Vietnam Law & Legal Forum Magazine is your gateway to the law of Vietnam

Official Gazette

Sunday, August 20, 2017

State businesses get go-ahead for non-core divestment under par value

Updated: 15:00’ - 24/07/2014

The Prime Minister on March 12 issued Directive No. 06/CT-TTg requesting ministries and local administrations as well as state business groups and corporations to put every effort in stepping up the restructuring of state-owned enterprises (SOEs) in the spirit of Government Resolution No. 15/NQ-CP of March 6.

He requested the Ministry of Finance to draft and submit to the Government a prime minister decision detailing Resolution No. 15, especially solutions to facilitate equitization and divestment of state capital of SOEs from non-core business.

SOEs are now allowed to withdraw state capital shares in other enterprises under par value or book value after setting aside provisions for loss of financial investments. They may also hire intermediary financial institutions (securities companies) to auction for transfer of their investments valued at VND 10 billion or more (calculated at par value) in unlisted joint-stock companies.

The State Capital Investment Corporation (SCIC) may consider purchasing capital amounts divested by SOEs from non-core business. 

State-run commercial banks may be designated to purchase or the SBV may take over the role as the representative of the owner of capital amounts divested by state business groups or corporations from financial institutions or commercial banks.  

Shares of SOEs in public companies engaged in production or business activities and suffering from losses for five consecutive years may be put for initial public offering.

To facilitate the above activities, the Prime Minister sets the deadline of the third quarter of 2014 for state business groups and corporations to finalize plans on conversion of their attached non-business units into joint-stock companies upon their equitization, and for ministries to work out equitization plans for such groups and corporations as well as companies with 100 percent state capital.    

The Ministry of Planning and Investment is assigned to draft a decree revising regulations on sale or assignment of SOEs and two prime minister decisions on assessment of the exercise of the state owner’s rights toward SOEs and on governance of state-owned single-member limited liability companies.

The Prime Minister also authorizes ministers and chairpersons of provincial-level People’s Committees to decide to adjust charter capital of equitized state business groups or corporations which obtain results of initial public offering of shares different from their approved plans.

The Ministry of Home Affairs will have to finalize and submit to the Prime Minister in the second quarter of this year a decree on key managerial posts in enterprises with 100 percent state capital and those with over 50 percent of their charter capital held by the State.

The Ministry of Agriculture and Rural Development is tasked to draft a decree replacing Decrees No. 170/2004/ND-CP and No. 200/2004/ND-CP on reorganization and renewal of state-run agricultural and forest farms.

* Bourses set to merge into sole national exchange: The State Securities Commission (SSC) is expected to submit to the Government a plan to merge the two stock exchanges into a single entity: the Vietnam Stock Exchange (VSE).

SSC Chairman Vu Bang made this announcement at a workshop held in Hanoi last month to discuss measures to perform securities market development tasks in 2014.

Under the plan, in the second quarter of this year, the Prime Minister will approve the consolidation of the Hanoi Stock Exchange and the Ho Chi Minh City Stock Exchange into the VSE with a single board of directors and a single control board.

The plan is divided into two phases. Between 2015 and 2020, the VSE will be a state-run business operating as a single-member limited liability company with charter capital fully owned by the State. After 2020, it will operate as a joint-stock company with the State holding 75-90 percent stake. All of its member securities companies will be permitted to purchase 10-25 percent stake.

The SSC will plan to diversify its products by developing the infrastructure for derivatives and draft a regulation to instruct the trading of derivatives such as index futures and bond futures. It will also focus on establishing a local exchange-traded fund (ETF) this year.

To restructure securities companies and businesses, by the end of 2014, 24 securities companies and six fund management companies will be reorganized and withdraw from the stock market by dissolving or halting operations.

Vu Bang also noted that apart from 10 current open-ended funds, five more funds would be established.


VNL_KH1 

Send Us Your Comments:

See also:

Video

Vietnam Law & Legal Forum