Vietnam: How are the proceeds from equitization settled?

The Ministry of Finance of Vietnam issued Circular No. 40/2018/TT-BTC, which provides guidelines for initial share offering and management and use of proceeds from the equitization of state-owned enterprises and single-member limited liability companies with 100% charter capital invested by state-owned enterprises.

According to Circular No. 40/2018/TT-BTC, proceeds from equitization of the state-owned enterprise at the official date of equitization shall be settled as follows:

- In case of sale of state capital:

The proceeds from equitization will be used to pay the costs of equitization and cover the expenses incurred on the implementation of the policy towards redundant employees as required. The remaining, including the difference among the selling prices of shares, will be submitted to the Business Arrangement and Developments Support Fund.

- In case of remaining of state capital and issuance of additional stocks for increasing the charter capital, the proceeds from equitization shall be handled as follows:

+ The proceeds value equivalent to the value of number of additional shares will be kept at the enterprise.

+ The capital surplus from additional shares will be used to pay the costs of equitization and cover all expenses incurred on the implementation of the policy towards redundant employees, where:

The remaining money amount of the capital surplus (if any) equivalent to the number of additional shares in the charter capital structure will be kept at the joint-stock company and submitted to the Business Arrangement and Development Support Fund. Where, the money amount kept at the joint-stock company which is equivalent to the additional shares in the charter capital structure (hereinafter referred to A) shall be determined as follows:

- In case of sale of state capital in combination with issuance of additional shares, the proceeds from equitization shall be handled as follows:

+ The proceeds from sale of state shares, including the difference in the selling prices, will be submitted to the Business Arrangement and Development Support Fund.

+ The remaining money will be handled as prescribed in point b, Clause 1, Article 13 of Circular No. 40/2018/TT-BTC.

Circular No. 40/2018/TT-BTC of the Ministry of Finance of Vietnam takes effect from June 18, 2018 and replaces Circular No. 115/2016/TT-BTC.

- Thanh Lam -

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