Circular No. 59/2018/TT-BTC Amending and supplementing certain provisions of Circular No. 219/2015/TT-BTC dated December 31, 2015 of the Minister of Finance on state capital investment in enterprises and management and use of capital and assets in enterprises

CIRCULAR

Amending and supplementing certain articles of Circular No. 219/2015/TT-BTC dated December 31, 2015 of the Minister of Finance on state capital investment in enterprises and management and use of capital and assets at enterprises.

Based on the Enterprise Law dated November 26, 2014;

Pursuant to the Law on Management and Use of State Capital for Investment in Business Operations dated November 26, 2014;

Article 1. Amending and supplementing some articles of Circular No. 36/2021/TT-BTC as follows:

Pursuant to Decree No. 32/2018/NĐ-CP dated March 8, 2018 of the Government amending and supplementing certain articles of Decree No. 91/2015/NĐ-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets at enterprises;

Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017 of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Minister of Finance hereby issues this Circular amending and supplementing certain Articles of Circular No. 133/2015/TT-BTC dated August 31, 2015, issued by the Minister of Finance guiding the financial management mechanism for the Vietnam Chamber of Commerce and Industry (hereinafter referred to as Circular No. 133/2015/TT-BTC).

The Minister of Finance promulgates this Circular amending and supplementing certain articles of Circular No. 219/2015/TT-BTC dated December 31, 2015 of the Ministry of Finance guiding certain contents of Decree No. 91/2015/NĐ-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets at enterprises (hereinafter referred to as Circular No. 219/2015/TT-BTC) as follows:

Article 1. Amending and supplementing certain articles of Circular No. 219/2015/TT-BTC as follows:

1. Amending and supplementing Clause 1 of Article 1 as follows:

"1. This Circular guides certain contents regarding state capital investment in enterprises and financial management for state-owned enterprises as prescribed in Decree No. 91/2015/NĐ-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets at enterprises (hereinafter referred to as Decree No. 91/2015/NĐ-CP) and Decree No. 32/2018/NĐ-CP dated March 8, 2018 of the Government amending and supplementing certain articles of Decree No. 91/2015/NĐ-CP (hereinafter referred to as Decree No. 32/2018/NĐ-CP)."

2. Amending and supplementing Clause 2 of Article 2 as follows:

"2. In cases of additional state capital investment in operating state-owned enterprises:

a) Operating state-owned enterprises shall record the increase in state capital at the enterprise (capital investment of the owner) and adjust the registered charter capital in accordance with the Law on Enterprises in the following cases:

- Using funds from the Development Investment Fund at the enterprise to increase the charter capital. The enterprise shall base on the plan to increase the charter capital or the decision to increase the charter capital approved by the competent authority to account for the increase in the owner's investment capital.

- Receiving assets transferred from other places that are invested with capital originating from the State budget. The enterprise shall base on the decision to transfer assets by the competent authority and the asset handover protocol to account for the increase in the owner's investment capital.

- Receiving money under State support policies (support for relocation, restructuring, disposal of real estate, support for investment in technical infrastructure of industrial zones) to implement investment construction, upgrading, and renovation projects. The enterprise shall base on the final settlement of State support money (the portion implemented after the project completion and settlement according to regulations) to account for the increase in the owner's investment capital.

- In cases where the State assigns additional capital and assets to participate in joint stock contracts, the operating state-owned enterprise shall base on the decision to assign capital and assets to account for the increase in the owner's investment capital.

b) When recording the increase in state capital at the enterprise, if the actual contribution capital of the owner exceeds the approved charter capital, the enterprise shall report to the State capital representative agency to decide to adjust the charter capital for the enterprise based on the accounting records of the capital increase for each case without having to prepare the capital determination documents and the supplementary capital investment proposal as prescribed in Articles 9 and 10 of Decree No. 91/2015/NĐ-CP."

3. Supplementing Article 2a as follows:

"Article 2a. Recording the reduction of state capital investment in enterprises

1. Operating state-owned enterprises shall adjust the reduction of state capital at the enterprise in the following cases:

a) For enterprises adjusting the reduction of charter capital:

The State capital representative agency shall base on the actual operation situation of the enterprise, the necessity to reduce the scale of operations of the enterprise, and the principle of determining the charter capital of state-owned enterprises prescribed in Clause 1 of Article 19 of Decree No. 91/2015/NĐ-CP to determine the reduced charter capital and report to the Prime Minister for a decision on handling the value of the reduced charter capital.

After receiving the Prime Minister's decision on handling the value of the reduced charter capital, the State capital representative agency shall decide to reduce the charter capital for the enterprise.

If the adjustment of the reduced charter capital results in a difference between the owner's investment capital and the reduced charter capital, it shall be handled as follows:

- The State capital representative agency shall notify and require the enterprise to submit this difference to the Enterprise Restructuring and Development Support Fund within 15 days from the date of the State capital representative agency's decision on reducing the charter capital.

- The state-owned enterprise shall account for the reduction in the owner's investment capital based on the adjusted charter capital.

b) In cases of restructuring state capital at the enterprise through splitting the enterprise in accordance with Point d of Clause 2 of Article 19 of Decree No. 91/2015/NĐ-CP which has been amended and supplemented by Clause 6 of Article 1 of Decree No. 32/2018/NĐ-CP.

c) Within the period of applying the adjusted charter capital level prescribed in Point a of Clause 1 of Article 9 of Decree No. 91/2015/NĐ-CP:

- If the source of additional charter capital is insufficient to meet the approved adjusted level, the competent authority shall decide to adjust the charter capital to the actual contributed capital for the enterprise.

- If due to policy changes, the enterprise no longer falls under the category eligible for state capital investment, the competent authority shall decide to reduce the charter capital for the enterprise; the difference between the owner's investment capital and the reduced charter capital shall be submitted by the state-owned enterprise to the Enterprise Restructuring and Development Support Fund within 15 days from the date of the competent authority's decision on reducing the charter capital."

2. In cases where the state-owned enterprise's registered capital is adjusted downward as mentioned above, the enterprise shall be responsible for implementing the procedures to change and announce information about the registered capital in accordance with the provisions of the Enterprise Law.

4. Amend and supplement Article 3 as follows:

"Article 3. Transfer of State Capital, State-Owned Enterprise Capital, Rights to Purchase Shares, and Rights to Invest in Share Capital at Joint Stock Companies and Limited Liability Companies with Two or More Members

1. The principles, decision-making authority, and methods for transferring State capital invested in joint stock companies and limited liability companies with two or more members shall be implemented in accordance with the provisions of Clause 15 and 16, Article 1 of Decree No. 32/2018/NĐ-CP.

2. The principles, decision-making authority, and methods for transferring investment capital out from state-owned enterprises in joint stock companies and limited liability companies with two or more members shall be implemented in accordance with the provisions of Clause 12 and 13, Article 1 of Decree No. 32/2018/NĐ-CP.

In the case where the value of the expected transfer proceeds is determined based on the actual value of the share capital contribution reflected in the financial statements of the receiving enterprise, the actual value according to the accounting records of the state-owned enterprise's share capital contribution shall be calculated by multiplying the proportion of the state-owned enterprise's share capital contribution at the receiving enterprise by (x) the equity capital recorded on the balance sheet in the quarterly or annual financial report of the receiving enterprise at the nearest time point to the decision to transfer the capital.

3. When changing between transfer methods (public auction, competitive bidding, negotiation) to implement the transfer of state capital and state-owned enterprise capital invested in joint stock companies and limited liability companies with two or more members as prescribed, the owner does not need to rebuild the capital transfer plan but must re-determine the starting price if the appraisal certificate has exceeded its validity period.

In the event of changes in information when switching between the above transfer methods, the owner shall be responsible for publishing additional information (if any).

The floor price serving as the basis for determining the transaction payment outside the exchange is the floor price determined according to the trading rules of the Securities Trading Exchange.

4. In cases where the owner has invested capital in enterprises but does not belong to industries or sectors requiring additional investment or must transfer capital according to the criteria and classification list of state-owned enterprises issued by the Prime Minister, during the process of transferring capital, if the owner receives the right to purchase shares (in joint stock companies) and the right to contribute capital (in limited liability companies with two or more members) in accordance with the Enterprise Law, the owner may consider and decide to transfer their rights to purchase shares and contribute capital to other organizations or individuals in accordance with Clause 17, Article 1 of Decree No. 32/2018/NĐ-CP. Among which:

a) The determination of the starting price for transferring the right to purchase shares and the right to contribute capital of the state-owned portion shall be carried out in accordance with the provisions of Clause 15, Article 1 of Decree No. 32/2018/NĐ-CP.

b) The determination of the starting price for transferring the right to purchase shares and the right to contribute capital of the state-owned enterprise portion shall be carried out in accordance with the provisions of Clause 12, Article 1 of Decree No. 32/2018/NĐ-CP.

c) Financial treatment principles when transferring the right to purchase shares (in joint stock companies) and the right to contribute capital (in limited liability companies with two or more members) of the owner are as follows:

- For the case where the owner is a state-owned enterprise:

The amount received from transferring the right to purchase shares and the right to contribute capital, after deducting reasonable costs related to the transfer and fulfilling tax obligations as prescribed (if any), if there is a positive difference, the enterprise shall record it as financial activity income, and if there is a negative difference, the enterprise shall use the provisionally set aside reserve to offset it, and if insufficient, the enterprise shall record it as financial activity expense.

- For the case where the owner is a representative body of the owner:

The amount received from transferring the right to purchase shares and the right to contribute capital, after deducting costs related to the transfer and fulfilling tax obligations as prescribed (if any), the representative body of the owner shall deposit it into the Fund for Enterprise Restructuring and Development.

In the event that the transfer of the right to purchase shares and the right to contribute capital is unsuccessful or the amount received from transferring the right to purchase shares and the right to contribute capital is insufficient to cover the transfer costs, the Fund for Enterprise Restructuring and Development shall be used to cover the remaining transfer costs according to the regulations of the Prime Minister.

5. The establishment of transfer documents and the announcement of information regarding the transfer of state capital and state-owned enterprise capital shall be carried out in accordance with the provisions of Decree No. 32/2018/NĐ-CP and the following guidelines:

a) In the case of transferring state capital and state-owned enterprise capital in listed joint stock companies or those registered for trading on the securities market through matching orders, the owner of the transferred capital shall publish information in accordance with the provisions of Clause 13 and Clause 16, Article 1 of Decree No. 32/2018/NĐ-CP.

b) In the case of transferring state capital and state-owned enterprise capital in enterprises specified in Clause 13 and Clause 16, Article 1 of Decree No. 32/2018/NĐ-CP through public auction, the owner of the transferred capital shall prepare a public auction document in accordance with the prescribed regulations.

The owner of the transferred capital/organizing entity shall prepare and publicly disclose complete auction information in accordance with the provisions of Clause 13 and Clause 16, Article 1 of Decree No. 32/2018/NĐ-CP, and simultaneously submit the prepared auction document to the Ministry of Finance - Department of Corporate Finance for monitoring, consolidation, and reporting (without sending it to the State Securities Commission).

c) In the case of transferring state capital, state enterprise capital at a joint-stock company that is a public company, after completing the transfer, the state asset management agency/state-owned enterprise transferring the capital shall publish changes to shareholder information in accordance with securities laws on information disclosure.

6. The determination of the initial transfer price of capital shall be carried out in accordance with Clause 12 and Clause 15, Article 1 of Decree No. 32/2018/NĐ-CP. Among which:

a) Regarding the organization of valuation:

- The selected valuation organization must comply with the current laws on prices, valuations, and related laws during the implementation of business operations and the execution of contracts signed with customers.

- The valuation organization and the appraiser conducting the valuation shall bear legal responsibility for the results of the valuation.

- The determination of the price must ensure compliance with all current regulations of the Vietnamese Valuation Standards System and related laws.

b) Determining the value of certain assets at the enterprise:

- For the value of land use rights (annual payment), it must be based on the direct land lease contract with the competent state authority or the decision of the competent state authority allowing the enterprise to lease land annually, the lease term, land rent, and other factors (if any).

Any difference (if any) between the land rent for the remaining lease term in the contract or the lease decision calculated based on the land price at the time of the contract or the lease decision and the land rent for the remaining lease term calculated based on the land price at the time of determining the transfer price shall be added when determining the initial price. The land price serving as the basis for calculating annual land rent shall be determined in accordance with Clause 1, Article 3 of Circular No. 77/2014/TT-BTC dated June 16, 2014, issued by the Ministry of Finance guiding some provisions of Government Decree No. 46/2014/NĐ-CP dated May 15, 2015, on land rent collection, water surface rent, and subsequent amendments, supplements, and replacements (if any).

- For the value of intellectual property rights, including cultural and historical values (if any), each value shall be determined separately in accordance with the valuation laws and appropriate methods. In cases where there is insufficient documentation to determine the cultural and historical values, the capital transferor shall base the determination on the impact and influence of the value on the image and position of the enterprise and the benefits brought to its production and business activities, to determine a ratio (at least 1%) of the actual total value of state capital, state enterprise capital as the basis for determining the initial price and shall be responsible for their decision.

7. Organizations and individuals purchasing shares (including in cases of receiving the right to purchase shares) according to the methods prescribed for the transfer of state capital, state enterprise capital under Clause 13 and Clause 16, Article 1 of Decree No. 32/2018/NĐ-CP shall not have to implement public tender procedures.

8. For plans for the transfer of state capital, state enterprise capital, the right to purchase shares, and the right to invest in joint-stock companies, limited liability companies with two or more members approved in accordance with Decree No. 91/2015/NĐ-CP but not implemented by the effective date of Decree No. 32/2018/NĐ-CP (May 1, 2018), the capital transferor shall review and adjust the capital transfer plan in accordance with Decree No. 32/2018/NĐ-CP to organize its implementation. Costs incurred in connection with the construction of the approved capital transfer plan before May 1, 2018, shall be included in the costs to determine the result of the capital transfer.

5. Supplement Article 3a as follows:

"Article 3a. State enterprises transferring investment participation in a Business Cooperation Contract (BCC contract)"

State enterprises transferring investment participation in a BCC contract shall follow the provisions of Clause 13, Article 1 of Decree No. 32/2018/NĐ-CP and the following guidelines:

1. The competent authority deciding on the transfer of capital shall base its decision on the specific content of the BCC contract. In cases where the state enterprise is permitted to transfer capital to divest, it shall decide on the application of a suitable method of transferring capital according to one of the following two cases:

a) In cases where only the transfer of capital to the parties participating in the BCC contract is allowed, the method of transferring capital of a state enterprise in a limited liability company with two or more members as stipulated in Clause 13, Article 1 of Decree No. 32/2018/NĐ-CP shall be applied.

b) In cases where there is no binding requirement to transfer capital to the parties participating in the BCC contract, the method of transferring capital of a state enterprise in an unlisted joint-stock company as stipulated in Clause 13, Article 1 of Decree No. 32/2018/NĐ-CP shall be applied.

2. In cases where the state enterprise participates in a BCC contract with land use value (including leased land and allocated land) but transfers capital without continuing to participate in the BCC contract, the handling of land shall be in accordance with the relevant land laws.

In cases where the transfer of capital is tied to land use value (including leased land and allocated land), the value of land use rights must be determined close to market prices to be included in the capital transfer value as the basis for determining the initial price.

6. Amend and supplement Article 4 as follows:

a) Amend and supplement the first paragraph as follows:

"Management of capital and assets at state enterprises shall be carried out in accordance with Chapter III, Section 1 of Decree No. 91/2015/NĐ-CP, Clause 6, 7, 8, 9, 10, Article 1 of Decree No. 32/2018/NĐ-CP, and the following provisions:"

b) Amend and supplement Point a, Clause 3 as follows:

"a) Establishment of reserve accounts for risks: inventory write-down reserves, doubtful debt reserves, investment security reserves, and product warranty reserves, enterprises shall carry out in accordance with the current regulations of the Ministry of Finance and subsequent amendments, supplements, and replacements (if any)."

7. Supplement Article 4a as follows:

"Article 4a. Transfer of investment and construction projects by state-owned enterprises as the main investors

In cases where the enterprise is the main investor implementing and carrying out investment and construction projects that have not yet formed assets for exploitation and use (unfinished projects), if it does not continue to invest in the project, the enterprise may transfer the project (partially or entirely) to another investor according to the provisions of the Investment Law and Clause 10, Article 1 of Decree No. 32/2018/NĐ-CP. Among which:

1. Authority to decide on project transfer: the enterprise decides based on the source of project investment and the purpose of the investment project, or submits to the competent authority for decision in accordance with the law.

2. When transferring a project together with the transfer of land use rights, it must comply with the provisions of the Land Law and the Law on Real Estate Business (for real estate business projects)."

8. Amend and supplement Article 5 as follows:

a) Amend and supplement the first paragraph as follows:

"The management of capital of state-owned enterprises at joint-stock companies and limited liability companies shall be carried out in accordance with the provisions of Section 2, Chapter III of Decree No. 91/2015/NĐ-CP, Clause 11, 12, Article 1 of Decree No. 32/2018/NĐ-CP, and the following regulations:"

b) Amend and supplement Clause 2 as follows:

"2. For wholly-owned subsidiaries that are limited liability companies held by state-owned enterprises with 100% charter capital, annually, state-owned enterprises are responsible for approving financial statements and deciding on the distribution and use of post-tax profits, and collecting post-tax profits from subsidiaries according to the approved financial regulations. If the equity capital in the subsidiary exceeds the approved charter capital, the excess amount will be transferred back to the state-owned enterprise (through the transfer of surplus Development Fund or undistributed post-tax profits at the subsidiary) and recorded as other income of the state-owned enterprise according to Clause 11, Article 1 of Decree No. 32/2018/NĐ-CP. This excess amount can only be distributed to supplement the Development Fund of the parent company, and the remaining part (if any) shall be remitted to the state budget in accordance with the law."

||| 9. AMEND and SUPPLEMENT Article 8 as follows:

"Article 8. Distribution of profits for state-owned enterprises

State-owned enterprises shall distribute profits in accordance with the provisions of Article 31 of Decree No. 91/2015/NĐ-CP, Article 2 of Decree No. 32/2018/NĐ-CP, and the following guidelines:

1. Enterprises with profits (including non-taxable income) may offset accumulated losses of previous years according to the Corporate Income Tax Law. After offsetting all previous year losses, the enterprise shall allocate to the Science and Technology Development Fund according to the law, pay corporate income tax; the remaining profit shall be distributed according to Clauses 1, 2, and 3 of Article 31 of Decree No. 91/2015/NĐ-CP and Article 2 of Decree No. 32/2018/NĐ-CP.

2. The basis for establishing reward funds, welfare funds, and management personnel bonus funds, and supervisory board members' bonus funds shall be determined as follows:

a) Regarding the classification of enterprises A, B, C as the basis for establishing funds according to the Government's regulations on supervising state capital investment in enterprises; financial supervision to evaluate operational efficiency and disclose financial information of state-owned enterprises and enterprises with state capital, and Circulars guiding the Ministry of Finance.

b) Regarding monthly salary as the basis for establishing these funds:

- For the allocation to the reward fund and welfare fund of state-owned enterprises: based on the actual wage fund implemented during the fiscal year of employees of the enterprise determined according to the provisions of Government Decree No. 51/2016/NĐ-CP dated June 13, 2016 on labor management, wages, and bonuses for employees working in wholly state-owned limited liability companies or amended, supplemented, replaced documents (if any), divided by 12 months.

- For the allocation to the bonus fund for enterprise managers and supervisors: based on the actual salary and remuneration fund implemented for managerial staff (full-time and part-time) determined according to the provisions of Government Decree No. 52/2016/NĐ-CP dated June 13, 2016 on salaries, remuneration, and bonuses for managers of wholly state-owned limited liability companies and amended, supplemented, replaced documents (if any), divided by 12 months."

10. Supplement Article 10a as follows:

"Article 10a. State Capital Representative in Joint-Stock Companies and Limited Liability Companies with Two or More Members

In cases where the state capital representative seeks opinions from the asset owner's agency regarding the dividend distribution plan and post-tax profit distribution of the enterprise they represent to participate in discussions, vote, and make decisions at the Shareholders' Meeting, Board of Directors meeting according to Clause 14, Article 1 of Decree No. 32/2018/NĐ-CP, the asset owner's agency must base its opinion on the Articles of Association, audited annual financial reports, business strategy, annual production and business plans of the enterprise with state-owned capital participation, and other necessary related documents to send a request for opinion to the same-level finance agency (the agency must clearly state its opinion on the content for which the state capital representative seeks opinion in the document). Within five working days from the date of receipt of the document from the asset owner's agency, the same-level finance agency must provide an opinion for the asset owner's agency to instruct the state capital representative at the enterprise to participate in discussions, vote, and make decisions at the Shareholders' Meeting, Board of Directors meeting."

11. Amend and supplement Clause 3 of Article 11 as follows:

"3. The distribution of post-tax profits and the establishment of reserve funds by enterprises shall be carried out in accordance with the provisions of Article 31 of Decree No. 91/2015/NĐ-CP and Article 2 of Decree No. 32/2018/NĐ-CP."

Article 2. Repeal the provisions of Article 6 of Circular No. 219/2015/TT-BTC.

Article 3. Effectiveness

1. This Circular takes effect from September 1, 2018.

2. During implementation, if there are difficulties, please promptly reflect them to the Ministry of Finance for study, supplementation, and amendment./."