The Government has recently issued Decree 116/2015 which includes certain amendments to Decree 59/2011 and Decree 189/2013 on equitisation of state-owned enterprises (SOEs). Decree 116/2015 took effect immediately upon signing on 11 November 2015. This shows certain urgency in the restructuring of SOEs in Vietnam. Decree 116/2015 covers the following:

For State Economic Groups, State Corporations and SOEs operating in Specialised Areas (such as insurance, banking, telecommunications, aviation, oil or coal exploitation etc.) whose equitisation plans are subject to Prime Minister’s approval, the authorities to (i) appoint the equitisation consultants and (ii) select the stock exchanges and financial intermediaries for public offering of shares are now delegated to managing Ministries or provincial People’s Committees. Previously, such powers also belonged to the Prime Minister.

For the purpose of valuating long-term investment of an Equitised SOE in other companies, in case the investment is re-valued and determined less than the book value recorded by the Equitised SOE then the re-valuation result will be used. Under Decree 59/2011, the book value recorded by the Equitised SOE will be used, which may enable the Equitised SOE to “cover” the losses from its investment in other companies during the valuation process.

Decree 59/2011 required the shareholding structure of an Equitised Joint Stock Company (Equitised JSC) to meet the following conditions: no less than 25% (or 20% for Equitised JSC with controlling stake held by the State) of the charter capital must be held by strategic investors and other investors provided that the number of shares held by other investors must not less than those held by strategic investors. These requirements were not imposed upon State Economic Groups, State Corporations and SOEs with more than VND 500 billion of charter capital operating in Specialised Areas, of which shareholding structure will be decided by the Prime Minister on a case-by-case basis. Decree 116/2015 now removes all the shareholding structure requirements applicable to “normal” Equitised JSCs.

After being incorporated and issued with the Enterprise Registration Certificate, an Equitised JSC now has 60 working days (compared to 30 working days under the preceding regulations) to conduct tax finalisation, prepare Opening Accounts, and valuation of the State’s capital in such Equitised JSC.

If an Equitised SOE fails to sell shares within 90 days after the equitisation plan is approved then the Equitised SOE may sell its shares to employees or trade union at a price of 60% of the proposed starting price.

This post is contributed by Tran Thi Thu Thao, a VILAF associate.

Vietnam Business Law