Circular No. 48/2006/TT-BTC amends and supplements certain provisions of Circular No. 26/2002/TT-BTC dated March 22, 2002 guiding financial handling when converting state-owned enterprises and enterprises of political organizations and social-political organizations into limited liability companies with one member.

CIRCULAR

Amending and supplementing certain provisions of Circular No. 26/2002/TT-BTC dated March 22, 2002 of the Ministry of Finance guiding financial treatment when converting state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member

Pursuant to Decree No. 145/2005/NĐ-CP dated November 21, 2005 of the Government amending and supplementing certain articles of Decree No. 63/2001/NĐ-CP dated September 14, 2001 of the Government on converting state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member, the Ministry of Finance guides the amendment and supplementation of certain provisions of Circular No. 26/2002/TT-BTC dated March 22, 2002 of the Ministry of Finance guiding financial treatment when converting state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member as follows:

1. Amend the name of the Circular as follows:

The name of Circular No. 26/2002/TT-BTC shall be amended to "Circular guiding financial treatment when converting state-owned companies (including holding companies and parent companies), enterprises of political organizations and political-social organizations into limited liability companies with one member"

2. Amend and supplement Section I scope and objects of application as follows:

"State-owned companies (including holding companies and parent companies), enterprises of political organizations and political-social organizations, independent accounting subsidiaries, dependent units, and dependent units of state-owned companies that are decided by the State or political organizations and political-social organizations to convert (hereinafter referred to collectively as the enterprise) into a limited liability company with one member and hold 100% of the charter capital (hereinafter referred to collectively as the LLC)"

3. Amend and supplement Section II financial treatment when converting the enterprise into an LLC as follows:

a) Amend and supplement Point 1.1 Clause 1 Section II as follows:

"Inventory and determine the quantity of assets at the enterprise (including fixed assets and long-term investments, current assets and short-term investments, leased assets, held-for-others, consigned, entrusted, occupied assets), reconcile with accounting records to identify excess, shortage, assets under management and use; assets not under management and use; clearly identify the cause, responsibility of those involved and propose handling measures for excess, shortage, assets not under management and use. Evaluate the actual status and classify assets needed for use, unused assets, stagnant assets, assets awaiting liquidation, assets formed from welfare funds (if any), leased assets, held-for-others, processed, agency, consigned assets to recommend handling measures for each type of asset."

b) Amend and supplement the second bullet point of Point 1.2 Clause 1 Section II as follows:

"- For liabilities, a list of creditors must be established and each liability must be identified. Among them, clearly analyze overdue liabilities, principal, interest, liabilities without an object to pay, individual and collective responsibilities for overdue liabilities to recommend solutions."

c) Amend and supplement some provisions at Point 2.1 Clause 2 Section II as follows:

- Amend and supplement the second bullet point: "For leased, held-for-others, processed, agency, consigned assets: depending on the need, the enterprise agrees with the lessor, holder, processor, agent, consignee to continue to inherit or liquidate contracts before conversion.

For assets formed from welfare funds, the enterprise transfers to the LLC for management and use to serve the company's workforce.

For assets occupied by the enterprise without the right to manage and use, the enterprise must return the assets to their owners."

- Amend and supplement the second plus sign of the third bullet point: "The shortage of assets identified during inventory must be clearly identified and handled for lost assets and other property losses as follows:

+ Clearly identify the cause, responsibility of individuals and collectives and require compensation according to the law.

+ The difference between the remaining value of the asset recorded in the books and the compensation amount of individuals, collectives related, insurance organizations (if any) is covered by the financial reserve fund; if insufficient, it is recorded in the business results. If the enterprise incurs a loss due to recording this shortage in the business results, the state capital or capital of political organizations and political-social organizations in the enterprise can be reduced, the maximum reduction being equal to the enterprise's loss."

d) Amend and supplement the provision on "Unrecoverable receivables" at Point 2.2 Clause 2 Section II as follows:

"For unrecoverable receivables (including receivables specified in Circular No. 13/2006/TT-BTC dated February 27, 2006 of the Ministry of Finance guiding the establishment and use of reserves for inventory write-downs, investment losses, bad debts, and product warranty expenses at enterprises), the enterprise uses the bad debt reserve and financial reserve fund to cover after deducting compensation from related individuals and collectives. If these reserves are insufficient, the shortfall will be recorded in the business results. If the enterprise incurs a loss due to recording this shortfall in the business results, the state capital or capital of political organizations and political-social organizations in the enterprise can be reduced, the maximum reduction being equal to the enterprise's loss. Procedures and processes for handling unrecoverable receivables are carried out according to Circular No. 13/2006/TT-BTC dated February 27, 2006 of the Ministry of Finance."

đ) Amend and supplement Clause 3 Section II as follows:

"Within thirty days from the completion of the conversion process, the enterprise shall prepare financial statements at the time of conversion for submission to the competent authority for approval and as the basis for transferring to the limited liability company. Financial statements shall be prepared in accordance with current regulations. The enterprise must develop plans for handling assets, finances, debts, and clearly explain the handling of lost assets, uncollectible receivables recorded in the business results; surplus assets, non-payable debts shall be recorded as increased capital. For cases where enterprises undergoing conversion are subsidiaries of state-owned companies, the representative of the enterprise's owner shall be responsible and decide on the determination of inventory assets, capital, debts, and financial issues according to the prescribed scope and content, which must be tied to the converting enterprise. Strictly prohibit any actions exploiting the authority of the enterprise's owner representative to resolve existing financial issues for the entire state-owned company during the conversion of subsidiaries."

Competent authority to approve the enterprise's financial statements at the time of conversion:

+ Minister, Head of a ministry equivalent to a minister for state-owned companies under central ministries and sectors.

+ Chairman of the People's Committee of provinces and centrally-administered cities for state-owned companies established by the People's Committee of provinces and centrally-administered cities.

+ Leaders of political organizations and political-social organizations for enterprises managed by such organizations.

+ Board of Directors or General Director of state-owned companies (if the state-owned company does not have a Board of Directors) for independent-accounting subsidiaries, dependent-accounting units, and subsidiaries of state-owned companies."

e) Amend and supplement the first provision stipulated in Clause 5, Section II as follows:

"The enterprise transfers to the limited liability company all assets, capital, funds, debts up to the conversion date and approved financial statements along with related documents. The transfer from the enterprise to the limited liability company must be documented by a signed agreement between the representative of the enterprise's owner and the representative of the limited liability company's owner as provided in Clause 4, Article 1 of Decree No. 145/2005/ND-CP of the Government, serving as the basis for management, monitoring, inspection, and supervision."

4. Supplement the provisions on costs for implementing the conversion to a limited liability company as follows:

"Costs for implementing the conversion to a limited liability company include expenses related to the conversion of the enterprise into a limited liability company from the date the enterprise is decided to be converted into a limited liability company until the transfer between the enterprise and the limited liability company.

Implementation costs include:

- Costs for domestic training on limited liability company conversion.

- Costs for inventory, classification, and determination of asset status, capital, debts...

- Costs for developing conversion plans, drafting the Charter of organization and operation of the limited liability company.

- Other costs related to limited liability company conversion.

Conversion implementation costs are recorded in the business results of the company. Specific expenditure levels are determined by the enterprise's owner representative based on the principle of thrift and efficiency appropriate to the scale of the converting enterprise, with a maximum not exceeding twenty million dong for enterprises converting to a limited liability company with a registered capital below twenty billion dong, for enterprises converting with a registered capital from twenty billion dong to less than fifty billion dong, the expenditure shall not exceed thirty million dong, and for enterprises converting with a registered capital of fifty billion dong or more, the expenditure shall not exceed fifty million dong."

1. This Circular takes effect from May 15, 2013.

This Circular takes effect fifteen days from the date of publication in the Official Gazette. Other provisions in Circular No. 26/2002/TT-BTC of the Ministry of Finance that are not supplemented or amended in this Circular remain effective. In the course of implementation, if there are difficulties, please promptly report to the Ministry of Finance for research and guidance on resolution./.