From June 1, 2022, a wholly state-owned single-member limited company can be converted into a multi-member limited liability company in what form?
From June 1, 2022, a wholly state-owned single-member limited company can be converted into a multi-member limited liability company in what form?
According to the provisions of the Enterprise Law, the form of business transformation from a wholly state-owned single-member limited company into a multi-member limited liability company include:
- Transferring or donating a part of the owner's capital to one or several other individuals and organizations.
- Mobilizing additional capital contributions from one or several other individuals and organizations.
- Combining both methods above.
According to Article 33 of Decree 23/2022/ND-CP on the conditions and the form to business into a multi-member limited liability company as follows:
Article 33. Conditions and form of converting an enterprise into a limited liability company with two or more members
Enterprises holding 100% of charter capital by the State shall be transformed into a limited liability company with two or more members when simultaneously meeting the following conditions:
1. Ensure the same conditions as for equitized enterprises (not applicable to agricultural and forestry companies undergoing conversion).
2. To be considered and decided by the Prime Minister in cases where it is necessary to limit the number of members contributing capital because it is related to national defense, security or other cases.
The enterprises transformation in which 100% of charter capital is held by the State into a two or more members limited liability company shall be effected in the form of transferring part of the existing state capital in the enterprise.
According to the above regulations, the form of converting an enterprise into a two or more members limited liability company applying to a single-member limited liability company with 100% of charter capital held by the State can only be carried out in the form of transferring a part of the existing state capital in the enterprise.
Form of enterprise transformation from a wholly state-owned single-member limited company into a two or more members limited liability company
Is it necessary to develop a business plan when converting the form of business?
According to Clause 8, Article 35 of Decree 23/2022/ND-CP, the content of the plan to convert an enterprise into a multi-member limited liability company is:
"Article 35. Contents of the plan to transform the enterprise into a multi-member limited liability company
The conversion plan includes the following basic contents:
1. Current status of enterprises at the time of enterprise valuation.
2. Result of enterprise value determination and issues that need to be further handled.
3. Criteria for selecting investors to receive transfers of State capital are related to business lines, fields of operation, financial capacity, corporate governance, technology and markets.
4. The level of charter capital according to the requirements of production and business activities of the enterprise.
5. Charter capital structure, starting price and method of capital transfer according to the following principles: Based on the size, nature of business lines and business development requirements, specify the investor's capital portion. must place a minimum order to ensure that the number of members does not exceed 50 members in accordance with the law on enterprises. Specify the minimum order level in the conversion plan, without discriminating between investors of all economic sectors.
6. Draft charter of organization and operation of limited liability companies with two or more members in accordance with the provisions of the Enterprise Law and current legal documents.
7. The plan to rearrange the labor under management.
8. Business plan for the next 3-5 years.
9. The land use plan has been approved by a competent authority."
Thus, when converting the form of enterprise into a two or more members limited liability company applying to a one-member limited liability company with 100% charter capital held by the State, it is necessary to develop a business operation plan for the next 3 to 5 years.
What policies do employees in the converted enterprise enjoy?
According to Article 37 of Decree 23/2022/ND-CP stipulating the policies for employees and people holding leadership and management positions when converting the type of enterprise as follows:
"Article 37. Policies for employees and holders of leadership and management titles
1. Employees are allowed to continue working at the enterprise after the transformation and enter into a new labor contract.
2. The employee who terminates the labor contract is entitled to the allowance for job loss or severance in accordance with the provisions of the labor law or the policy for redundant employees when converting the business ownership due to the change in business ownership. The State holds 100% of charter capital.
3. Employees who are eligible for the retirement regime shall comply with the provisions of the law on social insurance and other benefits in accordance with the provisions of the labor law.
4. The Chairman and members of the Members' Council or the President of the company, the General Director (Director) and the Controllers working under the appointment regime shall be considered on a case-by-case basis by the owner's representative agency to arrange employment after the transition. In case they work under the appointment regime but cannot arrange jobs, they will be dealt with the regime of downsizing the payroll according to regulations.
Decree 23/2022/ND-CP takes effect from June 1, 2022, replacing Decree 172/2013/ND-CP, Decree 128/2014/ND-CP and abolishing Decree 69/2014/ ND-CP.
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