Decree No. 73/2000/ND-CP Issuing the Regulation on Management of State Capital in Other Enterprises

DECREE OF THE GOVERNMENT

Issuing the Regulation on Management of State Capital in Other Enterprises

 

THE GOVERNMENT

Based on the Government Organization Law dated September 30, 1992;

Based on the Law on State-Owned Enterprises dated April 20, 1995;

At the proposal of the Minister of Finance,

 

DECREE DECIDE:

Article 1. The accompanying Decree promulgates the "Regulation on Management of State Capital in Other Enterprises"'.

Article 2. This Decree shall take effect fifteen days from the date of signature. All regulations concerning the management of state capital in other enterprises that conflict with the provisions of this Regulation shall be abolished.

Article 3. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under central jurisdiction, Boards of Directors, General Directors, and Directors of state-owned enterprises are responsible for implementing this Decree./.

 

REGULATIONS

MANAGEMENT OF STATE CAPITAL IN OTHER ENTERPRISES

(Issued together with Decree No. 73/2000/NĐ-CP dated December 6, 2000 of the Government)

I. GENERAL PROVISIONS

Article 1. The State manages the portion of state capital in other enterprises through the representative of state capital and the person directly managing the state capital in other enterprises.

Article 2.Some terms in these Regulations are understood as follows:

1. "Other enterprise" refers to an enterprise operating under the Enterprise Law; the Law on Foreign Investment in Vietnam, or the Law on Cooperatives.

2. "State capital in other enterprises" means the amount of capital belonging to the state from the budget or state-owned enterprises invested in other enterprises; including the state capital in state-owned enterprises that have been privatized.

3. "Representative of state capital in other enterprises" (hereinafter referred to as the representative) is the organization or individual specified in Article 6 of this Regulation representing the State to exercise ownership rights over state capital in other enterprises.

4. "Person directly managing state capital in other enterprises" (hereinafter referred to as the direct manager) is the person appointed by the representative to perform the rights and obligations of a capital contributor or state shareholder. The direct manager may operate full-time or concurrently. In cases where there are multiple direct managers in one other enterprise, the representative must appoint a person in charge to coordinate the direct managers to fulfill the assigned rights and obligations.

Article 3State capital in other enterprises includes:

1. Capital owned by the state at state-owned enterprises comprising money, value of land use rights or land rental fees, and the value of state-owned assets invested by state-owned enterprises in other enterprises or joint ventures with organizations and individuals within and outside the country.

2. Budget capital contributed by the state to other enterprises.

3. Value of state shares in state-owned enterprises that have been privatized, including the value of state shares issued to employees of state-owned enterprises to enjoy dividends before the effective date of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government.

4. Dividends derived from the state's investment in other enterprises, which are used for reinvestment in that enterprise.

Article 4In cases where the state does not hold controlling shares in the total number of shares of other enterprises, it may not need to appoint a direct manager. However, the representative must organize work to ensure monitoring of the state capital already invested and the dividends derived from the state capital invested in that enterprise, and delegate persons to exercise shareholders' rights according to the Articles of Association of the enterprise.

Article 5.

1. Other enterprises with state investment operate in accordance with relevant laws and the Articles of Association of the enterprise; implement financial reporting and statistical reporting systems as prescribed by law. When submitting reports to competent state authorities, the enterprise simultaneously sends copies of these reports to the representative of state capital.

2. Competent state authorities carry out inspection and supervision according to their state management functions over the activities of enterprises, without interfering in the business operations of enterprises.

II. RIGHTS AND OBLIGATIONS OF THE REPRESENTATIVE

PART V - STATE CAPITAL IN OTHER ENTERPRISES

Article 6.The representative of state capital in other enterprises shall be determined as follows:

1.The Ministry of Finance for the following cases:

a)The portion of state capital in other enterprises contributed by the central budget.

b)The portion of state capital in enterprises that have been converted from independent state-owned enterprises established by ministries and sectors to fully implement corporate conversion.

c)The portion of state capital in joint ventures formed from independent state-owned enterprises established by ministries and sectors contributing all their capital to the joint venture and ceasing to exist as state-owned enterprises.

2.Provincial People's Committees under the Central Government for the following cases:

a)The portion of state capital in other enterprises contributed by local budgets.

b)The portion of state capital in enterprises that have been converted from independent state-owned enterprises established by the Chairman of Provincial People's Committees to fully implement corporate conversion.

c)The portion of state capital in joint ventures formed from independent state-owned enterprises established by the Chairman of Provincial People's Committees contributing all their capital to the joint venture and ceasing to exist as state-owned enterprises.

3.The Board of Directors (for state-owned enterprises with a Board of Directors) or the General Director (for independent state-owned enterprises without a Board of Directors) for the following cases:

a)The portion of state capital in other enterprises resulting from partial corporate conversion of independent state-owned enterprises.

b)The portion of state capital in other enterprises resulting from partial or full corporate conversion of member enterprises within State Corporations.

c)State-owned enterprises investing part of the state capital in other enterprises or contributing to joint ventures with domestic and foreign organizations and individuals.

For State Corporations, the Board of Directors may authorize the General Director of member enterprises to represent the state capital in cases of partial corporate conversion of member enterprises, or contributing part of the member enterprise's capital to joint ventures. Such authorization must be stipulated in the Corporation's Charter.

, Clause 1, Clause 2 Article 7a of this Regulation.The representative has the following rights:

1.Appointing, dismissing, rewarding, and disciplining direct managers.

In the case where the representative is the Ministry of Finance as provided for in Clause 1, Article 6 of this Regulation, the head of the ministry or sector shall decide after consultation with the Ministry of Finance.

2.Requiring direct managers to report periodically or at any time on business operations, financial management, capital management, asset management, and business results of other enterprises with state investment. Assign tasks and require direct managers to report on the use of state controlling shares in joint-stock companies to guide strategic direction, set long-term and annual goals for these enterprises.

3.Supervising and monitoring the activities of direct managers, promptly identifying deficiencies and weaknesses to prevent and correct them.

4.Deciding or submitting to those with authority to decide on increasing or recovering state capital in other enterprises in accordance with laws and the enterprise charter.

5.In cases where the state budget and multiple state-owned enterprises contribute capital to another enterprise, representatives shall designate one person among themselves to coordinate and protect the state's interests in the other enterprise.

6.Exercising other rights as prescribed by law.

Article 8The representative has the following obligations:

1.Using state controlling shares to guide other enterprises' activities according to the state's objectives.

2.Reporting periodically or upon request from the Ministry of Finance on business operations, financial results, financial management, capital management, and asset management of other enterprises, the recovery of state shares issued to employees for dividends, the recovery of state loans given to employees to purchase shares, and the recovery of deferred payment shares sold to poor employees in enterprises.

For representatives as provided for in Clause 3, Article 6, they must also send these reports to the establishment decision-making body of state-owned enterprises with investment and other enterprises.

Reporting systems and indicators are regulated by the Ministry of Finance.

3.Reporting to the Ministry of Finance and the establishment decision-making body about measures to recover state capital in other enterprises; the performance of representatives and direct managers when state-invested enterprises are dissolved or bankrupt.

4.Directing direct managers to take timely measures to protect state capital in cases where state-invested enterprises suffer losses, lose capital, or face dissolution or bankruptcy.

5.Supervising the recovery of state loans given to employees to purchase shares during the implementation of corporate conversion of state-owned enterprises, the recovery of shares issued to employees for dividends when employees die without heirs or voluntarily return them (for enterprises implementing corporate conversion before the effective date of Decree No. 44/1998/NĐ-CP dated June 29, 1998), and the recovery of deferred payment shares sold to poor employees in state-owned enterprises implementing corporate conversion according to Decree No. 44/1998/NĐ-CP.

6.Supervising the recovery of profits distributed from state capital invested in other enterprises.

III. RIGHTS AND OBLIGATIONS OF DIRECT MANAGERS

Article 9Direct managers have the following rights:

1.Participating in the election to the management and operation bodies of other enterprises in accordance with the enterprise charter.

2.Exercising shareholder rights and capital contribution rights as prescribed by law and the company charter. Requesting other enterprises to transfer distributed profits to the address specified in Article 12 of this Regulation.

3.Direct managers with controlling shares participate in deciding management and operational measures based on the use of controlling shares as prescribed by law.

4.Proposing that the representative create conditions to fulfill assigned tasks.

5. The person directly managing and participating in the management board of state-owned enterprises shall be entitled to salary, allowances, and bonuses according to the regulations of the enterprise, paid by the enterprise.

The person directly managing who works concurrently without participating in the management board of the enterprise shall have their salary paid by their main place of work.

Article 10.

1. Study and propose management measures, directions, and methods of operation for approval by the representative. For important issues of the enterprise such as production direction, additional share issuance, dividend distribution to shareholders, etc., the person directly managing must seek the opinion of the representative before participating in voting at the Board of Management or Shareholders' Meeting.

2. The person directly managing the controlling shares of the state in other enterprises must propose directions, goals, and methods for using shareholder rights to guide the operation of the enterprise in line with state objectives for approval by the representative.

If discovering that the enterprise deviates from the state's guiding objectives, they must report promptly and propose handling opinions to the representative. Study and propose for the state controlling shareholder to decide on important matters of the enterprise according to the law.

3. Organize the implementation of tasks assigned by the representative, regularly analyze and evaluate the business operation and financial activities of other state-invested enterprises, identify potential losses and capital loss risks to report promptly and fully to the representative.

4. Monitor and implement the recovery of state capital provided to employees for dividends, loans to employees to purchase shares when the state enterprise implements shareholding (for enterprises implementing shareholding before Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government takes effect), recover the deferred payment of shares sold to poor employees in state enterprises implementing shareholding according to Decree No. 44/1998/NĐ-CP.

5. Monitor the income derived from the state investment in other enterprises.

6. Regularly or upon request by the representative, report fully and accurately on the business operation, financial management, capital management, and assets of other state-invested enterprises, financial results and dividend distribution of the enterprise, the recovery of capital provided to employees for dividends or capital lent to employees to purchase shares.

The person directly managing, in cases stipulated in Clause 1, Article 6 of this Regulation, when submitting reports to the representative, also submit a copy to the relevant economic ministry or agency.

7. Be responsible to the representative for the execution of assigned duties and responsibilities regarding the management of state capital invested in other enterprises.

8. Establish files on state-invested enterprises according to the regulations of the financial management authority.

The person directly managing who works concurrently shall fulfill the obligations prescribed in Clauses 3, 4, 5, 6, 7, and 8 of this Article.

Article 11.

The person directly managing must meet the following standards:

1. Be a Vietnamese citizen residing in Vietnam. In cases where appointed by the Board of Management or General Director of the state enterprise (for state enterprises without a Board of Management), the person directly managing must be an employee of that state enterprise.

2. Have good moral character and health to undertake the task.

3. Understand laws and have a sense of compliance with the law.

4. Possess professional qualifications in corporate finance or the business field of the state-invested enterprise, business capability, and organizational management skills. For those managing state capital in joint ventures with foreign entities, they must have sufficient language proficiency to work directly with foreigners in joint ventures without interpreters.

5. Not be a close relative (father, mother, spouse, child, brother, sister, half-sibling) of individuals in the Board of Management or General Director of the enterprise in which they directly manage; not have capital contribution, loan, or contract sales relationships with state-invested enterprises they are directly appointed to manage.

IV. PRINCIPLES FOR HANDLING DIVIDENDS AND CAPITAL RECOVERY FROM OTHER ENTERPRISES

AND CAPITAL RECOVERY FROM OTHER ENTERPRISES

Article 12.

The person directly managing has the responsibility to require the enterprise to transfer dividends received from other enterprises as follows:

1. To the State Enterprise Restructuring and Shareholding Support Fund, in cases where the Ministry of Finance or the People's Committee of the province/city under central government jurisdiction is the representative as stipulated in Clause 1 or Clause 2 of Article 6 of this Regulation.

Article 132. To the state enterprise that contributed capital to the other enterprise, in cases where the Board of Management or General Director of the state enterprise is the representative as stipulated in Clause 3 of Article 6 of this Regulation.

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The use of dividends to increase or decrease state capital in other enterprises is regulated as follows:

1. In cases where the Ministry of Finance is the representative as stipulated in Clause 1 of Article 6 of this Regulation, the Minister of Finance shall consider and decide after obtaining the opinion of the head of the sectoral management agency.

2. In cases where the Provincial People's Committee is the representative as stipulated in Clause 2 of Article 6 of this Regulation, the Chairman of the Provincial People's Committee shall consider and decide.

3. In cases where the Board of Management or General Director of the state enterprise is the representative as stipulated in Clause 3 of Article 6 of this Regulation.

a) For state enterprises with a Board of Management, the decision is made by the Board of Management.

Article 14. The capital of the State recovered when deciding to reduce the State's capitalportion in another enterprise, or when another enterprise is dissolved or bankrupt;recovering the amount of money lent to employees to purchase shares when state-owned enterprises are equitized, the value of shares allocated to employees fordividends, and shares sold on credit to poor employees in state-owned enterprises(post-Nghị định No. 44/1998/NĐ-CP equitization) shall be handled as follows:

1. Deposited into the Fund for Supporting the Restructuring and Equitization ofState-Owned Enterprises in the cases specified in Clauses 1 and 2, Article 6 ofthis Regulation.

2. Transferred back to the state-owned enterprise that has contributed capital inthe case specified in Clause 3, Article 6 of this Regulation.

V. RESPONSIBILITIES OF STATE MANAGEMENT ORGANIZATIONS FOR THE MANAGEMENT OFTHE STATE CAPITAL PORTION IN OTHER ENTERPRISES

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Article 15. Ministry of Finance:

1. Monitor and supervise the activities of the direct managers in the cases specifiedin Clause 1, Article 6 of this Regulation; monitor and supervise the performanceof the representative's duties as specified in Clause 3, Article 6 of thisRegulation.

2. Compile, analyze, and evaluate the effectiveness of the State's capitalcontribution in other enterprises. Summarize the situation of investment capital,recouped State capital, profit recovery at other enterprises with Stateinvestment, the situation of recovering loans for employees to purchase sharesin state-owned equitized enterprises, recovering shares issued to employees fordividends, and capital provided to poor employees in enterprises to purchase sharesaccording to the rights and obligations of the representative as specified inClauses 1 and 2, Article 6 of this Regulation.

3. Require representatives as specified in Points b and c, Clause 3, Article 13 ofthis Regulation to report promptly on the business operation, capital managementand assets, financial management, and financial results of other enterprises andthe implementation of their duties as representatives and direct managers.

4. Require representatives to implement measures to strengthen the management ofthe State's capital invested in other enterprises to ensure the preservation anddevelopment of State capital.

Article 16. Ministries, economic and technical management agencies, People's Committees ofprovinces and centrally governed cities:

1. Approve plans to use profits to supplement registered capital or to reduce theState's capital contribution in other enterprises for state-owned enterpriseswithout a Board of Management as specified in Point b, Clause 3, Article 13 ofthis Regulation.

2. Coordinate with enterprise financial management agencies to monitor and supervisethe implementation of the representative's duties as specified in Clause 3, Article6 of this Regulation.

3. Analyze and evaluate the effectiveness of capital contributions to otherenterprises and their impact on the operations of contributing state-ownedenterprises in the cases specified in Clauses 1 and 2, Article 6 of this Regulation.

4. Have the right to require representatives as specified in Clause 3, Article 6 ofthis Regulation to report promptly on the business operations, financialmanagement, profit distribution of other enterprises, the implementation ofrepresentative duties, and direct management.

VI. VIOLATION HANDLING

Article 17. Representatives who fail to fully perform or abuse their rights and obligations,causing damage to the State's capital portion in other enterprises, shall beadministratively disciplined according to the degree of violation; if it constitutesa crime, they shall be criminally prosecuted. In cases where losses, capitallosses, and inability to pay maturing debts of other enterprises are not timelydiscovered, discovered but not timely addressed leading to loss of State capitalin these enterprises, in addition to administrative discipline, 10% of the salaryfor the year in which the incident occurred must be deducted. If there is directaction causing material damage, compensation must be made according to the law.For cases where the representative is an organization, the responsibility ofindividuals for violations must be clearly determined and individuals violatingmust be dealt with as prescribed above.

Article 18. Direct managers who fail to fully perform or abuse their rights and obligations,causing damage to the State's capital portion in other enterprises, shall beadministratively disciplined according to the degree of violation; if it constitutesa crime, they shall be criminally prosecuted; in cases where they fail to timelyurge the division of profits to be used by other enterprises, they must compensateat the short-term loan interest rate of banks. The period for determiningcompensation liability starts from the 31st day after the enterprise approves theprofit distribution plan until the enterprise transfers the distributed profitsto the location specified in Article 12 of this Regulation. If there is directaction causing material damage, compensation must be made according to the law.

Article 19. State management organizations that fail to fully perform inspection andsupervision tasks, thus failing to discover violations by representatives ordiscovering them but not reporting or taking preventive measures, resulting indamage to the State's capital portion in other enterprises, shall bear jointliability with representatives and direct managers.