Decree No. 206/2013/ND-CP of December 9, 2013, on management of debts of enterprises with 100% State-owned charter capital

THE GOVERNMENT

Decree No. 206/2013/ND-CP of December 9, 2013, on management of debts of enterprises with 100% State-owned charter capital

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

Pursuant to the November 29, 2005 Law on Enterprises;

At the proposal of the Minister of Finance,

The Government promulgates the Decree on management of debts of enterprises with 100% State-owned charter capital.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

This Decree prescribes the management and handling of outstanding debts of enterprises with 100% state-owned charter capital.

Article 2. Subjects of application

1. This Decree applies to:

a/ Single-member limited liability companies with 100% state-owned charter capital and established under decisions of the Prime Minister or ministries, ministerial-level agencies and government-attached agencies (below referred collectively to as line ministries) or People’s Committees of provinces and centrally run cities (below referred to as provincial-level People’s Committees), including:

- Single-member limited liability companies being parent companies of economic groups; parent companies of state corporations; parent companies in the parent company-subsidiary company model.

- Independent single-member limited liability companies.

b/ Authorized representatives at enterprises with 100% state-owned charter capital and authorized representatives for state capital at enterprises.

c/ Agencies, organizations and individuals related to the management and handling of debts of enterprises.

2. For enterprises with 100% state-owned charter capital operating in the fields with particular financial characteristics, the handling and management of their outstanding debts comply with regulations and laws applicable to these fields.

Article 3. Interpretation of terms

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

1. Enterprise means a single-member limited liability company with 100% state-owned charter capital defined at Point a, Clause 1,  Article 2 of this Decree.

2. Outstanding debts means overdue receivables which an enterprise cannot recover after having applied such handling measures as comparison, confirmation and urging of payment, and overdue payables an enterprise is unable to pay.

3. Bad debts means receivables which are overdue for over 6 months (counted according to the initial payment deadline, excluding the extended payment time) and an enterprise cannot recover after having applied such handling measures as comparison, confirmation and urging of payment; or receivables which are not yet due but whose debtors being economic institutions have fallen bankrupt, are carrying out procedures for dissolution or whose individual debtors are missing, have absconded, are being prosecuted, held in custody or adjudicated by law enforcement agencies, are serving court sentences or have died.

4. Irrecoverable debts means receivables which are overdue or are not yet due but fall into one of the following cases:

a/ Debtors being enterprises or institutions have been completely dissolved or gone bankrupt in accordance with law.

b/ Debtors being enterprises or institutions have terminated operation and are unable to pay debts and have nobody taking over their debt payment obligation.

c/ Individuals debtors have died, are missing or are still alive but have lost working capacity or civil act capacity, or their heirs under law have no payment capability.

d/ Debtors have obtained debt write-off decisions from competent agencies in accordance with law.

dd/ They are remaining amounts of irrecoverable debts after handling the responsibilities of individuals and collectives liable to pay material compensations.

e/ They are overdue for 1 year or more and the debtors still exist or operate but have run business at a loss for 3 or more consecutive years, meet extreme difficulties and have no payment capability, and the enterprise cannot recover such debts after having actively applied various measures.

5. Unpayable debts means due or overdue debts an enterprise is unable to pay to their creditors according to committed contracts.

6. Authorized representatives for state capital at enterprises means individuals authorized in writing by owners to exercise the rights and perform the responsibilities and obligations of owners at enterprises (below referred to as representatives).

Article 4. Principles of management and handling of debts

1. Enterprises shall draft and issue Regulations on debt management (applicable to both receivables and payables), clearly identifying responsibilities of collectives and individuals (Members’ Council, chairperson of the Members’ Council (company president), director general (director), chief accountant and other related persons) for monitoring, collecting and paying debts; comparing, confirming and classifying debts, urging the collection thereof and proactively handling outstanding debts according to this Decree.

2. For bad debts or unpayable debts, enterprises shall first of all make deductions to set up provisions according to regulations and apply every measure to recover debts and share difficulties with creditors and debtors in the handling of debts through freezing, rescheduling, write-off, purchase and sale. Enterprises shall report on cases beyond their handling capacity and competence to competent agencies for settlement support measures.

3. Receivables and payables in foreign currencies must be converted into Vietnam dong at the time of accounting and making financial statements in accordance with law. Exchange rate differences arising in a period and resulting from the revaluation of the balances of receivables and payables in foreign currencies at the end of a fiscal year must be handled under regulations of the Ministry of Finance.