Thông tư 46/2021/TT-BTC

CIRCULAR

PROVIDING INSTRUCTIONS ABOUT SEVERAL REGULATIONS ON FINANCIAL DISPOSITION AND BUSINESS VALUATION DURING THE PROCESS OF TRANSFORMATION OF STATE ENTERPRISES AND SINGLE-MEMBER LIMITED LIABILITY COMPANIES WITH 100% OF THEIR CHARTER CAPITAL WHOLLY HELD BY STATE ENTERPRISES INTO JOINT-STOCK COMPANIES

Pursuant to the Law on Enterprises dated June 17, 2020;

Pursuant to the Law on Management and Use of State Capital Invested in Production and Business Activities of Enterprises dated November 26, 2014;

Pursuant to the Government's Decree No. 87/2017/ND-CP dated July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;  

Pursuant to the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017 on transformation of state enterprises and single-member limited liability companies with 100% of their charter capital wholly held by state enterprises into joint-stock companies;

Pursuant to the Government’s Decree No.140/2020/ND-CP dated November 30, 2020, amending and supplementing several articles of the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017, regarding transformation of state enterprises and single-member limited liability companies of which 100% of charter capital is held by state enterprises into joint-stock companies; the Government’s Decree No. 91/2015/ND-CP dated October 13, 2015, regarding investment of state capital in enterprises and management, use of capital and assets at enterprises and the Government's Decree No. 32/2018/ND-CP dated March 8, 2018, prescribing amendments and supplements to several Articles of the Decree No. 91/2015/ND-CP ;

Upon the request of the Director of the Corporate Finance Department,

The Minister of Finance hereby promulgates the Circular providing instructions about several regulations on financial disposition and business valuation during the process of transformation of state enterprises and single-member limited liability companies with 100% of their charter capital wholly held by state enterprises into joint-stock companies.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of application

1. Scope of application:

This Circular provides instructions about several regulations on financial disposition and business valuation during the process of transformation of state enterprises and single-member limited liability companies with 100% of their charter capital wholly held by state enterprises into joint-stock companies under the provisions of the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017, regarding the transformation of state enterprises and single-member limited liability companies of which 100% of charter capital is held by state enterprises into joint-stock companies (hereinafter referred to as 126/2017/ND-CP) and the Government’s Decree No. 140/2020/ND-CP dated November 30, 2020, prescribing amendments and supplements to several Articles of the Government’s Decree No. 126/2017/ND-CP ; the Government’s Decree No. 91/2015/ND-CP dated October 13, 2015, regarding investment of state capital in enterprises and management, use of capital and assets at enterprises and the Government's Decree No. 32/2018/ND-CP dated March 8, 2018, prescribing amendments and supplements to several Articles of the Decree No. 91/2015/ND-CP (hereinafter referred to as Decree No. 140/2020/ND-CP);

2. Subjects of application:

a) Enterprises specified in Clause 3, Article 2, Decree No. 126/2017/ND-CP ; Clause 1, Article 1, Decree No. 140/2020/ND-CP (hereinafter referred to as equitized enterprises), including:

- Enterprises whose charter capital is wholly held by the State (hereinafter refer to as tier-I enterprises), including single-member limited liability companies with their wholly state-owned charter capital which are parent companies of economic groups, parent companies of state corporations, parent companies in parent company-subsidiary groups; sovereign single-member limited liability companies with 100% of their charter capital wholly held by the State.  

- Single-member limited liability companies with 100% of their charter capital wholly held by tier-I enterprises (hereinafter referred to as tier-II enterprises)

b) Owner’s representative agencies, relevant entities or organizations prescribed in clause 1 and 4 of Article 2 of the Decree No. 126/2017/ND-CP .  

Article 2. Several principles of financial disposition during the equitization process

1. Based on the list of enterprises to be equitized as subject to approval by the competent authority, each equitized enterprise must proactively handle financial problems according to current regulations applied to enterprises whose charter capital is wholly own by the State. Upon receiving the decision on equitization from the competent authority, the enterprise shall have to take charge of inventorying and classifying assets, capital and funds the enterprise is managing, using, examining and verifying debts according to the provisions of Decree No. 126/2017/ND-CP , Decree No. 140/2020/ND-CP and instructions in this Circular as a basis for determining the actual value of the enterprise for equitization purposes.

With respect to a land lot that the enterprise is not allowed to keep and continue to use according to the plan to rearrange and dispose of real property, but in fact the enterprise is still monitoring and using, and which has not yet obtained a withdrawal plan from the competent authority, the equitized enterprise must give their report and explanation as a basis for transfer of that land lot to the competent authority when being officially transformed into a joint stock company.

2. An equitized enterprise is not allowed to adjust data contained in their accounting books and financial statements at the date of business valuation according to the business valuation results decided and announced by an owner's representative agency.

3. After having been financially treated and re-valued according to laws, if the actual value of the enterprise is lower than payables, further treatment actions shall be taken according to the provisions of Point b, Clause 2, Article 1, Decree No. 140/2020/ND-CP .

4. At the time the equitized enterprise is granted the certificate of initial registration of joint-stock enterprise, they shall prepare financial statements and handle financial issues as prescribed in Article 21 in the Decree No. 126/2017/ND-CP and Clause 5, Article 3 of Decree No. 140/2020/ND-CP as well as regulations of this Circular.

In case where the enterprise has received the competent authority’s decision on  reduction in the state capital at the time the equitized enterprise is granted an enterprise registration certificate in proportion to the loss incurred as prescribed in Clause 7 of Article 21 in Decree No. 126/2017/ND-CP , the joint-stock company shall not be allowed to carry forward this loss during the process of determination of taxable income of the following years in accordance with laws on corporate income tax and other relevant instructional documents.

5. The process of financial disposition and business valuation of an equitized enterprise must comply with market principles and ensure public disclosure, transparency, consistency and strict compliance with the State’s regulations. If any organization and individual involved in the process of financial disposition and business valuation fails to strictly comply with the prescribed regime to the extent of causing any damage or loss of state property, they shall bear administrative liability, pay material compensation or are criminally prosecuted in accordance with law.

6. In case where business value and state capital of an equitized enterprise are reduced due to the lack or omission of assets and liabilities occurring through the stocktaking or inventorying of assets, reconciliation and verification of debts, financial treatment actions prescribed in Clause 4, Article 10 of Decree No. 126/2017/ND-CP and Clause 2, Article 7 of this Circular shall be applied.

In particular, with respect to the amounts that must be paid to the state budget right after they are understated or omitted from the time of official transformation into a joint-stock company, the joint-stock company shall be responsible for declaring and remitting them to the state budget in accordance with regulations. Imposing administrative penalties for tax or invoice-related violations must conform to laws on tax administration and other relevant legislation.

7. The owner's representative agency shall be responsible for settling and handling financial issues arising during the equitization process according to the provisions of Decree No. 126/2017/ND-CP , Decree No. 140/2020/ND- CP and regulations laid down in this Circular, and those arising in other situations (if any) occurring in relation to the equitization process after the equitized enterprise is officially transformed into a joint stock company.

8. Business valuation consulting organizations must perform business valuation according to the asset-based method specified in Section 2, Chapter III of Decree No. 126/2017/ND-CP ; Clause 13, Clause 14, Clause 15 , Clause 16, Clause 17, Article 1; and Clause 6, Clause 7, Article 3 in the Decree No. 140/2020/ND-CP and specific instructions given in this Circular; may also choose at least one other business valuation method in accordance with the law on pricing and appraisal to seek a decision considered by the owner's representative agency.

9. The equitized enterprise must provide investors with interpretations and information about the equitization plan and the prospectus of information on assets currently available at the equitized enterprise (e.g. infrastructure assets; other assets under the enterprise’s custody or in use; assets that are investment projects in progress) that are acquired by using public investment capital and identified as public property.

In case where these assets are in the custody or in use by the enterprise authorized by the State and are deemed as the state capital share at the enterprise in accordance with law, but the final settlement of financial obligations arising in investment projects for the formation of these assets has not yet been approved at the time of business valuation, when approving the equitization plan, the owner's representative agency must integrate actions to be taken to dispose of them into the equitization plan during the process of generation of the final accounts approved by the competent authority (applicable in case where the value of these assets increases or decreases in comparison to the value thereof determined at the time they are assigned by the state to the enterprise), ensuring relevance to the form of corporate equitization according to the approved plan and, concurrently, publicizing information about these financial treatment actions in the course of selling their initially offered shares at auction to investors in order for investors and transformed enterprises to be informed of and implement the approved equitization plan.

In case where these assets are being disposed of according to the instructional documents of competent authorities before the effective date of this Circular, these documents shall continue to prevail.

Chapter II

DISPOSING OF FINANCIAL ASSETS IN THE PROCESS OF EQUITIZING AND VALUING ENTERPRISES BY USING THE ASSET-BASED METHOD

Section 1. ASSET STOCKTAKING, INVENTORYING AND DEBT RECONCILIATION

Article 3. Asset stocktaking, inventorying and classification

1. An equitized enterprise shall be responsible for stocktaking, inventorying and classifying assets, capital and funds in their custody or in use at the time of business valuation; cooperating with the consulting organization in stocktaking, inventorying and classifying assets.

2. At the time of business valuation, the enterprise must make a stocktaking chart describing the correct quantity, current condition, quality and value of the existing assets that the enterprise is keeping and using; must count cash, reconcile bank deposit balance; must determine asset and cash excess or deficit compared to data on asset or cash recorded in the accounting books, clearly analyze the causes of such excess, deficit and the responsibilities of involved persons, and identify compensation levels in accordance with law.

3. Assets determined after the stocktaking or inventorying process shall be classified into the following groups:

a) Operating assets.

b) Unused assets, stagnant assets, assets in slow circulation and assets awaiting liquidation.

c) Assets formed from the reward and welfare fund (if any).

d) Rented, borrowed assets, supplies and goods held in the authorized custody, kept under processing contracts, held as a fiduciary, held on consignment, assets received as capital contribution to a joint venture, affiliation and other assets not belonging to the enterprise

dd) Land-attached assets that have not been disposed of according to the plan for rearrangement and disposition of premises and land under the approval decision of a competent authority.

e) Assets of profitable non-business (land and premises of profitable non-business units according to the law on reorganization and disposition of real property under state ownership), and assets serving non-business activities.

g) Assets currently available at the equitized enterprise (e.g. infrastructure assets; other assets in the custody or in use by the enterprise; assets that are investment projects in progress) that are acquired by using public investment capital and identified as public property. This type of assets is clearly described as public property held in trust for use by the enterprise and deemed as the share of state capital at the enterprise; public property held in trust for use by the enterprise and not deemed as the share of state capital at the enterprise; public property that is managed and disposed of in trust by other transferee entities according to the provisions of law on management and use of public property after the enterprise does not continue their custody or use. The plan for disposition of these assets shall be subject to the decision of the competent state authority before commencement of business valuation.

h) Assets awaiting the disposition decision of the competent authority.

i) Financial contributions made by the value of land tenure, money/other assets (giving a clear interpretation of the plan for disposition of assets used as capital contribution to a joint venture upon termination of the joint venture with a foreign investors ).

k) Investments in joint-stock companies at the time of business valuation that the equitized enterprise owns (including the volume of shares received, currently in their custody or under their supervision in the interpretation of their financial statement) and the volume of dividend-paying shares that will be received after the time of business valuation according to the Resolution of the General Meeting of Shareholders or the notice of the right to receive dividends till the time of business valuation.

l) Other assets (if any).

Article 4. Reconciliation, verification and classification of debts

The equitized enterprise shall reconcile, confirm and classify debts and liabilities according to the provisions of Article 15, Article 16 of Decree No. 126/2017/ND-CP ; Clause 9, Clause 10, Article 1 of Decree No. 140/2020/ND-CP , and make a detailed list of debts of each debtor and creditor at the time of business valuation, and follow specific instructions hereunder:

1. Receivables:

a) Reconcile, verify the analysis of and determine the responsibilities of related parties for the receivables of specific debtors, including:

- Reconcile and verify all receivables that are due, undue and overdue; for commercial banks, they must reconcile and verify off-balance-sheet receivables.

- Make a clear analysis indicating bad debts are receivables that are past due at least 06 months (based on the initial principal repayment term stated in an economic contract, indebtedness covenant or other debt commitments without taking into account the grace period for debt repayment between the parties), and indicating the fact that, though the enterprise has sent a reconciliation report to verify debt or push the debt payment but has not yet recovered the debt, and the receivable is not due yet, the enterprise collects evidence that the economic organization as a debtor has gone bankrupt, has initiated bankruptcy proceedings, has absconded from their business location; the debtor is being prosecuted, detained, tried by law enforcement agencies, or is executing court judgement or is suffering from a fatal illness (certified by a hospital), or is dead, or the debt must be repaid upon the enterprise's request for execution of the court judgment but cannot be repaid because the debtor has fled from his or her residence; the debt is subject to the enterprise’s claim filed in the court but the case involving such debt is dismissed. Clearly identify responsibilities of organizations and individuals related to the debt which the party having obligation to repay cannot be identified.

With respect to bad debts that are unrecoverable, there must be sufficient documents proving that they are irrecoverable according to the provisions of the Circular No. 48/2019/TT-BTC dated August 8, 2019 of the Ministry of Finance, providing instructions about creation and treatment of provisions for devaluation of inventories, loss of investments, bad debts and warranties for products, goods, services or construction works at the enterprise and other documents stating amendment, supplementation or replacement (if any).

b) Review contracts to determine prepayments to suppliers of goods and services, but already record all prepayments as business expenses, such as house rents, land rents, purchase amounts, amounts paid for long-term insurance policies, salary, wages, etc.

c) Till the time of valuation of the equitized enterprise, if there are still some receivables proved by full evidencing documents and records, but have not yet been reconciled and verified, the equitized enterprise shall be responsible for taking financial disposition actions prescribed at point b, clause 9, Article 1 of Decree No. 140/2020/ND-CP .

2. Liabilities to organizations and individuals (including due, undue and overdue debts) at the time of business valuation:

a) Based on contracts, indebtedness notices, debt reconciliation statements, make a list of loans extended by specific creditors; determine tax debts and other payables to the state budget; make the detailed analysis of loans under contracts (e.g. domestic loans, foreign loans), guaranteed loans, loans due to bond issuance; payables that are due, due and overdue; outstanding principal, interest, and payables that do not need to be repaid.

b) Payables that do not need to be repaid are debts that creditors fall into the following cases when the equitized enterprise carries out the reconciliation and verification of debts:

- Creditors are businesses that have been dissolved or gone bankrupt but any agency or individual that inherits the rights to collect their debts is not identified according to the dissolution or bankruptcy plan decided by a competent authority.

- Creditors are individuals that die without intestate by operation of laws on inheritance.

- The enterprise owes debts to other creditors that are overdue but these creditors do not come to confirm these debts. In this case, the equitized enterprise must send a written notice to these creditors both directly and on mass media at least 10 working days before the time of business valuation.

Article 5. Reconciliation and verification of financial investments; distributed amounts; received capital contributions

1. An equitized enterprise shall make a detailed list to reconcile and verify their distributed financial investments and earnings, including investments existing as capital contributions to joint ventures or affiliations with enterprises and organizations; contributions of share capital, contributions of capital to the establishment of limited liability companies, capital contribution made through business cooperation contracts without forming new legal entities, investments in the establishment of single-member limited liability companies owned by the equitized enterprise; profits that are distributed from capital contribution investment activities (upon receipt of the resolutions of the General Meetings of Shareholders, the Members' Councils of the organizations receiving capital contributions), but have not been actually received at the time of business valuation.

2. Determine the quantity and value of securities (e.g. stocks, bonds, etc.) purchased; the number of shares distributed to the equitized enterprise, including the number of shares owned by the equitized enterprise (the number of shares received, in their custody and under their supervision as stated in the interpretation of the financial statements) and the number of dividend-paying shares that the equitized enterprise will receive after the time of business valuation according to the Resolution of the General Meeting of Shareholders till the time of business valuation.

3. For capital contributions to joint ventures and affiliations, an equitized enterprise shall, based on joint venture or affiliation contracts, make a detailed list of capital contributions that specific partners have made and notify capital contributors in order to work with the joint-stock company to inherit preexisting contracts or terminate these contracts.

Article 6. Inventorying, reconciliation, verification and classification of assets and liabilities during the process of state-owned commercial banks

The inventorying, evaluation and classification of assets that are capital in cash, financial leased assets and debts of state-owned commercial banks shall conform to the provisions of Articles 3, 4 and 5 of this Circular and the following specific instructions:

1. Inventorying and reconciling customers' deposits and security instruments (e.g. certificates of deposit, bills, promissory notes, bonds) as follows:

a) Checking entries in accounting books in detail.

b) Carrying out reconciliation to verify deposit balances, security instruments of customers that are legal entities.

c) Savings, personal deposits, security instruments must be reconciled with those recorded in accounting books or records kept at banks and compared with those of customers. If such reconciliation does not involve all customers, the provisions of Clause 10, Article 1 in Decree No. 140/2020/ND-CP shall apply.

2. Reconciliation of assets that are outstanding credit balances (even including off-balance sheet ones) shall be subject to the following regulations:

a) Based on credit profiles of specific customers at a commercial bank, making a list of customers with outstanding credit balance and credit balance of specific customers under corresponding credit contracts.

b) Comparing data determined according to credit profiles with data included in the commercial bank's accounting books; comparing credit balances with specific customers to get customers' confirmation of their credit balances.

For individual customers, if it is not possible to check with customers, the commercial bank must compare them with data included in accounting books and records kept at the bank.

c) In case where there is a discrepancy between data between credit profiles and accounting books and customers' confirmation, the commercial bank must clarify the reasons for such discrepancy and identify the responsibilities of involved organizations and individuals to impose sanctions according to current regulations of the State.

3. Classifying stagnant outstanding receivables against which risk provisions may be used in accordance with regulations of the State Bank of Vietnam.

4. For assets acquired under finance leases, it is a must to reconcile them with those of specific customers, and clearly identify outstanding debts of specific assets acquired under finance leases.

Section 2. FINANCIAL DISPOSITION DURING THE EQUITIZATION PROCESS

Article 7. Financial disposition occurring at the time of business valuation (before business valuation consulting)

1. Based on the results of inventorying and audit of their financial statement and settlement report on amounts payable to the state budget, the equitized enterprise shall have to cooperate with relevant authorities in proactively addressing financial issues before valuation of the equitized enterprise as prescribed in Articles 14, 15, 16, 17, 18, 19 and 20 of Decree No. 126/2017/ND-CP , Clause 8 , Clauses 9 and 10, Article 1 of Decree No. 140/2020/ND-CP and specific instructions given in Clauses 2, 3, 4, 5, 6 and 7 of this Article.

2. Based on the results of inventorying and classification of assets, for any asset excess or deficit, the enterprise must analyze and clarify the causes and take the following actions:

a) In case of asset deficits, they must identify the responsibilities of violating organizations and individuals to decide material compensation according to current regulations; the value of the missing assets after deducting the compensations paid by these organizations or individuals (if any), the enterprise shall record them in the business results during the process of preparation of the financial statement at the time of business valuation.

b) In case of asset excess, they must identify the responsibilities of violating organizations and individuals to take any disposition action according to current regulations; the value of the excess assets that are not returned shall be recorded in the business results of the enterprise during the process of business valuation.

3. Receivables (except for credit outstanding balances of state-owned commercial banks conducting equitization) shall be financially disposed of in accordance with the provisions of Article 15 of Decree No. 1 Decree No. 140/2020/ND-CP and Circular No. 48/2019/TT-BTC dated August 8, 2019 of the Ministry of Finance, providing instructions about the setting aside and treatment of provisions for devaluation of inventories, loss of investments, bad debts and warranties for products, goods, services, construction works at the enterprise and other documents stating amendment, supplementation or replacement (if any).

4. The enterprise’s payables shall be subject to financial disposition under Article 16 of the Decree No. 126/2017/ND-CP ; Clause 10, Article 1 of Decree No. 140/2020/ND-CP .

5. For accrued interest arising from the principal debt that has been included in the enterprise value that the enterprise inherits, continues to keep track of as off-balance sheet accounts after being transformed into a joint stock company, if such accrued interest is collected, after deducting expenses related to collection and payment (if any), the joint stock company shall transfer the residual amount of accrued interest to the state budget.

6. Domestic consulting organizations providing business valuation consulting services must fully meet the criteria specified in Clause 5, Article 12 of Decree No. 126/2017/ND-CP and point c, Clause 6, Article 1 Decree No. 140/2020/ND-CP. In case where the equitized enterprise already hires a business valuation consultant and is carrying out business valuation according to the provisions of Decree No. 126/2017/ND-CP , they shall not need to re-select a business valuation consultant.

7. For exchange rate spread occurring due to revaluation of monetary items of foreign currency origin at the time of business valuation, the equitized enterprise shall conduct the revaluation according to regulations and carry forward such spread to their business results.

Article 8. Financial disposition at the time of official transformation into a joint-stock company

1. Each equitized enterprise shall continue to comply with regulations on financial management applied to enterprises whose 100% of charter capital is held by the State for the period from the time of business valuation to the time when they are officially transformed into a joint stock company.

If any enterprise has already been valued and obtained the competent authority’s approval of the equitization plan according to the Decree No. 126/2017/ND-CP , but is not yet officially converted into a joint stock company, they can record exchange rate differences due to revaluation at the time of business valuation (if any) in the business results within the operating period before being officially transferred to a joint stock company in order to complete financial obligations at the time of being officially converted into a joint stock company.

In case where an equitized enterprise is equitized and simultaneously restructures their debts in accordance with the Government's Resolution, financial disposition and accounting of debt settlement results must be subject to the Government’s Resolution and other instructional documents.

2. Excess or deficient asset value compared with the value of the equitized enterprise decided and announced by the owner's representative agency shall be handled according to the provisions of Clause 4, Article 10 of Decree No. 126/2017/ND- CP.

3. The equitized enterprise shall treat receivables and payables determined at the time they are granted the certificate of initial registration of the joint-stock company in accordance with Article 15 and 16 in the Decree No. 126/2017/ND-CP ; Clause 9 and 10, Article 1 in the Decree No. 140/2020/ND-CP .

4. The equitized enterprise shall manage and use reward and welfare fund arising from the time of business valuation to the time when the equitized enterprise is granted the certificate of initial registration of the joint-stock company in accordance with regulations. The newly-established joint stock company can inherit and continue to use the residual balance (if any).

5. For any exchange rate difference arising due to revaluation of items of foreign currency origin at the time of being official transformed into a joint stock company, the equitized enterprise shall revalue it by comparing it with the exchange rate quoted at the time of cut-off of data for making the latest annual or semi-annual financial statement, and shall record the carry-forward in their business results and transfer the residual amount of the exchange rate difference at this time to the joint stock company (after transformation from a state enterprise) for their oversight and disposition according to the provisions of point b, clause 2, Article 21 in the Decree No. 126/2017/ND-CP , including treatment of the interest on exchange rate difference under supervision in undistributed after-tax profits.

6. In case where stock dividends arises after the time of business valuation and by or before the time of official transformation into a joint stock company (but these dividends have not yet been entered in the business value and has not yet been taken into account in the plan for determination of the starting price), based on the dividend distribution Resolution and the notice of the right to claim dividends, the equitized enterprise shall value the shares received in order to determine the value of additional state capital at the time of official transformation into a joint stock company by multiplying the price determined at the time of official transformation into a joint stock company by (x) the number of shares received.

In case where, at the time of official transformation to a joint stock company, the aforesaid dividend distribution Resolution is not available, the equitized enterprise shall direct the representative for their ownership interest to request the capital contribution transferee to issue a profit distribution Resolution (in the case of having controlling shares at the transferee) or request the joint stock company to give clear explanation that, when the recipient has a dividend distribution resolution later in the future, the amount of these stock dividends will be wholly in the State ownership (in case they do not hold controlling shares at the transferee; or their representative has made a request, but the transferee has not yet had a dividend distribution Resolution). When the joint-stock company assigns these shares, they are obliged to pay 100% of the value obtained after deducting taxes (if any) to the state budget (if any) and expenses incurred from such assignment of shares in accordance with law.

7. At the time of officially being transformed into a joint stock company, the equitized enterprise shall use risk provisions to deal with the loss of intercorporate financial investments qualified for such provisions (if any) and keep a reverse record of the residual provisions in the equitized enterprise’s business results. The joint stock company may make new risk provisions after being officially put into operation.

8. After being granted the certificate of initial registration of the joint-stock company, the joint-stock company shall be responsible for fulfilling the financial obligations and completing regulatory procedures to be allocated land, rent land or granted a certificate of the right to use land, own the house and other land-attached property in accordance with the provisions of the current land law and legislation on tax administration.

Time limits for a tax authority’s completion of finalization of taxes and other payables to the state budget of equitized enterprises after being granted the certificate of initial registration of the joint-stock company shall be subject to the Law on Tax Administration.

Article 9. Transfer between equitized enterprises and joint-stock companies

1. Documentation requirements used as a basis for an enterprise’s preparation of the dossier and transfer to the joint-stock company comprise audited financial statement at the time of initial registration of the joint-stock company; final accounts of taxes and amounts payable to the state budget to be registered with tax authorities, settlement of the proceeds from equitization; final accounts of equitization costs and expenses; final accounts of financial support for redundant employees (if any); the decision on announcement of the actual value of the state capital at the time the equitized enterprise is officially transformed into a joint stock company, which is prepared by the owner's representative agency, and the financial statement that is remade at the time of official transformation into the joint stock company after obtaining the approval decision from the owner's representative agency.

2. After the equitized enterprise completes the remade financial statement as prescribed in Clause 5, Article 21 of Decree No. 126/2017/ND-CP , the Steering Committee and the Assisting Group shall cooperate in speeding up and monitoring the transfer between the equitized enterprise and the joint stock company. The transfer must be proved by the minutes, enclosing all dossiers related to the equitization process in front of the owner’s representative agency. The transfer minutes must clarify rights and obligations of the involved parties; post-transfer actions (if any), specifically including:

a) Dossier of the transfer from an equitized enterprise into a joint-stock company, including:

- Dossier of business valuation and decision to announce business value, which shows the value of the share of state capital at the enterprise stated in accounting books and after re-evaluation.

- The financial statement that is remade at the time of official transformation into the joint stock company after receipt of the approval decision from the owner's representative agency;

- Final accounts of equitization costs and expenses and amounts payables to the Corporate Reorganization and Development Support Fund; final accounts of financial support for redundant employees.

- Decision on approval of value of the state capital share at the time of transformation into the joint stock company, which is made by the owner’s representative agency.

- Minutes of handover of assets and capital made at the time of issuance of the Certificate of initial registration of the joint stock company (enclosing a detailed chart of debts handed over to the joint-stock company to inherit obligations to such debts and other financial problems that need to be further addressed - if any), including documents on land and premises that the equitized enterprise is monitoring and using, but cannot be retained according to the approved plan for reorganization and use of land and premises and not yet recovered by the competent authority (if any).

- Reports on personnel; land use plans of the enterprise approved by the owner’s representative agency or of the enterprise that is managing and using such land.

- Tax finalization statement of the equitized enterprise.

b) Participants in the transfer process:

- The owner’s representative agency.

- Representative of the economic group, corporation, parent company (in case of equitization of a member enterprise of an economic group, corporation, subsidiary), the General Director/Director, the Chief Accountant and representative of the trade union of the equitized enterprise – the transferor’s representative.

- Chairperson of the Governing Board, General Director/Director, Chief Accountant and representative of the trade union of the joint-stock company – the transferee’s representative.

In case where the legal representative or the chief accountant is absent for objective reasons (retires according to the retirement plan, dies or transfers to other job position), the owner’s representative agency/the equitized enterprise shall be responsible for appointing/designating a legal representative to carry out the transfer.

- The representative of the State Capital Investment Corporation. This representative is required for equitized enterprises subject to the transfer of the right to represent the owner of state capital to the State Capital Investment Corporation.

c) The transfer minutes must bear all signatures of participants in the transfer process and must clarify:

- The current state of assets, capital, land, and labor available at the time of issuance of the Certificate of initial registration of the joint-stock company.

- Rights and obligations that the joint stock company continues to inherit.

- Issues that the joint stock company is responsible for continuing to address.

d) The owner’s representative agency shall be responsible for sending the transfer minutes to a tax authority to keep track of and push the payment of amount to the state budget.

dd) In case where the equitized enterprise is comprised of a parent company and single-member limited liability companies whose charter capital is wholly held by the parent company, the transfer for the purpose of equitization of single-member limited liability companies whose charter capital is wholly held by a parent company shall occur in the same manner as the transfer for the purpose of equitization of the parent company.

e) After transformation into a new joint-stock company obtaining approval of the official land prices from a competent authority, the owner's representative agency can direct the enterprise to remit the entire difference in the estimated value of the land tenure charged in the enterprise value and the value of land tenure revalued by the competent authority (if any) into the state budget.

Section 3. VALUING ENTERPRISES BY USING THE ASSET-BASED METHOD

Article 10. Determination of the actual value of the enterprise’s assets

The business valuation by the asset-based method shall conform to the provisions of Section 2, Chapter III of Decree No. 126/2017/ND-CP , Clause 13, Clause 14, Clause 15, Clause 16, Clause 17 of Article 1, and Clauses 6 and 7 of Article 3 of Decree No. 140/2020/ND-CP and the following specific instructions:

1. The actual value of each asset of the enterprise is determined in Vietnamese dong according to the inventory of specific assets tracked in the enterprise's accounting books.

2. Valuation of physical assets:

a) Only assets that the joint-stock company continues to use should be revalued.

b) The actual value of a physical asset is defined as (=) Original cost calculated at the market price determined at the time of business valuation multiplied by (x) Remaining quality of the physical asset determined at the time of business valuation.

Where:

- Market price is:

+ Price of a new asset of the same kind currently being purchased or sold on the market, including transportation and installation costs (if any). If it is a particular asset that is not available on the market, the purchase price of the asset is calculated according to the purchase price of an equivalent brand-new asset manufactured by the same country, having the same capacity or similar functions. In case where there is no equivalent asset, the price of the asset recorded in the accounting books (including assets acquired through investments and purchases in foreign currency).

+ Regarding assets that are houses and architectural objects: The market price is the capital construction unit price and unit investment cost regulated by the competent authority at the time nearest to the time of business valuation. In case where there is none of regulations, each of these assets is calculated according to the book value, taking into account capital construction price slippage factors.

If houses and architectural objects have just completely built within three (03) years before the time of business valuation, their value recorded in the construction cost settlement report works already approved by the competent authority shall be adopted. In particular cases where any house or architectural object is put to use without obtaining the report on settlement of costs of construction thereof, its price specified in the accounting books may be temporarily accepted for valuation of such asset.

- The remaining quality of an asset is expressed as its percent as against the quality of the asset of the same kind which is newly purchased or constructed in accordance with the State's regulations on safety conditions for use and operation of assets; quality assurance of manufactured products; environmental hygiene under the guidance of the Ministries in charge of the economic and technical sectors. If there is none of such regulations, the quality of an asset is determined as follows:

+ The quality of an asset, like machinery and equipment; means of transport, transmission equipment; controlling equipment or instrument and other fixed asset, are re-assessed in comparison with the actual quality provided that such quality is not less than 20% of the quality of the brand-new asset of the same kind;

+ The quality of a house or architectural object shall not be less than 20% of the quality of the newly-constructed asset of the same kind.

c) As for value of fixed assets that have been fully depreciated to recover capital; value of working tools and management tools that have all been distributed to business expenses, if the joint stock company continues to use these assets, they must redetermine the value thereof to include such value in the business value according to the rules under which their value is not less than 20% of the value of the brand-new ones.

d) For equitized enterprises having physical assets, like plantation forests or orchards, when determining the value of equitized enterprises, the value of these plantation forests and orchards shall be determined according to the provisions of the Joint Circular No. 17/2015/TTLT-BNNPTNT-BTC dated April 22, 2015 of the Ministry of Agriculture and Rural Development and the Ministry of Finance, the Circular No. 32/2018/TT-BNNPTNT dated November 16, 2018 of the Ministry of Agriculture and Rural Development, prescribing methods of valuation of forests; forest price brackets and other amending, supplementing and substitute documents (if any).

dd) Assets formed according to BOT contracts, infrastructure facilities of industrial parks are valued under the provisions of clause 6 and 7 of Article 27 in the Decree No. 126/2017/ND-CP .

e) Value of the assets currently available at the equitized enterprise (e.g. infrastructure assets; other assets in the custody or in use by the enterprise; assets that are investment projects in progress) that are acquired by using public investment capital and identified as public property that is assigned to the enterprise for their management, use and operation, and is not deemed as the share of state capital at the enterprise according to laws on management and use of public property shall not be included in the business value during the equitization process.

3. Monetary assets, including cash, deposits and security instruments (e.g. certificates of deposit, bills, promissory notes, bonds) of an enterprise, are valued as follows:

a) Cash amounts which are calculated according to cash count records.

b) Amounts of deposits determined according to balances reconciled and confirmed with banks where the enterprise has their accounted opened.

c) Security instruments that are valued according to prices applied to transactions thereof in the market. In case where none of transactions is performed, they are valued at face values thereof plus cumulative interest (if any) till the time of business valuation.

4. Receivables to be included in the enterprise’s value shall be valued according to the actual balance stated in the accounting books and after reconciliation shall be treated as prescribed in Article 15 of Decree No. 126/2017/ND-CP and Clause 9 of Article 1 of Decree No. 140/2020/ND-CP .

5. Costs of in-progress business, production, capital construction and other costs related to compensation, site clearance and ground leveling shall be determined according to the actual costs incurred as recorded in the accounting books.

Costs of in-progress business, production, capital construction which are assets invested in in-progress finance leases of credit institutions may be valued by using the audit results of financial statements in accordance with Clause 3, Article 27 of Decree No. 126/2017/ND-CP and Clause 13, Article 1 of Decree No. 140/2020/ND-CP .

6. The value of short-term and long-term collateral assets shall be determined according to the actual balance recorded in the accounting book that is reconciled and verified.

7. The average ratio of after-tax profits to state capital during five (05) years before the time of business valuation for the purpose of valuation of potentials for development of the equitized enterprise shall be valued according to the provisions of point b, clause 2, Article 31 of the Decree No. 126/2017/ND-CP.

As regards any equitized enterprise whose operational period is not fully five (5) years till the time of business valuation, the average ratio of after-tax profits to state capital shall be valued according to the provisions of Article 31 in the Decree No. 126/2017/ND-CP and the following regulations:

- It can be based on the actual operating years, not the years during which accrued losses arise.

- In case where the owner increases the state capital at a tier-I enterprise or a tier-I enterprise increases the investment capital in a tier-II enterprise due to the receipt of an investment project, assets and capital from another entity, the average state capital upon equitization shall be valued according to the state capital determined at the effective time of the latest decision on capital increase.

Chapter III

PUBLIC DISCLOSURE AND IMPLEMENTATION PROVISIONS

Article 11. Public disclosure

Equitized enterprises must publicly announce information about their equitization processes as prescribed in Clause 1, Article 11 of Decree No. 126/2017/ND-CP within 10 working days from the date of receipt of decisions and regulatory documents of competent authorities on handling of financial, labor and land issues related to the equitization process, and regulations laid down in Clause 1, Article 11 of the Decree No. 126/2017/ND-CP , on the enterprise's website and the Government’s Portal; and must send such information to the agencies representing owners’ ownership interests in the equitized enterprise, the Ministry of Finance, the Steering Committee for Enterprise Innovation and Development.

Article 12. Implementation provisions

1. This Circular shall take effect as of August 7, 2021.

2. This Circular shall replace the Circular No. 41/2018/TT-BTC dated May 4, 2018 of the Ministry of Finance, providing instructions about several regulations on financial disposition and business valuation during the process of transformation of state enterprises and single-member limited liability companies with 100% of their charter capital wholly held by state enterprises into joint-stock companies.

3. In the course of implementation hereof, if there is any difficulty that arises, it should be notified to the Ministry of Finance to seek its further actions./.