Vietnam: Parent companies shall carry out financial supervision in subsidiary companies and associate companies

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According to Decree No. 87/2015/ND-CP of Vietnam’s Government, parent companies shall carry out financial supervision in subsidiary companies and associate companies. Moreover, the representative agency shall preside over and cooperate with the financial institution in indirect supervision in subsidiary companies and important associate companies through their parent companies.

Entities subject to parent company’s supervision shall include all of subsidiary companies or associate companies. Entities subject to supervision carried out by the representative agency and financial institution shall include:

- Subsidiary companies;

- Important associate companies. The determination of important associate companies shall be selected by the representative agency and parent company according to the following criteria:

+ Demonstrate strategic importance (in terms of technology, market or finance) in the development of enterprises;

+ Have the capital contributed by the parent company which equals more than 35% of the charter capital;

+ Have the permitted amount of charter capital which meets the classification criteria applied to above-group-B projects in accordance with the Law on public investment; 

+ Earn proposed profit divided from associate companies which makes up for over 10% of revenue (including revenue generated from sale and provision of services as well as financial operations) of enterprises in the reporting year.

More details can be found in Decree No. 87/2015/ND-CP of Vietnam’s Government, which takes effect from December 01, 2015.

Thu Ba

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