Circular No. 51/2000/TT-BTC guides financial matters concerning the allocation of business operations and leasing state-owned enterprises as stipulated in Decree No. 103/99/NĐ-CP dated September 10, 1999 of the Government.

CIRCULAR

Guidelines on financial matters related to business contracting and leasing state enterprises as prescribed in Decree No. 103/1999/NĐ-CP dated September 10, 1999 of the Government.

the State in accordance with the provisions of Government Decree No. 103/1999/NĐ-CP dated September 10, 1999

I. GENERAL PROVISIONS

1. Scope and Conditions for Application:

1.1. This Circular stipulates financial issues related to the implementation of business contracting and leasing of entire state-owned enterprises, applicable to independent state-owned enterprises and member enterprises of State Corporations, specifically as follows:

a) Enterprises with state capital under accounting books below one billion VND, experiencing prolonged losses, or where the State does not need to hold shares except for state-owned enterprises in the form of national farms, forestry farms, and enterprises operating in consultancy, design, and inspection services.

b) Enterprises with state capital under accounting books from one billion to less than five billion VND, suffering prolonged losses but not yet in bankruptcy, after implementing necessary measures without improvement, then depending on specific cases, the Prime Minister decides or delegates to relevant Ministries, Provincial People's Committees, Central City People's Committees, and Management Councils of State Corporations 91 to decide on contracting or leasing the enterprise.

1.2. Internal business contracting within state-owned enterprises, leasing parts of state-owned enterprises, and leasing individual assets of state-owned enterprises are not within the scope of this Circular.

2. Principles for Financial Handling when Implementing Business Contracting and Leasing of Enterprises.

2.1. Prior to business contracting or leasing enterprises, the Enterprise Management Reform Board shall be responsible for inventorying assets, determining the quantity and status of fixed assets, long-term investments, current assets, short-term investments, receivables, payables, and sources of funds and reserves; addressing existing issues regarding assets and finances according to the following principles:

Fixed assets, current assets, receivables, and payables that remain unaddressed and are not included in the leasing or contracting list and are not inherited, the lessor or contractor must take measures such as transferring, liquidating, selling off, and submitting to competent authorities for decision-making according to current financial regulations.

Leased, borrowed, held-in-trust, processed, consigned assets are separately inventoried and classified, and agreements are made with relevant parties regarding the handling of these assets: inheritance or transfer of lease, borrowing contracts... before business contracting or leasing enterprises.

Receivables and payables: the enterprise reconciles and confirms, including classifying difficult-to-collect debts and those not yet payable.

The enterprise contracting or leasing agrees with the contractor or lessee regarding the inheritance of receivables.

Balances at the time of leasing or contracting handover concerning monetary funds: cash in reserve, bank deposits, promissory notes, bonds... are agreed upon in the enterprise leasing contract: the lessor withdraws or the lessee continues to use and is refunded in the leasing price.

Assets formed from incentive and welfare funds are transferred to the labor collective managed by the Trade Union together with the enterprise lessee or contractor, or both parties agree with the Trade Union of the enterprise on the management method of these assets. For surplus incentive and welfare fund balances (if any), the enterprise lessor and the enterprise Trade Union develop a resolution before signing the handover contract, ensuring fair and just rights of workers.

In cases where there are remaining receivables or materials not yet resolved and not agreed to be inherited by the contractor or lessee, they are set aside and handed over to the contractor or lessee for continued handling or custody. Costs related to storage, custody, consumption, debt collection... are borne by the party contracting or leasing and are specifically agreed upon in the contracting or leasing contracts.

The handling period for these assets is no later than ninety days; beyond this period, if unresolved, they are handed over to the contractor or lessee for continued handling and storage.

2.2. All assets of the enterprise when implementing business contracting and leasing are valued based on market value. Market value may be higher or lower than the book value determined by the contractor and lessor, serving as the basis for agreement (or tendering) with the contractor or lessee. If the actual market value of the enterprise is lower than the book value, approval from the enterprise financial management authority at the same level (Ministry of Finance for central enterprises, Department of Finance-Price for local enterprises) is required.

After reaching an agreement or tender result on the contracting amount or leasing price, the Minister, Chairman of the Provincial People's Committee, Central City People's Committee, or Management Council of State Corporation 91 decides the contracting amount or leasing price for enterprises with state capital under accounting books below one billion VND.

For enterprises with capital from one to less than five billion VND, the Minister, Chairman of the Provincial People's Committee, Central City People's Committee, or Management Council of State Corporation 91 reports to the Prime Minister for consideration and decision or decides according to the delegation of the Prime Minister.

2.3. Costs of Business Contracting or Leasing.

Costs for organizing business contracting or leasing include inventory costs, advertising information, tender organization... must be included in the enterprise's regular operating expenses before contracting or leasing.

2.4. Clause on business operation, leasing enterprises to continue production and business operations while preserving capital and effectively utilizing labor within the enterprise. The party receiving the operation or lease has the right to manage the enterprise according to the provisions of the contract for profit-making purposes and does not have ownership rights over the assets received through the operation or lease. Matters related to the sale of assets for modernization, replacement of equipment, or liquidation of unused assets that have been fully depreciated during the period of operation and leasing shall be carried out in accordance with specific conditions stipulated in the contract.

In cases where the party receiving the operation or lease liquidates or sells assets to replace fixed assets, both parties must resolve financial issues based on current financial regulations regarding the liquidation and sale of fixed assets.

2.5. The party receiving the operation or lease has the right to invest additional funds to complete technological improvements from its own capital or raised capital (bank loans and other sources of funding).

These assets belong to the party receiving the operation or lease and can be withdrawn when the contract is terminated. When making additional investments, the party receiving the operation or lease must inform the party granting the operation or lease.

2.6. The term of the operation or lease of the enterprise shall be agreed upon by both parties but shall not be less than five years.

Both parties must comply with the term specified in the contract and neither party may unilaterally terminate the contract before the term expires, except in cases where both parties agree to terminate the contract early.

The party granting the operation or lease of the enterprise has the right to request the decision-making body for the operation or lease to terminate the contract prematurely (if the party receiving the operation or lease breaches the contract).

Upon expiration of the lease term, if the lessee purchases the enterprise, both parties shall terminate the contract and implement the regulations governing the sale of the enterprise.

II. OPERATING CONTRACTS

1. Contents, indicators, and conditions for operating contracts

Based on the characteristics of each industry and the business results of the enterprise, the authority issuing the operating contract (the Ministry managing the industry, the People's Committee of provinces or centrally governed cities, or State-owned Corporation 91 for member enterprises under its jurisdiction) shall specify the contents, indicators, and conditions for the operating contract according to the following requirements:

1.1. The party granting the contract must ensure the preservation of the capital allocated by the State. The party receiving the contract must ensure the preservation of the capital received according to the contract. The party receiving the contract has full authority to manage and utilize the physical assets, materials, funds, and labor of the enterprise at the time of transfer for business purposes without causing losses to the party granting the contract.

1.2. The party granting the contract must clearly define the conditions for implementing state policies and regulations in business activities and the continuation of previously signed contracts by the party granting the contract, including material supply and product sales contracts, receivables and payables, which must be agreed upon with the party receiving the contract and included in the contract. The party receiving the contract commits to organizing business activities and managing the enterprise according to the terms of the operating contract and in compliance with current laws.

1.3. Both parties to the operating contract must agree on the annual profit (or loss) target. The profit target may remain stable throughout the contract period or be specifically set for each year. The profit target must not be lower than the average profit achieved by the enterprise in the three years prior to the grant of the contract. For enterprises experiencing prolonged losses before the grant of the operating contract, the contract may set a reduction in losses, conditions, and time frame for ending losses, but the reduction in losses must increase annually. After the loss period, the profit target as specified above shall apply.

The aforementioned contents of the operating contract, the conditions for the contract, and the specific rights and responsibilities of both parties must be recorded in the contract and must be negotiated and agreed upon between the party receiving the contract and the party granting the operating contract.

2. Operating Contract

The operating contract must clearly reflect the rights and responsibilities of the party receiving the contract, the party granting the contract, and the authority deciding on the operating contract. Specifically:

2.1. Rights and responsibilities of the party receiving the contract:

a) The party receiving the contract must accept an annual profit target (or actual loss) as stipulated in Section 1 of Part II of this Circular. This profit target will be distributed as follows:

Pay corporate income tax as prescribed by law;

Pay the budgetary fund usage fee authorized by the party granting the contract to the party receiving the contract according to the contract. If the actual loss is granted, there will be no payment of the fund usage fee;

The remainder shall be allocated from the financial reserve fund, investment development fund, unemployment reserve fund, reward fund, welfare fund in accordance with the current regulations applicable to state-owned enterprises.

b) Annual profits exceeding the quota shall be distributed as follows: Pay corporate income tax according to the law, the remaining portion shall be decided by the party receiving the quota for use: supplementing the reserve fund to offset the shortfall of the profit quota and preserving capital. The remaining amount shall be added to revenue or used for rewards and benefits for employees.

In case the profit quota is not achieved, the party receiving the quota must first take measures to reduce production costs, self-fund from the enterprise's financial reserve fund or reduce the wage fund of the enterprise during the period to ensure the level of corporate income tax payment according to the profit quota. If the enterprise reduces losses compared to the loss quota, the reduced loss amount will be considered as excess profit as mentioned above and recorded, when the enterprise makes a profit, it will be determined to increase the corresponding excess profit amount and used as stipulated above. Conversely, if the enterprise incurs actual losses higher than the loss quota, the additional loss amount will be treated as a reduction in profit quota and handled as in the case of not achieving the profit quota.

c) The party receiving the quota shall implement the allocation and accounting of depreciation of fixed assets and labor costs in production costs in accordance with the current regulations applicable to state-owned enterprises. The enterprise receiving the quota retains this depreciation money and uses it in accordance with the current regulations.

The party receiving the quota is responsible for regular maintenance and major repairs of fixed assets, these expenses are included in production costs according to current regulations.

d) The party receiving the quota decides on organizing business operations, wage payment methods; decides on rewarding cadres and employees within the enterprise, including rewards within production costs for material savings, initiatives, and increased labor productivity provided that the reward does not exceed the economic benefit generated.

The party receiving the quota decides on using the capital and assets transferred by the party granting the quota for production and business purposes with the highest efficiency in accordance with the contract and without violating the law. In cases where assets need to be liquidated due to damage, natural disasters, or business risks, the party receiving the quota shall carry out the liquidation in accordance with the provisions of the business grant contract.

The party receiving the quota fulfills the obligations stated in the contract regarding the succession of receivables and payables. Both parties granting and receiving the quota must clearly define responsibilities for each debt.

2.2. Rights and Responsibilities of the Party Granting the Quota

The party granting the quota is the representative of the State's ownership rights over the assets, materials, and capital granted, and is responsible for supervising and monitoring the implementation of commitments in the business quota contract, handling issues arising between the granting and receiving parties related to or violations of the contract. It has the responsibility to preserve the granted capital and not interfere in the organization and management of the business operations of the receiving enterprise, including the use and internal mobilization of assets within the receiving enterprise.

2.3. Handling Violations and Rewards/Penalties During the Implementation of the Business Quota

Both parties granting and receiving the quota have the responsibility to comply with all terms stipulated in the contract, including those concerning rewards and penalties during the implementation of the business quota. If the receiving party violates the contract, the penalty shall be borne by the receiving party. If the granting party violates the contract, the granting party shall bear the responsibility for compensation according to the contract.

In case of disputes over contract violations, the agency issuing the business quota decision: the relevant ministry, provincial/municipal people's committee under the central government, or state-owned corporation (for enterprises under corporations) shall lead the resolution process with the participation of the equivalent enterprise financial management agency.

3. Settlement of Quota Indicators and Termination of the Business Quota Contract

Termination of the business quota contract: Upon expiration or termination of the business quota contract, both the receiving and granting parties must terminate the contract. The receiving party is responsible for returning the enterprise to the granting party according to the terms stipulated in the contract.

Prior to terminating the contract, the enterprise receiving the quota must lead the inventory verification, determination of quantity and value of assets, and settlement between the granting and receiving parties, with the participation and supervision of relevant parties.

The principles of contract termination are stipulated in Clause 4, Part III of this Circular.

III. LEASING OF STATE-OWNED ENTERPRISES.

1. Forms of Leasing Enterprises

The lessee may choose one of the following two forms:

1.1. Asset leasing: the lessee leases all fixed assets forming the production and business base of the enterprise along with the enterprise's workforce but does not inherit receivables, monetary capital, payables, and other funds of the leased enterprise.

For remaining inventory at the time of leasing, the lessor sells to the lessee either through installment payments or in one lump sum at the actual price. Installment payments may include interest or not, as agreed by both parties, and such interest is included in the asset leasing price.

1.2. Operation leasing: the lessee leases all assets forming the production and business base of the enterprise along with the enterprise's workforce while inheriting receivables, monetary capital, payables, and other funds of the leased enterprise.

1.3. In both forms of enterprise leasing mentioned above, the lessee may inherit economic contracts, other rights, and obligations of the lessor enterprise as agreed by the relevant parties.

Fixed assets and circulating assets not agreed upon in the leasing asset list or purchase agreement (for circulating assets) shall be managed and disposed of by the lessor according to current regulations.

2. Determination of Enterprise Lease Price

Based on the form of business leasing, the minimum leasing price for the enterprise is stipulated by the person deciding to lease the enterprise, the lessor and lessee directly agree on the leasing price (in the case of direct leasing) or the leasing price is the winning bid price (in the case of bidding), but it must not be lower than the minimum leasing price prescribed by the person deciding to lease.

The minimum price is determined based on the following principles:

2.1. In the case of asset leasing:

a) Ensuring compensation for the depreciation cost of fixed assets being leased. This cost is determined based on the current depreciation system for state-owned enterprises.

b) Ensuring the source of payment for budget capital usage fees or bank loan interest and other capital raising interest (if applicable).

c) Compensating reasonable costs of the lessor during the organization and supervision of the leased assets: salaries and expenses (lessor) for managing and supervising the enterprise after leasing.

d) Interest included in the leasing price: this rate depends on many factors: the value and condition of the assets, technology, enterprise reputation and product quality, competitiveness, consumption, financial status and business efficiency of the enterprise before leasing.

For enterprises currently making profits: the interest rate in the minimum leasing price is determined based on the corresponding minimum profit level achieved before leasing the enterprise.

For enterprises currently operating at a loss or without profit, no profit is included in the minimum leasing price.

2.2. In the case of activity leasing:

The minimum leasing price includes the costs mentioned in points "b", "c", "d" above in Section 3.1.

3. Utilization of rental income from state-owned enterprises

3.1. In the case of asset leasing:

The rental income from state-owned enterprises includes:

- Rental income from the enterprise, including separate revenue from depreciation of fixed assets;

- Revenue from selling current assets;

- Revenue from transferring and liquidating the enterprise's assets (excluding leased assets);

- Recovery of receivables.

These revenues are used as follows:

To cover costs related to leasing the enterprise and settle debts.

Specifically, depreciation revenue from fixed assets is used for reinvestment in leased fixed assets or to repay debt. If there is a surplus, it is transferred to the State Enterprise Restructuring and Shareholding Support Fund of Corporation 91 (if the enterprise belongs to Corporation 91). Enterprises under Corporation 90, which do not have such a fund, transfer the surplus depreciation revenue from fixed assets into the working capital of the corporation for reinvestment back into the enterprise after leasing. While not yet reinvested, this can be used for business operations or allocated to other enterprises within the corporation; for independent enterprises under ministries, provincial or municipal people's committees, the surplus is transferred to the Central or local State Enterprise Restructuring and Shareholding Support Fund (depending on whether the enterprise is central or local).

The difference between rental income from the enterprise after deducting depreciation of fixed assets and leasing costs is recorded as profit or loss of the leasing enterprise.

Any price differences arising from the sale of current assets, transfer, and liquidation of unused assets are recorded as financial activity profit (or loss) of the enterprise. The original value of these assets is used to pay off debts, with any surplus transferred to the State Enterprise Restructuring and Shareholding Support Fund or incorporated into working capital (for Corporation 90) as specified above for reinvestment back into the enterprise after the end of the leasing contract.

Accounts receivable and payable: the leasing enterprise must continue to monitor and settle debts fairly. Recovered debts are used to repay debts, with any surplus transferred to funds and working capital as stated above. Long-standing debts that cannot be recovered due to objective reasons are recorded as losses of the enterprise.

3.2. In the case of activity leasing:

Rental income from state-owned enterprises includes:

- Rental income from the enterprise;

- Revenue from transferring and liquidating the enterprise's assets not included in the leasing value (if any);

- Recovery of receivables not included in the leasing value of the enterprise (if any).

Used to cover costs related to leasing the enterprise and settle debts belonging to the leasing enterprise (if any).

3.3. Leasing enterprises shall record relevant revenue and costs from leasing activities into the financial income and expenditure of the enterprise, distribute profits, and fulfill tax obligations to the state budget according to the current regulations for state-owned enterprises.

4. Settlement of enterprise leasing contracts

Upon expiration of the leasing period, both the lessor and lessee must complete the contract settlement procedures according to the terms stipulated in the contract.

Prior to contract settlement, the lessee must take the lead, with the participation and supervision of all parties, in conducting an inventory, determining the quantity and value of assets, and settling payments between the lessor and lessee.

Principles for handling when liquidating the contract.

Based on the terms stipulated in the contract.

Based on agreements and documents between the lessor and lessee regarding the handling of assets during operation such as transfers, liquidations, additional investments, etc.

Based on the results of the inventory prior to handing over the enterprise.

Any discrepancies and valuation differences identified in the inventory must be resolved based on the contract and current financial regulations.

In cases where damage, loss, or destruction of assets occurs due to objective reasons such as natural disasters or enemy actions during the operation of the leased enterprise, compensation will not be required but instead deducted from the value of the enterprise to be returned.

Disputes exceeding the authority of both parties that cannot be resolved on their own shall report to the person who made the decision to lease the enterprise and the financial management agency at the same level for their opinion on resolution.

IV. IMPLEMENTATION PROVISIONS

1. This Circular takes effect fifteen (15) days after its issuance.

2. Financial management agencies at all levels shall be responsible for guiding, supervising, and inspecting the implementation of this Circular in enterprises.

The Board of Directors, General Managers of State Corporations, and Directors of enterprises without a Board of Directors shall be responsible for implementing this Circular.

3. In the course of implementation, if there are any difficulties, they are requested to promptly reflect them so that the Ministry of Finance may study and supplement for appropriateness./.