In order to improve the marketability of state-owned enterprises’ equity, the Government issued on July 18 Decree No. 59/2011/ND-CP, on transformation of wholly state-owned enterprises into joint-stock companies.
Under the Decree, enterprises eligible for being equitized include single-member limited liability companies with 100% of their charter capital held by the State which are parent companies of economic groups and state corporations (including state-owned commercial banks) or enterprises under ministries, ministerial-level agencies, government-attached agencies and People’s Committees of provinces and centrally run cities; and wholly state-owned enterprises not yet transformed into single-member limited liability companies.
From September 5, these enterprises may be equitized if they are not those in which the State needs to hold 100% of charter capital and left with some state capital portions after their financial settlement and revaluation.
The Decree provides three forms of equitization: (i) keeping intact existing state capital amounts in enterprises and issuing additional stocks for increasing the charter capital; (ii) selling part of existing state capital amounts in enterprises or combined doing so and issuing additional stocks for increasing the charter capital; and (iii) selling the whole of existing state capital amounts in enterprises or combined doing so and issuing additional stocks for increasing the charter capital.
Eligible equity purchasers are domestic investors, foreign investors and strategic investors. Strategic investors must have financial capacity, commit to attaching to equitized enterprises for long-term interests and supporting them in transferring new technologies, training human resources, improving financial and business administration capabilities, supplying materials and developing product outlets.
Each enterprise may have no more than 3 strategic investors. These investors may not transfer their purchased shares within 5 years after joint-stock companies are granted first-time business registration certificates. In special cases when they wish to transfer their shares within this period, approval of the shareholders’ general meeting is required.
Equitized enterprises must publicly and transparently disclose their vital information, their equitization plans, and the land and labor management in accordance with the Enterprise Law and other relevant laws.
This Decree supersedes Decree No. 109/2007/ND-CP of June 26, 2007. Other regulations on equitization which are contrary to this Decree are no longer valid.-