This is a content mentioned at the Decree No. 150/2020/NĐ-CP on transformation of public non-business units into joint stock companies, effective from February 15, 2021. 03 basic notes on transformation of public non-business units into joint stock companies include:
Article table of contents
1. Public non-business units subject to conversion into joint stock companies
According to Article 2 of the Decree No. 150/2020/NĐ-CP of the Vietnam’s Government, public non-business units that meet the conditions for conversion into a joint stock company include:
- Public non-business units under ministries, ministerial-level agencies, and agencies attached to the Government;
- Public non-business units attached to units under ministries, ministerial-level agencies, and agencies attached to the Government;
- Public non-business units under the People's Committees of central-affiliated provinces and cities;
- Public non-business units under specialized agencies or other administrative organizations of the People's Committee of the province;
- Public non-business units under the People's Committees of districts, towns, provincial cities;
- Public non-business units under Hanoi National University, Vietnam National University Ho Chi Minh City;
- Public non-business units under public non-business units attached to ministries, ministerial-level agencies, Governmental agencies, provincial People's Committees, Hanoi National University, Vietnam National University Ho Chi Minh City;
- Public non-business units belonging to wholly State-owned enterprises.
2. Conditions for a public non-business unit to be transformed into a joint stock company
According to Article 4 of the Decree No. 150/2020/NĐ-CP of the Vietnam’s Government, public non-business units mentioned above shall be transformed into joint stock companies when simultaneously meeting the following conditions:
- Self-guaranteeing recurrent expenditure and investment or self-guaranteeing recurrent expenditure in the year nearest to the time of conversion;
- State capital remains after having financial treatment and re-valuation of public non-business units;
- Under the list of industries and fields in which the transformation of public non-business units into joint stock companies is decided by the Prime Minister in each period. This list does not include industries and fields that are not regulated by specialized law to convert public non-business units into joint stock companies.
- Having a plan to rearrange and handle houses and land approved by a competent authority in accordance with the law on management and use of public property.
Besides, according to Article 5 of the Decree No. 150/2020/NĐ-CP of the Vietnam’s Government, there are 02 forms of conversion of public non-business units, including:
- Maintain the existing state capital in public non-business units, issue more shares to increase charter capital.
- Selling a part of existing state capital in a public non-business unit or both selling part of state capital and issuing more shares to increase charter capital.
3. Objects not allowed to buy shares issued for the first time of public non-business units converted into joint stock companies
According to Clause 4 Article 6 of the Decree No. 150/2020/NĐ-CP and Clause 23 Article 4 of the Law on Enterprises 2020 of Vietnam, organizations and individuals that are not allowed to buy shares issued for the first time in converted public non-business units include:
- Members of the Steering Committee, the assisting group to convert public non-business units into joint-stock companies (except for members who are representatives of the converted public non-business units);
- Intermediary financial institutions and individuals under these institutions participate in consulting on the transformation of public non-business units into joint stock companies, financial statement audit units and auditing agencies determining the value of public non-business units (except for underwriting organizations that purchase undistributed shares under the guarantee contract);
- Organization conducting the auction of shares and individuals of this organization related to the auction;
- The parent company, its executive and legal representative, and the person who has the power to designate the executive officer of the parent company;
- The subsidiary company, its executive and legal representative;
- Any individual, organization or group of individuals or organizations that can influence the enterprise’s operation through ownership, acquisition of shares/stakes or making corporal decisions;
- The enterprise’s executive, legal representative, controllers;
- Spouses, biological parents, adoptive parents, parents-in-laws, biological children, adopted children, children-in-law, biological siblings, siblings-in-law and biological siblings of spouses of the executive officer, legal representative, controllers, members/partners and shareholders holding the controlling stakes/shares;
- Any individual that is the authorized representative of the companies or organizations mentioned in Point a, b and c Clause 23 Article 4 of the Law on Enterprises 2020 of Vietnam;
- Any enterprise in which an individual, company or organization has the controlling interest.
Le Vy
- Key word:
- Decree No. 150/2020/NĐ-CP
- joint stock company
