Vietnam: Guidelines for determining the real value of assets in equitized enterprises

In response to this demand, the State issued Circular No. 41/2018/TT-BTC, which provides guidelines for financial settlement and enterprise valuation in equitization of state-owned enterprises and single-member limited liability companies 100% charter capital of which by state-owned enterprises.

Circular No. 41/2018/TT-BTC of the Ministry of Finance of Vietnam guides the asset valuation as follows:

1. The real value of each type of asset shall be calculated in Vietnam dong.

2. With regard to assets in kind:

- Only assets to be used by the joint stock company are revaluated.

- The real value of an asset equals (=) its historical cost according to the current market price at the date of enterprise valuation multiplied by (x) its remaining quality at the date of enterprise valuation.

- Fully depreciated assets, working instruments, equipments used in management of which all value has been allocated to the business costs but held for use by the joint stock company must be re-valuated to count towards the enterprise value but not lower 20% of the value of assets, instruments or equipments recently purchased.

- Assets in the forms of planting forests, gardens must be evaluated in accordance with regulations in Joint Circular No. 17/2015/TTLT-BNNPTNT-BTC and amended or replaced documents (if any) in the enterprise valuation.

- Assets generated under provisions in the Building-Operate-Transfer contract, engineering infrastructure must be evaluated as prescribed in Clause 6 and 7 in Article 27 of Decree No. 126/2017/ND-CP of Vietnam’s Government.

- The value of assets generated from funding by the state budget for serving public purposes that are managed and used by the equitized enterprise shall not count towards the enterprise value.

3. Monetary assets including cash in hand, deposit and valuable papers such as treasury bills, bonds, etc of the equitized enterprise shall be calculated as follows:

- Cash in hand shall be calculated depending on the fund checklist.

- The deposit shall be calculated according to the balance compared and verified with the bank where the deposit account is opened.

- Valuable papers shall be evaluated depending on the current market price. If no transaction is found, the value will be equal to the face value of such papers.

4. Accounts receivable counting towards the enterprise value shall be evaluated according to the real balance recorded in the accounting book and after making comparison.

5. Business operation and capital construction in progress as well as expenses relating to compensation, clearance and grading of land shall be calculated depending on the real ones incurred which are being recorded in the accounting book.

6. Short-term and long-term deposit assets shall be evaluated according to the balance recorded on the accounting book.

More details can be found in Circular No. 41/2018/TT-BTC of the Ministry of Finance of Vietnam, which takes effect from June 18, 2018 and replaces Circular No. 127/2014/TT-BTC.

- Thanh Lam -

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