THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 109/2008/ND-CP

Hanoi, October 10, 2008

 

DECREE

ON SALE OR ASSIGNMENT OF ENTERPRISES WITH 100% STATE CAPITAL

THE GOVERNMENT

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

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Pursuant to the November 26, 2003 State Enterprise Law;

Pursuant to the November 29, 2005 Enterprise Law;

At the proposal of the Minister of Planning and Investment,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree provides for the sale or assignment of enterprises with 100% state capital and independent cost-accounting member companies, and the sale of dependent units of enterprises with 100% state capital and independent cost-accountins member companies.

Article 2.- Subjects of and conditions for application

1. Enterprises with 100% state capital and independent cost-accounting member companies may be sold, regardless of their state capital amounts, in the following cases:

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a/ They are subject to sale approved by the Prime Minister in the general scheme on reorganization of enterprises with 100% state capital;

b/ They are subject to equitization in the general scheme on reorganization of enterprises with 100% state capital but cannot be equitized.

2. The sale of dependent units of enterprises with 100% state capital applies to dependent cost- accounting units of state corporations, parent companies, enterprises with 100% state capital or independent cost-accounting member companies in the following cases:

a/ They are subject to sale of enterprise divisions as approved by the Prime Minister in the general scheme on reorganization of enterprises with 100% state capital and such sale does not affect the operation of other enterprise divisions and their capability to fulfill their debt payment obligation:

b/They are subject to equitization of enterprise divisions in the general scheme on reorganization of enterprises with 100% state capital but cannot be equitized.

3. The assignment of an enterprise with 100% state capital or an independent cost-accounting member company (below referred to as enterprise assignment) mav be conducted when the following conditions are satisfied:

a/ Its total book asset value is under VND 15 billion;

b/ It has no land advantage;

c/ It is subject to enterprise assignment in the general scheme on reorganization of enterprises with 100% state capital approved by the Prime Minister, or had been put for sale but could not be sold.

Article 3.- Interpretation of terms

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In this Decree, the terms and phrases below shall be construed as follows:

1. "Enterprise sale," which covers the sale of the whole or a division of an enterprise with 100% state capital or an independent cost-accounting member company specified in Clause 1, or the sale of a dependent unit specified in Clause 2, Article 2 of this Decree, means the transfer of ownership, with collection of sale proceeds, of the whole or a division of the enterprise to another collective, individual or legal entity.

2. "Enterprise assignment" means the transfer of Ownership, without collection of a sum of money, of an enterprise with 100% state capital or an independent cost-accounting member company to the labor collective in the enterprise with clear definition of ownership of each individual laborer.

3. "Enterprise with 100% state capital" means an independent state company or a one-member limited liability company with 100% state capital and under a ministry, ministerial-level agency, government-attached agency (below collectively referred to as ministry) or People's Committee of a province or centrally run city (below collectively referred to as provincial-level People's Committee) as its owner's representative.

4. "Independent cost-accounting member company" means an independent cost-accounting member company or one-member limited liability company owned by a state corporation, a parent company in a state corporation or economic group or a parent company in the parent company-affiliate company model.

5. "Parent company" means a parent company in a state corporation or economic group or parent company in the parent company-affiliate company model.

6. “Enterprise or enterprise division purchaser" means the labor collective in an enterprise, a legal entity, a group of persons or an individual that purchases an enterprise or a division of an enterprise.

7. "Enterprise assignee" means the labor collective in an enterprise which is assigned the enterprise.

8. "Enterprise or enterprise division assignor or seller" means an agency or organization acting as the enterprise owner's representative.

9. "Sale by direct mode" means a mode of negotiation, agreement and conclusion of a contract directly between the seller and the purchaser of an enterprise or enterprise division in case only one organization or the labor collective in the enterprise or a group of persons or an individual registers for the purchase (below referred to as purchase registrant).

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10. "Sale by mode of auction" means a mode of selecting an enterprise or enterprise division purchaser in case there are two or more purchase registrants to otter competitive bids at a public auction.

11. "Labor collective in an enterprise" means the collective of laborers currently on the list of regular employees of an enterprise who voluntarily implement a resolution of the General Meeting of employees of the enterprise or enterprise division on acceptance of the enterprise or enterprise division assignment or purchase at the effective time of the decision approving a scheme on labor arrangement. The labor collective in an enterprise is represented by the enterprise's Trade Union Executive Committee or Provisional Trade Union Executive Committee or a person elected as its representative by the General Meeting of the enterprise's employees for acceptance of the enterprise or enterprise division assignment or purchase.

12. "Renewal Board at an enterprise" means an organization set up at an enterprise to conduct the enterprise sale or assignment under a decision of the concerned ministry, provincial-level People's Committee, state corporation or parent company.

13. "Enterprise Renewal and Development Board" means an organization set up under a decision of the concerned ministry, provincial-level People's Committee, stale corporation, parent company in an economic group or corporation established by the Prime Minister to perform the tasks and exercise the powers specified in this Decree in the course of enterprise or enterprise division sale or assignment.

14. "Enterprise which cannot be equitized" means an enterprises which, according to the general scheme on reorganization of enterprises with 100% state capital approved by the Prime Minister, is on the list of those to be equitized. but. after the application of all equitizing measures provided for by law. could not be equitized or fails to satisfy the conditions on equitization.

15. "Enterprise without land advantage" means an enterprise which:

a/ has land use rights to a land area of under 200 m2:

b/ has the transfers price of its land use rights or the lease rate of its land on the market under normal conditions not higher by 20% than the price or rate set by the provincial-level People's Committee. If it is impossible to determine the transfer price or lease rate, the transfer price or lease rate of a land lot with similar location and conditions may be referred to.

Article 4.- Subjects entitled to purchase or be assigned an enterprise

1. Subjects entitled to purchase a, enterprise include:

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a/The labor collective in the enterprise;

b/ Individual laborers in the enterprise;

c/ Enterprises with 100% state capital and enterprises of all economic sectors including foreign-invested enterprises in Vietnam, other than intermediary financial institutions providing enterprise price appraisal or auction consultancy:

d/ Vietnamese citizens who have the full civil act capacity, except those who are not allowed to establish and manage enterprises defined at Points b. c, d, e. f and g. Cause 2. and Point b. Clause 4. .Article 13 of the Enterprise Law. members of the

Enterprise Renewal and Development Board, individuals of intermediary financial institutions providing enterprise price appraisal or auction consultancy:

e/ Economic or financial institutions established under foreign laws and conducting business activities overseas or in Vietnam and foreigners, except intermediary economic or financial institutions and individuals of these institutions providing enterprise price appraisal or auction consultancy.

2. Foreign-invested enterprises specified at Point c and entities specified at Point e, Clause 1 of this Article that are specified by law as foreign investors may join other Vietnamese enterprises and citizens in purchasing part of enterprises at a ratio not exceeding that provided in Vietnam's international commitments on business-rights of foreign investors in specified domains or sectors. Foreign investors may purchase whole enterprises operating in other domains or sectors.

3. Entitled to be assigned an enterprise is the labor collective in the enterprise satisfying the conditions specified in Article 2! of this Decree.

Article 5.- Principles for enterprise sale or assignment

1. The purchaser or assignee of an enterprise may not resell the enterprise within the period stated in the contract.

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2. Upon sale or assignment of an enterprise, its assets shall be calculated in value. The value of an enterprise to be sold shall be calculated at actual market prices. The value of an enterprise

to be assignee shall be calculated according to its audited book value.

3. The priority order for selection of the mode of enterprise sale:

a/Auction with inheritance of debts;

b/ Auction without inheritance of debts;

c/ Sale under direct agreement with inheritance of debts;

d/ Sale under direct agreement without bequeathal of debts.

The labor collective in an enterprise is given priority to purchase the enterprise if they offer a bid equal to other purchasers' bids in the last auction call.

4. To publicize the enterprise sale or assignment under Articles 15 and 23 of this Decree.

5. Enterprise purchases shall be paid in Vietnam dong. Foreign investors wishing to purchase enterprises shall open deposit accounts at payment service providers operating in the Vietnamese territory and effect the payment for enterprise purchases via these accounts.

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6. Actual, reasonable and necessary expenses for the enterprise sale or assignment may be deducted from state capital in enterprises or proceeds from enterprise sale. Deficit shall be made up for with supports from the Enterprise Reorganization Support Fund. The Ministry of Finance shall guide enterprise sale or assignment expense items and levels.

Article 6.- Assurance by the State

The State recognizes and protects the property ownership and use rights, other lawful rights and interests of enterprise purchasers or assignees: lawful rights and interests of laborers and related parties under law.

Chapter II

ENTERPRISE SALE

Article 7.- Rights and obligations of enterprise or enterprise division purchasers

1. Purchase registrants:

a/ may survey the actual state of enterprises they wish to purchase; study dossiers, financial statements, asset lists and certificates of ownership of or rights to use assets and land, and contracts related to these enterprises;

b/ shall keep confidential information collected from the survey of the actual state and examination of documents of enterprises; may not disclose or use such information to the detriment of enterprises or enterprise divisions.

2. Enterprise purchasers:

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a/ may select the legal status of enterprises after purchase; continue renting land or receiving land assigned with collection of land use levy under the land law;

b/ may inherit lawful rights and interests and obligations of state enterprises stated in enterprise sale and purchase contracts and other signed contracts:

c/ shall pay for enterprise purchase under signed contracts.

Article 8.- Order of enterprise or enterprise division sale

1. Preparations for the sale of an enterprise include notification of the sale and preparation of legal dossiers and papers of the enterprise.

2. Elaboration and approval of an enterprise sale plan cover inventory, crosschecking and classification of assets and debts; elaboration of financial statements and plans on handling of assets, finance and debts; working out of plans on labor arrangement: valuation of the enterprise; elaboration of sale plans, the minimum sale price and sale mode, estimated expenses for organization of the sale; approval of plans on sale or handling of assets, finance, debts and labor. In case estimated proceeds from the enterprise sale are not enough to cover sale expenses (in case purchasers inherit debts) or not enough to cover expenses and pay debts (in case purchasers do not inherit debts) enterprise sale shall be shifted to enterprise assignment, dissolution or bankruptcy.

3. Handling of assets, finance, debts and labor.

4. Organization of the enterprise sale.

5. Approval of the sale result: elaboration of financial statements of the enterprise at the time of enterprise handover to the purchaser; conclusion of the contract; payment; handover of assets, documents and relevant dossiers to the purchaser: notification of completion of the enterprise sale.

6. Business registration for the enterprise after sale.

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Article 9.- Notification of enterprise sale Based on the general scheme on reorganization

of enterprises with 100% state capital approved by the Prime Minister, agencies or organizations that have decided on sale of enterprises shall notify these enterprises of their sale.

Article 10.- Handling of assets and finance upon enterprise sale

1. Assets and cash balances of reward and welfare funds, expenses for uncompleted construction works, financial provisions, losses or profits shall be handled according to the provisions of Chapter II of the Government's Decree No. 109/2007/ND-CP of June 26, 2007, on transformation of enterprises with 100% state capital into joint-stock companies (below referred to as Decree No. 109/2007/ND-CP).

2. Differences in inventoried assets:

a/ For redundant assets, if the causes of redundancy and their owners cannot be identified, enterprises may account their actual value as an increase in their state capital;

b/ For deficient, lost or damaged assets, enterprises shall clearly identify causes of deficit or loss, responsibilities of collectives and individuals and claim compensations under law. Difference between compensations paid by related individuals and collectives or insurance organizations (if any) and the actual loss value shall be offset by the financial provision fund. Any deficit after offsetting shall be accounted into business results. If enterprises still suffer from a loss, they may account it as a decrease in their state capital.

Article 11.- Handling of debts and valuation of enterprises

1. Enterprises which are sold or have their divisions sold shall compare, certify and recover receivable debts which are due before the sale: mobilize various sources to pay due debts or reach agreement with creditors on the settlement of these debts before the sale.

2. Other receivable debts and payable debts shall, depending on whether enterprise sale and purchase involves or does not involve debt inheritance, be handled on the following principles:

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a/ In case purchasers are committed to debt inheritance, they shall pay payable debts and recover receivable debts under their commitments. Commitments to inherit receivable and receivable debts must be stated in enterprise sale and purchase contracts and notified in writing to creditors, debtors and related parties;

b/ In case purchasers are not committed to debt inheritance, sold enterprises shall handle these debts under the State's current regulations on handling of outstanding debts, In case there remain some debts not yet completely handled under the State's current regulations on handling of outstanding debts, these debts shall be handled under Clause 2. Article 5 of Decree No. 109/2007/ ND-CP at the time of decision on disclosure of the enterprise value.

3. For amounts already paid in advance to goods suppliers or service providers, such as house and land rents, goods purchase payments or remunerations, comparison must be made between these amounts and supply or provision contracts and actual quantities of supplied goods or provided services before accounting these amounts into the value of enterprises.

4. The valuation and adjustment of the value of enterprises shall adhere to the principles specified in Chapter III of Decree No. 109/2007/ND-CP. The Enterprise Renewal and Development Board shall inspect the observance of legal provisions on enterprise valuation, and propose competent agencies and organizations to decide on the value of enterprises. In case results of enterprise fail to ensure valuation state regulations, agencies or organizations competent to decide on sale of enterprises may refuse to pay evaluation consultancy service charges. If causing damage to the State and enterprises, evaluation consultancy organizations shall pay compensations.

5. Enterprises which cannot be equitized and should be sold may inherit results of their valuation approved by competent agencies in the course of equitization.

Article 12.- Determination of sale prices of enterprises

1. The reserve price for sale of an enterprise shall be determined on the following principles:

a/ It must not be lower than the total of the value of the suite capital in the enterprise already determined under Clause 4, Article 11 of this Decree and the value of land use rights (if any) calculated at the price announced by the provincial-level People's Committee in case the purchaser inherits debts.

b/ It must not be lower than the total of the value of the enterprise already determined under Clause 4, Article 11 of this Decree and the value of land use rights (if any) calculated at the price announced by the provincial-level Peoples

Committee in case the purchaser does not inherit debts.

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2. Sale prices of enterprises:

Sale prices shall be decided based on the sale mode (auction or direct sale), payment mode (lump sum or installments), offered purchase prices and the number of laborers continuing to be employed by purchasers but must not be lower than reserve prices specified in Clause 1 of this Article.

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