Decree No. 95/2006/NĐ-CP on the conversion of state-owned enterprises into limited liability companies with one member

DECREE

Regarding the conversion of state-owned enterprises to

of a limited liability company with one member

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Enterprise Law dated November 29, 2005;

Considering the proposal of the Minister of Planning and Investment.

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates the conversion of state-owned enterprises to single-member limited liability companies operating under the Enterprise Law.

Article 2. Applicability

1. The objects subject to application include:

a) Independent state-owned enterprises;

b) State-owned enterprises that are parent companies in the parent company - subsidiary model; parent companies of economic groups decided to be established by the Prime Minister (referred to collectively as parent companies);

c) Member companies with independent accounting of state-owned holding corporations;

d) Subordinate units with dependent accounting of state-owned holding corporations permitted by the Prime Minister.

2. The conversion of the State Capital Investment Corporation to operate under the Enterprise Law shall be carried out according to the regulations of the Prime Minister.

Article 3. Owner of a single-member limited liability company

1. The State Capital Investment Corporation is the owner of the single-member limited liability company converted from an independent state-owned enterprise, except for those directly serving national defense, security, and performing essential public service tasks of Ministries, People's Committees of provinces and centrally governed cities (hereinafter referred to as provincial People's Committee) as decided by the Prime Minister.

2. The parent company is the owner of the single-member limited liability company converted from member companies with independent accounting and subordinate units with dependent accounting of state-owned holding corporations or subsidiaries, subordinate units of the parent company.

3. The provisions regarding the owner of state-owned holding corporations, parent companies, and state-owned enterprises not owned by the State Capital Investment Corporation as mentioned in Clause 1 of this Article when converting to single-member limited liability companies and the implementation of state ownership rights at state-owned holding corporations, state-owned enterprises during the period before conversion shall be carried out according to the laws and delegation by the Government.

Article 4. Conversion Costs

1. Conversion costs shall be recorded as a reduction in equity.

2. The content and level of conversion costs shall be specified by the Ministry of Finance.

Article 5. Succession of Rights and Obligations of Enterprises Before Conversion

A single-member limited liability company has the responsibility to succeed all lawful rights, interests, and obligations of the enterprise being converted according to the law.

Chapter II

CONDITIONS, PROCEDURES, AND FORMALITIES FOR CONVERSION

Article 6. Conditions for Conversion

1. Belonging to industries, sectors, or regions where the State needs to hold 100% capital.

2. Having a minimum charter capital of 30 billion VND for independent state-owned enterprises or subordinate units with dependent accounting of holding corporations, parent companies, and 500 billion VND for parent companies.

For businesses in industries or professions where the law requires statutory capital, the charter capital of the company must not be lower than the statutory capital.

3. Companies for conversion as stipulated in Article 2 of this Decree must be approved by the Prime Minister.

In cases involving subordinate units with dependent accounting of holding corporations or parent companies, the conversion shall not affect the operations of the holding corporation or parent company.

Article 7. Procedures for Conversion

1. Procedures for converting state-owned enterprises, parent companies, and subordinate units with dependent accounting of state-owned holding corporations

a) Preparing for conversion, including: compiling a list, approving the list of enterprises to be converted; announcing the conversion plan; establishing a conversion committee;

b) Developing a conversion project, including: preparing relevant documents and materials; inventorying, classifying, determining capital, assets, debts, and labor of the enterprise; formulating financial settlement plans, labor arrangement plans, enterprise transfer plans; building and proposing a model and organizational structure of the single-member limited liability company; drafting articles of association and estimating charter capital;

c) Submitting, reviewing, approving, and implementing the conversion project;

d) Deciding on conversion and registering business.

2. Procedures for converting state-owned holding corporations decided by the State to invest in and establish into single-member limited liability companies operating under the parent company - subsidiary model:

a) The procedures and formalities for conversion under the parent company - subsidiary model shall be carried out according to Decree No. 153/2004/NĐ-CP dated August 9, 2004, of the Government on the organization and management of state-owned holding corporations and the conversion of state-owned holding corporations and independent state-owned enterprises into the parent company - subsidiary model;

b) The procedures for converting parent companies into single-member limited liability companies shall be carried out according to Clause 1 of this Article.

Article 8. Authority to Decide on Conversion

1. The Minister, Chairman of the People's Committee of the province decides on the roadmap and conversion of enterprises established by himself/herself.

2. The Prime Minister decides on the roadmap and conversion of enterprises established by the Prime Minister.

Article 9. Tasks of Enterprises in Building the Conversion Proposal

1. State-owned corporations reorganized under the holding company-subcompany model, where the holding company converts into a limited liability company with one member, shall have the following tasks:

a) Review each subsidiary unit, compare with the conversion conditions; determine the structure and develop a plan for forming the holding company in the form of a limited liability company with one member; develop a plan for forming subsidiary companies as limited liability companies with one member owned by the holding company;

b) Inventory, classify, identify various types of capital, assets, debts, and current labor force of the entire corporation, each subsidiary unit, and units forming the holding company; prepare financial reports at the time of conversion, including investment and capital contribution situations of the corporation and subsidiary units in other enterprises;

c) Develop plans for handling assets, finances, debts, and labor realignment; plans for transferring rights, obligations, assets, capital, debts, and labor to the holding company; estimate the registered capital of the holding company; coordinate with relevant state agencies to proactively address issues related to capital, finance, and labor of the holding company during the conversion process as stipulated in Article 10 of this Decree;

d) Draft the charter of the holding company.

2. The holding company converting into a limited liability company with one member shall have the following tasks:

a) Compare with the conversion conditions, determine the structure and develop a plan for forming the holding company as a limited liability company with one member; develop a plan for forming subsidiary companies as limited liability companies with one member (for enterprises that have not yet converted);

b) Inventory, classify, identify various types of capital, assets, debts, and current labor force of the holding company; prepare financial reports at the time of conversion, including investment and capital contribution situations of the holding company in other enterprises;

c) Develop plans for handling assets, finances, debts, and labor realignment; plans for transferring rights, obligations, assets, capital, debts, and labor to the holding company; estimate the registered capital of the holding company; coordinate with relevant state agencies to proactively address issues related to capital, finance, and labor of the holding company during the conversion process as stipulated in Article 10 of this Decree;

d) Draft the charter of the holding company.

3. Independent state-owned enterprises, subsidiaries of corporations, and subsidiaries of holding companies converting into limited liability companies with one member shall have the following tasks:

a) Inventory, classify, identify various types of capital, assets, debts, and current labor force of the enterprise; prepare financial reports at the time of conversion, including investment and capital contribution situations of the enterprise in other enterprises;

b) Develop plans for handling assets, finances, debts, and labor realignment; plans for transferring rights, obligations, assets, capital, debts, and labor to the limited liability company with one member; estimate the registered capital of the enterprise; coordinate with relevant state agencies to proactively address issues related to capital, finance, and labor of the enterprise during the conversion process as stipulated in Article 10 of this Decree;

c) Draft the charter of the limited liability company with one member.

Article 10. Principles for handling capital, assets, finance, and labor when converting

1. The handling of capital, assets, finance, and labor of state-owned joint-stock corporations organized under the holding company-subsidiary model, where the holding company converts into a single-member limited liability company, shall be carried out according to the following principles:

a) All assets of the corporation and its subsidiaries at the time of conversion shall be valued.

b) Assets under the management and use of subsidiaries planned for conversion and forming the single-member limited liability company shall be inventoried, classified, quantified, and assessed for their current status before being transferred to the single-member limited liability company.

c) For leased, borrowed, held-in-custody, or deposited assets: the enterprise continues to lease, borrow, hold custody, or deposit according to agreements with the lessors, lenders, or depositors.

d) For unused assets and surplus assets awaiting liquidation: the enterprise may sell or liquidate them according to current regulations.

đ) For excess assets: the enterprise may record an increase in the owner's equity at the enterprise.

e) For lost, missing, or damaged assets: the cause and responsibility of the collective or individual must be clearly identified, and compensation must be sought from the responsible parties according to the law. The difference between the remaining value of the asset and the compensation amount from the individual, collective, or insurance organization (if applicable) shall be covered by the financial reserve fund; if insufficient, it shall be recorded in the business results. If the enterprise incurs losses due to recording this difference, the owner's equity can be reduced, with the maximum reduction equal to the enterprise's loss amount.

g) For receivables: the enterprise is responsible for receiving and recovering receivables from the converted enterprise within the due date.

For uncollectible receivables, after identifying the cause and responsibility of the collective or individual and seeking compensation according to the law, the enterprise uses the reserve for doubtful receivables and the financial reserve fund to cover the shortfall after deducting the compensation from the individual or collective. If these funds are insufficient, the shortfall shall be recorded in the business results. If the enterprise incurs losses due to recording this shortfall, the owner's equity can be reduced, with the maximum reduction equal to the enterprise's loss amount.

h) For payables: the enterprise is responsible for assuming all payables to creditors according to commitments, including tax debts, budget debts, and employee debts; paying off payable debts within the due date. Payables without claimants and undetermined asset values shall be included in the owner's equity. In cases where the company has difficulties in settling overdue debts, they shall be handled according to current state regulations on dealing with outstanding debts.

i) For labor: the enterprise is responsible for arranging and utilizing labor according to labor laws and reorganizing state-owned enterprises; inheriting all rights and obligations towards employees according to labor laws.

2. The handling of capital, assets, finance, and labor of independent state-owned companies and subsidiaries of state-owned joint-stock corporations that operate independently, when converting into a single-member limited liability company, shall be carried out according to the following principles:

a) All assets of the company at the time of conversion shall be valued.

b) Assets under the management and use of the company shall be inventoried, classified, quantified, and assessed for their current status before being transferred to the single-member limited liability company.

c) The principles stipulated in points c, d, đ, e, g, h, and i of Clause 1 of this Article.

3. The financial report approved by the representative of the owner is the report at the time the single-member limited liability company receives the business registration certificate.

Article 11. Determination of Registered Capital

1. The registered capital of the parent company converted from a holding company to operate under the parent company - subsidiary model is the amount of state investment capital recorded in the Articles of Association of the parent company, including:

a) Actual state capital on accounting books at the time of conversion, centralized at the holding company after being processed according to the principles stipulated in Article 10 of this Decree;

b) The registered capital of a single-member limited liability company owned by the holding company;

c) State capital contributed by the holding company to joint stock companies, limited liability companies with two or more members, foreign joint ventures, and overseas investments;

d) Additional state investment capital for the parent company (if any).

2. The registered capital of a single-member limited liability company converted from a parent company, independent state-owned enterprise, or independently accounted subsidiary within a holding company is the amount of owner's equity investment recorded in the Articles of Association of the company, including:

a) Actual owner's equity on accounting books at the parent company, independent state-owned enterprise, or independently accounted subsidiary within the holding company after being processed according to the principles stipulated in Article 10 of this Decree;

b) The amount of owner's equity committed to be supplemented for the company (if any);

3. In cases where the determined registered capital is greater than the actual owner's capital, written approval must be obtained from the Ministry of Finance, and the additional capital and commitment period must be clearly stated. The owner is responsible for fully investing the registered capital for the company according to the agreed timeframe. If the owner fails to contribute the committed capital on time, they will bear responsibility as prescribed in Clause 1 of Article 65 of the Enterprise Law.

4. When increasing registered capital, the company must promptly adjust and register with the business registration authority.

Article 12. Articles of Association of a Single-Member Limited Liability Company

The Articles of Association of a single-member limited liability company are approved by the owner; the Articles include the following main contents:

1. Name and principal address of the company; branch offices and representative offices (if any);

2. Objectives and business sectors;

3. Registered capital; methods of increasing registered capital;

4. Name, address, rights, and obligations of the owner or individuals appointed as authorized representatives to exercise the owner's rights and obligations;

5. Corporate management structure;

6. Legal representative of the company;

7. Procedures for passing company decisions; principles for resolving internal disputes;

8. Basis and methods for determining remuneration, salaries, and bonuses for managers and supervisors;

9. Principles for distributing post-tax profits and handling losses in business operations;

10. Circumstances for dissolution and procedures for liquidating the company's assets;

11. Procedures for amending and supplementing the Articles of Association;

12. Full name and signature of the legal representative, owner of the company, and authorized representatives;

13. Other contents decided by the company owner but not contrary to the law.

Article 13. Submission, Approval, and Implementation of the Conversion Plan

1. The enterprise undergoing conversion submits the conversion plan to the competent authority specified in Article 8 of this Decree to issue the conversion decision.

Contents of the conversion decision include:

a) Name, address, account number of the converting enterprise; name and address of the single-member limited liability company;

b) Business sectors;

c) Registered capital of the company;

d) Name and address of the organization that is the owner and individuals appointed as authorized representatives to exercise the owner's rights and obligations;

đ) Responsibilities of the company regarding the succession of rights and obligations and the resolution of existing and emerging issues of the converting enterprise.

2. The converting enterprise is responsible for implementing the approved conversion decision.

Article 14. Business Registration

The enterprise shall change its business registration and publicly announce it on mass media in accordance with the provisions of the Enterprise Law. The business registration dossier must include the decision to convert and other contents as prescribed by the Enterprise Law.

Article 15. Re-registration of Property Ownership Rights

After being issued a business registration certificate, a limited liability company with one member must re-register the property ownership rights for assets transferred from the converted enterprise to the company at the competent state agency issuing the registration. The re-registration of property ownership rights is exempt from stamp duty.

Chapter III

IMPLEMENTING PROVISIONS

Article 16. Effective Date

1. This Decree takes effect fifteen days after its publication in the Official Gazette.

2. This Decree replaces Decree No. 63/2001/NĐ-CP dated September 14, 2001 on the conversion of state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member, and Decree No. 145/2005/NĐ-CP dated November 21, 2005 amending and supplementing certain articles of Decree No. 63/2001/NĐ-CP dated September 14, 2001 on the conversion of state-owned enterprises and enterprises of political organizations and political-social organizations into limited liability companies with one member.

Article 17. Responsibility for Implementation and Organization

1. Within four years from the date the Enterprise Law comes into effect, entities specified in Article 2 and meeting the conditions stipulated in Article 6 of this Decree must complete their transition to operate under the Enterprise Law.

2. The owners of enterprises of political organizations and political-social organizations shall apply this Decree to convert into limited liability companies with one member.

3. The Ministries of Planning and Investment, Finance, Labor, Invalids and Social Affairs, Home Affairs, Natural Resources and Environment shall be responsible for coordinating with relevant agencies to guide the implementation of this Decree.

4. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of provincial People's Committees directly under the Central Government, Boards of Directors of State-owned Joint Stock Corporations are responsible for implementing this Decree.

The Minister of Planning and Investment is responsible for monitoring the implementation of this Decree./.