Circular No. 96/2001/TT-BTC guiding the implementation of Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Prime Minister on selling preferential shares at industrial processing enterprises to raw material growers and sellers.

CIRCULAR

Guidelines for implementing Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Prime Minister on selling preferential shares at processing industrial enterprises to raw material growers and sellers.

Implementing Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Prime Minister on selling preferential shares at processing industrial enterprises to raw material growers and sellers; Ministry 1. Delegating the Cục trưởng (Director) of the Cục Thuế (Tax Bureau) of provinces and centrally-administered cities to examine and approve the models of self-presented invoices of organizations and individuals conducting business with headquarters in their localities.

I. SUBJECTS ELIGIBLE FOR IMPLEMENTATION

PURCHASE AND SALE OF SHARES AT PREFERENTIAL PRICES

1. State-owned enterprises undergoing shareholding reform may sell shares at preferential prices to individuals who grow and sell raw materials directly used by the enterprise in its production activities (hereinafter referred to as processing enterprises).

2. Individuals and households engaged in farming and forestry under state regulations, producing agricultural and forest products directly and selling them to processing enterprises (hereinafter collectively referred to as raw material suppliers), may purchase shares at preferential prices from processing enterprises during their shareholding reform if they meet the following conditions:

a) They produce agricultural and forest products directly and have sold these products to processing enterprises continuously for at least three years up to the time of the processing enterprise's shareholding reform.

In cases where processing enterprises have been operating for less than three years and undergo shareholding reform, individuals who produce agricultural and forest products directly and have sold them to processing enterprises since the establishment of the enterprise shall be eligible.

b) They actually use land allocated by the state to plant and produce agricultural and forest products for sale to processing enterprises.

c) When selling agricultural and forest products to processing enterprises, they must enter into economic contracts in accordance with laws on contracts. The purchase and sale contracts for raw materials must be directly signed between the raw material supplier and the processing enterprise.

In cases where the formation of raw material supply areas is not centralized but scattered with small scale, and direct signing of purchase and sale contracts between raw material suppliers and processing enterprises is not feasible, such contracts must be signed through agricultural farms, agricultural cooperatives, professional associations... (collectively referred to as representatives) in the area, with the authorization of the raw material supplier to the representative to sign the contract.

3. According to Article 4 of Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Prime Minister, state-owned enterprises with a closed production and business process from agriculture to processing, when implementing shareholding reform in the processing sector, those purely collecting agricultural and forest products to sell to the enterprise do not fall within the scope of application of this Circular.

II. REGIME OF PREFERENCES AND DETERMINATION OF SHARES SOLD AT

PREFERENTIAL PRICES TO RAW MATERIAL SUPPLIERS 1. Preference regime for raw material suppliers:

The value of state preference in each share sold to raw material suppliers is reduced by 30% compared to other subjects not entitled to preferential treatment. The total value of shares sold at preferential prices to raw material suppliers shall not exceed 10% of the state capital value in the enterprise.

The total value of preferences for raw material suppliers stipulated in Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Prime Minister shall not exceed 3% of the state capital value in the enterprise and shall be deducted from the existing state capital in the processing enterprise undergoing shareholding reform.

The level of preference for raw material suppliers does not count towards the limit on the value of preferential shares sold to employees in the enterprise as stipulated in Article 14 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government.

2. Determination of the number of shares sold at preferential prices to each raw material supplier is based on:

Legal land area allocated and actually used for planting raw materials to sell stably to processing enterprises;

Total value of preferential shares.

The quantity of agricultural and forest products directly produced and sold to processing enterprises by raw material suppliers over the three years prior to the processing enterprise's shareholding reform. If a raw material supplier both produces and purchases raw materials to sell to processing enterprises, the purchased raw material quantity shall not be counted in determining the number of preferential shares sold to the raw material supplier.

The number of shares sold at preferential prices is calculated based on the quantity of agricultural and forest products directly produced and sold to processing enterprises by raw material suppliers. Processing enterprises base their determination on actual annual raw material procurement data, planted land area, and crop yield confirmed by the People's Committee of the commune and local specialized management agencies in agriculture and forestry to determine the quantity of agricultural and forest products directly produced and sold by raw material suppliers to the enterprise, excluding collected quantities.

Example of determining the number of shares sold at preferential prices to raw material suppliers:

An enterprise undergoing shareholding reform has a state capital value at the enterprise according to the competent authority's decision on enterprise valuation of 20,000,000,000 VND, then:

The total value of preferential shares for raw material suppliers to the enterprise is at the maximum level of: 20,000,000,000 VND x 10% = 2,000,000,000 VND.

+ The total value of preferences for raw material suppliers to the processing enterprise is:

+ 2,000,000,000 VND x 30% = 600,000,000 VND.
The total number of shares sold at preferential prices to raw material suppliers shall not exceed:

+ 2,000,000,000 VND ÷ 100,000 VND = 20,000 shares.
The total quantity of agricultural and forest products directly produced and sold by raw material suppliers to the enterprise in the three years prior to the processing enterprise's shareholding reform is 200,000 tons, then for every 10 (ten) tons of product sold to the processing enterprise, the raw material supplier can purchase 1 (one) share at a preferential price.

+ + The number of shares sold at preferential prices to each raw material supplier is as follows:

The number of shares sold at a preferential price to each material supplier shall be as follows:
Mr. A has supplied 100 tons of raw materials to the factory in the three years prior to the time when the processing enterprise implements shareholding.

Mr. A is entitled to purchase preferential shares as follows: 100 tons ÷ 10 tons = 10 preferential shares.

Mr. A is entitled to the preferential value of 10 x 100,000 VND x 30% = 300,000 VND.

If he purchases all the preferential shares, Mr. A only needs to pay:

10 x 100,000 VND x 70% = 700,000 VND.

Using a similar calculation method for Mr. A, the enterprise determines the quantity of preferential shares for other raw material suppliers.

III. IMPLEMENTATION

1. The General Director of the state-owned enterprise implementing shareholding shall be responsible for coordinating with local authorities and specialized management agencies in agriculture and forestry where the raw material suppliers reside to determine the area of stable raw material cultivation land and the subjects who meet the conditions to purchase shares at preferential prices as stipulated in Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Government Prime Minister and the guidance provided in this Circular.

2. State-owned enterprises implementing shareholding that sell shares at preferential prices to raw material suppliers must develop a shareholding restructuring plan according to the procedures prescribed in Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government. The enterprise's share sale plan must include sufficient grounds to determine the number of preferential shares and the total preferential value to be sold to employees within the enterprise and raw material suppliers to the enterprise.

3. The authority to approve the shareholding restructuring plan and decide on the conversion of state-owned enterprises into joint-stock companies for enterprises selling shares at preferential prices to raw material suppliers shall be carried out in accordance with Article 17 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government.

4. The General Director of the processing enterprise approves the quantity of shares sold at preferential prices to each raw material supplier and bears responsibility under the law for this matter.

In cases where shares are sold to incorrect recipients or the quantity is incorrectly determined, causing state capital losses at the enterprise, the loss value will be deducted from the post-tax profit of the joint-stock company.

5. Enterprises that have already implemented the sale of shares at preferential prices to raw material suppliers before the issuance date of Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Government Prime Minister shall not adjust the number of preferential shares according to this provision.

IV. IMPLEMENTATION PROVISIONS

This Circular takes effect from May 18, 2001 (from the date Decision No. 69/2001/QD-TTg dated May 3, 2001 of the Government Prime Minister comes into force).

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