What are the conditions and methods for conversion of wholly state-owned enterprises into multi-member limited liability companies in Vietnam?
- What are the conditions and methods for conversion of wholly state-owned enterprises into multi member limited liability companies in Vietnam?
- What are the rules for conversion of wholly state owned enterprises into multi member limited liability companies in Vietnam?
- What are the contents of the plan for conversion of a wholly state-owned enterprise into a multi-member limited liability company?
What are the conditions and methods for conversion of wholly state-owned enterprises into multi member limited liability companies in Vietnam?
Pursuant to Article 33 of Decree 23/2022/ND-CP of Vietnam on the conditions and and methods for conversion of wholly state-owned enterprises into multi-member limited liability companies as follows:
Conditions and methods for conversion of wholly state-owned enterprises into multi-member limited liability companies
A wholly state-owned enterprise may be converted into a multi-member limited liability company if:
1. It meets the same conditions as those for equitization of enterprise (except conversion of agricultural enterprises and forestry enterprises).
2. It is subject to the Prime Minister’s consideration and decision in case the number of capital contributors is limited because of national defense and security reasons or other cases.
Conversion of a wholly state-owned enterprise into a multi-member limited liability company shall be carried out by transferring a part of state capital at converted enterprise.
Thus, a wholly state-owned enterprise may be converted into a multi-member limited liability company when simultaneously meeting the following conditions:
- It meets the same conditions as those for equitization of enterprise (except conversion of agricultural enterprises and forestry enterprises).
- It is subject to the Prime Minister’s consideration and decision in case the number of capital contributors is limited because of national defense and security reasons or other cases.
What are the conditions and methods for conversion of wholly state owned enterprises into multi member limited liability companies in Vietnam?
What are the rules for conversion of wholly state owned enterprises into multi member limited liability companies in Vietnam?
According to the provisions of Article 34 of Decree 23/2022/ND-CP of Vietnam on the rules for conversion of an enterprise into a multi member limited liability company:
Rules for conversion of wholly state-owned enterprises into multi-member limited liability companies
1. Financial settlement, determination and adjustment of enterprise value, use of valuation consulting service, determination of starting price and formulation of the conversion plan shall comply with the Government’s regulations on conversion of wholly state-owned enterprises into joint-stock companies.
2. Based on the structure of charter capital, offering rate and criteria for selection of investors approved by competent authorities under the Plan for conversion of a wholly state-owned enterprise into a multi-member limited liability company, an auction shall be conducted to transfer state capital in accordance with regulations on conversion of wholly state-owned enterprises into joint-stock companies. Successful bidders shall be selected in descending order and limited to 50 investors as prescribed in Clause 5 Article 35 of this Decree.
Thus, the conversion of an enterprise into a multi member limited liability company shall comply with the following rules:
- Financial settlement, determination and adjustment of enterprise value, use of valuation consulting service, determination of starting price and formulation of the conversion plan shall comply with the Government’s regulations on conversion of wholly state-owned enterprises into joint-stock companies.
- Based on the structure of charter capital, offering rate and criteria for selection of investors approved by competent authorities under the Plan for conversion of a wholly state-owned enterprise into a multi-member limited liability company, an auction shall be conducted to transfer state capital in accordance with regulations on conversion of wholly state-owned enterprises into joint-stock companies.
Successful bidders shall be selected in descending order and limited to 50 investors as prescribed in Clause 5 Article 35 of this Decree.
What are the contents of the plan for conversion of a wholly state-owned enterprise into a multi-member limited liability company?
These contents are specified in Article 35 of Decree 23/2022/ND-CP of Vietnam as follows:
The conversion plan includes the following basic contents:
A conversion plan shall, inter alia, include the following contents:
- The actual status of the enterprise at the time of enterprise valuation.
- Enterprise valuation results and issues that need to be dealt with.
- Criteria for selection of investors receiving transfer of state capital in connection with business lines, scope of operation, financial capacity, administration capacity, technology and market.
- Charter capital required for the enterprise’s business operations.
- Structure of charter capital, starting price and method of transfer of state capital which adhere the following principle: Based on scale, business lines and development requirements, the minimum amount of capital to be received by each investor must be determined so as to ensure that no more than 50 investors will be selected as prescribed by the Law on enterprises. The provision on minimum amount of capital to be purchased by each investor included in the conversion plan shall abide by the principle of equality for investors of all economic sectors.
- The draft charter on organization and operation of the multi-member limited liability company that is drawn up in accordance with the Law on enterprises and other legislative documents in force.
- The plan for rearrangement of existing employees.
- The business plan for the following 3-5 years.
- The land use plan approved by a competent authority.
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