| THE GOVERNMENT ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness -------------- |
| No. 09/2009/ND-CP | Hanoi, February 5, 2009 |
DECREE
PROMULGATING THE REGULATION ON FINANCIAL MANAGEMENT OF STATE COMPANIES AND MANAGEMENT OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES
THE GOVERNMENT
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the 2003 Law on State Enterprises;
At the proposal of the Minister of Finance,
DECREES:
Article 1. To promulgate together with this Decree the Regulation on financial management of state companies and management of state capital invested in other enterprises.
Article 2. This Decree takes effect on March 25, 2009, and replaces the Government's Decree No. 199/2004/ND-CP of December 3, 2004, promulgating the Regulation on financial management of state companies and management of state capital invested in other enterprises.
Article 3. The Minister of Finance shall guide and inspect the implementation of the Regulation on financial management of state companies and management of state capital invested in other enterprises, promulgated together with this Decree.
Article 4. Ministers, heads of ministerial-level agencies and government-attached agencies, presidents of provincial-level People's Committees; boards of directors, directors general or directors of state enterprises shall implement this Decree.
| | ON BEHALF OF THE GOVERNMENT PRIME MINISTER Nguyen Tan Dung |
REGULATION
ON FINANCIAL MANAGEMENT OF STATE COMPANIES AND MANAGEMENT OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES
(Promulgated together with the Government's Decree No. 09/2009/ND-CP of February 5, 2009)
(Promulgated together with the Government's Decree No. 09/2009/ND-CP of February 5, 2009)
Chapter I
GENERAL PROVISIONS
Article 1. Subjects and scope of application
The Regulation prescribes the financial management of state companies and the management of state capital invested in other enterprises established and operating under the Law on Enterprises or the Law on Cooperatives.
For state enterprises subject to special financial management, apart from complying with the provisions of this Decree, they shall also observe the Government's specific regulations on special financial management.
Article 2. Interpretation of terms
1. State companies include:
a/ Independent state companies;
b/ State corporations, which are corporations invested and established under decisions of the State or those invested and established by companies themselves.
2. State business groups, which are groups of companies with the independent legal entity status and satisfying the conditions specified by law, and business groups without the independent legal entity status.
3. "Capital invested by the State in state companies" means capital allocated directly from the state budget to state companies upon their establishment and in the course of business operation; state capital received from other sources under decisions of competent authorities; the value of aid, gifts, presents; unclaimed assets, assets found redundant upon inventory of state companies and accounted as an increase in state capital at state companies; capital supplemented from after-tax profits; land use rights value and other amounts included in state capital under law.
4. "Assets of state companies'* include fixed assets (tangible fixed assets, intangible fixed assets, long-term financial investments, expenditures for unfinished capital construction works and long-term collateral and escrow account amounts); liquid assets (cash, short-term financial investments, receivables, inventories, other liquid assets and non-business budgets), which state companies have the right to possess, use and dispose of under law.
5. "Raised capital of state companies" means capital amounts raised by state companies through issuance of bonds, borrowing of loans from organizations and individuals at home and abroad and other forms of capital raising not banned by law.
6. "Preservation of state capital at state companies'" means preventing state capital at state companies from reduction throughout the course of business operation.
Boards for management and administration of a state company with board of directors include the board of directors and the directorate (director general and deputy directors general or director and deputy directors). For state companies without boards of directors, they are their directorates.
7. "Other enterprises" means enterprises operating under the Law on Enterprises or the Law on Cooperatives.
8. "State capital invested in other enterprises" means capital invested in other enterprises by the State or state companies.
9. "Representative of a state company's capital contributed at other enterprises" means a person authorized by the owner of a state company to represent its state capital invested in other enterprises.
10. "Representative of the owner of a state company" means an agency decentralized or authorized by the Government to perform the function of representing the owner, including the Prime Minister, line ministers, presidents of provincial-level People's Committees, and boards of directors of groups, corporations or parent companies.
11. "Owner of state capital in other enterprises" means a state company or an agency decentralized or authorized by the Government to act as an owner of state capital in other enterprises.
Article 3. State companies engaged in public-utility activities
1. State companies participating in the provision of public-utility products or services on the basis of bidding or orders placed or plans assigned by the State shall conduct economic accounting of these public-utility products or services under current regulations.
2. For public-utility products or services provided on the basis of bidding, state companies shall cover product or service expenses with the value of their bids and take accountability for results of these activities.
When providing public-utility products or services on orders placed or plans assigned by the State, state companies shall use sums of money paid by the State and/or beneficiaries of these public-utility products or services to cover expenses for these public-utility activities and ensure their laborers1 interests. In case paid amounts are smaller than actual reasonable expenses, the deficit will be offset by the state budget according to the actual quantity or volume and estimated unit prices. State companies shall separately account turnover and expenses for these products or services. Deficit-offsetting amounts are regarded as turnover of state companies. State companies' business results shall be determined on the basis of aggregating results of public-utility activities and business activities.
Article 4. State capital invested in other enterprises
State capital invested in other enterprises includes:
1. Capital in cash, land use rights value or land rents and the value of other assets of state companies which are invested in, or contributed to, other enterprises;
2. State budget capital invested in, or contributed to, other enterprises, and assigned to state companies for management;
3. Value of shares at equitized state companies, including the value of state shares provided by the State to laborers in state companies for enjoying dividends, which were equitized before July 14, 1998; and the value of state capital at state-run one-member limited liability companies and limited liability companies with more than one member;
4. Capital borrowed by state companies for investment;
5. Dividends and other divided amounts invested in, or contributed to, other enterprises by the State or state companies for re-investment in these enterprises;
6. Value of bonus shares or shares provided in substitution for dividends on state capital at other enterprises;
7. Other types of capital specified by law.
Article 5. Representatives of owners of state companies and owners of state capital at other enterprises
1. Representatives of owners of state companies and owners of state capital at other enterprises shall exercise the rights and perform the obligations provided in the Law on State Enterprises and as assigned or decentralized by the Government.
2. Owners of state capital at other enterprises shall manage state capital at other enterprises through exercising the rights and performing the obligations of shareholders or capital contributors, and appointing representatives of state capital at these enterprises.
In case owners do not appoint representatives of state capital invested in other enterprises, their heads shall exercise all rights and perform all obligations toward state capital at these enterprises.
Chapter II
REGULATION ON FINANCIAL MANAGEMENT OF STATE COMPANIES
Section I. MANAGEMENT AND USE OF CAPITAL AT STATE COMPANIES
Article 6. Charter capital
1. Charter capital of state companies
a/ Charter capital of a state company is the capital amount necessary for maintaining and assuring its production or business operations in normal conditions, suitable to its business scale and development strategy, and stated in its charter. Charier capital of a state company conducting a business line for which a legal capital level is prescribed by law must not be lower than such legal capital level. The Finance Ministry shall guide principles for determining charter capital;
b/ Owner representatives shall reach agreement with the Finance Ministry on charter capital levels and capital sources. In case budget sources are used to allocate charter capital, the Finance Ministry shall sum up and propose them to the Government and the National Assembly for decision;
c/ Based on capital investment plans already approved by competent authorities, the Finance Ministry (the central budget) and provincial-level People's Committees (local budgets) shall allocate sufficient charter capital for state companies. Specifically:
- Newly established state companies, which have to carry out investment and construction, will be allocated sufficient charter capital upon commencement of their business operations;
- Operating state companies will have their charter capital supplemented according to the progress of performance of tasks assigned by the State;
- State companies which are not allocated sufficient capital will have to reduce their charter capital at least equal to the legal capital.
In case owners do not reduce the charter capital of their companies, they may. depending on the practical situation, decide to transform, reorganize or equitize their companies under regulations.
2. In the course of business operation, owner representatives may decide to increase or reduce stale companies' charter capital.
Owner representatives may withdraw capital invested in state companies only when these state companies are reorganized or reduce their charter capital. Capital withdrawal may be effected only if it still ensures state companies' solvency.
The Finance Ministry shall guide the order of and procedures for increasing or reducing charter capital of state companies.
3. State companies, which have been designed, established with investment and made business registration to realize the main, regular and stable objective of providing public-utility products or services under orders placed or plans assigned by the State, or through bidding, will be allocated by owner representatives additional capital sufficient for the performance of public-utility product or service volumes.
4. State companies will be allocated start-up charter capital and additional charter capital in the course of business operation from the Slate's investment capital sources specified in Clause 3, Article 2 of this Regulation and additional sources from the Assistance Fund for Enterprise Reorganization.
Article 7. Assignment of state capital invested in state companies
1. Competent state authorities shall assign invested state capital to newly established state companies.
2. The capital assignment must be completed within 60 days from the date a state company is granted a business registration certificate. For a state company which has to carry out investment and construction, the capital assignment shall be carried out within 60 days from the dale the state company commences its business operation.
3. Capital recipients include:
a/ Chairmen of boards of directors, for state companies with boards of directors;
b/ Directors, for state companies without boards of directors.
4. For state companies which are established before the effective date of this Decree and have been assigned capital, capital assignment is not required to be conducted again. For state companies merged with other enterprises and state corporations accepting more members, the capital assignment and receipt is not required to be conducted again but state capital at these state companies shall be adjusted to correspond to these enterprises' capital amounts reflected in financial statements of those state companies or corporations.
Article 8. State companies' rights and obligations in using capital and funds under their management
1. State companies may take the initiative in using the State-assigned capital amounts and other kinds of capital and funds under their management for their business activities. State companies are answerable to owner representatives for capital preservation and development and effectiveness; and ensure the interests of related parties, such as creditors, customers and employees, under concluded contracts.
2. If state companies use funds under their management for purposes other than the prescribed ones, they shall ensure sufficient sources to meet their arising needs for using these funds. The use of capital and funds for construction investment must comply with the law on investment and construction management.
3. For state companies designed to regularly and stably provide public-utility products or services on orders placed or plans assigned by the State, they shall concentrate capital and resources for the production of public-utility products or the provision of such public-utility services. When necessary, owner representatives may transfer capital among these state companies in the form of recording capital increase or reduction. In case capital is transferred to companies of other ministries, sectors or localities or from ministries, central branches to localities or vice versa, owner representatives shall agree or decide on the transfer after obtaining the Finance Ministry's opinions. The aforesaid capital transfer must not affect the provision of public-utility products or services by state companies having their capital transferred.
4. State companies which are assigned special tasks by the State shall concentrate capital and other resources for the fulfillment of these tasks.
Article 9. Capital raising
1. Capital raising must comply with Clause 1, Article 17 of the Law on State Enterprises and adhere to the following principles:
a/ It must ensure solvency and have a plan approved by competent authorities. Persons approving capital raising plans shall inspect and supervise the capital raising, ensuring that raised capital is used effectively for proper purposes and targets;
b/ The raising of capital from foreign organizations and individuals must comply with current regulations on management of foreign debts;
c/ The raising of capital through issuance of bonds must comply with the laws on securities and enterprises. State companies dealing in securities investment, banking, insurance or investment funds, which are not their main business lines, may not issue bonds for investment in these businesses.
2. Competence to approve capital raising plans:
a/ State companies may take the initiative in raising capital for their production or business but shall ensure that their payable debts do not exceed thrice their charter capital, with:
- Their boards of directors deciding on plans to raise capital amounts larger than their charter capital. If their boards of directors authorize the directors general or directors to decide on these plans, such authorization must be stated in their charters and financial regulations;
- Their owner representatives, in case they have no boards of directors, deciding on plans to raise capital amounts larger than their charter capital.
Other loan contracts valued equal to or lower than charter capital shall be decided by directors general (directors) of state companies.
b/ State companies that need to borrow loans more than thrice charter capital shall report such to owner representatives for consideration and decision on the basis of effective capital raising projects. After making decisions, owner representatives shall notify their decisions to the Finance Ministry for coordinated monitoring and supervision.
3. Agencies representing state companies' owners shall coordinate with the Finance Ministry in strictly supervising the capital raising and use by these state companies.
Article 10. Management of payable debts
For payable debts, state companies shall:
1. Open books for monitoring all payable debts, including payable interests;
2. Pay payable debts strictly according to committed schedules. Regularly consider, assess and analyze their solvency to early detect difficulties in debt repayment and take timely remedies so as not to have overdue debts;
3. For debts to be paid in foreign currencies, state companies shall account as business expense the whole arising exchange rate difference (exchange rate increase or decrease at the time of making financial statements or recording accounting books) of the payable debit balance in the period. In case the accounting of an exchange rate difference as business expense puts the companies at a loss, that exchange rate difference can be partly carried forward to the subsequent year so that the companies will not sustain the loss, but the level of exchange rate difference accounted as business expense in a year must be at least equal to the exchange rate difference of foreign currency amounts due to be paid in that year.
