State enterprises that still suffer losses after two years of being supervised under the Regulation on supervision of state enterprises conducting business activities at a loss or inefficiently operating, promulgated together with Prime Minister’s Decision No. 169/2007/QD-TTg of November 8, are required to be subject to ownership transformation or dissolution or bankruptcy according to regulations.
Supervision is conducted according to seven groups of criteria: output and value of principal products, goods or services produced, sold or unsold; turnover from business operations and other incomes; expenditures for business activities, wages, fixed asset depreciation, interest and overhead; profits earned and profit ratio on state capital; efficiency of use of capital and assets; debts and debt payment capacity; and management and administration activities of the Board of Directors and the Director General.
State enterprises subject to supervision shall send quarterly and annual reports and financial statements to representatives of their owner and finance agencies of the same level.
Based on an enterprise’s reports and statements, representatives of the owner coordinate with finance agencies of the same level in analyzing and appraising the results of business operation and management work of enterprises and give timely recommendations to enterprises.
If these enterprises fail to make supervision reports or to follow the owner’s recommendations or solutions, thus leading to further losses, their managers or executive officers will be replaced.-