Dossier and Procedures for Reducing State Capital Due to Asset Shortages in Inventory

According to Circular 51/2015/TT-BTC, at the time of conversion, agricultural and forestry companies must conduct a full inventory of assets under their management, including fixed assets and long-term investments, current assets and short-term investments, receivables and payables, and owners' equity (including plantations, orchards, and livestock). Assets need to be classified into those that are necessary, unnecessary, or not yet necessary for production and business, and assets awaiting liquidation (including damaged, deteriorated, or degraded assets). Surplus and deficient assets, uncollectible receivables, overdue debts must be recorded, and causes and responsibilities of relevant organizations and individuals must be determined, along with any compensations according to legal regulations.

Documentation and procedures for reducing state capital for deficient assets in inventory (Illustration)

Agricultural and forestry companies with deficient assets in inventory due to objective reasons shall prepare and submit documentation to competent authorities as specified in Clause 3 of this Article for consideration and decision on reducing state capital. The documentation includes:

- A written request for reducing state capital; the written request from the parent corporation or general company (for agricultural and forestry companies that are member enterprises of the corporation or general company);

- A resolution of the members' council/a document from the company president on the reduction of state capital in the company;

- An inventory report indicating clearly the value lost, the causes, and responsibilities; documentation on the determination of insurance compensation value (if any);

- Related documents for the request to reduce capital: financial reports, appraisal reports on the deficient assets, and losses due to objective reasons from the management agency, and other related documents.

Procedures for considering and deciding on the reduction of state capital:

- For enterprises established by decision of the Prime Minister, within 30 working days from the date of receiving conformable documentation, the managing ministry is responsible for reporting and seeking the opinion of the Prime Minister. Within 30 working days from the date of receiving the Prime Minister’s opinion, the managing ministry must respond to the company (either by a decision to reduce state capital or a written response in case of non-approval of the capital reduction).

- For enterprises established by the decision of the managing ministry or the provincial People's Committee, within 30 working days from the date of receiving conformable documentation, the managing ministry or the provincial People's Committee is responsible for checking the documentation and responding to the company (either by a decision to reduce state capital or a written response in case of non-approval of the capital reduction).

- During the process of receiving and processing the documentation for reducing state capital, if the company's documentation is not conformable, within 15 working days from the date of receiving the documentation, the managing ministry, the provincial People's Committee, and related agencies must request the company to supplement and complete the documentation conformably. If the competent authorities and related agencies do not accept the company's documentation for reducing capital, they must have a written response (stating clear reasons) to the enterprise.

Details can be found in Circular 51/2015/TT-BTC, effective from June 2, 2015

Le Hai

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