Form of restructuring of state capital in the enterprise in Vietnam

Form of restructuring of state capital in the enterprise in Vietnam (Internet image)

1. Regulations on restructuring of state capital in the enterprise in Vietnam

According to Clauses 1, 2, 3 and 4, Article 36 of the Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities 2014 (amended 2018) as follows:

- . According to the scope of state capital investment in enterprise establishment stipulated in Article 10 of the Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities 2014, the Government shall specify the roadmap for the divestment of state capital in enterprises, which must conform to the socio-economic development strategy and plan and national sector planning.

- The enterprise of which 100% charter capital is not held by the State shall be required to restructure the state capital in that enterprise in accordance with regulations laid down in Article 37, 38 and 39 of the Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities 2014.

- Divesting the State capital of the enterprise must serve the purpose of reinvestment and enhancement of efficiency in the operating activities of the enterprise of which 100% charter capital is held by the State.

- Domestic or foreign investors shall be attracted to get involved in the enterprise's manufacturing and business activities when the restructuring of such enterprise occurs.

2. Form of restructuring of state capital in the enterprise in Vietnam

Form of restructuring of state capital in the enterprise in Vietnam according to Clause 5, Article 36 and Articles 37, 38 and 39 of the Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities 2014 include:

2.1. Ownership transformation and corporate rearrangement

- The enterprise shall be entitled to transform its ownership in the following forms:

+ Equitization;

+ Sale of the whole of the enterprise;

+ Sale of a part of state investment in joint-stock companies and multiple-member limited liability companies.

- The restructuring of the enterprise shall be carried out in the following forms:

+ Corporate consolidation, merger and separation;

+ Corporate dissolution and bankruptcy.

2.2. Transfer of the right to act as the representative of state ownership in the enterprise;

- Transfer principles:

+ Do not cause any impact on manufacturing and trading activities of the enterprise’s core businesses;

+ Maintain payment capability and secure obligations to pay debts of the enterprises;

+ Do not make a reduction in the charter capital of the enterprise that carries out the ownership transfer of a part of capital and assets between enterprises.

- Cases in which such transfer shall be carried out shall include:

+ Transfer occurring between the owner’s representative agencies;

+ Transfer of a part of capital and assets between enterprises;

+ Transfer of public investment projects and works from project management units to enterprises;

+ Transfer of state investment in the enterprise occurring between the owner's representative agency and enterprises specializing in state capital investment and business.

2.3. Disposal of state investment in joint-stock companies and multiple-member limited liability companies.

- Disposal principles:

+ Conform to classification requirements stipulated by laws;

+ Stick to the principles of market, disclosure and transparency;

+ Disposal of capital pertaining to land title must comply with the law on land.

- Modalities of this disposal:

+ Disposal of state investment in multiple-member limited liability companies shall be carried out in compliance with legal regulations on enterprises;

+ Disposal of state investment in joint-stock companies whose stocks are listed on the stock exchange market shall conform to legal regulations on securities;

+ Disposal of state investment in joint-stock companies whose stocks have yet to be listed on the stock exchange market shall be carried out through the open auction.

In case the open auction is not successful, the competitive bidding shall be in place. In case the competitive bidding is failed, the method agreed by interested parties shall be in place

Quoc Dat

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