Circular No. 49/2006/TT-BTC amends and supplements Circular No. 58/2002/TT-BTC guiding the Financial Regulations of a single-member limited liability company under state ownership, political organizations, and socio-political organizations.

CIRCULAR

Amending and supplementing Circular No. 58/2002/TT-BTC dated June 28, 2002 of the Ministry of Finance guiding the financial regulations of state-owned limited liability companies with one member, political organizations political-social organizations

Pursuant to Decree No. 145/2005/NĐ-CP dated November 21, 2005 of the Government amending and supplementing some articles of Decree No. 63/2001/NĐ-CP dated September 14, 2001 of the Government on the conversion of state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member, the Ministry of Finance amends and supplements some provisions of Circular No. 58/2002/TT-BTC dated June 28, 2002 of the Ministry of Finance as follows:

1. Amend the following terms: All phrases "state-owned enterprise" in Circular No. 58/2002/TT-BTC shall be amended to "state company".

2. Amend and supplement Point 2, Part I as follows:

"2. The limited liability company with one member operates in accordance with the Enterprise Law, guiding documents for the Enterprise Law, Decree No. 63/2001/NĐ-CP dated September 14, 2001, Decree No. 145/2005/NĐ-CP dated November 21, 2005, Circular No. 58/2002/TT-BTC dated June 28, 2002, this Circular, and the Company's Charter, provided that they do not contravene the regulations of the State."

3. Amend and supplement Item 1.1, Point 1, Section A, Part II as follows:

“- The actual owner’s capital recorded in the accounting books at the time of converting from a state company, enterprise of a political organization, or political-social organization into a company according to Decree No. 63/2001/NĐ-CP dated September 14, 2001 and Decree No. 145/2005/NĐ-CP dated November 21, 2005 of the Government, or the owner’s capital invested at the time of establishing the company;"

4. Amend Point 3.3, Section A, Part II as follows:

"3.3. Management and use of fixed assets: Fixed assets are managed and used in accordance with the regulations of the State and the Company's Charter. All existing fixed assets of the company (including unused and unnecessary fixed assets awaiting liquidation) must be depreciated according to current regulations, except for fixed assets belonging to public welfare projects and housing. Depreciation of fixed assets used in production and business operations is accounted for as business expenses; depreciation of unused, unnecessary, and awaiting liquidation fixed assets is accounted for as other expenses. The minimum depreciation rate is determined based on the maximum usage period specified in Appendix 1 issued together with Decision No. 206/2003/QĐ-BTC dated December 12, 2003 of the Minister of Finance regarding the management, use, and depreciation of fixed assets. There is no cap on the maximum depreciation rate. The General Director or Director of the company decides on the specific depreciation rate but it cannot be lower than the minimum depreciation rate.”

5. Amend and supplement Paragraph 2, Point 5, Section A, Part II as follows:

“Before closing the accounting books to prepare the annual financial report, the company must inventory and reconcile each debt with creditors and debtors. The company has the right to sell receivables according to the law, including receivables within the due date, difficult-to-collect receivables, and unrecoverable receivables to recover capital. The selling price of receivables is agreed upon by both parties. In the case where the sold receivable is an unrecoverable receivable that the company has processed according to State regulations and is being monitored outside the balance sheet, the amount recovered from selling this receivable is considered as other income. If the sold receivable is an unrecoverable receivable being monitored within the balance sheet and is not recoverable, the difference between the amount received from selling the receivable and its book value is treated as an unrecoverable receivable.

For receivables identified as difficult to collect, a provision must be established according to current regulations. Unrecoverable receivables require the company to handle them and be compensated by the bad debt reserve after deducting compensation from related individuals or groups, financial reserves, if there is still a shortfall, it will be accounted for as business expenses of the company.”

6. Amend the end of Point 6.3, Section A, Part II as follows:

“The value of missing or lost assets after compensating with personal or group compensation, insurance organization compensation, if there is still a shortage, it will be accounted for as production and business expenses of the period.”

7. Add Point 7 to Section A, Part II as follows:

“7. The handling of exchange rate differences shall be carried out in accordance with Circular No. 105/2003/TT-BTC dated November 4, 2003 of the Ministry of Finance guiding accounting practices based on six (06) accounting standards issued together with Decision No. 165/2002/QĐ-BTC dated December 31, 2002 of the Minister of Finance.”

8. Amend and supplement Item 8, Subsection a, Point 2.1, Section B, Part II as follows:

“- The value of provisions for write-downs of inventory, severance pay, losses from financial investments, bad debts, and warranties for goods and construction projects at the enterprise.

The establishment and use of provisions are based on the actual situation of the company and the regulations stipulated in Circular No. 82/2003/TT-BTC dated August 14, 2003, and Circular No. 13/2006/TT-BTC dated February 27, 2006 of the Ministry of Finance."

9. Amend Point 1, Section C, Part II as follows:

"1. The profit realized in the year by the company is the total of operating profit and other income. Operating profit includes: The difference between sales revenue from selling products, goods, and providing services and the total cost of all products, goods consumed or service costs incurred during the period; the difference between financial income and financial expenses incurred during the period. Other income is the difference between income from other activities and other activity expenses incurred during the period."

10. Delete Subsection b of Point 2, Section C, Part II; Transfer Subsection c of Point 2, Section C, Part II to Subsection b of Point 2, Section C, Part II and amend as follows:

"b. After deducting subsection a, the remaining profit is distributed in proportion to the equity capital invested in the company and the average self-raised capital of the company during the year."

- The portion of profit distributed according to the invested equity capital at the company shall be used for additional reinvestment to supplement the equity capital at the company; in cases where there is no need to supplement the capital, the representative of the owner decides to reallocate it to the centralized fund for investment in other companies in accordance with current regulations.

- Profit distributed according to self-raised capital shall be allocated as follows:

+ Allocate a minimum of 30% into the Company's Development Investment Fund.

+ Allocate up to 5% to establish a fund for the Management Board of the company. The annual allocation amount shall not exceed 500 million VND (for companies with a Board of Directors) or 200 million VND (for companies without a Board of Directors), provided that the pre-tax return on equity of the company must be equal to or greater than the planned return; in cases where the actual pre-tax return is lower than the plan, the allocation for this fund must be reduced correspondingly with the decrease in profit compared to the plan.

+ The remaining profit shall be allocated to the company's incentive and welfare fund. The allocation amount to each fund shall be decided by the Board of Directors or the Chairman of the company after consulting the opinion of the Trade Union Executive Committee of the company.

11. Amend and supplement Point 3, Subsection C, Part II as follows:

"3. The Board of Directors or the Chairman of the company shall propose to the owner to decide on the specific ratio for allocating funds to the company's development investment fund, incentive and welfare fund, and bonus fund for the Management Board of the company."

12. Delete Point 4, Subsection C, Part II and transfer Point 3, Subsection C, Part II to become Point 4, Subsection C, Part II.

This Circular takes effect fifteen days from the date of publication in the Official Gazette; Other provisions in Circular No. 58/2002/TT-BTC dated June 28, 2002, of the Ministry of Finance, which have not been amended or supplemented in this Circular, remain in force. During implementation, if there are any difficulties, please promptly report them to the Ministry of Finance for research and guidance on resolution./.