Circular No. 66/2002/TT-BTC guides the procedures, formalities, and financial handling when state-owned enterprises are dissolved.

CIRCULAR

Guidelines on the sequence and procedures for financial settlement when dissolving

state-owned enterprise

Implement Article 15 of Decree No. 50/CP dated August 28, 1996 of the Government on establishment, restructuring, dissolution, and bankruptcy of state-owned enterprises;

The Ministry of Finance provides guidelines on the sequence and procedures for financial settlement when dissolving state-owned enterprises as follows:

I. OBJECTS, SCOPE AND CONDITIONS FOR APPLICATION

1. The objects to which this Circular applies include state-owned enterprises, including independent state-owned enterprises, State Corporations, and member enterprises of State Corporations operating under the Law on State-Owned Enterprises (hereinafter referred to as enterprises) that fall within the scope of consideration for dissolution.

2. Scope of consideration for declaring dissolution:

Enterprises falling within the scope of consideration for dissolution in the following cases:

2.1 Expiration of the business term specified in the decision on establishment and business registration certificate without requesting an extension or being granted permission for an extension.

2.2 Continued maintenance of the enterprise is unnecessary according to planning, reorganization, and restructuring plans of Ministries, sectors, localities, and State Corporations.

2.3 Operating at a loss for three consecutive years with accumulated losses equal to or more than 3/4 of the State capital in the enterprise but not yet in a situation of inability to pay maturing debts, despite having applied financial measures and organizational forms of restructuring.

2.4 Public service enterprises failing to fulfill assigned tasks for two consecutive years despite necessary measures being applied.

3. Conditions for considering dissolution of enterprises: Enterprises falling into any of the cases stipulated above must ensure sufficient ability to pay outstanding debts and dissolution costs to be eligible for dissolution.

II. SEQUENCE AND PROCEDURES FOR ANNOUNCING ENTERPRISE DISSOLUTION

1. Proposers for enterprise dissolution:

- Proposers for establishing enterprises include: Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairmen of People's Committees of provinces and centrally-run cities, Boards of Directors of State Corporations.

- Board of Directors or General Director (for enterprises without a Board of Directors) of the enterprise proposing dissolution.

2. Documents for proposing enterprise dissolution:

+ A request for dissolution of the enterprise clearly stating the reasons and conditions for dissolution.

+ Business registration certificate (for enterprises whose business term has expired).

+ Financial reports of the enterprise for the three preceding years.

+ Reports on production and business operations and financial status of the enterprise as required by the person deciding on establishment of the enterprise or the proposer for establishment of the enterprise.

+ Restructuring plan of the Ministry, sector, State Corporation 90, State Corporation 91 (for central enterprises), People's Committee of provinces and centrally-run cities (for local enterprises).

3. Authority to decide on enterprise dissolution:

The person authorized to decide on enterprise dissolution is the person deciding on establishment of the enterprise.

For enterprises established by delegation from the Prime Minister, the decision on dissolution shall be made by delegation from the Prime Minister.

4. Dissolution Council:

a. Establishment of the Dissolution Council:

Upon receipt of the documents proposing enterprise dissolution, the person authorized to dissolve the enterprise (or the person delegated) establishes the Dissolution Council based on using their own support staff and inviting experts familiar with the contents to be reviewed to examine the documents proposing enterprise dissolution.

Experts designated or invited to join the Dissolution Council exchange opinions and submit written independent opinions which are preserved. The Chairman of the Dissolution Council compiles these opinions and presents them to the person authorized to decide on enterprise dissolution.

b. Tasks of the Dissolution Council:

Reviewing the dissolution documents to present to the person authorized to decide on enterprise dissolution for examination and issuance of a dissolution announcement or non-dissolution announcement. The review includes:

- The legality and completeness of the documents proposing enterprise dissolution.

- Whether the enterprise has truly fallen into one of the four situations requiring dissolution as stipulated in Point 2 of Section I above. In cases 3 or 4, careful examination of the measures already supported for the enterprise is required.

- The conditions for enterprise dissolution as stipulated in Point 3 of Section I.

c. Term of operation of the Dissolution Council:

The term of operation of the Dissolution Council does not exceed thirty days. The Dissolution Council concludes its activities upon issuance of the dissolution announcement or non-dissolution announcement becoming effective.

5. Announcement of Enterprise Dissolution:

- Within twenty (20) days from the date of establishment of the Dissolution Council, the Dissolution Council submits the review opinion on the proposal for enterprise dissolution to the person authorized to decide on enterprise dissolution. The person authorized to decide on enterprise dissolution examines and issues an announcement of enterprise dissolution or non-dissolution in writing.

- The announcement of enterprise dissolution contains the following contents:

+ Name and address of the enterprise undergoing dissolution.

+ Reason for dissolution.

+ Date of commencement of cessation of production and business operations to proceed with the dissolution procedures.

- The announcement of enterprise dissolution is sent to the following authorities:

+ Proposer for enterprise dissolution.

+ Enterprise undergoing dissolution.

+ Superior authority of the enterprise undergoing dissolution (if any).

+ Financial authority of the enterprise: for central enterprises, send to the Ministry of Finance (Enterprise Finance Department); for local enterprises, send to the Provincial Department of Finance and Price Control.

+ Tax authority directly managing the collection of corporate taxes.

+ People's Committee of the province or centrally-run city where the main office of the enterprise is located if the enterprise is dissolved due to proposals from central Ministries, sectors, or State Corporations.

- In the case of non-dissolution of the enterprise, the reason for non-dissolution must be clearly stated.

III. LIQUIDATION BOARD OF THE ENTERPRISE

1. Establishment of the Liquidation Board of the Enterprise

Upon the effective date of the dissolution announcement of the enterprise, the person deciding to dissolve the enterprise shall establish a Liquidation Board comprising the following members:

- The General Director of the dissolved enterprise or a person designated by the person deciding to dissolve the enterprise to serve as the Chairman of the Board,

- The Chief Accountant of the enterprise,

- A representative of the trade union of the enterprise,

- The financial authority of the enterprise: A representative of the Ministry of Finance (Enterprise Financial Department) for central enterprises; A representative of the Provincial Department of Finance and Prices for local enterprises.

- Representatives from some specialized departments of the enterprise being dissolved.

- Some experts (if necessary).

During the liquidation process, the Liquidation Board may establish working groups. Personnel of these working groups shall be drawn from the organizational structure of the dissolved enterprise.

2. The Liquidation Board has the following powers and responsibilities:

- To use the seal of the dissolved enterprise for the purpose of liquidation according to current regulations.

- During the liquidation process, if necessary, the Liquidation Board may invite organizations or experts, both domestic and foreign, to conduct audits, appraisals of machinery, equipment, factories, and determine the residual value of the enterprise.

3. The Liquidation Board has the following tasks:

- To notify in writing creditors and related organizations about the dissolution of the enterprise.

- To develop a dissolution plan for the enterprise to be submitted to the person deciding to dissolve the enterprise for approval.

- To implement the liquidation of the enterprise according to the approved plan, including: settling unfinished economic contracts, liquidating and selling assets, recovering debts, handling labor issues, paying off debts...

- In cases where unfinished contracts can be completed during the dissolution period without affecting the settlement and disposal of assets, the Liquidation Board may continue to organize the implementation of these contracts according to the decision of the person deciding to dissolve the enterprise.

- To settle the liquidation process. Prepare a report on the results of the liquidation and make recommendations.

4. The duration of operation of the Liquidation Board shall not exceed six months from the date of establishment. In case of requesting an extension of the dissolution period of the enterprise, it must be reviewed and agreed in writing by the person deciding to dissolve the enterprise, but the extension period shall not exceed two months.

5. The Liquidation Board and its working group staff if they violate the following issues, depending on the nature and degree of violation, they will be subject to administrative disciplinary action or criminal prosecution, and if they cause damage to the assets of the dissolved enterprise, they must compensate:

- Preparing asset lists that do not correspond to reality, or preparing them in violation of prescribed legal procedures;

- Compile creditor lists and amounts incorrectly without basis;

- Organize auctions contrary to legal provisions;

- Dividing the assets of the dissolved enterprise in accordance with the approved plan and the priority order of payment to creditors unfairly;

- Using the assets of the dissolved enterprise improperly;

- Failing to take protective measures leading to the loss of assets of the dissolved enterprise;

- Preparing financial reports at the end of the dissolution process that do not reflect the truth;

- Abandoning their duties or performing them inadequately, causing difficulties for the operations of the Liquidation Board or resulting in the loss of assets of the dissolved enterprise.

6. Until the dissolution of the enterprise is not terminated, the General Director and Chief Accountant of the dissolved enterprise shall not be transferred to other positions. the head of the enterprise being dissolved has not been transferred to another position.

IV. DISSOLUTION PLAN OF THE ENTERPRISE

1. Within forty (40) days from the effective date of the dissolution announcement of the enterprise, the Liquidation Board must complete the dissolution plan of the enterprise (including the financial settlement plan of the enterprise) to submit to the person deciding to dissolve the enterprise, and simultaneously send it to the following agencies for written comments:

- For central enterprises:

+ Ministry of Finance (Enterprise Financial Department);

+ Ministry of Industry.

- For local enterprises:

+ Provincial Department of Finance and Prices;

+ Provincial Department of Planning and Investment.

2. The main contents of the enterprise dissolution plan are stipulated in the annex attached to this Circular.

3. Based on the dissolution plan presented by the Liquidation Board and the written opinions of the above agencies, the person deciding to dissolve the enterprise shall issue a resolution approving the dissolution plan of the enterprise. The time for reviewing and approving the dissolution plan of the enterprise shall not exceed fifteen (15) days from the date of receipt of the plan.

V. PRINCIPLES FOR FINANCIAL HANDLING WHEN

V. PRINCIPLES FOR FINANCIAL SETTLEMENT DURING

ENTERPRISE DISSOLUTION

1. The assets of the enterprise being dissolved are those under the lawful management and use of the enterprise, including: current assets and short-term investments, fixed assets and long-term investments.

2. From the effective date of the dissolution announcement of the enterprise: all outstanding debts are considered due, interest on debts is suspended.

3. When dissolving, the transfer of assets of the enterprise being dissolved to other units or individuals must be conducted through sale at market prices at the time of transfer.

4. Secured creditors are creditors whose debts are secured by the assets of the debtor enterprise.

Secured creditors shall receive the security assets at the price determined by the Liquidation Board; if the creditor does not accept, the assets shall be auctioned according to current regulations. The proceeds from the auction of the security assets shall be used to pay the secured creditors; any surplus belongs to the assets of the enterprise being dissolved, any deficiency is treated as unsecured debt and handled like other unsecured debts.

6. Assets and capital contributed to joint ventures, business cooperation, or investments outside the enterprise shall be recovered through the transfer of joint venture capital contributions or shares to other entities. In cases where the Liquidation Board's term of operation has expired and the enterprise has not been able to transfer its joint venture capital contributions to other partners, the person deciding to dissolve the enterprise shall designate another enterprise to replace it after reaching an agreement with the joint venture partner on the principle of ensuring sufficient funds for debt repayment. The designated enterprise will continue to act as a joint venture partner or carry out the liquidation of the joint venture contract according to the instructions of the person deciding to dissolve the enterprise.

VI. ORGANIZATION OF ASSET DISPOSITION AND DEBT PAYMENT

1. Within five (5) days from the date the dissolution announcement of the enterprise becomes effective, the Liquidation Board must publish in three (3) consecutive issues of one central daily newspaper and one local newspaper an announcement regarding the cessation of operations and the commencement of the dissolution process. The contents published include:

+ The name and address of the enterprise undergoing dissolution.

+ The number, date, month, year, and authority issuing the dissolution announcement of the enterprise.

+ The date of commencement of the dissolution process.

+ A request for creditors to come forward to reconcile debts. It should clearly specify the deadline for submitting proof of debt. After the specified deadline, if any creditor does not come forward to reconcile debts, the Liquidation Board will only consider payment based on the amount recorded in the accounting records. The Liquidation Board will not be responsible for any discrepancies arising from creditors' failure to reconcile debts.

2. From the date the dissolution announcement of the enterprise becomes effective, the dissolved enterprise must:

- Cease all production and business activities except as provided in point 4, Clause 3, Section III of this Circular.

- Cease all activities: buying and selling unrelated to the dissolution process; paying off debts; leasing, lending assets;

- Cease entering into new economic contracts;

- Close accounting books, inventory assets, receivables, and payables (including receivables and payables), reconcile between accounting records and actual physical assets and values. If there are discrepancies between the accounting records and actual conditions, a record must be established detailing the reasons and responsibilities of individuals or groups for each specific case.

3. Within thirty (30) days from the date the dissolution announcement of the enterprise becomes effective, the Liquidation Board must complete the Financial Statement at the time the dissolution announcement becomes effective. This Financial Statement must be sent to the person deciding to dissolve the enterprise, the enterprise's financial agency, and the tax authority where the enterprise registers for tax payment.

4. Within sixty (60) days from the date of the first publication of the dissolution announcement, creditors must submit to the Liquidation Board a reconciliation statement specifying secured debts, partially secured debts, and unsecured debts.

Within fifteen (15) days from the end of the reconciliation period specified in the announcement, the Liquidation Board must complete the list of creditors and amounts owed (divided into secured debts, partially secured debts, and unsecured debts); the list of debtors and amounts due (divided into recoverable debts and non-recoverable debts). The Liquidation Board must publicly post these lists of creditors, debtors, and amounts owed at the main office of the dissolved enterprise.

Within ten (10) days from the posting date, the Liquidation Board must finalize the list of creditors as the basis for distributing the assets of the dissolved enterprise.

5. Within thirty (30) days from the date of the first publication of the announcement of the cessation of production and business activities and the commencement of the dissolution process, those who have lent, borrowed, or entrusted assets to the dissolved enterprise must present documents proving their lawful ownership or management rights to reclaim the assets. If the dissolved enterprise has rented assets but the rental period has not yet expired and all rent payments have been made, the lessor must refund the excess rent according to the agreement before reclaiming the asset.

6. The Liquidation Board shall execute the lease contract termination and recovery of leased, borrowed, entrusted, or held assets. When recovering, the Liquidation Board must present the dissolution announcement of the enterprise.

7. The Liquidation Board shall establish an appraisal team or hire professional appraisal organizations to appraise all assets of the dissolved enterprise, including mortgaged or pledged assets, as the basis for auctioning the assets. The appraisal team consists of:

+ The head of the Liquidation Board as the team leader.

+ A representative of the enterprise's financial agency participating in the Liquidation Board.

+ A representative of the enterprise's Finance and Accounting Department.

+ A representative of the Technical Department.

If necessary, the head of the Liquidation Board may invite external experts knowledgeable about the assets to be appraised to join the appraisal team.

The head of the Liquidation Board invites creditors with secured debts to participate in the appraisal of assets securing their debts.

The appraisal team decides by majority vote. In case of a tie, the opinion of the team leader's vote is decisive.

8. The assets of the dissolved enterprise shall be auctioned through professional auction organizations or organized openly by the Liquidation Board in accordance with the current Auction Regulations. In cases where multiple bidders offer the same bid price, the creditors of the dissolved enterprise shall be given priority to purchase the auctioned assets. If multiple creditors wish to purchase, the creditor with the larger total debt has the right to purchase first. Sales of prohibited or restricted circulation assets must comply with state regulations.

The sale of assets related to land use rights must comply with the Land Law.

9. Not later than five (5) days from the date on which the decision establishing the Liquidation Board becomes effective, the Chairman of the Liquidation Board must open an account at the State Treasury where the enterprise's main office is located to deposit funds obtained from liquidation, sale of assets, and recovery of debts of the dissolved enterprise. The account shall be managed by the Chairman of the Liquidation Board.

All funds received from the dissolution of the enterprise, including capital in cash, proceeds from the sale and liquidation of assets, and recovered debts of the dissolved enterprise, must be deposited into the account of the Liquidation Board on the day such funds are received. In case the end of the working day is reached, the funds must be deposited on the next working day. Any person who intentionally delays the deposit of funds shall compensate according to the interest rate for demand deposits published by the Bank and shall bear administrative disciplinary action depending on the severity of the offense.

10. For creditors with accounts at banks or State Treasuries, the Chairman of the Liquidation Board shall process the transfer of debt repayment funds into the creditor's account. If the creditor does not have an account, the Chairman of the Liquidation Board shall notify the creditor to collect the funds directly or send them via postal service to the creditor. Postal fees shall be deducted from the amount paid to the creditor.

VII. PAYMENT OF DISSOLUTION COSTS AND DEBTS

1. After paying off secured creditors, all funds obtained from the dissolution of the enterprise shall be processed in the following sequence:

a. Payment of dissolution costs of the enterprise.

Dissolution costs of the enterprise include:

+ Costs associated with the liquidation of economic contracts, costs for the recovery, transportation, storage, and preservation of the dissolved enterprise's assets;

+ Costs related to organizing the auction of assets;

+ Costs for organizing, storing, and preserving the documents of the dissolved enterprise and other related costs for implementing the dissolution of the enterprise. These expenses shall be reimbursed based on actual expenditures approved by the Chairman of the Liquidation Board. The Chairman of the Liquidation Board shall be responsible for their decisions.

+ Wages for employees of the dissolved enterprise mobilized to participate in the Liquidation Board and assisting organizations.

b. Payment of wages arrears, social insurance debts, and other benefits due to workers in accordance with the terms of employment contracts or collective labor agreements and current regulations of the enterprise.

Labor support systems and funding in dissolved enterprises shall be implemented in accordance with Decree No. 41/2002/NĐ-CP dated April 11, 2002, of the Government on surplus labor systems and other current regulations.

c. The remaining funds after paying the above two items shall be paid to unsecured creditors.

Payments to creditors shall be based on the ratio between the total amount paid in each installment and the total outstanding debt. The Liquidation Board may prioritize payment of small debts not in proportion to this ratio and shall be responsible for its decisions.

Example: Funds obtained from the first round of asset liquidation of the dissolved enterprise amount to three billion (3,000,000,000) Vietnamese dong. Debts of the enterprise include: secured debt of one billion (1,000,000,000) Vietnamese dong, unsecured debt of five billion (5,000,000,000) Vietnamese dong, and dissolution costs and wage arrears, social insurance of five hundred million (500,000,000) Vietnamese dong.

Remaining funds to pay unsecured creditors are: three billion (3,000,000,000) Vietnamese dong - one billion (1,000,000,000) Vietnamese dong - five hundred million (500,000,000) Vietnamese dong = one billion five hundred million (1,500,000,000) Vietnamese dong.

The ratio between the total amount paid in this round and the unsecured debt is: one billion five hundred million (1,500,000,000) Vietnamese dong / five billion (5,000,000,000) Vietnamese dong = 0.3 (30%).

Payments to creditors will be carried out as follows:

Creditor A has unsecured debt of five hundred million (500,000,000) Vietnamese dong and will be paid: 30% x five hundred million (500,000,000) Vietnamese dong = one hundred fifty million (150,000,000) Vietnamese dong.

Creditor B has unsecured debt of one billion (1,000,000,000) Vietnamese dong and will be paid: 30% x one billion (1,000,000,000) Vietnamese dong = three hundred million (300,000,000) Vietnamese dong.

...

Funds obtained from subsequent rounds will be successively paid out to cover remaining unsecured debts.

d. Tax debts and other government debts.

2. The remaining funds after fully paying off all debts shall belong to the State Budget. Within five (5) days from the end of payments to creditors, the Liquidation Board shall be responsible for depositing the entire amount into the Fund for Enterprise Restructuring and Shareholding.

3. In cases where funds obtained from the dissolution of the enterprise (including government subsidies to support payments to workers) are insufficient to pay off all debts, the entity deciding on the dissolution of the enterprise shall inform creditors and relevant agencies about the enterprise's insolvency. At that point, the dissolution process shall not follow the provisions for enterprise dissolution but shall proceed with bankruptcy procedures.

VIII. CONCLUSION OF ENTERPRISE DISSOLUTION

1. Upon expiration of the dissolution period, if there are unresolved issues, the Liquidation Board shall report to the entity deciding on the dissolution of the enterprise for review and resolution.

2. Seven (7) days after the completion of payments to creditors, the Liquidation Board must prepare a report on the dissolution of the enterprise. The report shall be sent to the entity deciding on the dissolution of the enterprise, the enterprise's financial authority (central enterprises send to the Department of Enterprise Finance - Ministry of Finance, local enterprises send to the Provincial Department of Finance - Price Control), and the superior management agency of the dissolved enterprise (if applicable).

3. The entity deciding on the dissolution of the enterprise shall examine the dissolution report and issue a decision on the dissolution of the enterprise after receiving a written opinion from the enterprise's financial authority through the dissolution report.

The dissolution decision shall be sent to the following agencies:

- The entity proposing the dissolution of the enterprise (if applicable);

- The enterprise's financial authority (central enterprises send to the Ministry of Finance (Department of Enterprise Finance), local enterprises send to the Provincial Department of Finance - Price Control);

- The Department of Planning and Investment where the dissolved enterprise is registered to operate;

- The Provincial/City Statistics Bureau where the dissolved enterprise's main office is located;

- The Tax Authority directly managing the tax collection of the enterprise.

4. After the dissolution process of the enterprise has ended, all files and accounting books of the dissolved enterprise, as well as records related to the dissolution process of the enterprise must be stored at the agency that established the enterprise in accordance with the regulations on document storage.

IX. IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance and replaces Circular No. 25-TC/TCDN dated May 15, 1997 guiding the procedures, formalities, and principles for financial settlement when dissolving state-owned enterprises. Any other provisions contrary to this Circular shall not be enforceable.

This Circular does not apply in cases of merger, division of enterprises, or conversion of enterprises into public service units pursuant to the decision of the competent authority.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for study and resolution.

ANNEX

Dissolution Plan of the Enterprise

I. Economic Contract Disposal Scheme:

The total number of economic contracts being executed by the enterprise at the time of dissolution. Among them, clearly identify the contracts to be liquidated immediately and those that can continue to be performed during the dissolution period of the enterprise.

1. Contracts to be liquidated immediately: specify the total income or costs for liquidating the contract (if applicable).

2. Contracts that can continue to be performed: clearly explain the following contents:

+ Total value of the contract.

+ Explanation of the plan to continue completing the contract: extent of work completed, time required to complete the contract, costs for completing the contract, production organization plan without affecting the dissolution schedule of the enterprise (including product consumption, revenue collection...), amount of money received after completing the contract...

II. Asset Disposal Scheme of the Dissolved Enterprise:

1. For physical assets:

+ Inventory and classify physical assets currently owned by the enterprise and determine the market value of these assets.

+ Liquidation and sale scheme for assets.

+ Scheme for handling assets attached to land use rights.

+ Scheme for handling assets used as collateral.

2. For receivables:

+ Total amount of receivables. Among them, separate receivables secured by assets, overdue receivables, non-overdue receivables, recoverable receivables, and unrecoverable receivables.

+ Measures to recover receivables and the expected time for recovery.

III. Scheme for Handling Joint Venture Assets and Investments Outside the Enterprise (if any):

- Transfer form

- Expected transfer value...

IV. Financial Scheme:

A. Estimated Revenue from Dissolving the Enterprise, including:

1. Cash, balances in deposit accounts (Vietnamese dong and foreign currency), value of gold, silver, precious stones, and the total value of negotiable instruments of the enterprise.

2. Revenue from selling and liquidating assets (including assets used as collateral).

3. Revenue from transferring joint venture equity and investments outside the enterprise.

4. Revenue recovered from receivables.

5. Other revenues.

B. Estimated Expenditure for Dissolving the Enterprise:

1. Dissolution expenses.

2. Payment to employees including: arrears in wages, social insurance...

3. Payment of the enterprise's liabilities.

4. Payment of tax debts and other budget debts.

5. Other expenditures.

C. Revenue-Expenditure Difference (A - B)

V. Labor Disposal Scheme:

1. List of regular employees of the enterprise at the time of dissolution.

2. Scheme for arranging employment for enterprise employees after dissolution:

+ Employees transferred to another enterprise,

+ Employees retiring according to regulations,

...

3. List of employees for whom the enterprise must pay severance pay and unemployment benefits according to current regulations; Severance pay and unemployment benefits that the enterprise must pay to each employee according to current state regulations.

VI. Recommendations