Amendments to regulations on converting wholly state-owned agriculture companies into multi-member limited liability companies in Vietnam as of March 1, 2024

Amendments to regulations on converting wholly state-owned agriculture companies into multi-member limited liability companies in Vietnam as of March 1, 2024 (Internet image)

Regarding this issue, LawNet would like to answer as follows:

On January 12, 2024, the Government issued Decree 04/2024/ND-CP amending Decree 118/2014/ND-CP on restructuring, development and improvement of agriculture and forestry companies in Vietnam.

Regulations on converting wholly state-owned agriculture companies into multi-member limited liability companies in Vietnam

From March 1, 2024, the regulations on converting wholly state-owned agriculture companies into multi-member limited liability companies in Vietnam are as follows:

(1) A wholly state-owned agriculture company can be converted into a multi-member limited liability company when the following conditions are met:

- Having a production and processing plan applying high technology to meet domestic and foreign market needs according to the following criteria:

+ Applying high technology to the List of high technologies prioritized for investment and development according to the provisions of the law on high technology to produce agricultural products;

+ Applying environmentally friendly and energy-saving measures in the production and quality management of agricultural products to meet Vietnam's standards and technical regulations; In the event that there are no Vietnamese standards or technical regulations, the standards of specialized international organizations shall apply;

- State capital remains after financial settlement and enterprise value reassessment.

(2) Form of transformation and state control

- Conversion form: selling part of the existing state capital in a wholly state-owned single-member limited liability company to investors and converting it into a multi-member limited liability company according to the provisions of Clause 2 of Article 33 of Decree 23/2022/ND-CP.

- State's controlling power: The State holds controlling capital contributions to agricultural companies with land use plans of 500 hectares or more.

(3) The selected investor must meet the following conditions:

- Having legal status according to the provisions of the law;

- Having equity capital at least twice the charter capital of the plan to establish a multi-member limited liability company;

- Having profitable production and business results for the last 3 years as of the time of registration to contribute capital or purchase state capital;

- Written commitment of the investor when registering to become a member of a multi-member limited liability company, including the following contents:

+ Maintain the main business line of the enterprise for at least 03 years from the date the multi-member limited liability company is granted a Business Registration Certificate for the first time operating under the Law on Enterprise 2020;

+ Do not transfer capital contributions within 05 years from the date the multi-member limited liability company is granted a Business Registration Certificate for the first time operating under the Law on Enterprise 2020;

+ Plan to support businesses after establishing a two-member limited liability company in transferring new technology, training human resources, improving financial capacity, corporate governance, supplying raw materials, and developing product consumption markets;

+ Carry out compensation obligations when violating signed commitments, with compensation levels determined according to actual damages and the State's right to dispose of the entire contributed capital of the investor when violating signed commitments;

+ Other commitments (if any).

- The commitment at Point d of this clause is a mandatory part of the capital transfer contract.

(4) Principles of conversion, content of the conversion plan, responsibilities for implementing the conversion, management, and utilization of funds from the conversion of wholly state-owned forestry companies into companies with two or more members under the provisions of Articles 34, 35, 36, and 38 of Decree 23/2022/ND-CP.

Agricultural and forestry companies that have completed restructuring and innovation while remaining state-owned enterprises with 100% charter capital but are inefficient and in need of further restructuring and innovation shall follow the provisions of Decree 118/2014/NĐ-CP on restructuring, development and improvement of agriculture and forestry companies, as well as the provisions of Decree 04/2024/ND-CP.

For agricultural and forestry companies that have not completed restructuring and innovation before the effective date of Decree 04/2024/ND-CP but have an approved plan for restructuring and innovation that complies with the provisions of Decree 04/2024/ND-CP by the Prime Minister, they shall continue to implement the approved plan.

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