Decree No. 101/2009/ND-CP dated November 05, 2009 of the Government on pilot establishment, organization, operation and management of state economic groups
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
Hanoi, November 05, 2009
ON PILOT ESTABLISHMENT, ORGANIZATION, OPERATION AND MANAGEMENT OF STATE ECONOMIC GROUPS
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the November 26, 2003 Law on State Enterprises;
Pursuant to the November 29, 2005 Law on Enterprises;
At the proposal of the Minister of Planning and Investment,
Article 1. Objectives and requirements of pilot establishment of state economic groups
1. Concentrating investment in and mobilizing resources for the formation of groups of large-sized companies in key branches and industries which need to be developed, thereby raising their competitiveness and accelerating the international economic integration.
2. State economic groups are tasked to maintain the major balances in the national economy, apply high technologies and create a motive force for development of other branches and industries and the whole economy.
3. Promoting linkage in the value-added chain and developing other economic sectors.
4. Enhancing the effective management and supervision of state capital and assets invested in enterprises of the groups.
5. Creating grounds for further improvement of mechanisms, policies and laws on economic groups.
Article 2. Scope of regulation
This Decree provides for:
1. Establishment of state economic groups;
2. Organization, operation, management and governance of state economic groups;
3. Management and supervision of the exercise of rights and the performance of obligations of the state owner of state economic groups.
Article 3. Subjects of application
This Decree applies to state economic groups established under the Prime Minister's decisions in the following major business sectors and industries:
1. Post, telecommunications and information technology;
2. Ship building and repair;
3. Electricity generation, transmission, distribution and trading;
4. Petroleum survey, exploration, exploitation and processing:
5. Coal and mineral survey, exploration, exploitation and processing;
6. Textile and garment;
7. Rubber tree plantation and rubber latex exploitation and processing;
8. Fertilizer and chemical production and trading;
9. Real estate investment and trading;
10. Construction industry and manufacturing mechanical engineering;
11. Finance, banking and insurance;
12. Other sectors and industries as decided by the Prime Minister.
Article 4. State economic groups
1. A state economic group to be established on a pilot basis under this Decree means a group of large-sized companies which are related as parent companies and affiliate companies or otherwise to form a conglomerate of enterprises which are closely and permanently interconnected in terms of economic interest, technology, market and other business services.
2. A state economic group consists of:
a/ Parent companies (below referred to as grade-1 enterprises) which are enterprises whose charter capital is wholly owned or controlling right is held by the State under the Prime Minister's decision;
b/ Affiliate companies of grade-I enterprises (below referred to as grade-II enterprises) which are enterprises whose controlling right is held by grade-I enterprises and organized as joint-stock companies, one-member or two-plus-member limited liability companies, corporations after the parent-affiliate company model, joint-venture companies (not yet re-registered under the Law on Enterprises), or overseas subsidiaries;
c/ Affiliate companies of grade-II enterprises and lower-grade enterprises:
d/ Associated enterprises of the group, including enterprises in which capital contribution portions of parent companies and affiliate companies are below the controlling level; enterprises without contributed capital of parent companies and affiliate companies which voluntarily join the association, whether under association contracts or not. and have close and permanent relationships with parent companies or member enterprises of the group in terms of economic interest, technology, market and other business services.
3. Parent companies and member enterprises of the group have the legal entity status, their own capital and assets, and the right to possess, use and dispose of their assets under law and the group's general agreement. The State is the owner of state capital directly invested in parent companies. Parent companies are owners of state capital in affiliate companies and associated enterprises.
Article 5. Names and business registration
1. State economic groups have their own names, logos and brands. The Prime Minister shall decide on names of state economic groups and parent companies established on a pilot basis under this Decree.
2. Member enterprises shall make the business registration under law. The naming of member enterprises organized as joint-stock companies or limited liability companies shall comply with the Law on Enterprises and relevant laws.
Article 6. Interpretation of terms
In this Decree, the terms below are construed as follows:
1. "Main business line of an enterprise" means the business line determined by the enterprise owner on the basis of the enterprise's investment objective and development strategy and assigned to the enterprise to conduct upon its establishment and throughout its operation.
2. "Business lines related to the main business line of an enterprise" (below referred to as related business lines) means those allied to or deriving from the main business line on the basis of the conditions and advantages, or utilizing the advantages and competitive edge of the main business line, and directly serve the main business line.
3. "Business lines unrelated to the main business line of an enterprise" (below referred to as unrelated business lines) means those neither deriving nor developed from the main business line or from related business lines.
4. "Association contract" means a contract on use of the brand, commercial franchise or long-term association with the logo of a group.
5. "Affiliated entities of a parent company" means organizations and individuals directly or indirectly related to the parent company under Clause 17, Article 4 of the Law on Enterprises.
6. "Member enterprises of a group" means enterprises whose charter capital or controlling shares or contributed capital portions are directly held by parent companies, parent companies' affiliate companies or affiliate companies of lower grades, which hold the right to control these enterprises.
7. "Controlling right" means the right of an enterprise to another, including at least one of the following rights:
a/ Right of the sole owner of the other enterprise;
b/ Right of shareholders or capital contributors that hold the controlling share or contributed capital portion of the other enterprise;
c/ Right to directly or indirectly appoint the majority of or all members of the Board of Directors or the Members' Council, or the director general of the other enterprise;
d/ Right to decide on approval and revision of the charter of the other enterprise;
e/ Other cases of control under an agreement between the controlling enterprise and the controlled enterprise which are stated in the charter of the controlled enterprise.
Article 7. Party organizations and sociopolitical organizations in state economic groups
1. The Communist Party of Vietnam's organizations in state economic groups shall operate under the Constitution, laws, and the statutes of the Communist Party of Vietnam.
2. Socio-political organizations in state economic groups shall operate under the Constitution, laws and their respective statutes in compliance with law.
3. State economic groups shall create conditions and provide supports for Party and Trade Union organizations and other sociopolitical organizations to operate under law and their respective statutes.
Article 8. Application of relevant laws and treaties
1. The establishment, organization, operation and management of state economic groups comply with this Decree, the Law on Enterprises, the Law on State Enterprises, the Law on Competition and other relevant laws.
2. In case a treaty to which the Socialist Republic of Vietnam is a contracting party contains provisions different from those of this Decree, the treaty prevails.
ESTABLISHMENT OF STATE ECONOMIC GROUPS
Article 9. Mode of establishment of state economic groups
The Prime Minister decides on the establishment of state economic groups on the basis of state corporations and companies which satisfy the conditions specified in Article 10 of this Decree.
Article 10. Conditions on establishment of state economic groups
A state economic group planned to be established must satisfy the following conditions:
1. Having a main business line as specified in Article 3 of this Decree and the potential for development on the basis of the main business line and related business lines;
2. Satisfying the conditions on the business line structure specified in Article 16 of this Decree;
3. The parent company must satisfy the following conditions:
a/ Its charter capital is at least equal to the minimum capital level prescribed for parent companies of state economic groups in each business sector or industry under the Prime Minister's decisions:
b/ It is staffed with persons who are professionally qualified and experienced and capable of conducting the main business line and related business lines, managing investment capital and administering, managing and coordinating operations of member enterprises and associated enterprises;
c/ It is capable of utilizing technological know-how, brands and markets to control affiliate companies and associate with other associated enterprises;
d/ Having financial resources or worked out feasible plans to mobilize financial resources, ensuring investment of sufficient capital in affiliate companies and other associated enterprises.
4. Enterprises intending to become members of state economic groups may transform themselves or work out transformation plans or must have transformed themselves into or made business registration as joint-stock companies or limited liability companies under the Law on Enterprises.
Article 11. Order of and procedures for elaboration and implementation of schemes on establishment and development of state economic groups
1. Permission for scheme elaboration: Pursuant to the Government's regulations on sectors and industries in which state economic groups will be established on a pilot basis, the Prime Minister shall decide on agencies or organizations responsible for elaborating schemes on pilot establishment of state economic groups.
2. Elaboration and submission of schemes: Agencies or organizations tasked by the Prime Minister to elaborate schemes on pilot establishment of state economic groups shall organize the elaboration of these schemes and gather opinions of ministries specified at Point d of this Clause on these schemes, then submit them to the Prime Minister for approval. A dossier of a scheme to be submitted to the Prime Minister for approval comprises:
a/ A report on the scheme on establishment of a state economic group;
b/ The scheme on establishment of a state economic group.
A scheme must contain the following principal details: The necessity and objectives of establishment of the state economic group; actual organization, management and operation of the state corporation; structure of member enterprises and associated enterprises; method of building, maintenance and development of forms of association between the corporation or parent company and member enterprises and associated enterprises; method of formation of the parent company; legal states, name and organizational and managerial structure of the parent company; names, legal states and organizational structures of member enterprises; the main business line and related business lines; structure of investment in the main business line, related business lines and unrelated business lines within the group; plan on use and development of leading and managerial human resources in the parent company; the human resource to function as the representative of the parent company's owner at member enterprises; plan on arrangement and use of human resources; plan on business operation of the group after its establishment; strategic orientations for long-term development of the group; organization, management and governance within the group; the representative of the state owner at the parent company of the group; proposals to the state owner in the formation of the group; and plan and schedule on the transformation, formation of the group;
c/ Draft charter of the parent company of the group;
d/ Comments of the Ministry of Planning and Investment, the Ministry of Finance, the Justice Ministry, the line ministry (in case the scheme submitter is a corporation established under the Prime Minister's decision), the Ministry of Home Affairs and the Ministry of Labor, War Invalids and Social Affairs, on the scheme.
3. Approval of schemes: The Prime Minister shall consider and decide to approve schemes on establishment of state economic groups. A decision approving a scheme on establishment of a state economic group must clearly detail the supervision of the scheme implementation and responsibilities of agencies, organizations and individuals for the supervision and settlement of problems arising from the scheme implementation and the adjustment of the scheme (when necessary).
4. Implementation of schemes on establishment of state economic groups:
a/ The Prime Minister shall decide on establishment of parent companies and appointment of chairpersons and members of Boards of Directors of parent companies;
b/ Boards of Directors of parent companies shall directly organize the implementation of the schemes; develop forms of association between parent companies and affiliate companies and among member enterprises in the course of implementation of the schemes and operation of the groups.
MANAGEMENT AND ADMINISTRATION WITHIN STATE ECONOMIC GROUPS
Section I. ORGANIZATION OF MAN A CEMENT AND ADMINISTRA TION OF STATE ECONOMIC GROUI'S
Article 12. Principles on management and administration of state economic groups
Management and administration of a state economic group shall be performed by one or several of the following methods:
1. Management and administration through parent companies;
2. Management and administration through different forms of investment and association;
3. Management and administration under agreements or cooperation on the use of common services within the group; observance of common regulations, standards and norms within the group not in contravention of law; mutual use of products and services according to market rules;
4. Other methods provided for by law and in accordance with the charters of member enterprises.
Article 13. Management and administration of state economic groups through parent companies
1. Parent companies represent state economic groups in conducting common operations of these groups in relation to third parties at home or abroad or other operations in the name of these groups under agreements among member enterprises and relevant laws.
2. Parent companies use rights and obligations of the capital owner in member enterprises and rights of shareholders and members to coordinate and direct operations of their economic groups:
a/ To use their management and administration apparatuses or set up separate sections to study and elaborate strategies and propose solutions to coordinating and directing activities specified in Clause 3 of this Article, then submit them to their Boards of Directors for approval. To carry out coordinating and directing activities specified in Clause 3 of this Article through their authorized representatives in member enterprises and associated enterprises;
b/ To coordinate and direct operations of their economic groups through performing economic contracts or association contracts together with member enterprises and associated enterprises;
c/ To elaborate uniform regulations of their economic groups.
3. Coordinating and directing activities of a parent company include:
a/ Elaborating and organizing the implementation of development strategies and general business coordination plans of the group; providing guidelines on business strategies of affiliate companies under the development strategy and general business coordination plan of the group; elaborating and organizing the implementation of management and administration regulations and standards and norms for uniform application within the group;
b/ Classifying member enterprises according to their positions and importance in the general development strategy of the group: drawing up a list of main business lines and a list of key member enterprises; directing member enterprises according to main business lines; managing and guiding its representatives in securing its controlling right in key member enterprises against the annexation by other economic groups or enterprises;
c/ Setting orientations for medium- and long-term production and business plans of member enterprises:
d/ Directing the determination of operation and investment objectives, production and business targets; the assignment of tasks, specialization, cooperation, marketing, market expansion and sharing, export, use of brands, information, scientific and technological research and application and training services and other operations of member enterprises in line with common policies of the group;
e/ Elaborating and implementing regulations on management of brands of the group; providing guidance on the common element in proper names of member enterprises and associated enterprises;
f/ Directing the organization and staffing of affiliate companies;
g/ Providing guidance on the charters and controlling the charter capital structure of affiliate companies;
h/ Appointing its authorized representatives to participate in the management and administration of affiliate companies. Issuing and implementing regulations on appointment, replacement, supervision and evaluation of activities of authorized representatives: specifying issues which must be approved by the parent company before authorized representatives decide or taking part in making decisions thereon in member enterprises and associated enterprises:
i/ Acting as a focal point to pool up resources of member enterprises and associated enterprises for bidding for and implementing common projects as agreed upon by member enterprises and associated enterprises;
j/ Providing technological research and transfer, marketing, trade promotion and other services for member enterprises and associated enterprises;
k/ Coordinating the setting up, management and efficient use of common funds; conducting financial supervision and risk control; providing supports for financial operations of member enterprises of the group at the request of these enterprises;
l/ Coordinating the performance of administrative affairs and transactions with partners of member enterprises of the group at the request of these enterprises; performing public-utility duties and tasks assigned by the State to the group;
m/ Establishing and connecting an information network linking all member enterprises and associated enterprises of the group;
n/ Making consolidated financial statements of the parent company and affiliate companies:
o/ Consulting member enterprises and associated enterprises in performing common activities;
p/ Organizing the directed supervision, regulation and coordination of its sections;
q/ Conducting other activities relevant to characteristics of each slate economic group in accordance with relevant laws and the charters of the parent company, member enterprises and associated enterprises.
4. Parent companies, member enterprises and associated enterprises have the rights and obligations of an enterprise provided for by law; take responsibility before law for their production and business operations; and are bound to exercise rights and perform obligations under association contracts and agreements among them.
5. Coordination and direction work within a group must comply with law, charters of members enterprises and associated enterprises, conform to the rights of the owner in parent companies or agreements between parent companies and member enterprises and associated enterprises, and reflect the position of parent companies in each activity of coordination with member enterprises and associated enterprises.
In case a parent company abuses its position to intervene beyond the powers of the owner in the operation of members or shareholders, or to act in contravention of association contracts and agreements among member enterprises of a group, harming interests of member enterprises or related parties, this parent company and its affiliated persons shall bear responsibility under Clauses 3.4, 5 and 6, Article 147 of the Law on Enterprises and other relevant laws.
Article 14. Responsibilities of parent companies for management and administration of state economic groups
1. To be answerable to the state owner for achieving objectives of main business lines and other objectives assigned by the State to their groups. To submit to supervision by the state owner's representatives of investment portfolios, investment projects in the sectors of finance, banking, insurance, securities and real estate (except groups operating in these sectors).
2. To manage their investment portfolios in order to ensure conditions on investment and business line structure specified in Article 16 of this Decree; to monitor and supervise their investments in affiliate companies; to monitor and supervise business lines of affiliate companies.
3. To provide information and report on contents specified in Clause 2, Article 41 of this Decree.
4. To set up organizations to provide services for members of economic groups.
5. To report to the competition management agency and submit to the latter's supervision of economic concentration in their groups.
6. To perform the obligations of an enterprise suitable to their registered legal forms and other law-prescribed obligations.
7. To build and operate systems for assessment of operation effectiveness of authorized representatives in member enterprises. Such a system must satisfy the following requirements:
a/ Having principal criteria for each post;
b/ Performing periodical assessment of operation effectiveness:
c/ Having a stimulating mechanism;
d/ Having penalties against violations.
8. To formulate and implement policies on their managerial personnel and authorized representatives in member enterprises. A managerial personnel policy must contain:
a/ Management experience and skill criteria;
b/ Methods and process of selection (including selection through examination) and appointment of leading and managerial posts within the parent company's competence; selection and nomination of candidates for selection and appointment by competent authorities to leading and managerial posts of the parent company; selection and nomination of candidates for election by enterprises with the parent company's capital contributions to their Boards of Directors or Members' Councils; selection (including selection through examination) and appointment of representatives of the parent company's capital contributions in other enterprises;
c/ A system for assessment of management effectiveness applicable to key leaders and managers of the parent company, affiliate companies and authorized representatives in member enterprises in the entire group;
d/ Principles on and methods of salary and bonus payment to promote competition among employees;
e/ Penalties against violations.
9. To guide affiliate companies in forming consolidated funds and uniform administration and accounting systems.
Article 15. Management and administration in state economic groups through different forms of investment, association, transaction or information exchange
Member enterprises of a state economic group may use the following forms to ensure their interconnection in management and administration within the group:
1. Investment in. purchase and sale of products and services; technological assistance; development of brands among them.
2. Agreements on a credit mechanism applicable within the group; a credit guarantee mechanism; and formation of a consolidated fund.
3. Organization of conferences or consultation meetings:
a/ Between the parent company's managers and executive officers and its authorized representatives in member enterprises to direct, regulate and coordinate activities specified in Clause 3, Article 13 of this Decree, and implement the group's important development strategies and orientations;
b/ Between functional units of the parent company and those of member enterprises for handling professional matters.
4. Transfer of authorized representatives who are leading officials among affiliate companies.
Article 16. Provisions on investment limitations and business lines of state economic groups
1. Controlled enterprises may not purchase shares from or contribute capital to controlling enterprises within the same state economic group.
2. The outward capital investment by parent state companies complies with the 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.
3. Parent companies and member enterprises of groups may register business lines under law but shall concentrate their investment on and conduct business operations within main business lines and related business lines; submit to supervision by state owner representatives of investment in main business lines, related business lines and unrelated business lines as well as investment capital ratio and efficiency.
State owner representatives shall decide on business operations within main business lines; adjustment of or change in main business lines; supervision of business operations within main business lines, related business lines and unrelated business lines.
4. A parent company which, directly or through its affiliate companies, conducts business operations in business lines unrelated to main business lines must satisfy the following conditions:
a/ It has fulfilled the task of conducting the main business lines assigned by the owner; conducting unrelated business lines will cause no impact on the performance of the main business lines as well as on their expansion and development;
b/ It uses business operations and results in unrelated business lines to support and develop the main business lines;
c/ It performs the reporting obligation and submits to supervision by the state owner representative of investment, investment efficiency and impacts of business operations in unrelated business lines.
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