Vietnam: Expansion of public non-business unit to be transformed into a joint stock company from February 15, 2021

According to Clause 1 Article 2 of the Decree No. 150/2020/NĐ-CP of the Vietnam’s Government, public non-business units that satisfy the conditions for transformation into a joint stock company include:

(1) Public non-business units affiliated to ministries, ministerial-level agencies, agencies attached to the Government;

(2) Public non-business units affiliated to units under ministries, ministerial-level agencies, and agencies attached to the Government;

(3) Public non-business units under the People's Committees of central-affiliated provinces and cities (hereinafter referred to as provincial People's Committees);

(4) Public non-business units affiliated to specialized agencies and other administrative organizations of the People's Committee of the province;

(5) Public non-business units under the People's Committees of districts, towns, provincial cities (hereinafter referred to as district-level People's Committees);

(6) Public non-business units under Hanoi National University, Vietnam National University Ho Chi Minh City;

(7) Public non-business units belonging to public non-business units under ministries, ministerial-level agencies, Government agencies, provincial-level People's Committees, Hanoi National University, Ho Chi Minh City National University;

(8) Public non-business units belonging to enterprises in which 100% of charter capital is held by the State.

According to current provisions of the Decision No. 22/2015/QĐ-TTg on transformation of public non-business units into joint stock companies issued on June 22, 2015, only public non-business units directly under ministries, ministerial-level agencies, government-attached agencies, People's Committees of central-affiliated provinces and cities, economic groups and state-owned corporations are eligible to convert into joint stock companies.

Besides, new regulations on conditions for converting a public non-business unit into a joint-stock company are also stricter than current regulations. To be specific, according to Clause 1 Article 2 of the Decision No. 22/2015/QĐ-TTg of the Prime Minister of Vietnam, the above-mentioned entities must further satisfy the following conditions:

- The state capital remains after having financial treatment and re-valuation of public non-business units.

- 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.

Form of transformation of public non-business unit remains the same according to current regulations, including the following forms:

- Keep intact the existing state capital in the public non-business units and issue more stocks to increase charter capital.

- Sell a part of the existing State capital.

- Combine the sale of part of state capital with the additional issue of stock to increase charter capital.

Decree No. 150/2020/NĐ-CP of the Vietnam’s Government takes effect from February 15, 2021 and replaces the Decision No. 22/2015/QĐ-TTg.

Le Hai

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