From September 1, newly-established state economic groups and corporations will have no more than three corporate grades, including parent enterprises (grade-I enterprises) which direct and control member enterprises of groups or corporations; grade-II enterprises which operate as single-member or multiple-member limited liability companies; and grade-III enterprises which are affiliated to grade-II enterprises.
Government Decree No. 69/2014/ND-CP of July 15, on state economic groups and corporations, prescribes this corporate grade system to help prevent these enterprises from investing in non-core business lines.
The State owns 100 percent of charter capital or holds the controlling rights of parent enterprises.
State economic groups and corporations established before September 1, 2014, which have more than three corporate grades must be reorganized within two years from the effective date of the Decree.
A to-be-established state corporation must engage in economic sector(s) of great importance to the national economic security; have at least 50 percent of its affiliated companies engaged in its main business lines, and total shares of the parent enterprise in affiliated companies accounting for 60 percent of its total investment capital in all affiliated and associated companies.
The Decree also requires state corporations to increase their charter capital to at least VND 10 trillion. In case parent enterprises are limited liability companies with two or more members, the state capital portion must account for at least 75 percent of their total capital.-