Vietnam: What are the regulations on classification of liabilities when converting a public non-business unit into a joint stock company?
- What are the new regulations on the classification of liabilities when converting public non-business units into joint-stock companies in Vietnam?
- What do the liabilities but not payments of the public non-business unit when converted into a joint stock company include in Vietnam?
- What is the basis for comparing and confirming the liabilities of a public non-business unit when converted into a joint stock company in Vietnam?
What are the new regulations on the classification of liabilities when converting public non-business units into joint-stock companies in Vietnam?
Pursuant to Clause 2, Article 5 of Circular 111/2020 / TT-BTC stipulates as follows:
Reconciliation, confirmation and classification of liabilities
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2. Liabilities of organizations and individuals include debts due, debts that are not yet due and debts that are overdue for payment at the time of valuation.
a) Based on the contract, debt notice, debt reconciliation and other documents (if any), the converted public non-business unit shall make a list of loan debts according to each creditor; Determination of tax liabilities, fees and other state budget payables; Specific analysis of contractual loans (domestic loans, foreign loans), guaranteed loans, unsecured loans, loans due to bond issuance, liabilities due, due and overdue for payment, principal debts, interest debts, liabilities payable but not payable.
...
Accordingly, according to the above provisions, the classification of liabilities when converting public non-business units into joint stock companies includes due debts, undue debts and overdue debts paid at the time of valuation.
However, according to the latest provisions in Clause 1 Article 1 of Circular 76/2022 / TT-BTC, the above regulations have been amended as follows:
Reconciliation, confirmation and classification of liabilities
...
2. Liabilities:
Public non-business units convert the classification of liabilities according to the provisions of Clause 1, Article 16 of the Government's Decree No. 150/2020/ND-CP dated 12/25/2020 on converting public non-business units into joint stock companies.
Accordingly, this new regulation has amended the classification of liabilities when converting public non-business units into joint stock companies based on Clause 1 Article 16 of Decree 150/2020/ND-CP, specifically according to this regulation, liabilities are determined to include due and undue debts.
Vietnam: What are the regulations on classification of liabilities when converting a public non-business unit into a joint stock company?
What do the liabilities but not payments of the public non-business unit when converted into a joint stock company include in Vietnam?
Pursuant to Point b, Clause 2, Article 5 of Circular 111/2020/TT-BTC (amended by Clause 1, Article 1 of Circular 76/2022/TT-BTC) stipulating liabilities but not payments of public non-business units when converted into joint stock companies, including:
- Debts converted by creditors of public non-business units when reconciling debt confirmation in one of the following cases:
+ Debts of dissolved or bankrupt enterprises but cannot identify agencies or individuals inheriting debts according to the dissolution or bankruptcy plan decided by competent agencies;
+ Debts of deceased individuals but whose heirs cannot be identified in accordance with the law on inheritance;
+ Debts of other creditors are overdue but creditors do not come to compare and confirm. In this case, the converted public non-business unit must have a written notice sent directly to the creditor and notify on the mass media at least 10 working days before the time of valuation.
- State budget grants;
- Non-refundable foreign aid and loans;
- Fees shall be left in accordance with the law on fees and charges;
- The funding portion of the specific fund, other funds formed from the state budget or the difference in revenue and expenditure of the converted public non-business unit;
- Other non-payment liabilities.
What is the basis for comparing and confirming the liabilities of a public non-business unit when converted into a joint stock company in Vietnam?
Pursuant to Point a, Clause 2, Article 5 of Circular 111/2020/TT-BTC (amended by Clause 1, Article 1 of Circular 76/2022/TT-BTC) provides as follows:
Reconciliation, confirmation and classification of liabilities
...
2. Liabilities:
Public non-business units convert the classification of liabilities according to the provisions of Clause 1, Article 16 of the Government's Decree No. 150/2020/ND-CP dated 12/25/2020 on converting public non-business units into joint stock companies.
a) Based on the contract, debt notice, debt reconciliation and other documents (if any), the converted public non-business unit shall make a list of loan debts according to each creditor; Determination of tax liabilities, fees and other state budget payables; Specific analysis of contractual loans (domestic loans, foreign loans), guaranteed loans, unsecured loans, loans due to bond issuance; liabilities that are due and not yet due, principal liabilities, interest liabilities, liabilities that are payable but not payable.
Accordingly, the basis for comparing and confirming the liabilities of a public non-business unit when converted into a joint stock company is a contract, debt notice, debt reconciliation and other documents (if any), the converted public non-business unit performs.
Based on these grounds, the converting business unit makes a list of loans according to each creditor; Determination of tax liabilities, fees and other state budget payables; Specific analysis of contractual loans (domestic loans, foreign loans), guaranteed loans, unsecured loans, loans due to bond issuance; liabilities that are due and not yet due, principal liabilities, interest liabilities, liabilities that are payable but not payable.
Circular 76/2022/TT-BTC takes effect on February 06, 2023.
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