Circular No. 50-TC/TCDN guides financial matters, selling shares, and issuing stocks in the process of converting state-owned enterprises into joint-stock companies according to Government Decree No. 28/CP dated May 7, 1996.

 

CIRCULAR

Guidelines on financial matters, share sales, and stock issuance in the process of converting state-owned enterprises into joint-stock companies pursuant to Decree No. 28/CP dated May 7, 1996 of the Government

Implementing Decree No. 28/CP dated May 7, 1996 of the Government on the conversion of state-owned enterprises into joint-stock companies (hereinafter referred to as the privatization of state-owned enterprises), the Ministry of Finance provides guidelines on financial issues, share sales, and stock issuance as follows:

Part One:

FINANCIAL ISSUES

I. GENERAL PROVISIONS

1. The conversion of state-owned enterprises into joint-stock companies (also known as the privatization of state-owned enterprises) is a measure to transfer enterprises from state ownership to a multi-component ownership structure, including a portion of state ownership.

The privatization of state-owned enterprises aims to mobilize capital for investment in production development, promote the resolution and rectification of current issues in state-owned enterprises, create conditions for capital contributors and employees to truly control the enterprise, and enhance the efficiency of 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, adding or subtracting changes in capital, and other factors that generate effectiveness and impact the enterprise's value up to the time of privatization, including fixed assets, working capital, land compensation funds from state budget sources, and accumulated self-funded 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 part of the enterprise meeting the conditions for privatization, it is necessary to clearly define 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, debts payable...). Based on the enterprise value and the par value of shares, the total number of shares to be sold is determined.

3. Enterprises must address existing financial issues such as losses, stagnant inventory, slow turnover, difficult-to-collect receivables, and immediately pay any remaining amounts due to the state budget prior to 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 State Capital and Asset Management General Department under the Ministry of Finance is responsible for managing state-held shares in joint-stock companies, except in cases where the state delegates this responsibility to another state-owned enterprise as stipulated in 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 specified by the Ministry of Finance.

6. During the privatization of state-owned enterprises, business operations cannot be disrupted. Newly formed joint-stock companies must inherit the operations of the old enterprises 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-owned enterprises may use the entire surplus of the reward and welfare fund in monetary form 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 to the enterprise, with the participation of the enterprise trade union.

Welfare facilities such as cultural houses, clubs, clinics, convalescent homes, kindergartens, and primary schools shall not be distributed as part of the welfare fund and must be 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.

If joint-stock companies meet the conditions specified in Article 15 of Decree No. 29/CP dated May 12, 1995 of the Government regarding detailed implementation of the Law on Encouraging Domestic Investment and have higher rates and longer periods, they will be subject to the provisions of Decree No. 29/CP mentioned above.

10. All assets in state-owned 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 implementing privatization may reserve 10% of the enterprise value expressed in share value to grant to employees based on their length of service and quality of work. The maximum value of shares granted to each person shall not exceed six months' salary according to the state-defined wage scale. These shares belong to the state, and employees will enjoy dividends at the regular share rate until the end of their lives. The joint-stock company will maintain a separate record for this type of share.

The enterprise undergoing shareholding reform may use up to fifteen percent (15%) of the enterprise's value (for enterprises with accumulated capital of forty percent (40%) or more of the enterprise's value, this amount can be increased to twenty percent (20%) of the enterprise's value) to sell on credit to employees currently working at the enterprise who will continue to work at the joint-stock company thereafter. The total number of shares sold on credit shall not exceed the number of shares purchased with cash by the employees at the enterprise.

These shares entitle the employees to annual dividends. Annually, employees must pay at least twenty percent (20%) of the value of the shares purchased on credit and four percent (4%) interest on the outstanding debt. If an employee fails 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 for the shares purchased on credit is made, the right to inherit, buy, or mortgage these shares is prohibited.

The list of individuals receiving shares, the allocation level (as stipulated in Point 11 above), the purchasers and the amounts purchased on credit are determined by the Shareholding Reform Board of the enterprise after obtaining a unified opinion from the Party organization and the Trade Union of the enterprise.

The recipients of shares and the purchase on credit are employees within the establishment and those under contracts of three years or more with the enterprise at the time of shareholding reform who will continue to work at the joint-stock company thereafter. The contract for purchasing shares on credit is signed by the purchaser and the General Director of the enterprise, confirmed by the Ministry of Economic and Technical Management (for central enterprises), the People's Committee of the province or city (for local enterprises), the Board of Directors for members established pursuant to Decision 91/TTg of the Prime Minister, and the Ministry of Finance (the system of the General Department of State Capital and Asset Management 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 economic and financial situation of the enterprise based on the audited reports of the production and business operations for the last three years (according to the indicators in Appendix No. 1). Based on these data, analyze in detail according to the following contents:

1. For fixed assets and fixed capital: analyze and evaluate the technical condition of each asset, which is machinery and equipment, capacity already used, and propose the actual value of each asset. If the asset was formed using borrowed funds, it is necessary to analyze the total amount borrowed, the amount repaid, and the remaining debt. Debt repayment measures.

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 capital, borrowed capital, clearly record the total capital and assets at the time of the shareholding reform, specifying the name of the unit or individual as the owner of that capital source. Clearly state the profit-sharing or interest payment methods of these joint ventures. Enterprises with private shares formed before the shareholding reform need to analyze the original capital, residual capital determined in accordance with the national policy for transforming commercial and industrial capital after the South's liberation (1975) and subsequent opening policies, and the capital already 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 enterprise's production and business activities: 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,...

In cases where only a part of the enterprise is being shareholding reformed, a detailed analysis of the planned shareholding reform section is required. If the enterprise only calls for additional capital to expand production and business operations, a detailed analysis of the reasons and capital requirements is needed.

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 mobilizing unused, unutilized, and pending disposal assets to enhance 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 business efficiency, and handling surplus labor that has not been resolved before corporate transformation.

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

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

C. JOINT-STOCK TRANSFORMATION PLAN:

- For partial sale of enterprise value, propose the state's retained share, the amount sold to other shareholders (including sales to employees within the enterprise and external sales).

- Proposed share par value, types of shares to be issued, issuance time and location, and recommendation for agency (Commercial Bank, Finance Company, etc.) to act as agents for share sales (details according to regulations on share sales and issuance below).

- 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 transformation board develops the joint-stock transformation plan, reports to the Minister of relevant Ministries (for central enterprises), Chairman of the People's Committee of provinces and centrally-administered cities (for local enterprises), and Management Board of State-owned Joint Stock Companies established by the Prime Minister (for members of Joint Stock Company 91) to obtain opinions on state-owned enterprises with over 3 billion VND in capital before submitting to the Central 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).

After inventory verification and valuation according to book values, enterprises base their reassessment of actual asset value on residual quality and current market prices of each asset type, and the value of intangible assets. For buildings and structures, the current local government pricing list is used to reassess value (Annex 3).

Land in use: Land value is not included in enterprise value. Enterprises and joint-stock companies are allowed to use land for a specified period. Joint-stock companies must pay annual land rent according to the Land Law and other national regulations on land use. Before transferring to joint-stock companies, state-owned enterprises have paid compensation and land leveling fees, which are included in enterprise value.

3. Determination of circulating asset value:

Includes: cash capital, materials and goods (based on actual inventory and revalued current market prices); receivables, and other circulating asset values (mortgages, deposits, pledges, short-term, etc.) (Annex 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 ongoing business activities that the joint-stock company intends to continue, they should be valued similarly to fixed assets mentioned above.

5. Value of joint venture and cooperative contributions (if any): The value of joint venture contributions must be determined and revalued based on actual figures at the time of transformation. Contributions include cash, materials and goods, fixed assets, land (compensation and leveling costs).

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: Including previous year losses, unrecoverable receivables, remaining losses after insurance compensation and liability payments, lost or missing assets, reductions 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 business advantages: The basis for determining business advantages includes convenient geographical location, reputable brand, good management level, business efficiency, etc., which are included in the value of the enterprise when conducting shareholding reform.

LOWEST AMOUNT OF FINANCIAL SANCTION

Compare the profit rate on average operating capital of the three years prior to shareholding reform with the profit rate on operating capital of similar enterprises within the same economic sector according to the national economic classification of the State. The value of the advantage equals the difference in the profit rate on operating capital between the shareholding enterprise and other enterprises in the same industry, multiplied by the enterprise's value after revaluation.

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

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

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:

 

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 and payables, the enterprise must classify them: Collect debts for receivables that can be recovered; analyze the reasons for difficult-to-collect receivables and report 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, it is recorded as business loss deducted from the enterprise's actual profit; if due to subjective reasons, individuals responsible must compensate.

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

+ Assets, materials, and capital losses or shortages: Determine the cause clearly, if responsibility lies with individuals, they must compensate, the remaining amount should be covered by the enterprise's reserve fund, if insufficient, it is transferred to state losses together with asset valuation losses for shareholding reform.

+ 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.

- Sales of these assets and materials must be conducted through public auctions with a Supervisory Board (the board consists of the Price Department, the local State Capital and Asset Management Authority, and specialized management authorities).

+ Joint venture, associated enterprise capital, or leased capital received by the enterprise before shareholding reform must be clearly identified for the joint-stock company to accept and be responsible for subsequent 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

Auditing the enterprise value is carried out by the Enterprise Value Audit Committee after obtaining revaluation data and independent audit confirmation.

1. Enterprise Value Audit Committee:

a) Central Audit Committee: Chaired by the Ministry of Finance, with members including the industry management ministry or the corporation established under Decision No. 91/TTg of the shareholding enterprise, the provincial or municipal People's Committee where the enterprise is located, and other members comprising economic, financial, and technical experts appointed by the Ministry of Finance.

The central audit committee is responsible for auditing the value of enterprises with capital exceeding 3 billion dong (state capital according to pre-shareholding reform settlement) and enterprises that are members of corporations established under Decision No. 91/TTg.

The central audit committee is responsible for preparing minutes on the value of state enterprises, submitting them to the Minister of Finance for decision, after obtaining written agreement from the Minister of the industry management ministry or the board of directors of the corporation established under Decision No. 91/TTg, and the provincial or municipal People's Committee Chair.

b) Audit committees for enterprises with state capital up to 3 billion dong are chaired by the ministry (for central enterprises), provincial or municipal People's Committees (for local enterprises), or the board chair (for members of corporations 91). Members include economic and financial experts from the finance department, specialized management departments, and the State Capital and Asset Management Authority at the enterprise.

The audit committee is responsible for preparing minutes on the enterprise value before and after auditing, submitting them to the Minister of Finance for decision, after obtaining written agreement from the Minister of the industry management ministry (for central enterprises), the provincial or municipal People's Committee Chair (for local enterprises), or the board (for members of corporations 91).

2. Audit methods:

Based on the approved final settlement report, the re-evaluated enterprise value data, audit data, and related materials, the Audit Committee evaluates the enterprise's value (quantity, condition of assets, current market price of all inventory and goods...) relevant to the enterprise's value for privatization. In cases where the Audit Committee disagrees with the data or valuation method of the entity, the Audit Committee must recalculate the enterprise's value and submit the calculation results to the Minister of Finance for decision regarding state-owned enterprises with capital over 3 billion VND; and the Minister of the economic and technical management sector, the Chairman of the People's Committee of the province/city, and the Board of Directors (members of State Corporation 91) for decision regarding state-owned enterprises with 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 legal entity shareholder (economic organizations with legal status, social organizations recognized by law) has the right to purchase one or more shares in privatized enterprises, but the maximum amount shall not exceed 100% of the enterprise's 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 a company has equal value and is denominated in Vietnamese Dong. In cases of purchasing shares with gold or foreign currency, they will be converted into Vietnamese Dong at the exchange rate at the time of payment for purchasing shares as follows:

+ 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.

- Named shares are those with the name of the owner recorded on the share, including: founder shares, shares of Board of Directors members, and shares given无偿或贷款购买的股份。董事会成员持有的股份在任职期间和离职后两年内不得转让。

- Bearer shares are those without the name of the owner recorded on the share. Bearer shares can be freely bought and sold, transferred. Shares purchased by the state through loans become bearer shares when shareholders repay their debts in full.

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 using state capital to buy shares must be confirmed by the State Capital and Asset Management Authority at the enterprise. Strictly prohibited are organizations using 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.

An enterprise organizes the sale of shares after obtaining the competent authority's confirmation decision on the enterprise's value, the amount to be sold, or additional capital raised (as stipulated in point 1, Article 14 of Decree No. 28/CP) according to the following provisions:

a) Announce repeatedly (at least three times) on mass media and post at the company's headquarters about the enterprise's privatization so that investors inside and outside the enterprise understand and know about the situation of the enterprise's privatization.

The announcement content includes: total enterprise asset value, quantity and proportion of state-owned enterprise shares to be sold, target groups and share purchase ratio, selling period, profit margin over the past three years before and after privatization.

b) Organize registration of share buyers and open accounts at the State Treasury to deposit share sale proceeds. When registering, the enterprise must clearly specify the privatization form: selling part of the enterprise's value, maintaining the enterprise's value while raising additional capital, or both forms. Funds in this account from selling part of the enterprise's value can only be withdrawn upon the Ministry of Finance's decision. For the form of maintaining the enterprise's value while raising additional capital, when the enterprise withdraws money for expenses, the joint-stock company must notify the local State Capital and Asset Management Authority for monitoring.

c) When collecting money from registered shareholders who have purchased shares, the enterprise must strictly follow the cash collection and submission system. At the end of the day, the enterprise must deposit the entire collected amount into the account opened at the State Treasury, and shall not misuse the proceeds from selling shares for purposes not specified in Decree No. 28/CP.

- Privatization by selling part of the enterprise's value: after the enterprise has sold the expected number of shares, the enterprise director must prepare a list of shareholders who have purchased shares and the amount paid (confirmed by the Treasury) and send it to the Ministry of Finance for monitoring.

- Privatization by maintaining the current enterprise value and issuing shares to raise additional capital: After the enterprise has raised the entire planned amount of capital or at least half of the planned amount, and all shareholders who have committed to invest the registered capital have invested the full amount or a Commercial Bank or Financial Company has agreed to act as an agent to raise the remaining amount, the enterprise's General Director shall prepare a list of each capital contributor, the amount of capital contributed, and the name of the Commercial Bank or Financial Company acting as an agent to raise the remaining capital (if any) and submit it to the Ministry of Finance (State Capital and Asset Management Agency at Enterprises) for monitoring. The joint-stock company is entitled to withdraw money from its account for share sales deposited at the Treasury to cover expenses, and notify the State Capital and Asset Management Agency at the enterprise's headquarters for monitoring.

The Chairman of the Board of Directors and the General Director of the joint-stock company are responsible for using the proceeds from the sale of shares for the intended purposes stated in the economic and technical feasibility study approved by the competent authority and ratified by the Shareholders' Meeting. If, six months after the decision to convert the state-owned enterprise into a joint-stock company, the enterprise has not raised the necessary capital, it must raise funds through loans and continue selling shares to repay the loans. If it is unable to raise funds, it must report to the Central Steering Committee for Privatization for resolution.

d) After operating for one year or having collected the full amount of borrowed funds used to purchase shares, if the company wishes to increase its charter capital by issuing 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 shall submit an application to the Ministry of Finance requesting issuance of shares (according to form 5) along with the company's articles of association approved by the Shareholders' Meeting.

- 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 receiving the application (and other documents), the Ministry of Finance will review, consider, and issue a decision allowing the joint-stock company to issue shares. In cases where the conditions for issuance are deemed insufficient, the Ministry of Finance will provide a response in writing.

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

d) The total value of shares transferred by the Treasury to the enterprise equals the total amount of capital purchased by shareholders deposited into the Treasury account, the amount of money borrowed by employees within the enterprise to purchase shares on credit, the amount provided by the state without charge, and the retained state 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 entrusted with the task of managing, issuing, and storing shares, if they lose a share certificate, must compensate according to the market price of the shares. If they damage a share certificate, they must compensate according to the stipulated price for selling the damaged share certificate to the company and must return the damaged share certificates.

- 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 System of State Capital and Asset Management Agencies at Enterprises) deposited at the provincial or municipal National Treasury where the joint-stock company is headquartered are exempt from storage fees.

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 and dividend income in cases of dissolution, bankruptcy, merger, or division of the joint-stock company.

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 implementation, if there are difficulties, the Ministries, People's Committees of provinces and centrally-administered cities, and State-Owned Enterprises established under Decision No. 91/TTg, which are implementing privatization, should report to the Central Steering Committee for Privatization and the Ministry of Finance for guidance.