To be transformed into economic groups, parent companies of state corporations or parent-subsidiary company groups must have state-owned capital of at least VND 7 trillion, in addition to other conditions on their major business lines and structures, according to a draft decree on the formation, organization, operation and supervision of state economic groups.
Under the draft, a parent-subsidiary corporation or state corporation which plans to operate after the model of an economic group must run one of the 21 major business lines and have potential for development.
The 21 major business lines include post and telecommunications, information technology, shipbuilding and maritime transportation, aviation, textile and garment, electricity, rubber, coffee, food, tobacco, fertilizers and chemicals, paper and pulp, oil and gas, coal and minerals, cement, state capital investment, financial and insurance services, to name but a few.
The parent company of a parent-subsidiary corporation or state corporation must be wholly state-owned and set up after the model of one-member limited liability, two-plus member limited liability, joint stock or state company.
Furthermore, a state economic group which wishes to expand its business lines to other sectors must meet certain requirements, specifically:
- The related business line must not affect the performance and development of the major business line; and,
- Revenues from related business lines must be re-invested in the major business line.
Particularly, Prime Minister approval would be required in case the parent company of an economic group directly or indirectly via another company in which the parent company holds dominant shares invests in sectors risky to the performance of the major business line.