Change in State-owned Enterprise Capital Ratio from January 01, 2021 – This is one of the notable new contents in the Enterprise Law 2020 recently passed by the 14th National Assembly of Vietnam in the 9th session.
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Law on Enterprises 2020: Change in capital ratio in State-owned enterprises - Illustration image
To be specific, according to the Law on Enterprises 2020, State-owned enterprises include those in which the State holds more than 50% of the charter capital or the total number of voting shares as stipulated in Article 88 of the Law on Enterprises 2020 (Currently, according to the Law on Enterprises 2014, a State-owned enterprise is one in which the State holds 100% of the charter capital).
Article 88 of the Law on Enterprises 2020 has amended the concept of State-owned enterprises based on the principle of categorizing enterprises with State ownership according to different levels of ownership as follows:
Article 88. State-owned enterprises
1. State-owned enterprises are managed and organized in the form of limited liability companies, joint-stock companies, including:
a) Enterprises in which the State holds 100% of the charter capital;
b) Enterprises in which the State holds more than 50% of the charter capital or the total number of voting shares, except for the enterprises specified in point a, clause 1 of this Article.
In which, enterprises in which the State holds 100% of the charter capital include:
- One-member limited liability companies, in which the State holds 100% of the charter capital, serving as the parent company of State economic groups, the parent company of State corporations, the parent company in parent-subsidiary company groups;
- Independent one-member limited liability companies in which the State holds 100% of the charter capital.
Additionally, enterprises in which the State holds more than 50% of the charter capital or the total number of voting shares include:
- Two-member limited liability companies or more, joint-stock companies in which the State holds more than 50% of the charter capital or the total number of voting shares, serving as the parent company of economic groups, corporations, or in parent-subsidiary company groups;
- Independent two-member limited liability companies or more, joint-stock companies in which the State holds more than 50% of the charter capital or the total number of voting shares.
For more details, see: Law on Enterprises 2020, effective from January 01, 2021.
Nguyen Trinh
