For exchange rate differences resulting from the revaluation of monetary items denominated in foreign currencies at the time of determining the enterprise value, the equitized enterprise shall conduct the revaluation according to regulations and transfer it to the operating results of production and business activities.

Article 8. Financial Handling at the Time When the Enterprise is Officially Transformed into a Joint Stock Company

1. The enterprise undergoing joint stock transformation shall continue to implement financial management regulations for state-owned enterprises holding 100% of the charter capital from the time of determining the enterprise's value until the time the enterprise officially transforms into a joint stock company.

For enterprises that have determined their value and received approval from competent authorities on the joint stock transformation plan according to Decree No. 126/2017/NĐ-CP but have not yet officially transformed into joint stock companies, they may account for any exchange rate differences arising from revaluation at the time of determining the enterprise's value (if any) into the production and business results during the period before officially transforming into a joint stock company for financial settlement at the time of official transformation.

In cases where enterprises undergoing joint stock transformation simultaneously implement debt restructuring according to Government Resolutions, financial handling and accounting for debt resolution shall be carried out in accordance with Government Resolutions and guiding documents.

2. Any excess or deficiency in asset value compared to the value of the enterprise undergoing joint stock transformation, which has been decided and announced by the representative body of the owner, shall be handled in accordance with Clause 4, Article 10 of Decree No. 126/2017/NĐ-CP.

3. Debts receivable and payable at the time when the enterprise undergoing joint stock transformation first receives the Business Registration Certificate shall be handled in accordance with Articles 15 and 16 of Decree No. 126/2017/NĐ-CP, Clause 9 and Clause 10, Article 1 of Decree No. 140/2020/NĐ-CP.

4. Reward funds and welfare funds generated from the time of determining the enterprise's value to the time when the enterprise undergoing joint stock transformation first receives the Business Registration Certificate shall be managed and disbursed in accordance with regulations. The remaining balance (if any) shall be inherited and continued to be used by the new joint stock company.

5. For exchange rate differences arising from revaluation of monetary items denominated in foreign currency at the time of officially transforming into a joint stock company, the enterprise undergoing joint stock transformation shall revalue based on comparing with the exchange rate at the latest year-end or mid-year closing date for financial statements and shall not transfer these differences into production and business results. The balance of exchange rate differences at this time shall be transferred to the joint stock company (after the state-owned enterprise conversion) for monitoring and handling in accordance with Point b, Clause 2, Article 21 of Decree No. 126/2017/NĐ-CP, including handling of exchange rate difference interest being monitored under undistributed profits.

6. In cases where dividends distributed in the form of shares occur after the time of determining the enterprise's value until the time of officially transforming into a joint stock company (where dividend sources have not been included in the enterprise's value and have not been considered in the initial valuation plan), based on the Resolution on Dividend Distribution and notification of dividend rights, the enterprise undergoing joint stock transformation shall determine the value of the shares received to increase the state-owned capital value at the time of officially transforming into a joint stock company according to the price at the time of official transformation multiplied by the number of shares received.

If there is no Resolution on Dividend Distribution at the time of officially transforming into a joint stock company, the enterprise undergoing joint stock transformation shall instruct the Capital Representative to propose the receiving entity to issue a Profit Distribution Resolution (in cases where it controls the investment) or request the joint stock company to clearly explain, and later if the receiving entity issues a dividend distribution resolution, the dividends distributed in the form of shares belong entirely to the State (in cases where it does not control the investment or the Capital Representative has already proposed but the receiving entity still has not issued a dividend distribution resolution). When the joint stock company transfers these shares, the joint stock company shall remit 100% of the proceeds after deducting tax liabilities (if any) and costs for share transfer in accordance with the law.

At the time of officially transforming into a joint stock company, the enterprise undergoing joint stock transformation shall use the provision fund to handle losses from financial investments outside the enterprise (if any) and reverse the remaining provision back into the production and business results of the enterprise undergoing joint stock transformation. New provision shall be made by the joint stock company after officially commencing operations.

After receiving the first Business Registration Certificate, the joint stock company shall be responsible for fulfilling financial obligations, procedures for land allocation, land lease, land use right certificates, ownership certificates of houses and other assets attached to the land in accordance with current land laws and tax management laws.

The tax authority shall complete tax settlement and payment of state budget revenues of the enterprise undergoing joint stock transformation within the prescribed time limit after receiving the first Business Registration Certificate in accordance with the Law on Tax Administration.

Article 9. Transfer between the joint-stock company and the corporation

1. The basis for the enterprise to prepare the transfer dossier and organize the handover to the corporation includes: financial statements at the time of the first registration of the joint-stock enterprise that have been audited; settlement of taxes and other amounts payable to the state budget with the tax authority; settlement of proceeds from the joint-stock conversion; settlement of joint-stock conversion costs; settlement of support funds for redundant employees (if any); decision on announcing the actual value of the state capital at the time when the enterprise officially becomes a corporation by the representative body of the owner and the re-prepared financial statements at the time of officially becoming a corporation after approval by the representative body of the owner.

2. After the joint-stock enterprise completes the re-preparation of financial statements in accordance with Clause 5, Article 21 of Decree No. 126/2017/NĐ-CP, the Steering Committee and the Working Group will coordinate to urge and monitor the handover process between the joint-stock enterprise and the corporation. The handover must be recorded in a protocol accompanied by all relevant documents related to the joint-stock conversion process under the witness of the representative body of the owner. The handover protocol must clearly record the rights and obligations of the parties involved; matters requiring further processing after the handover (if any), specifically as follows:

a) The handover dossier from the joint-stock enterprise to the corporation includes:

- Dossier determining the enterprise's value and the decision announcing the enterprise's value, including the state capital value at the enterprise according to the books and after reassessment.

- Re-prepared financial statements at the time of officially becoming a corporation after approval by the representative body of the owner.

- Reports on the settlement of joint-stock conversion costs and amounts payable to the Enterprise Restructuring and Development Fund; Report on the settlement of support funds for redundant employees.

- Decision approving the state capital value at the time of becoming a corporation by the representative body of the owner.

- Protocol of asset and capital handover established at the time of receiving the first business registration certificate for the joint-stock enterprise (including a detailed list of receivables and payables handed over for the corporation to continue to inherit and financial issues requiring further resolution - if any); including dossiers on land and real estate properties that the joint-stock enterprise is monitoring and using but not retained according to the approved restructuring and utilization plan but not yet recovered by the competent authority (if any).

- Reports on labor conditions; land utilization plans of the enterprise approved by the representative body of the owner or managed and utilized by the enterprise.

- Settlement report of taxes of the joint-stock enterprise.

b) Handover participants include:

- Representative of the representative body of the owner.

- Representative of the Economic Group, Corporation, Parent Company (in the case of converting a member enterprise of the Economic Group, Corporation, subsidiary into a joint-stock enterprise), General Director/Manager, Chief Accountant, and representative of the trade union of the joint-stock enterprise - representing the transferring party.

- Chairman of the Board of Directors, General Director/Manager, Chief Accountant, and representative of the trade union of the corporation - representing the receiving party.

In case the Legal Representative, Chief Accountant is absent due to objective reasons (retirement, death, job transfer), the representative body of the owner/joint-stock enterprise has the responsibility to appoint a legal representative to carry out the handover.

- Representative of the State Capital Investment Corporation for enterprises undergoing joint-stock conversion that are transferred to the State Capital Investment Corporation for ownership representation.

c) The handover protocol must contain signatures of all handover participants and must clearly record:

- Asset, capital, land, and labor situation at the time of receiving the first business registration certificate for the joint-stock enterprise.

- Rights and obligations that the corporation continues to inherit.

- Issues that the corporation is responsible for continuing to resolve.

d) The representative body of the owner is responsible for sending the handover protocol to the tax management agency to monitor and urge payment of amounts payable to the state budget.

đ) In cases where the joint-stock enterprise includes the parent company and wholly-owned limited liability companies held by the parent company: The handover of joint-stock conversion for wholly-owned limited liability companies held by the parent company is carried out similarly to the handover of joint-stock conversion for the parent company.

e) After the new competent authority approves the official land price, the representative body of the owner directs the enterprise to pay into the state budget the entire difference between the temporarily calculated land use value included in the enterprise value and the reassessed land use value determined by the competent authority (if any).

Section 3

DETERMINATION OF ENTERPRISE VALUE BY ASSET METHOD

Article 10. Determining the Actual Value of Various Types of Assets of Enterprises

The determination of enterprise value according to the asset method shall be carried out in accordance with the provisions of Section 2 Chapter III of Decree No. 126/2017/ND-CP, Clause 13, Clause 14, Clause 15, Clause 16, Clause 17 of Article 1 and Clause 6, Clause 7 of Article 3 of Decree No. 140/2020/ND-CP, and the following specific guidance contents:

1. The actual value of each asset of the enterprise is determined in Vietnamese dong based on the list of assets recorded in the accounting books of the enterprise.

2. For tangible assets:

a) Only revalue those assets that the joint-stock company continues to use.

b) The actual value of the asset equals the Original Cost calculated based on the market price at the time of determining the enterprise value multiplied by the Remaining Quality of the asset at the time of determining the enterprise value.

Where:

- Market price is:

+ The price of new assets of the same type currently being bought and sold on the market including transportation and installation costs (if any). If it is a special asset not available on the market, the purchase price is calculated based on the price of a new equivalent asset from the same country of production with the same capacity or similar features. In cases where there is no equivalent asset, the price recorded in the accounting books (including assets invested or purchased with foreign currency) is used.

+ For real estate assets: The market price is the basic construction unit price or investment cost rate prescribed by the competent authority at the time closest to the time of determining the enterprise value. In cases where there is no regulation, the book value is used, taking into account the inflation factor in basic construction.

For newly completed real estate assets within three (03) years before the time of determining the enterprise value, the final settlement value approved by the competent authority shall be used. In exceptional cases, if the project has been put into use but not yet approved by the competent authority, the provisional value recorded in the accounting books shall be used.

- The remaining quality of the asset is determined as a percentage compared to the quality of new assets of the same type purchased or newly constructed, in compliance with state regulations on safety conditions for using and operating assets; ensuring product quality; environmental hygiene according to the guidelines of the relevant ministries managing economic and technical sectors. In cases where there is no state regulation, the asset quality is determined as follows:

+ For machinery and equipment; transport means; transmission equipment; management tools and other fixed assets, they are revalued based on actual conditions but not less than twenty percent (20%) of the quality of new assets of the same type purchased;

+ For real estate assets, it is not less than twenty percent (20%) of the quality of newly constructed assets of the same type.

c) Fixed assets that have been fully depreciated; tools and management equipment that have been fully allocated to business expenses but continue to be used by the joint-stock company must be revalued to include in the enterprise value according to the principle of not being lower than twenty percent (20%) of the value of new assets, tools, and equipment.

d) For enterprises undergoing shareholding transformation with tangible assets such as planted forests and orchards, when determining the value of the shareholding enterprise, the value of planted forests and orchards is determined in accordance with Circular Joint Circular No. 17/2015/TTLT-BNNPTNT-BTC dated April 22, 2015 of the Ministry of Agriculture and Rural Development - Ministry of Finance, Circular No. 32/2018/TT-BNNPTNT dated November 16, 2018 of the Ministry of Agriculture and Rural Development stipulating valuation methods for forests; forest price range and any subsequent amendments, supplements, or replacements (if any).

đ) For assets formed under BOT contracts, industrial infrastructure, the value is determined in accordance with Clause 6, Clause 7 of Article 27 of Decree No. 126/2017/ND-CP.

e) For existing assets at the enterprise (infrastructure assets; other assets under management and use; unfinished construction projects) funded by public investment and recognized as state assets entrusted to the enterprise for management, exploitation, and use without being counted as state capital components in the enterprise according to the laws on the management and use of state assets, shall not be included in the enterprise value during the shareholding transformation.

3. Cash assets including cash on hand, deposits, and securities (deposit certificates, bills, promissory notes, bonds) of the enterprise are determined as follows:

a) Cash on hand is determined based on the inventory reconciliation report.

b) Deposits are determined based on the confirmed balance with the bank where the enterprise maintains its account.

c) Securities are determined based on the transaction price on the market. If there is no transaction, the face value of the security plus accrued interest (if any) up to the time of determining the enterprise value is used.

4. Accounts receivable included in the enterprise value are determined based on the actual balance in the accounting books and after processing as specified in Article 15 of Decree No. 126/2017/ND-CP and Clause 9 of Article 1 of Decree No. 140/2020/ND-CP.

5. Uncompleted production and business costs, uncompleted basic construction investment costs, and costs related to compensation, relocation, and land leveling are determined based on the actual occurrence recorded in the accounting books.

Uncompleted production and business costs, uncompleted basic construction investment costs which are uncompleted financial lease investments of credit institutions shall use the audit results of the financial statements to determine the asset value in accordance with Clause 3 of Article 27 of Decree No. 126/2017/ND-CP and Clause 13 of Article 1 of Decree No. 140/2020/ND-CP.

6. The value of collateral and short-term and long-term deposits is determined based on the actual balance in the accounting books after confirmation.

7. The determination of the post-tax profit margin over the average state capital for five (05) years prior to the time of determining the enterprise value to calculate the potential development value of the shareholding enterprise is determined in accordance with Point b Clause 2 of Article 31 of Decree No. 126/2017/ND-CP.

For joint-stock enterprises undergoing privatization that have not operated for a full period of five (5) years up to the valuation date of the enterprise, the determination of the post-tax profit rate on average state capital shall be carried out in accordance with Article 31 of Decree No. 126/2017/NĐ-CP and the following provisions:

- The actual number of operating years shall be taken into account without counting the year in which planned losses occur.

- In cases where the owner increases state capital at the first-tier enterprise or the first-tier enterprise increases investment capital at the second-tier enterprise due to the acceptance of investment projects, assets, or capital from other units, the average state capital for privatization shall be determined based on the state capital at the time of the most recent decision to increase capital.

Chapter III

ANNOUNCEMENT OF INFORMATION AND IMPLEMENTATION PROVISIONS

Article 11. Announcement of Information

Joint-stock enterprises undergoing privatization must publicly announce information about the privatization process of the enterprise in accordance with Clause 1 of Article 11 of Decree No. 126/2017/NĐ-CP within the latest ten (10) working days from the date of receiving decisions and documents from competent authorities regarding financial issues, labor, land related to the privatization process, and the contents stipulated in Clause 1 of Article 11 of Decree No. 126/2017/NĐ-CP. The enterprise must publicly announce this information on its website and submit it to the Government's Electronic Portal; simultaneously, it must send it to the representative body of the owner of the joint-stock enterprise, the Ministry of Finance, and the Steering Committee for Enterprise Reform and Development.

Article 12. Implementation Provisions

1. This Circular takes effect from August 7, 2021.

2. This Circular replaces Circular No. 41/2018/TT-BTC dated May 4, 2018, issued by the Ministry of Finance, guiding certain contents regarding financial handling and determining the value of enterprises when transferring state-owned enterprises and wholly state-owned limited liability companies to joint-stock companies.

3. During implementation, if there are any difficulties, units are requested to report them to the Ministry of Finance for consideration and resolution./.