Vietnam: What are the regulations on the management and use of proceeds from sale of an entire wholly state-owned enterprise?
- What do the costs incurred from sale of an entire wholly state-owned enterprise in Vietnam include?
- What are the regulations on the management and use of proceeds from sale of an entire wholly state-owned enterprise in Vietnam?
- Can employees in Vietnam continue to work in enterprises after they are sold?
What do the costs incurred from sale of an entire wholly state-owned enterprise in Vietnam include?
Pursuant to Article 30 of Decree 23/2022/ND-CP on the costs of sale of an entire wholly state-owned enterprise in Vietnam as follows:
Costs of sale of an entire wholly state-owned enterprise
1. Costs of sale of an entire enterprise are expenses incurred in connection with the sale of the enterprise from the issue date of the decision to sell the enterprise to the date of transfer of the sold enterprise to the auction winner. The owner’s representative agency shall decide to approve and make a statement of costs of sale of the entire wholly state-owned enterprise. The General Director (or Director) of the sold enterprise shall decide the specific spending amounts according to contents approved by the owner’s representative agency and assume legal responsibility for their decision. Costs of sale of enterprise must be supported by adequate, valid and reasonable documents as prescribed by law.
2. Costs incurred from sale of an entire wholly state-owned enterprise include:
a) Direct costs, including: costs of inventory and determination of the enterprise value; costs of developing the plan for sale of enterprise; costs of organizing employees’ meeting to disseminate information about the sale of entire enterprise; costs of disseminating and disclosing information about the enterprise; costs of auction of the enterprise.
b) Costs of hiring a qualified financial intermediary to provide valuation consulting or organize auction of the enterprise. Consulting service fees shall be paid under the contract signed between the parties.
c) Other costs incurred in connection with the sale of the entire enterprise (if any).
3. Costs of audit of financial statements at the time of valuation of the enterprise shall not be included in the costs of sale of entire enterprise but shall be recorded by the sold enterprise as its business expenses in the period.
4. In case the sale of the entire enterprise is unsuccessful or suspended, or estimated proceeds from the sale of entire enterprise are not sufficient to cover costs of sale of entire enterprise, the owner’s representative agency shall consider recording such costs as the enterprise's expenses. These costs shall be considered as non-deductible expenses when determining taxable income if the enterprise still operates as a wholly state-owned enterprise. If the enterprise is reorganized adopting another method, the owner’s representative agency shall send request the Ministry of Finance in writing to allocate funding for covering costs of sale of enterprise. Such request should be supported by relevant documents.
Thus, the costs incurred from sale of an entire wholly state-owned enterprise in Vietnam include:
- Direct costs, including: costs of inventory and determination of the enterprise value; costs of developing the plan for sale of enterprise; costs of organizing employees’ meeting to disseminate information about the sale of entire enterprise; costs of disseminating and disclosing information about the enterprise; costs of auction of the enterprise.
- Costs of hiring a qualified financial intermediary to provide valuation consulting or organize auction of the enterprise. Consulting service fees shall be paid under the contract signed between the parties.
- Other costs incurred in connection with the sale of the entire enterprise (if any).
What are the regulations on the management and use of proceeds from sale of an entire wholly state-owned enterprise in Vietnam?
According to the provisions of Article 31 of Decree 23/2022/ND-CP on the management and use of proceeds from sale of an entire wholly state-owned enterprise as follows:
Management and use of proceeds from sale of entire enterprise
After deducting costs of sale of enterprise and benefits paid to employees and managerial position holders, the remaining proceeds earned from the sale of an entire wholly state-owned enterprise shall be submitted to the central government budget and local government budget in accordance with the Government’s regulations.
Accordingly, after deducting costs of sale of the enterprise and benefits paid to employees and managerial position holders, the remaining proceeds earned from the sale of an entire wholly state-owned enterprise shall be submitted to the central government budget and local government budget in accordance with the Government’s regulations.
Can employees in Vietnam continue to work in enterprises after they are sold?
According to the provisions of Clause 1, Article 32 of Decree 23/2022/ND-CP on this content as follows:
Policies for employees and managerial position holders when selling entire enterprise
1. Employees who continue employment with the enterprise after it is sold shall enter into new employment contracts.
2. Employees who wish to terminate employment contracts shall be provided with redundancy or severance allowances in accordance with regulations on labour or policies for employees redundant after sale of an entire wholly state-owned enterprise.
3. Employees who are eligible for retirement benefits shall be treated in accordance with regulations of the Law on social insurance and provided with other benefits in accordance with regulations of the Labour Code.
4. The assignment of works to Chairperson and members of the Board of Members or company’s President, General Director (Director) and controllers who are working under appointment regime shall be considered by the owner’s representative agency after the sale of enterprise. In case the assignment of works to persons who are working under appointment regime cannot be carried out, these cases shall be settled according to downsizing policies as prescribed.
Thus, employees who continue employment with the enterprise after it is sold shall enter into new employment contracts.
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