Regulations on investment restrictions and business lines in the Vietnam National Electricity Corporation

Regulations on investment restrictions and business lines in the Vietnam National Electricity Corporation (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. What is Vietnam National Electricity Corporation?

According to Clause 1, Article 1 of the Charter issued together with Decree 26/2018/ND-CP, Vietnam National Electricity is a group of companies with independent legal status, including:

- Vietnam Electricity Group (class I enterprise);

- Scientific research and training units;

- Subsidiaries of Vietnam Electricity Group (class II enterprises);

- Subsidiaries of class II enterprises (class III enterprises);

- Affiliated enterprises of Vietnam National Electricity Group.

2. Regulations on investment restrictions and business lines in the Vietnam National Electricity Corporation

Restrictions on investment and business lines in the Vietnam National Electricity Group according to Article 12 of the Charter issued together with Decree 26/2018/ND-CP are as follows:

- Subsidiaries are not allowed to contribute capital or purchase shares of the parent company in the Vietnam National Electricity Group. Subsidiaries of the same parent company in the Vietnam National Electricity Group may not jointly contribute capital or purchase shares for cross-ownership in accordance with the law.

- EVN's subsidiaries, having the same parent company as an enterprise owning at least 65% of EVN's capital, are not allowed to jointly contribute capital to establish an enterprise where the total number of shares and contributed capital of these companies is equal to or greater than 51% of the charter capital or the total number of ordinary shares of the related company.

- The outward capital investment of EVN must comply with the law on state capital investment in enterprises and the financial management of enterprises in which 100% of charter capital is held by the State.

- EVN and its member enterprises may register and invest only in the main lines of business and the lines of business related to the main business lines;

Subject to the owner's supervision on the investment, investment capital ratio, and investment efficiency in the main business lines, lines of business, lines related to the main business lines, or lines. EVN, member enterprises of the Vietnam National Electricity Corporation are not allowed to conduct business in unrelated industries.

- EVN's Members' Council approves or assigns the Representative at EVN's subsidiaries to exercise the rights of shareholders and controlling members to vote on decisions on the main business lines;

Decide the adjustment or change to the main business lines and lines; supervise business lines and trades related to the main business lines.

3. Responsibilities of the Vietnam Electricity Group in the management and administration of the Vietnam National Electricity Corporation

The responsibilities of the Electricity of Vietnam (EVN) in the management and administration of the National Electricity of Vietnam, according to Article 11 of the Charter issued together with Decree 26/2018/ND-CP, are as follows:

- Take responsibility before the state owner for ensuring the business objectives of the main lines of business and other objectives prescribed by the state owner.

- Manage the investment portfolio at EVN to ensure the investment conditions and structure of industries and trades according to the provisions of the Charter issued together with Decree 26/2018/ND-CP; monitor and supervise the investment portfolio of EVN in its subsidiaries; monitor and supervise the business lines of subsidiaries.

- Provide information and report on the contents as prescribed in the Charter promulgated together with Decree 26/2018/ND-CP.

- Set up service providers for member enterprises.

- Report to the competition authority and be supervised by the competition authority on economic concentration in the Vietnam National Electricity Group.

- Perform the obligations of the enterprise in accordance with the registered legal form and other obligations as prescribed by law.

- Develop and implement the performance evaluation system applicable to the Representative at member enterprises in accordance with the law.

- Develop and implement the management personnel policy at EVN and for the Representative at member enterprises. The management personnel policy must include:

+ Standards of management experience and qualifications;

+ Method and process of selection (including entrance exam), appointment of leadership and management positions under EVN's authority; select and nominate competent authorities to select and appoint EVN's leadership and management positions;

Select and nominate enterprises with EVN's capital to be elected to the Board of Directors; Council of members of that enterprise; selection (including entrance exam), appointment of representatives at other enterprises;

+ Management effectiveness assessment system applied to key leaders and managers at EVN, subsidiaries, and representatives at member enterprises;

+ Competitive salary and bonus principles and methods;

+ Sanctions for handling violations.

- Guide subsidiaries to form a unified operating system, accounting, and centralized funds.

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