Quyết định 3383/QD-BTC

DECISION

APPROVING REGULATION ON FINANCIAL MANAGEMENT OF VINACOMIN

THE MINISTER OF FINANCE

Pursuant to Law on enterprises dated November 29, 2005;

Pursuant to the Government's Decree No. 215/2013/NĐ-CP dated December 23, 2013 defining the functions, tasks, entitlements and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No. 212/2013/NĐ-CP dated December 19, 2013 on Charter of organization and operation of Vinacomin;

Pursuant to the Government's Decree No. 69/2014/NĐ-CP dated July 15, 2014 on state-owned economic corporations and state-owned general companies

Pursuant to the Government's Decree No. 71/2013/NĐ-CP dated July 11 on investment of state capital in enterprises and financial management of enterprises whose charter capital is wholly held by the State;

Pursuant to suggestion of the Prime Minister specified in the Official Dispatch No. 10615/VPCP-KTTH dated December 31, 2014 of Office of the Government on promulgating Regulation on financial management of Vinacomin;

At the request of the Ministry of Industry and Trade specified in Official Dispatch No. 6603/BCT-TC dated July 16, 2014 on approval for Regulation on finance of parent company – Vinacomin;

At the request of the Director of Department of Enterprise Finance,

DECIDES:

Article 1. Approving a Regulation on financial management of Vinacomin (enclosed).

Article 2. This Decision comes into force from the day on which it is signed and replaces Decision No. 1511/QD-BTC dated June 22, 2011 of the Ministry of Finance on approval for financial management of parent company – Vinacomin.

Article 3. The Director of Department of enterprise finance, Chiefs of the Ministry Offices, Heads of relevant units, Member Assembly of Vinacomin shall implement this Decision./.

REGULATION

ON FINANCIAL MANAGEMENT OF VINACOMIN
(Issued together with Decision No. 3383/QD-BTC dated December 31, 2014 of the Ministry of Finance)

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. This Regulation deals with financial management applicable to Vinacomin.

2. Vinacomin shall implement the Regulation on financial management of single-member limited liability companies whose charter capital is wholly held by the State and management of state capital invested in other enterprises as prescribed by the Government and other regulations of relevant law provisions and this Regulation.

Article 2. Interpretation of terms

1. For the purposes of this Regulation, the terms below shall be construed as follows:

a) “Vietnam National Coal and Mineral Industries Group” (hereinafter referred to as Vinacomin) is the parent company of the Vinacomin conglomerate whose charter capital is wholly held by the State, which is organized in the form of single-member limited liability company as prescribed in Decision No. 989/QD-TTg dated June 25, 2010 of the Prime Minister.

b) “Vinacomin conglomerate” means a group of companies without legal status, including:

- Vinacomin (level-I enterprise);

- Subsidiaries of Vinacomin (level-II enterprises);

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

- Associates of Vinacomin.

- The terms: affiliate of Vinacomin; subsidiary; associate; member enterprise; controlling share or stake; non-controlling share or stake; controlling right of Vinacomin; internal market of Vinacomin; plan for business collaboration of Vinacomin conglomerate, etc. shall be prescribed in Decree No. 212/2013/NĐ-CP dated December 19, 2013 of the Government on Charter of organization and operation of Vinacomin.

2. Other terms in this Regulation shall be explained in Civil Code, Law on enterprises and other legislative documents. The phrase “law” shall be construed as Vietnamese law.

Article 3. Owner

The State is the owner of Vinacomin. The Government shall manage and exercise rights and perform obligations of the State in the Vinacomin.

Chapter II

REGULATION ON FINANCIAL MANAGEMENT OF VINACOMIN

Section 1: MANAGEMENT AND USE OF CAPITAL

Article 4. Capital of Vinacomin

1. Capital of Vinacomin includes state-owned capital invested in Vinacomin, capital mobilized by Vinacomin and other lawful capital resources as prescribed.

2. Charter capital

a) Charter capital of Vinacomin shall be stated in the Charter of organization and operation of Vinacomin approved by the Prime Minister.

b) Charter capital of Vinacomin shall be increased during the business operation as prescribed; the procedures for increasing charter capital shall comply with regulations of the Government.

c) Charter capital shall be supplemented from Development investment funds and other supplement sources (if any). If charter capital is supplemented from Enterprise Arrangement and Development Fund, it shall comply with Circular No. 10/2013/TT-BTC dated January 18, 2013 of the Ministry of Finance providing guidance on management and use of Enterprise Arrangement and Development Fund in parent companies of economic groups and state-owned general companies, and parent companies in conglomerate.

Article 5. Rights and obligations of Vinacomin in using of capital and funds under management of Vinacomin

1. Vinacomin may use state capital invested in other capital resources and funds under management of Vinacomin to operate business of Vinacomin as prescribed in regulations of law and decisions of the owner; manage the use, preservation and development of capital resources; provide the owner and the Ministry of Finance with reports on losses, insolvency, incompletion of objectives and tasks assigned by the owner or other violations of Vinacomin.

2. The use of capital resources and funds for construction investment shall comply with law on investment and construction management.

Article 6. Capital mobilization

1. The capital mobilization of Vinacomin shall comply with Article 19 of Decree No. 71/2013/NĐ-CP Circular No. 220/2013/TT-BTC and other regulations of law.

2. The power to approve plans for capital mobilization;

a) Vinacomin may mobilize capital to serve the business provided that the ratio of liabilities to owner’s equity of Vinacomin ≤ 3, including loan guarantees of enterprises having stakes of Vinacomin. Where: Member Assembly approves plans for capital mobilization of which value is between 5% and 30% of charter capital of Vinacomin.

Member Assembly shall authorize General Director to decide loan agreements (capital mobilization) of which value is smaller than 5% of charter capital of Vinacomin.

b) If Vinacomin wishes to mobilize capital which exceeds the amount prescribed in Point a of this Clause for important projects, it must report to the owner for consideration and decision according to the solvency and effectiveness of those projects.

3. On-lending:

a) With regard to credit agreements which are concluded by Vinacomin to perform investment projects and transferred to subsidiaries, associates of Vinacomin under decisions of competent authorities, Vinacomin shall agree with lenders or loan guarantors to replace borrower of those agreements with companies receiving projects from Vinacomin. In the event that lenders or loan guarantors disagree to replace the borrower, Vinacomin shall conclude agreements on on-lending with companies receiving projects. After concluding the agreement on on-lending, Vinacomin shall report the Ministry of Industry and Trade and the Ministry of Finance as prescribed.

b) Costs of on-lending between Vinacomin and companies receiving projects shall not exceed costs of credit agreements concluded between Vinacomin and credit institutions.

c) Those on-lending prescribed in this Article shall not be included in the list of outside investments of Vinacomin.

d) Vinacomin must perform all obligations occurring from loan agreements (or loan guarantees), reporting, monitoring as prescribed related to loans that Vinacomin on-lends to subsidiaries or associates thereof.

dd) Vinacomin must regularly inspect, monitor and forecast the financial situation and solvency of companies receiving on-lending to promptly propose debt recovery solutions.

Article 7. Management of liabilities

1. Vinacomin shall keep record of liabilities, including interests.

2. Vinacomin must discharge liabilities on schedule. Vinacomin shall regularly consider, evaluate and analyze the solvency of Vinacomin, early discover difficulties in discharge of liabilities to prevent overdue liabilities, liabilities other than payments or without any creditor shall be recorded to the income of Vinacomin.

Article 8. Management of construction capital

1. Construction capital shall be managed from pre-investment, investment, to settlement upon the completion the building works to be put into operation in accordance with regulations of the State and internal regulations of Vinacomin.

2. Leaders of Vinacomin and affiliates thereof shall be responsible for investments in infrastructure incurring therein and relevant figures, documents, invoices, documentary evidence and financial statements, settlement of investment of completed construction works, upgraded construction works, Heads of affiliates shall supervise and assess their performance according to the regulations on supervision in force.

Article 9. Preservation of state capital

1. Vinacomin is responsible for preserving and developing owner’s equity invested in Vinacomin. In case of an increase or decrease in owner’s equity, enterprise must report the owner and finance authorities for monitoring.

Biannually and annually, Vinacomin shall assess the capital efficiency according to the capital preservation ratio as guided by the Ministry of Finance. In case Vinacomin suffers losses (failure to preserve equity), Member Assembly shall provide the owner and the Ministry of Finance with explanation for failure to preserve equity and solutions in writing.

The actions against losses of Vinacomin shall comply with the Law on Enterprise income tax in force.

2. Vinacomin shall preserve state capital via the following measures:

a) Comply regime for management and use of capital, assets, profit distribution, other regime for financial management and accounting as prescribed.

b) Purchase asset insurance as prescribed.

c) Promptly take actions against losses, bad debts and make provisions for the potential risks:

- Provisions for decline in value of inventories.

- Provisions for doubtful debts.

- Provisions for decline in value of long-term financial investment.

- Provisions for warranty of products, goods and construction works.

d) Other measures for preservation of owner's equity at enterprises as prescribed.

3. The provisions including provisions for decline in value of inventories; provisions for doubtful debts; provisions for decline in value of long-term financial investment; provisions for warranty of products, goods and construction works shall comply with Circular No. 228/2009/TT-BTC dated December 7, 2009 and Circular No. 89/2013/TT-BTC dated June 28, 2013 of the Ministry of Finance (hereinafter referred to as provisions of the Ministry of Finance). The outside investment shall be made provisions as prescribed in provisions for provisions for decline in value of long-term financial investment as prescribed in above Circulars.

Vinacomin must formulate regulations on management of materials, goods, debts to minimize risks, promote efficiency in business; determine responsibilities of every department and individual in monitoring and managing goods and debt collection.

Article 10. Outside capital investment of Vinacomin

1. Vinacomin shall make outside capital investment of Vinacomin as prescribed in Articles 29, 30, 31, 32, and 33 of Decree No. 71/2013/NĐ-CP Where:

a) Vinacomin may not use assets which Vinacomin hires, borrows, keeps for processing or receives as deposits to make outside investment.

b) Regarding outside investment of Vinacomin, when Vinacomin receives a number of stocks issued by joint-stock companies without payment (including the number of stocks received as mentioned in description of periodical financial statement as prescribed), Vinacomin shall monitor and record those stocks to the accounting records of Vinacomin, in particular:

- Regarding additional stocks paid by joint-stock companies (stock dividends), Vinacomin shall record increases in financial income and value of outside investments of Vinacomin in proportion to the value of paid dividends.

- Regarding stocks received without payment (non stock dividends), Vinacomin shall record increases in financial income and value of outside investments of Vinacomin according to the number of stocks received and par value of the stocks.

2. Vinacomin shall transfer outside investments as prescribed in Article 30 of Decree No. 71/2013/NĐ-CP and following the guidelines below:

a) Method for transferring outside investments of Vinacomin:

- The transfer of outside investments of Vinacomin at subsidiaries being multi-member limited liability companies shall be carried out in the form of public auction or direct agreement as prescribed in Clause 2 Article 8 of Circular No. 220/2013/TT-BTC

- The transfer of outside investments of Vinacomin at multi-member limited liability companies shall comply with Point c Clause 3 Article 8 of Circular No. 220/2013/TT-BTC

- The transfer of outside investments of Vinacomin at joint-stock companies shall comply with Point d, Clause 3, Article 8 of Circular No. 220/2013/TT-BTC The hiring of organizations in charge of auction and determination of selling prices and transfer of enterprise shall comply with Point c, Clause 1, Article 30 of Decree No. 71/2013/NĐ-CP and relevant legislative documents.

- Pursuant to Clause 2 Article 30 of Decree No. 71/2013/NĐ-CP the transfer of outside investments shall following the rules for market prices at the selling time. Where:

+ In case the expected transfer price closes to the market price (the price is appraised as prescribed in law on price appraisal and standards for price appraisal of Vietnam) but is smaller than the value included in the accounting records of Vinacomin, if Vinacomin has made provisions as prescribed, and the provision equals or is greater than the difference between expected selling price and the value included in the accounting records, Member Assembly shall decide the transfer to recover outside investments.

+ If case the provision is still lower than the difference between investments included in the accounting records and expected transfer value, Member Assembly shall report the owner to consider and decide before the transfer.

- Regarding transfer of government securities and bonds that Vinacomin invests to receive interests, the transfer shall be carried out as prescribed in regulations on issuance or the plan of the issuing organization. In case Vinacomin transfers bonds before schedule, the transfer price shall ensure the full recovery of investment values and profit.

Regarding transfer of bonds which is registered deposit, posting and transactions on stock exchange, Vinacomin shall carry out the transfer as prescribed in law on securities.

b) Accounting receipts of transfer of outward investments:

The receipts of transfer of outside investments of Vinacomin after deducting from value of investment capital included in the accounting records of Vinacomin, costs of transfer and tax liabilities as prescribed shall be recorded to the business outcome of Vinacomin.

Section 2: MANAGEMENT AND USE OF ASSETS OF VINACOMIN

Article 11. Assets of Vinacomin

1. Assets of Vinacomin include short-term assets (such as money, inventories, and other short-term assets) and long-terms assets (such as fixed assets, investment properties, long-term receivables, and other long-term assets).

2. Vinacomin must manage and use assets efficiently and not being waste, unnecessary or losses, poor and degraded or obsolete; keep records accurately, adequately and promptly; and carry out physical inventory count and compare periodically and at the request of the owner.

Article 12. Investment, construction and procurement of fixed assets

Vinacomin shall formulate plans for 5-year investment projects, including list of group-B investment projects and higher-level projects as prescribed in law on management of construction projects or lower-level projects as prescribed in the Charter of Vinacomin, and then submit them for the owner’s approval.

1. The power to decide projects for investment, construction and procurement of fixed assets of Vinacomin.

a) Member Assembly of Vinacomin decides projects for investment, construction and procurement of fixed assets with a value smaller than 30% of charter capital of Vinacomin provided that the levels of those projects are not higher than group-B projects as prescribed in law on management of construction projects. Member Assembly of Vinacomin authorizes General Director to decide projects for investment, construction and procurement of fixed assets within the power to decide of the Member Assembly. The projects of which levels beyond the competence of the Member Assembly shall be considered and decided by the enterprise’s owner.

b) Procedures for projects for investment, construction and procurement of fixed assets shall comply with law on construction projects.

2. Investment and procurement of vehicles serving the operation of Vinacomin:

Any manager uses use shuttles from home to work or on business trip, or use shuttles for general operation of Vinacomin as prescribed by the Prime Minister. The provision or replacement of shuttles shall decided by the Member Assembly of Vinacomin according the regulations of the Prime Minister.

3. The person deciding the investment, construction and procurement of fixed asset shall be responsible for inappropriate, obsolete and unused fixed assets.

Article 13. Fixed asset depreciation

The management, use and period of time for fixed asset depreciation shall comply with Article 21 of Decree No. 71/2013/NĐ-CP and in accordance with instructions of the Ministry of Finance.

Article 14. Renting, mortgaging, and pledging

1. Vinacomin may rent, mortgage, or pledge assets of Vinacomin according to the principle of efficiency, preservation and development of capital resources as prescribed.

2. Member Assembly of Vinacomin shall decide agreements on renting assets with value of below 30% of charter capital of Vinacomin.

3. The power to decide to mortgage or pledge Vinacomin’s assets to apply for loans as prescribed in Article 6 of this Regulation.

4. The renting, mortgaging or pledging of assets shall comply with regulations of Civil Code and relevant provisions.

Article 15. Disposing and selling assets

1. Vinacomin may dispose or sell the assets that are damaged, obsolete, degraded, unused or useless to recover capital according to the principles of public, transparency and capital preservation. Regarding disposing or selling assets acquiring from on-lending of the Government, borrowed capital guaranteed by the Government which is still outstanding, it is required an approval issued by the Sponsor (regarding on-lending of the Government) or the Borrower (regarding borrowed capital guaranteed by the Government with the consent of the Ministry of Finance before disposing or selling.

2. The power to dispose or sell fixed assets:

a) Member Assembly of Vinacomin decides plans for disposing or selling assets with remaining value of below 30% of charter capital of Vinacomin provided that they do not exceed standards of group-B projects. The plans for disposing or selling fixed assets with higher value than the level in charge by Member Assembly, the Member Assembly shall request the owner for decision.

b) Regarding plans for selling fixed assets that are impossible for full capital recovery, Vinacomin shall provide explanation for incapacity of capital recovery and report to the Ministry of Industry and Trade and the Ministry of Finance before selling the fixed assets.

c) Regarding fixed assets that are currently invested and fail to achieve economic efficiency as mentioned in the approved initial plans. If Vinacomin does not keep using the asset and the sale of the asset incapable of recovering capital leading the failure to repay debts under loan agreements, Member Assembly shall determine responsibility of every relevant person, then report to the owner for decision as prescribed.

3. Method for disposing and selling fixed assets: The fixed assets shall be sold in the form of auction by an auctioneer or Vinacomin in accordance with procedures prescribed in law on auction of assets. Regarding the value of a fixed asset to be sold is smaller than VND 100 million, the General Director of Vinacomin shall sell it in the form of auction or negotiation provided that its value is not lower than the market price.

Regarding the fixed asset to be sold is not exchanged on the market, Vinacomin shall hire a price appraiser to appraise its price according to the above methods.

4. The disposing and selling property on land shall comply with law on land.

5. Procedures for disposing and selling assets shall comply with Point b, Clause 3 Article 13 of Circular No. 220/2013/TT-BTC

Article 16. Management of inventories

1. Inventories means goods held by Vinacomin for sale, materials, tools or goods in transit, unfinished products of production process, finished products not being stored, finished products in stocks, goods on consignment.

2. Vinacomin may take actions against inventories which are degraded, obsolete, outstanding, and slow-moving to recover capital.

3. Regarding inventories subject to provisions, the provisions for decline in value of inventories shall be prescribed by the Ministry of Finance.

4. At the end of the accounting period, when the original price of an inventory recorded in the accounting records is higher than the net recoverable value, Vinacomin shall make provisions for decline in value of inventories as prescribed.

5. Vinacomin shall formulate regulations on Inventories means goods held by Vinacomin for sale, materials, tools or goods in transit, unfinished products of production process, finished products not being stored, finished products in stocks, goods on consignment. The Regulation shall specify the cooperation between managers of Vinacomin and responsibilities of every relevant department and individual in monitoring and managing assets of Vinacomin.

The General Director of Vinacomin shall direct Directors of affiliates to formulate and inspect quotas on materials and equipment for strategical provisions or manufacturing provision.

Article 17. Management of receivables

The management and settlement of receivables of Vinacomin shall comply with Clause 1 Article 25 of Decree No. 71/2013/NĐ-CP and Decree No. 206/2013/NĐ-CP dated December 9, 2013 of the Government on management of liabilities of enterprises whose charter capital is wholly held by the State.

Regarding every public receivables that are not recoverable, Vinacomin shall adjust accounting records in terms of those receivables upon the solutions given by the competent agencies.

Regarding receivables subject to provisions, the creating or reverting of provisions for doubtful debts shall comply with regulations on provisions prescribed by the Ministry of Finance.

Article 18. Physical inventory count

1. Vinacomin shall carry out regular or irregular physical inventory count to determine quantity of assets (fixed assets and long-term investment, current assets and short-term investment), and compare public receivables and payables in the following cases: closing accounting records to prepare annual financial statements; abiding decisions on division, acquisition and consolidation, ownership conversion; upon natural disasters or hostility; or any other reasons causing fluctuation in Vinacomin’s assets; or as prescribed by the State. Vinacomin shall release statistics on assets in surplus and shortage, bad debts, overdue debts with specific reasons, responsibility of relevant organizations or individuals and damages as prescribed.

2. Physical inventory count

a) Actions against impairment of assets after physical inventory count

Impairment of assets means assets which are lost, deficient, damaged, degraded, obsolete, and redundant as determined by regular or irregular physical inventory count. Vinacomin must determine the value of impairment, reasons, responsibility and solutions as follows:

- In case of subjective reason, the person causing impairment shall be liable for damages and legal actions as prescribed. Member Assembly shall decide the rates of damages as prescribed and be responsible for their decisions.

- In case of impairment of insured assets, these assets shall be settled according to the insurance policy.

- Value of impaired assets shall be compensated by damages of the organization or individual, or insurer, the deficiency shall be recorded to operating costs in the same accounting period.

- Regarding damage caused by natural disasters or force majeure events which the enterprise cannot self repair, Member Assembly shall make a solution for impairment, and then submit them for the Prime Minister’s consideration.

- Vinacomin is responsible for settling impairment of assets, if not, Member Assembly and General Director shall be held accountable to the owner similarly to the untruthful financial statements.

b) Actions against assets in surplus after physical inventory count

Assets in surplus mean difference between quantity of assets determined by physical inventory count and quantity of assets included in accounting records, the value of assets in surplus after physical inventory count shall be recorded to income of Vinacomin.

Article 19. Asset revaluation

1. Vinacomin shall revaluate assets in the following cases:

a) Comply with decisions of competent agencies.

b) Converting enterprise’s ownership: equitization or conversion of enterprise’s ownership in the other forms.

c) Use Vinacomin’s assets to make outside investments.

d) Revaluate assets in other cases as prescribed.

2. The asset revaluation shall comply with regulations of the State, positive or negative differences in value upon asset revaluation prescribed in Clause 1 of this Article shall comply with regulations on the case-by-case basis.

Article 20. Exchange differences

The exchange differences shall be settled as prescribed in Article 26 of Decree No. 71/2013/NĐ-CP and guiding Circulars of the Ministry of Finance.

Section 3: REVENUES, EXPENSES AND BUSINESS OUTCOME

Article 21. Revenues and other incomes

1. Revenues and other incomes of Vinacomin shall be determined in accordance with accounting standards and legislative documents in force.

2. Revenues of Vinacomin shall include revenues from business and revenues from financial activities, which:

a) Revenues from business mean total receivables incurring in the same accounting period from sale of goods and services of an enterprise.

b) Revenues from financial activities include: receipts from copyright, renting assets, interests of loans; interests of deposits, interests of deferred and installment payment; interests of finance lease; interest differences upon sale of foreign currencies, exchange differences of foreign currency, including exchange differences of debts payable in foreign currencies of which exchange rates at the time of making the financial statement are lower than exchange rates included in accounting records; receipts from capital transfer invested in other enterprises by Vinacomin; profits, dividends from outside investments (including post-tax profits after making provisions for the funds of single-member limited liability companies whose charter capital wholly held by Vinacomin and stock dividends at joint-stock companies). If distributed profits are deducted from enterprise income tax, Vinacomin is not liable for paying enterprise income tax

3. Other incomes include receipts from disposing and selling fixed assets, insurance payout, liabilities without creditors which are recorded as an increase in income, fines for contract violations, value of intellectual property accepted by stake receiving party, which are recorded to other incomes of Vinacomin and other receipts as prescribed.

4. Member Assembly, General Director, and Director of the enterprise shall be held accountable to the owner and take legal responsibility in terms of management and assurance of the lawfulness of the revenues and other incomes of Vinacomin.

5. Total revenues and other incomes of Vinacomin incurring are required sufficient documentary evidence as prescribed in law on accounting and adequately recorded in accounting records of Vinacomin in accordance with accounting policies for enterprises in force.

6. Revenues and other incomes shall be determined in VND, the receipts in foreign currencies shall be converted into VND as prescribed.

Article 22. Operating costs

Operating costs of Vinacomin mean the expenses which are related to the operation of a business in the same financial year. Operating costs include:

1. Operating costs:

a) Costs of materials, fuel, cost of allocation of working tools and equipment, semi-finished products, outside purchase services (determined according to actual consumption and actual cost), costs of allocation of working tools and equipment, costs of fixed asset repair, accrued expenses from fixed asset repair.

b) Depreciation costs of fixed assets.

c) Expenses incurred from salaries, wages paid to employees which are decided by Member Assembly or General Director according to instructions of the Ministry of Labor, War Invalids and Social Affairs.

d) Expenses incurred from social insurance - unemployment insurance, trade union fees, health insurance paid to employees by Vinacomin as prescribed.

dd) Actual expenses incurred from transaction, brokerage, entertainment, marketing, trade promotion, advertisement, or meetings that are determined according to rules prescribed in the Law on Enterprise income tax.

e) Other in-money expenses include:

- Taxes, fees and charges as prescribed by law that are included in operating costs of Vinacomin;

- Land rents;

- Severance pay for employees;

- Expenses incurred from refresher courses in terms of management and professional skills provided for employees;

- Expenses incurred from health;

- Expenses incurred from bonuses for innovations, labor productivity increase, material and cost savings. The bonus levels shall be decided by General Director of Vinacomin and Directors of affiliates according to the employees’ performance provided that they do not exceed the cost savings in the same year:

- Expenses paid to female employees;

- Expenses incurred from environment protection;

- Expenses incurred from shift meals for employees;

- Expenses incurred from activities of the Communist Party and Unions of Vinacomin (any expense incurred outside the funding for the Communist Party and Unions shall be covered as prescribed);

- Other in-money expenses.

g) Bad debts prescribed in Article 17; value of actual impairment of assets prescribed in Clause 2 Article 18 of this Regulation.

h) Value of provisions for decline in value of inventories, provisions for doubtful debts, provisions for decline in value of financial investments, provisions for warranty of products, goods, construction works, and accrued expense incurred from warranty of products.

i) Financial expenses, including: expenses incurred from outside investments of Vinacomin (including expenses covered by contributing parties and losses distributed from the contributing enterprise); value of stakes to be transferred, interests payable upon capital mobilization, exchange differences, expenses incurred from payment discount, renting assets; provision for decline in value of long-term investments.

2. Other expenses, including:

a) Expenses incurred from selling and disposing fixed assets, including their residual value.

b) Expenses incurred from recovery of debts eliminated from the accounting records;

c) Expenses incurred from fine collection;

d) Expenses incurred from fines for contract violations.

dd) Other expenses as prescribed.

3. The following expenses which are covered by other funds or not related to business shall not be included in operating costs:

a) Expenses incurred from construction procurement and installation of tangible or intangible fixed assets

b) Expenses incurred from loan interests which are included in investment and construction costs.

c) Other expenses not relating to the business operation of Vinacomin; and expenses without valid documentary evidence.

d) Expenses incurred from fines due to legal violations caused by individual not in the name of Vinacomin.

4. Member Assembly, General Director, and Director of the enterprise shall be held accountable to the owner and take legal responsibility in terms of management and assurance of the lawfulness of the revenues and other incomes of Vinacomin.

Article 23. Cost management

1. Costs of Vinacomin include operating costs, financial costs, and other costs that Vinacomin must manage closely and ensure reasonable and valid costs as prescribed in law on taxes.

2. Vinacomin must formulate, issue and implement economic and technical norms in conformity with economic-technical characteristics, business lines, and organizational model of Vinacomin. Those norms must be published in order for persons in charge and employees to implement and inspect. If it fails to implement those norms and the costs increase, it is required to analyze reasons and responsibility as prescribed by the State and competent agencies. In case of subjective reasons, the person causing the failure to implement above norms shall be liable for damages. The power to decide the amount of damages shall comply with Clause 2 Article 18 of this Regulation.

3. Vinacomin shall determine operating costs accurately and adequately and cover all expenses by their revenues and income and take responsibility for their business outcome.

4. Periodically, Vinacomin shall analyze production costs and prime costs of Vinacomin to discover the weak and poor management, the factors that increase the cost, the cost of products for timely solutions.

5. Every expense of Vinacomin is required appropriate and valid documentary evidence as prescribed. Any expense paid to improper entity or without documentary evidence or invalid documentary evidence shall not be recorded to expenses. Regarding above expenses, the person deciding these expenses shall be liable for reimbursement and take legal responsibility.

6. General Director of Vinacomin shall formulate and provide Member Assembly economic-technical norms; labor quotas; quotas on financial expenses and other expenses in conformity with business conditions and according to quotas and norms issued by the Corporation to issue detailed norms and quotas in order to reduce costs.

Article 24. Revenues and costs liable for enterprise income tax

Revenues and costs liable for enterprise income tax shall be determined according to Law on enterprise income tax.

Section 4: PROFITS AND DISTRIBUTING PROFITS

Article 25. Realizable profits

1. Realizable profits of Vinacomin means total profits earned from business operation and other activities.

2. Profits earned from business operation include:

a) Difference between revenues from sale of goods and provision of services and total prime costs of all consumed products, goods and services in the same accounting period.

b) Difference between revenues from financial activities and expenses incurred from financial activities in the same accounting period.

3. Profits earned from other activities mean difference between revenues from other activities and expenses incurred from other activities in the same accounting period.

Article 26. Distributing profits

The profits of Vinacomin after deducting from loss of previous year as prescribed in the Law on Enterprise income tax, funding for scientific and technological development, and enterprise income tax shall be distributed as follows:

1. Distributing interests to associates as specified in the contract (if any).

2. Cover the losses of previous years whose time limit for deducting from pre-tax profits expires.

3. The remaining profit after deducting accounts prescribed in Clauses 1 and 2 of this Article shall be distributed as prescribed in regulations of law in force.

Article 27. Receipts and expenditures on maritime safety.

1. Annual fees for maritime safety shall be collected from Cam Pha Port and Logistics Company and deducted from amount paid to government budget as prescribed, and then the remaining fees shall be recorded to revenues of the company. Cam Pha Port and Logistics Company shall separately keep records of annual fees for maritime safety for monitoring and annual declarations.

2. Expenditures on maritime safety shall comply with Circular No. 119/2010/TT-BTC dated August 11, 2010 of the Ministry of Finance providing guidance on receipts, management, and use of fees for maritime safety and financial regime in provision of public services in terms of maritime safety.

3. The difference between receipts and expenditures on maritime safety shall be made provisions for 02 welfare funds according to the principles prescribed in Decree No. 71/2013/NĐ-CP and Circular No. 220/2013/TT-BTC for officers and employees in charge of maritime safety. The remaining difference shall be contributed to Development Investment Fund of the company, this Fund shall be used for renovation and upgrade of lanes and Cam Pha port.

3. Annually, Cam Pha Port and Logistics Company must formulate plans for receipts and expenditures on maritime safety, plans for investing difference between receipts and expenditures in Investment Fund, and then submit reports for Vinacomin’s approval upon the consent of the Ministry of Finance and the Ministry of Industry and Trade.

4. Vinacomin shall take charge and cooperate with the Ministry of Finance (Department of enterprise finance) in inspection and declarations of expenditures on maritime safety of Vinacomin.

Article 28. Receipts and expenditures from Business Cooperation Contract with PT. Vietmindo Energitama – Indonesia.

1. Annual revenues from 10% of coal commercial products (or 10% of revenues in money) distributed from Business Cooperation Contract with PT. Vietmindo Energitama – Indonesia shall be considered revenues liable for enterprise income tax as prescribed.

2. Reasonable expenditures on coal yield distributed from the delivery to consume, such as: shipping costs from Uong Thuong screening plant to the final destination, expenses incurred from processing, handling, sale, etc. shall be recorded to expenses liable for taxes in the same accounting period.

3. Profits collected from Business Cooperation Contract shall equal (=) revenues earned from 10% of coal commercial products deducted from expenses related to coal yield distributed from the delivery to the consume.

The profits collected after deducting from corporate income tax as prescribed in Business Cooperation Contract shall be added to the Development Investment Fund.

4. The revenues, expenses and profits from above Business Cooperation Contract shall be kept records separately to determine the amount paid to government budget and make provisions for the Development Investment Fund.

5. Annually, Vinacomin shall take charge and cooperate with the Ministry of Finance (Department of enterprise finance) in inspection and declarations of expenditures on Business Cooperation Contract to determine the sources contributing to Development Investment Fund.

Article 29. Use of funds.

The using of Development Investment Fund, commendation funding, welfare fund, commendation funding for enterprise’s managing staff shall comply with Clauses 2, 3, 4, 5, 6 and 7Article 39 of Decree No. 71/2013/ND-CP and following the instructions below:

1. Development Investment Fund shall be used to add charter capital of Vinacomin. In case owner’s equity of Vinacomin is greater than its charter capital approved by the competent agency, the Ministry of Finance shall request the Prime Minister to transfer the Development Investment Fund to Enterprise Arrangement and Development Fund as prescribed in Clause 4 Article 38 of Decree No. 71/2013/NĐ-CP

- The transfer of Development Investment Fund of Vinacomin shall only be determined after Vinacomin used its fund to contribute charter capital of which value approved by the competent agency until December 31 of the financial year.

- Within 05 days from the date on which the decision on transferred is issued by the Prime Minister, Vinacomin must contribute the Enterprise Arrangement and Development Fund and record a decrease in Development Investment Fund in proportion to the above amount. If Vinacomin makes late payments or fails to make payments, the enterprise’s managing officers shall be evaluated poor performance and Vinacomin is subject to late payment interests, Vinacomin shall be liable for coercive measures as prescribed in Regulation on management and use of Enterprise Arrangement and Development Fund issued together with Decision No. 21/2012/QD-TTg dated May 10, 2012 of the Prime Minister.

2. Vinacomin shall formulate Regulations on use of commendation funding, welfare fund, commendation funding for enterprise’s managing officers as prescribed, ensure the democracy and transparency with the participation of Executive board of Trade Union of Vinacomin.

The commendation funding, welfare fund, commendation funding for enterprise’s managing officers shall be used according to the contents and entities prescribed in Clauses 3, 4 and 5 Article 39 of Decree No. 71/2013/NĐ-CP and Point b, Clause 1 Article 19 of Circular No. 220/2013/TT-BTC dated December 31, 2013.

Section 5: FINANCIAL PLANS, ACCOUNTING, AND AUDITING

Article 30. Financial plans

1. According to the strategy and planning for business development approved by the owner, Vinacomin shall formulate appropriate plans for business, long-term financial plans.

2. Annually, according to the long-term plans for business, capacity of Vinacomin and market demand, Vinacomin shall formulate the plan for business in the next year and then submit it to Member Assembly for decision.

3. Annually, Vinacomin shall formulate and send plans for receipts and expenditures on maritime safety and plans for investing difference between receipts and expenditures in Development Investment Fund to the Ministry of Finance.

4. According to the plan for business decided by Member Assembly, Vinacomin shall assess the business operation of the reporting year and make a financial plan for next year and then send it to the Ministry of Industry and Trade, the Ministry of Finance and the Ministry of Planning and Investment before July 31 of the same year.

5. The Ministry of Industry and Trade shall take charge and cooperate with the Ministry of Finance in checking financial plans made by Vinacomin and send official response to Vinacomin for adjustment. The financial plan after completing is the official plan on which the Ministry of Industry and Trade and the Ministry of Finance base to evaluate the management and administration of Vinacomin’s business.

Article 31. Accounting, statistics and auditing

1. Vinacomin shall implement policies on accounting and statistics as prescribed, keep records of initial documentary evidence, update accounting records, and reflect financial activities adequately, promptly, truthfully, accurately and objectively; and prepare annual financial audit as prescribed.

2. Annually, Vinacomin shall hire independent auditing companies to audit financial statements of Vinacomin (including financial statements and consolidated financial statements of Vinacomin) and Vinacomin’s affiliates.

Article 32. Financial statements and other reports

Vinacomin shall prepare financial statements and other reports as prescribed in Article 41 of Decree No. 71/2013/NĐ-CP Where:

1. At the end of the financial year, Vinacomin shall prepare and send financial statements, monitoring reports, and statistical reports to authorities in charge on schedule, and make financial disclosure as prescribed.

2. The annual financial statement of Vinacomin shall be made using the form prescribed in Decision No. 15/2006/QD-BTC dated March 20, 2006 of the Minister of Finance, modified or substituted documents (if any) and Form No. 02b-DN “Reports on liabilities for government budget in…[year]” of Appendix No. 01 issued together with Circular No. 220/2013/TT-BTC

3. In addition, Vinacomin must send report on monitoring, evaluating and ranking enterprises issued together with Circular No. 158/2013/TT-BTC dated November 13, 2013 of the Ministry of Finance to the owner and the Ministry of Finance.

4. Vinacomin must also prepare and send irregular reports at the request of the owner and competent agencies. Regarding domestic and foreign loans guaranteed by the Government, Vinacomin shall send reports as prescribed in regulations of law on management of debts guaranteed by the Government.

Chapter III

IMPLEMENTATION

Article 33. Implementation

1. Vinacomin shall implement this Regulation and Regulation on financial management of single-member limited liability companies whose charter capital is wholly held by the State and management of state capital invested in other enterprises as prescribed by the Government, and other regulations of relevant law provisions.

2. According to this Regulation and relevant law provisions, Member Assembly of Vinacomin shall formulate financial regulations on capital investment and financial management of subsidiaries whose charter capital is wholly held by Vinacomin, internal regulations to manage finance of subsidiaries and affiliates of Vinacomin.

3. The funds of Vinacomin shall be made, managed and used as prescribed in Circular No. 206/2012/TT-BTC dated November 26, 2012 of the Ministry of Finance.

4. Any other regulations applicable to Vinacomin is contrary to this Regulation shall be annulled./.