The Parent Company - Vietnam Oil and Gas Group: How to Preserve State Capital?

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According to the provisions of Article 3 Decree 06/2015/ND-CP, the capital of the Parent company - Vietnam Oil and Gas Group includes capital invested by the State at the Parent company, capital mobilized by the Parent company itself, and other sources of capital as prescribed by law. The Parent company is responsible for organizing accounting, monitoring each source of capital separately according to current regulations.

The Parent company is responsible for preserving state capital at the Parent company by measures regulated by the Government of Vietnam on state capital investment in enterprises and financial management for State-owned enterprises and the following measures:

- Strictly implementing policies on the management and use of capital, assets, profit distribution, other financial management policies, and accounting policies as prescribed by law.

- Purchasing asset insurance as prescribed by law.

- Promptly handling asset depreciations, unrecoverable debts, and making provisions for risks under current regulations, including:

+ Provision for inventory devaluation;

+ Provision for doubtful debts;

+ Provision for diminution of long-term financial investments;

+ Provision for product, goods, and construction warranty.

- Other measures for preserving the owner's equity in the enterprise as prescribed by law.

This Decree stipulates that the Parent company is entitled to manage and flexibly use the entire amount of capital invested by the State and other lawful sources of capital into production and business activities with the goal of making a profit; assuming responsibility before the owner for preserving and developing capital, efficient use of capital; ensuring the rights of those associated with the Parent company such as creditors, customers, and employees according to the concluded contracts. In case the Parent company temporarily uses idle funds under its management to invest in production and business, it must ensure sufficient funds for these uses when needed. The use of capital and funds for investment construction must comply with the laws on investment and construction management.

Moreover, any fluctuations in the increase or decrease of owner's equity must be reported by the Parent company to the owner and financial authorities for monitoring and supervision. Periodically every 6 months and annually, the enterprise must evaluate the efficiency of capital use through the capital preservation rate according to the guidance of the Ministry of Finance.

More details can be found in Decree 06/2015/ND-CP effective from March 1, 2015.

Thu Ba

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