Circular No. 50/TC-TCÐN guides the implementation of regulations on land rental fees, water surfaces, and sea surfaces for foreign investment projects.

MINISTRY OF FINANCE ********	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ********
Number: 50-TC/TCDN	Hanoi, August 30, 1996

 

CIRCULAR

OF THE MINISTRY OF FINANCE NO. 50 TC/TCDN ON AUGUST 30, 1996 GUIDING ISSUES REGARDING FINANCE, SALE OF SHARES AND ISSUE OF SHARE CERTIFICATES IN THE TRANSFORMATION OF SOME STATE ENTERPRISES INTO JOINT STOCK COMPANIES ACCORDING TO DECREE NO. 28/CP ON MAY 7, 1996 OF THE GOVERNMENT

Implementing Decree No. 28/CP dated May 7, 1996 of the Government on the transformation of some state enterprises into joint stock companies (hereinafter referred to as the privatization of state enterprises), the Ministry of Finance guides issues regarding finance, sale of shares and issue of share certificates as follows:

Part One:

FINANCIAL ISSUES

I. GENERAL PROVISIONS

1. State enterprises transformed into joint stock companies (also known as the privatization of state enterprises) is a measure to transfer enterprises from state ownership to a multi-component ownership form in which state ownership remains.

The privatization of state enterprises aims to mobilize capital for investment in production development, promote the process of addressing and overcoming current shortcomings of state enterprises, create conditions for capital contributors and workers to truly own the enterprise, and enhance the efficiency of the enterprise's business operations.

2. In implementing the privatization of state-owned enterprises, it is necessary to determine the actual value of the enterprise, the par value of shares, and the number of shares sold to shareholders.

The actual value of the enterprise is determined based on the decision to allocate capital to the enterprise, plus or minus changes in capital and other factors that affect the enterprise's value at the time of privatization, including: fixed assets, working capital, land compensation funds from state budget sources, and self-accumulated capital of the enterprise. All these sources of capital belong to the state and are included in the enterprise's asset value.

In all three cases: maintaining the current value of the enterprise, issuing additional shares, selling part of the current value of the enterprise, or separating a portion of the enterprise that meets the conditions for privatization, it is necessary to clearly determine the entire enterprise value before privatization. Assets included in the enterprise value for calculating shares are not limited to state budget capital and self-accumulated capital (fixed assets, working capital), but may also include other sources of capital depending on the agreement between the buyer and seller (such as unconverted investment capital, borrowed capital, payable debts, etc.). Based on the enterprise value, the par value of the share determines the total number of shares sold.

3. Enterprises must address financial issues such as losses, stagnant inventory, slow turnover, difficult-to-collect receivables, and promptly pay any remaining amounts due to the state budget before privatization, and develop plans to handle remaining issues after privatization.

4. After privatization, enterprises must operate according to the Law on Enterprises, and the leadership structure of joint-stock companies must be established according to the Law on Enterprises.

The General Department of State Capital and Asset Management under the Ministry of Finance is responsible for managing state shares in joint stock companies, except in cases where the state delegates this responsibility to another state enterprise according to Clause 2, Article 17 of Decree No. 28/CP dated May 7, 1996 of the Government.

5. Depending on the specific situation during the privatization of enterprises, the proceeds from the sale of shares should be handled accordingly.

- In the case of raising additional capital according to approved feasibility studies for further investment or to repay previous loans, the proceeds should be deposited into a Treasury account for use in investment and debt repayment purposes.

- In the case of selling part of the state-owned value to shareholders, the proceeds must be deposited into a separate account of the state budget and can only be used for investment in expanding production and business activities as stipulated by the Ministry of Finance.

6. During the privatization of state enterprises, business operations must not be interrupted. Newly formed joint stock companies must inherit the operations of the old enterprise and take measures to continue and develop production after privatization.

7. Dividends on shares are determined based on the production and business capital of the enterprise, which includes fixed and working capital contributed by shareholders.

8. State enterprises may use the entire balance of the reward and welfare fund in cash up to the time of privatization to distribute among employees to purchase shares on a fair and reasonable basis, promoting production development based on years of service and contributions of employees to the enterprise, with the participation of the enterprise trade union.

Public facilities such as cultural houses, clubs, clinics, convalescent homes, kindergartens, and primary schools, which exist under the welfare fund, shall not be divided but maintained and developed to ensure common welfare in the enterprise after privatization.

9. Joint-stock companies are entitled to a 50% reduction in corporate income tax for two years starting from the date the state-owned enterprise begins operating under the Law on Enterprises.

In cases where joint stock companies meet the conditions specified in Article 15 of Decree No. 29/CP dated May 12, 1995 of the Government "on detailed regulations for implementing the Law on Encouraging Domestic Investment" with higher rates and periods, they shall apply the provisions of Decree No. 29/CP mentioned above.

10. All assets in state enterprises undergoing privatization belong to shareholders. When joint stock companies complete procedures to transfer ownership of assets from the state to shareholders, they are exempted from stamp duty.

11. Rights of employees:

Enterprises undergoing privatization may reserve 10% of the enterprise value, represented by share certificates, to grant to employees based on their years of service and job performance. The maximum value of share certificates granted to each person shall not exceed six months' salary according to the state-defined wage scale. These share certificates belong to state ownership, and employees will receive dividends at the regular share rate until the end of their lives. The joint stock company shall maintain a separate record for this type of share certificate.

Privatized enterprises may use 15% of the enterprise value (for enterprises with self-accumulated capital accounting for 40% or more of the enterprise value, they may use 20% of the enterprise value) to sell on credit to employees currently working in the enterprise who will continue to work in the joint stock company. The total number of shares sold on credit shall not exceed the number of shares purchased in cash by employees.

Employees receiving these shares will receive annual dividends. Each year, employees must repay at least 20% of the value of the shares purchased on credit and 4% interest on the outstanding debt. If employees fail to repay the debt for two consecutive years, they must return the value of the shares purchased on credit to the state. Until the full payment of the shares purchased on credit is made, employees shall not have the right to inherit, buy, or mortgage them.

The list of individuals eligible to receive share certificates, the amount allocated (as per point 11 above), those purchasing shares, and the amount purchased on credit shall be decided by the Enterprise Privatization Board after obtaining a consensus opinion from the Party and Trade Union organizations of the enterprise.

The subjects eligible for issuance and deferred payment of shares are employees within the establishment and those under contracts of three years or more with the enterprise at the time of shareholding reform who continue to work for the joint-stock company thereafter. The deferred payment share purchase contract shall be signed by the buyer and the General Director of the enterprise, confirmed by the Ministry of Economic and Technical Management (for central enterprises), People's Committee of provinces and cities (for local enterprises), Board of Directors established pursuant to Decision No. 91/TTg of the Prime Minister, and the Ministry of Finance (the system of State Capital and Asset Management General Departments in enterprises).

This contract is sent to the State Treasury, where the joint-stock company conducts transactions, and the General Department of State Capital and Asset Management in enterprises under the Ministry of Finance for monitoring.

12. Costs for implementing the shareholding reform of the enterprise include expenses related to the process of converting a state-owned enterprise into a joint-stock company, including:

- Printing costs for documents.

- Fees for auditing services.

- Fees for preparing the shareholding reform plan (if deemed necessary).

- Expenses for appraising the enterprise's value.

- Advertising costs.

- Costs for selling shares.

- Shareholders' meeting...

All costs incurred during the implementation of the shareholding reform are included in the value of the shareholding-reformed enterprise.

Specifically, the cost of purchasing share certificates is borne by the purchaser of the shares.

The total expenditure during the implementation of the shareholding reform of the enterprise is controlled as follows:

- For state capital of up to three billion dong, the shareholding reform costs shall not exceed five percent (5%) of the enterprise's value.

- For state capital between three billion dong and ten billion dong, an additional three percent (3%) of the increase in enterprise value is allowed.

- For state capital exceeding ten billion dong, an additional one percent (1%) of the increase in enterprise value is allowed.

II. DEVELOPMENT OF THE SHAREHOLDING REFORM PLAN

A. ANALYSIS AND ASSESSMENT OF THE CURRENT STATUS OF THE ENTERPRISE:

The shareholding reform board at the enterprise analyzes and assesses the current economic and financial status of the enterprise.

a) Summarize the formation process and characteristics of the enterprise's production and business activities over the past three years before the shareholding reform, such as industry, scale, production and business tasks.

b) Analyze the current financial situation of the enterprise based on the audited reports of production and business operations for the last three years (according to the indicators in Appendix No. 1). Based on these data, analyze in detail the following contents:

1. For fixed assets and fixed capital: Analyze and evaluate in detail the technical status of each asset such as machinery and equipment, capacity already utilized, and propose the actual value of each asset. If the asset was formed through borrowing, it is necessary to analyze the total amount borrowed, the amount repaid, and the remaining debt. Measures to repay the loan.

Analyze unfinished construction projects according to budgeted and actual prices, by sources of investment, evaluate the feasibility of the project, and propose subsequent handling measures.

2. The enterprise prepares a list of land area usage, including the land area used for public welfare facilities.

3. For circulating assets: analyze the accumulation of materials and goods, poor quality, shortage in quantity and type.

4. Analyze the results of production and business operations, compare the profits (losses) of the enterprise before the shareholding reform with actual revenue, and calculate the profit margin based on operating capital.

5. For other sources of capital such as joint venture and associated capital, borrowed capital, clearly state the total amount and physical assets at the time of shareholding reform, specifying the name of the unit or individual as the owner of that capital source. Clearly state the profit-sharing or interest repayment methods of those joint ventures. Enterprises with private shares formed before shareholding reform need to analyze the original capital, residual capital determined in accordance with the policy of transforming private commercial and industrial assets after the South's liberation (1975) and subsequent opening policies, and the capital that has been preserved.

6. Regarding income and income distribution: the enterprise needs to compare the basic wage fund with revenue, the highest and lowest income levels within the enterprise.

7. Accounts receivable and payable: it is necessary to clearly analyze overdue debts, debts that cannot be collected, and debts that cannot be paid.

8. Other issues related to the production and business activities of the enterprise: It is necessary to analyze the conditions and capabilities, difficulties and advantages of the enterprise's business, such as product quality, domestic and export markets, patents and inventions, business location, trademarks, etc.

In cases where only a part of the enterprise is to be shareholding reformed, carefully analyze the planned shareholding reform part. If the enterprise only calls additional capital to expand production and business operations, carefully analyze the reasons and capital needs for expansion.

B. PREPARATION OF THE PRODUCTION AND BUSINESS PLAN FOR THE ENTERPRISE AFTER SHAREHOLDING REFORM:

The shareholding reform board of the enterprise is responsible for preparing the production and business plan after the shareholding reform for three to five years (Appendix No. 2). The content of the plan includes:

- Purpose and scale of production and business after the shareholding reform.

- Investment plan for expanding production development, replacing and modernizing equipment, production lines, and technology, and utilizing unused, idle, or pending liquidation assets to enhance production and business efficiency.

- Product plan including: improving traditional product quality, new products, and market consumption arguments for both domestic and foreign markets.

- Labor utilization and wage plan aimed at increasing labor productivity and production and business efficiency, and plans for handling surplus labor not yet resolved before the enterprise's shareholding reform.

- Financial plan including revenue, cost, selling price plans for major products, total expenses, pre-tax and post-tax profits, annual return, and proposals for annual dividend distribution to shareholders based on this.

- Proposed organizational structure and management system for the joint-stock company.

C. JOINT-STOCK TRANSFORMATION PLAN:

- For the form of selling a portion of the enterprise's value, set out the proportion of state-held shares, the proportion sold to other shareholders (including the proportion sold to employees within the enterprise and the proportion sold outside the enterprise).

- Forecast the par value of shares, types of shares intended to be issued, time and place of issuance, and recommend entities (Commercial Banks, Financial Companies, etc.) to act as agents for selling shares (details according to regulations on share sales and issuance as stipulated later).

- Plan for addressing existing issues related to capital and financial usage that cannot be fully resolved before transformation and must be inherited and addressed after transformation (specific details below).

D. AUTHORITY TO APPROVE THE JOINT-STOCK TRANSFORMATION PLAN:

The enterprise's shareholding reform board develops a shareholding reform plan and reports to the Ministers of relevant Ministries (for central enterprises), Chairmen of Provincial and Municipal People's Committees (for local enterprises), and the Board of Directors of State-owned Joint Stock Corporations established by the Prime Minister's decision (members of Corporation 91) for their opinions on state-owned enterprises with over 3 billion dong in capital before submitting to the Central Shareholding Reform Steering Committee for approval by the Prime Minister.

The Minister, Chairman of the People's Committee of provinces and centrally-administered cities, and Management Board of Joint Stock Company 91 approve the joint-stock transformation plan for enterprises with up to 3 billion VND in state capital.

III. DETERMINATION OF ENTERPRISE VALUE

1. Basis for determining enterprise value:

a) On accounting records:

- Latest capital contribution figures.

- Audit report on final accounts for three years prior to transformation.

- All related accounting documents.

b) Actual inventory data:

- Inventory documentation on assets, capital, materials, goods, etc.

- Verified reconciliation statements of receivables and payables.

- Joint venture and cooperation contracts (if applicable).

- Other financial investment-related documents.

c) Current status and current prices of each type of asset, materials, and goods.

2. Determination of fixed asset value:

Fixed assets must clearly define original cost, depreciation value, and remaining value, for each currently used, unused, not yet used, leased, and pending disposal asset (Annexes 3a, 3b, 3c).

In cases where enterprises have intangible fixed assets such as patents or other intangible assets, they should also be included in the enterprise's assets (see item 7 below).

All fixed assets, after inventory and valuation based on book values, the enterprise bases its reassessment of the actual remaining value of assets on the remaining quality and current market prices of each type of asset, and the value of intangible assets. Specifically, for buildings and structures, the current local pricing table where the enterprise is headquartered shall be used to reassess their value (Appendix No. 3).

Land in use: The value of land is not included in the enterprise's value. The State allows enterprises and joint-stock companies to use land for a certain period. Joint-stock companies must pay annual land rent and comply with the Land Law and other State regulations on land use. Before transferring land use rights to joint-stock companies, state-owned enterprises have paid certain amounts such as compensation, site leveling costs, which are included in the enterprise's value.

3. Determination of circulating asset value:

Includes: Capital in cash, materials and goods (based on actual inventory and revalued according to current market prices); receivables, other circulating asset values (mortgages, deposits, pledges, short-term loans, etc.) (Appendix 3D).

COMBINED VALUE OF ENTERPRISE CIRCULATING ASSETS IS AS FOLLOWS:

Value of Circulating Assets = Cash Capital + Revalued Materials and Goods + Receivables - Difficult-to-collect Debts + Other Circulating Asset Values

TSLĐ = bằng + VTHH sau + khoản - khó + TSLĐ

thực tế tiền khi đánh phải đòi khác

giá lại thu

4. Value of unfinished construction projects: For construction projects tied to the enterprise's production and business activities that the joint-stock company intends to continue building, they should be valued similarly to the fixed assets mentioned above.

5. Value of joint venture and associated capital contributions (if any): The value of joint venture capital contributions must be reassessed based on the actual amount according to the valuation level at the time of shareholding reform. Joint venture capital contributions include cash, materials and goods, fixed assets, land value (compensation and site leveling costs), etc.

6. Determination of capital formation sources:

a) Shareholder equity: Clearly identify state-owned capital sources (budget allocation, self-supplementation), joint venture contributions, and other ownership sources (details of each source).

b) Debts payable: Including short-term, long-term, and other debts (Annex 3E).

After revaluation of each asset type and determination of enterprise value formation, it is calculated using the following formula:

Enterprise Value after Revaluation = Fixed Asset Value + Circulating Asset Value + Unfinished Construction Project Value + Joint Venture and Cooperative Contributions Value

sau kiểm kê = trị + trị + XDCB + liên doanh, -

đánh giá lại TSCĐ TSLĐ dở dang liên kết

- Debts Payable - Non-receivable Debts + Loss Reserves + Received Contributions

- phải - trả không + khoản + PL + nhận

trả có chủ trả lỗ KT LD

c) Losses: Include: previous year losses, uncollectible debts, remaining losses after insurance compensation and liability payments from the person causing damage, lost or missing materials and goods, reduced values after processing according to point 8 below, and other losses.

d) Welfare and incentive fund: Includes assets formed from the welfare and incentive fund, and unspent monetary welfare and incentive funds.

e) Joint venture capital.

7. Determining the enterprise's advantages: The basis for determining the enterprise's advantages includes geographical location, reputable trademarks, good management levels, business effectiveness, etc., which are included in the enterprise's value when conducting shareholding reform.

LOWEST AMOUNT OF FINANCIAL SANCTION

The profit margin on average operating capital of the three years prior to corporatization shall be compared with the profit margin on operating capital of similar enterprises within the same technical economic sector according to the national economic classification of the State. The value of the advantage equals the difference in the profit margin on operating capital between the corporatized enterprise and the reassessed enterprise value after inventory valuation.

Example: The shareholding enterprise has the following average profit rates over three years:

	1993	1994	1995	(*) The basis for budgeting expenses is based on the current regulations of the Ministry of Finance regarding travel expenses for civil servants and employees of the State going on short-term business trips abroad funded by the state budget.
Profit after tax	770	831,6	881,2	2.482,8
Business Capital	3.500	3.600	3.750	10.850
P/capital ratio (%)	22	23,1	23,5	22,9

The profit rate of enterprises in the same industry as the shareholding enterprise but without advantages is as follows:

	1993	1994	1995	(*) The basis for budgeting expenses is based on the current regulations of the Ministry of Finance regarding travel expenses for civil servants and employees of the State going on short-term business trips abroad funded by the state budget.
Profit after tax	1.360	1.476	1.665	4.501
Business Capital	8.000	8.200	9.000	25.200
P/capital ratio (%)	17	18	18,5	17,9

Example: If the enterprise's value after revaluation is 4.5 billion dong, then the value of the enterprise's advantage will be:

4.5 billion dong x (22.9% - 17.9%) = 225 million dong

Thus:

Enterprise Value = Enterprise Value after Revaluation + (or -) Advantage Value + Shareholding Reform Costs

 

8. Handling existing issues regarding assets and capital before and after shareholding reform:

To determine the enterprise value comprehensively and accurately, the enterprise needs to handle the following existing issues:

+ Adjustments for price differences in materials, exchange rate differences, handled as capital increase or profit according to current regulations depending on specific circumstances.

For outstanding receivables, the enterprise must classify them: collectable receivables should be pursued for collection; difficult-to-collect receivables must be analyzed for both objective and subjective reasons and reported to the State Capital and Asset Management Authority at the enterprise for appropriate measures. In cases where debts cannot be collected: if due to objective reasons, they will be recorded as business losses deducted from the actual profits of the enterprise; if due to subjective reasons, individuals responsible will be held accountable and required to compensate.

+ Pay all amounts due to the budget and other debts to social organizations (Social Insurance, Health Insurance, etc.).

For lost or missing assets, materials, and capital: determine the cause clearly, if responsibility lies with individuals, they must compensate, the remaining amount the enterprise must cover using its reserve fund, if insufficient, it will be transferred to state losses along with asset valuation losses when corporatizing.

+ For assets and materials still in existence in the following forms:

- Unneeded or not yet needed fixed assets should be sold and liquidated immediately. If not completed, the joint-stock company will inherit and continue to process after shareholding reform.

When selling these assets and materials, public auction procedures must be followed with a Supervisory Board (the board includes the Price Control Agency, the State Capital and Asset Management Authority at the local level, and specialized management agencies).

The capital, asset values, or capital received through joint ventures, leases, or loans before corporatization must be clearly identified for the joint-stock company to accept and assume responsibility for settlement.

Enterprises with private capital contributions will have their portion determined and converted into stock values for continued participation in the shareholding enterprise.

In cases where existing issues regarding assets and capital of the enterprise undergoing shareholding reform remain unresolved, they are handed over to the joint-stock company for continued processing.

IV. AUDITING THE ENTERPRISE VALUE

The enterprise value review committee shall conduct the enterprise value audit after obtaining inventory data to re-evaluate the enterprise value and data verified by an independent auditing agency.

1. Enterprise Value Audit Committee:

a) The Central Review Committee: chaired by the Ministry of Finance, with members including the economic sector management ministry or the corporation established under Decision No. 91/TTg of the joint-stock enterprise, the People's Committee of the province or city where the enterprise is located, and other members comprising economic, financial, and technical experts appointed by the Ministry of Finance.

The Central Enterprise Value Review Committee is tasked with reviewing the value of enterprises with capital exceeding 3 billion VND (state capital according to the final accounts before corporatization) and enterprises that are members of corporations established under Decision No. 91/TTg.

The Central Review Committee is responsible for preparing records on the value of state enterprises, submitting them to the Minister of Finance for decision after receiving written agreement from the Minister of the economic sector management or the Board of Directors of the corporation established under Decision No. 91/TTg, and the Chairman of the People's Committee of the province or centrally-administered city.

b) The Enterprise Value Review Committee for state enterprises with capital up to 3 billion VND is chaired by the Ministry (for central enterprises), the People's Committee of the province or city (for local enterprises), and the Chairman of the Board of Directors (for members of the corporation established under Decision No. 91/TTg). Members include economic and financial experts from the Department of Finance, the Specialized Management Department, and the State Capital and Asset Management Authority at the enterprise.

The Review Committee is responsible for preparing records on the enterprise value before and after the review, submitting them to the Minister of Finance for decision after receiving written comments from the Minister of the economic and technical sector management (for central enterprises), the Chairman of the People's Committee of the province or city (for local enterprises), and the Board of Directors (for members of the corporation established under Decision No. 91/TTg).

2. Audit methods:

Based on approved final accounts, reassessed enterprise value data, auditing agency data, and related documents, the Review Committee evaluates the enterprise value (quantity, condition of assets, current market prices of all assets, materials, goods...) relevant to the corporatization process. If the Review Committee disagrees with the data or valuation methods provided by the entity, the Committee must recalculate the enterprise value and submit the calculation results to the Minister of Finance for decision for enterprises with state capital over 3 billion VND; and the Minister of the economic and technical sector management, the Chairman of the People's Committee of the province or city, and the Board of Directors (members of the corporation established under Decision No. 91/TTg) for enterprises with state capital up to 3 billion VND.

Part Two:

SALE OF SHARES AND ISSUE OF SHARE CERTIFICATES

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Some concepts:

- Share: Is the minimum capital portion that each shareholder invests in a joint-stock company, with a minimum value of each share being 50,000 VND.

- Shareholder is either a legal entity or an individual owner of shares.

- Share certificate of an enterprise is a document confirming investment and ownership rights of the share owner towards a joint-stock company.

2. Purchase level:

Each corporate shareholder (economic organizations with legal status, social organizations recognized by law) has the right to purchase one or more shares in corporatized enterprises, but the maximum limit does not exceed 100% of the enterprise value.

- Each individual shareholder - Vietnamese citizens aged 18 and above have the right to purchase a maximum of no more than 5% of the enterprise's value.

Each share of the company has equal value and is denominated in Vietnamese currency. In cases where shares are purchased with gold or foreign currency, they must be converted into Vietnamese currency at the exchange rate prevailing at the time of payment for purchasing shares.

+ For gold: calculated based on the purchase price of the State Gold, Silver, Precious Stones Company in the province/city where the headquarters of the enterprise implementing privatization is located.

+ For foreign currency: calculated based on the purchase price of foreign currency from the State Commercial Bank or State Foreign Trade Bank in the province/city where the headquarters of the enterprise implementing privatization is located.

3. Share certificates of enterprises include two types: named shares and bearer shares.

Registered shares are those with the name of the owner recorded on the share certificate, including those of founders, board members, and employees granted shares by the state without cost or on loan. Shares of shareholders who are board members may not be transferred during their tenure and for two years thereafter.

Unregistered shares are those without the name of the owner recorded on the share certificate. Unregistered shares can be freely bought, sold, and transferred. Shares purchased on credit by the state can be converted into unregistered shares once the shareholders have fully repaid their debt.

The transfer of ownership rights for various types of shares (bearer, named) is carried out at the joint-stock company issuing the shares and according to other regulations of the State (if applicable).

State-issued shares for employees may only be enjoyed for dividends throughout life and cannot be transferred.

4. Economic entities that use state capital to purchase shares must obtain confirmation from the State Capital and Asset Management Authority at the enterprise. It is strictly prohibited for organizations to use administrative or public service funds provided by the state budget or having the nature of a state budget to purchase shares.

5. Enterprises' shares have multiple denominations, with the minimum denomination of a share being equal to the value of one share. Subsequent denominations are determined based on the geometric progression of the value of one share.

6. Share certificates are regulated by the Ministry of Finance, which organizes printing, manages, and sells them to joint-stock companies for issuance. Any certificates not issued by the Ministry of Finance are invalid.

II. SPECIFIC PROVISIONS

1. Sale of shares of privatized enterprises.

A business shall organize the sale of shares after receiving the competent authority's decision confirming the enterprise value, the amount to be sold, or the additional capital-raising amount (as classified at Point 1, Article 14, Decree No. 28/CP) according to the following provisions:

a) Announce on mass media multiple times (at least three times) and post at the company headquarters regarding the enterprise's shareholding reform for investors inside and outside the enterprise to understand and be aware of the situation of the enterprise's shareholding reform.

The announcement content includes: total asset value of the enterprise, quantity and proportion of state-owned enterprise shares for sale, target group and purchase ratio, selling period, profit rate over the past three years before and after the shareholding reform.

b) Register the list of share buyers and open an account at the State Treasury to deposit share sale proceeds. When registering, the enterprise must clearly specify the form of shareholding reform: selling part of the enterprise value, maintaining the current enterprise value while issuing shares to raise additional capital, or both forms. The funds in this account from selling part of the enterprise value can only be withdrawn with the Ministry of Finance's decision. For the form of maintaining the current enterprise value while issuing shares to raise additional capital, when the enterprise withdraws money for expenses, the joint-stock company must notify the State Capital and Asset Management Agency at local enterprises to monitor.

c) When collecting money from shareholders who have registered to buy shares, the enterprise must strictly follow the cash collection and payment regulations. At the end of each day, the enterprise must deposit all collected funds into the account opened at the State Treasury, without misusing the share sale proceeds (as stipulated in Decree No. 28/CP).

- Shareholding reform through the form of selling part of the enterprise value: after the enterprise has sold all the expected shares, the enterprise director must prepare a list of shareholders who purchased shares and the amount paid (with confirmation from the State Treasury) and send it to the Ministry of Finance for monitoring.

- Shareholding reform through the form of maintaining the current enterprise value while issuing shares to raise additional capital: after the enterprise has raised the expected capital or at least half of the expected capital, and the shareholders who committed to invest the registered amount or a Commercial Bank, Financial Company accepted as agents to raise the remaining amount, the enterprise director must implement shareholding reform, prepare a list of each investor, the amount paid, the name of the Commercial Bank, Financial Company accepting to raise the remaining capital (if any), and send it to the Ministry of Finance (State Capital and Asset Management Agency) for monitoring. The joint-stock company is entitled to withdraw money from the account holding share sale proceeds deposited at the State Treasury for expenses, and notify the State Capital and Asset Management Agency at the location where the enterprise is headquartered for monitoring.

The Chairman of the Board of Directors and the General Director of the joint-stock company are responsible for using the share sale proceeds for the purposes specified in the economic and technical justification in the approved and shareholder meeting-approved shareholding reform proposal. Six months after the decision to convert the state-owned enterprise into a joint-stock company, if the enterprise fails to raise the necessary capital, it must borrow funds for investment and continue selling shares to repay the loan. If unable to raise funds, the enterprise must report to the Central Steering Committee for Shareholding Reform for handling.

d) After operating for one year or having collected all the borrowed money for purchasing shares, if the company needs to increase its charter capital by calling additional shares, it must obtain approval from the Shareholders' Meeting and permission from the Ministry of Finance.

2. Issuing shares:

Shares are classified as follows (marked):

- Type A: issued to shareholders purchasing on credit and state economic entities.

- Type B: for members of the Board of Directors.

- Type C: individuals and other organizations.

a) After the first Shareholders' Meeting, the Chairman of the Board of Directors sends a letter to the Ministry of Finance requesting the issuance of shares (according to Form 5) along with the approved joint-stock company charter.

- Confirmation from the National Treasury when the enterprise has deposited the full amount into the Treasury.

- Commitment to repay debt of the person borrowing to purchase shares (if applicable).

In case the list of shareholders depositing money changes, the joint-stock company must submit the official list to the Ministry of Finance.

b) Upon receipt of the letter (and other documents), the Ministry of Finance will review and issue a decision for the joint-stock company to issue shares. In cases where the conditions for issuance are not met, the Ministry of Finance will provide a response.

c) After receiving the Ministry of Finance's decision, the joint-stock company goes to the provincial or municipal State Treasury where the enterprise is headquartered to purchase share certificates. The procedure for purchasing share certificates follows that of special-value stamps (such as purchasing checks).

The total value of the share certificates transferred by the State Treasury to the enterprise equals the total amount deposited into the State Treasury account by shareholders who purchased shares, the amount borrowed by employees within the enterprise to purchase shares, the amount provided by the State without charge, and the retained state-owned shares.

e) Within sixty days from the date of the Ministry of Finance's decision allowing the company to issue shares, the joint-stock company must issue shares to each shareholder who has invested in the joint-stock company.

f) Preservation and storage of shares:

- The management, receipt, transportation, and preservation of shares shall be conducted like cash and special-value stamps.

- Units and individuals assigned the tasks of managing, issuing, and storing share certificates, if they lose the share certificate, must compensate according to the market price of the share sale. If they damage the share certificate, they must compensate according to the prescribed price for selling the damaged share certificate to the company and must return the damaged share certificate.

- The registered owner of the share certificate, upon losing the share certificate, must immediately report to the joint-stock company that issued the share certificate to take appropriate measures.

- State-owned shares, represented by the Ministry of Finance (State Capital and Asset Management Agency at Enterprises) as the owner, must be registered shares.

The method of recording on the share certificate will be separately regulated.

g) Shareholders may deposit their share certificates at a Commercial Bank, National Treasury, or Financial Company for safekeeping and must pay a storage fee according to the agreement between both parties.

Storage fees for shares owned by legal entities can be paid from the dividends.

State-owned shares (owned by the State Capital and Asset Management System at enterprises) are stored at the provincial or central city State Treasury where the joint-stock company is headquartered free of charge.

Part III:

IMPLEMENTATION

1. The Ministry of Finance shall inspect and supervise the sale of shares and issuance of shares in enterprises undergoing privatization and has the right:

- To consider extending the time limit for selling shares and issuing shares in joint-stock companies.

- To suspend the sale of shares and issuance of shares when joint-stock companies violate current regulations.

- The representative of the state-owned capital at the joint-stock company is responsible for checking the state-owned capital portion as well as the share profits in cases where the joint-stock company is dissolved, bankrupted, merged, or split.

2. This Circular takes effect from the date of signature, and all previous regulations of the Ministry of Finance that conflict with this Circular are hereby abolished.

3. During the implementation process, ministries, provincial and municipal people's committees directly under the central government, and state-owned enterprises established according to Decision No. 91/TTg implementing shareholding reform, if encountering difficulties requiring reflection, should report to the Central Steering Committee for Shareholding Reform and the Ministry of Finance for guidance.

Pham Van Trong (Signed)