THE MINISTRIES

THE MINISTRY OF PLANNING AND INVESTMENT

CIRCULAR No.8-BKH/DN OF JUNE 11, 1997 GUIDING THE IMPLEMENTATION OF DECREE No.50-CP OF AUGUST 28, 1996 OF THE GOVERNMENT ON THE ESTABLISHMENT, REORGANIZATION, DISSOLUTION AND BANKRUPTCY OF STATE ENTERPRISES AND DECREE No.38-CP OF APRIL 28, 1997 OF THE GOVERNMENT ON AMENDMENTS AND SUPPLEMENTS TO A NUMBER OF ARTICLES OF DECREE No.50-CP

In furtherance of Decree No.50-CP of August 28, 1996 of the Government on the establishment, reorganization, dissolution and bankruptcy of State enterprises (hereafter referred to as Decree No.50-CP for short) and Decree No.38-CP of April 28, 1997 of the Government on Amendments and Supplements to a Number of Articles of Decree No.50-CP, the Ministry of Planning and Investment provides the following detailed guidances on the procedures for the establishment, business registration and reorganization of State enterprises as well as changes after business registration:

I. ESTABLISHMENT OF STATE ENTERPRISES

1. Proposers of the establishment of State enterprises

1.1. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government (the Ministers for short) are the proposers of the establishment of State enterprises of the ministries.

1.2. The presidents of the People�s Committees of the provinces and cities directly under the Central Government (the presidents of the provincial People�s Committees for short) are the proposers of the establishment of the provincial State enterprises.

1.3. The presidents of the People�s Committees of the districts, provincial cities and towns (the presidents of the district People�s Committees for short) are the proposers of the establishment of the district State public utility enterprises.

1.4. The Managing Boards of the State Corporations are the proposers of the establishment of the Corporations� member units.

2. Plans on the establishment of State enterprises

2.1. The ministers, the presidents of the provincial People�s Committees shall submit to the Prime Minister plans on the establishment of State Corporations, State enterprises directly in service of national defense and security and State enterprises with statutory capital at the time of establishment equivalent to the capital of Group A-investment projects prescribed in Appendices attached to the Regulation on the Management of Investment and Construction issued together with Decree No.42-CP of July 16, 1996 of the Government (the capital of Group A-investment projects for short).

The Managing Boards of the State Corporations set up by decision of the Prime Minister shall submit to the Prime Minister plans on the establishment of the Corporations� member units.

After approving the plans on the establishment of State enterprises, the Prime Minister shall directly sign or empower the ministers, the presidents of the provincial People�s Committees to sign decisions on the establishment of State enterprises mentioned in Points 3.1, 3.2, Item 3, Part I of this Circular.

2.2. The ministers, the presidents of the provincial People�s Committees shall send to the Minister of Planning and Investment the plans on the establishment of independent State enterprises, which are not members of State corporations, conduct business activities and have the statutory capital at the time of establishment being lower than the capital of Group-A investment projects.

After considering the plans on the establishment of such State enterprises, the Minister of Planning and Investment shall make a written agreement letting the other ministers or the presidents of the provincial People�s Committees to sign the establishment decisions.

2.3. The plans on the establishment of State enterprises mentioned in Points 2.1 and 2.2 above must be examined and approved in advance by the Prime Minister or the Minister of Planning and Investment. After having been approved in writing, the plans shall be sent to the persons competent to decide the establishment of enterprises or the persons empowered to sign the decisions on the establishment of enterprises together with the dossiers proposing the establishment of such State enterprises.

The plans on the establishment of State enterprises mentioned in Points 3.3, 3.4, Item 3, Part I of this Circular shall be sent to the persons competent to decide the establishment of enterprises together with the dossiers proposing the establishment of such State enterprises.

3. Decision on the establishment of State enterprises

3.1. The Prime Minister shall decide the establishment of State Corporations operating in the form defined in Decision No.91-TTg of March 7, 1994 of the Prime Minister and a number of particularly important State enterprises with statutory capital at the time of establishment equivalent to the capital of Group A-investment projects.

3.2. The Prime Minister shall approve the plans on the establishment of State enterprises mentioned in Point 2.1, Item 2, Part I of this Circular, then empower:

- The Minister of Defense, the Minister of the Interior to sign decisions on the establishment of State enterprises directly in service of national defense and security;

- The ministers in charge of economic-technical branches, the presidents of the provincial People�s Committees to sign decisions on the establishment of State corporations operating in the form defined in Decision No.90-TTg of March 7, 1994 of the Prime Minister, and a number of State enterprises with the statutory capital at the time of establishment equivalent to the capital of Group A-investment projects;

- The ministers in charge of economic-technical branches to sign decisions on the establishment of member units of State corporations set up by decision of the Prime Minister.

3.3. The ministers shall decide the establishment of member units of State corporations which have been set up by their decision under the authorization of the Prime Minister, and of State public utility enterprises founded by the ministers themselves.

3.4. The presidents of the provincial People�s Committees shall decide the establishment of member units of State Corporations which have been set up by their decision under the authorization of the Prime Minister, and of State public utility enterprises founded by themselves or at the proposal of the presidents of the district People�s Committees in their respective localities.

3.5. The Minister of Planning and Investment shall consider plans on the establishment of State enterprises mentioned in Point 2.2, Item 2, Part I of this Circular, then make a written agreement letting other ministers or the presidents of the provincial People�s Committees to sign decisions on the establishment of independent State enterprises which are not members of State Corporations, conduct business activities and have the statutory capital at the time of establishment lower than the capital of Group A-investment projects and the establishment of which is proposed by the ministers or the presidents of the provincial People�s Committees.

4. Dossiers proposing the establishment of State enterprises

4.1. A dossier proposing the establishment of a State enterprise include:

a/ A proposal on the establishment of the State enterprise which must be signed by the proposer of the establishment of such enterprise and has the contents being in accordance with Appendix No.1 attached to this Circular;

b/ A plan on the establishment of the State enterprise with the contents provided for in Appendix No.2 attached to this Circular;

With regard to plans on the establishment of State enterprises mentioned in Point 2.1, Item 2, Part I of this Circular, the dossiers proposing the establishment must be enclosed with a written approval of the Prime Minister, and for plans on the establishment of State enterprises mentioned in Point 2.2, the dossiers must be enclosed with a written approval of the Minister of Planning and Investment.

c/ The statutory capital and written opinions of the financial agency on sources and the amount of statutory capital to be allocated.

The statutory capital at the time of establishment of a State enterprise is the capital stated in the Statute of the enterprise at the time it is established. The statutory capital at the time of the enterprise�s establishment must not be less than the prescribed capital set for business lines prescribed in Appendix No.2 attached to Decree No.50-CP. If the enterprise engages in different business lines, the statutory capital must not be lower than the highest level of prescribed capital set for a business line.

The proposer of the establishment of a State enterprise must assure that the State�s capital is readied for the enterprise at the time of his/her proposal, which shall include the investment capital for capital construction already allocated to the enterprise, capital mobilized by the State corporation from other member enterprises, preferential loans from the State, capital in cash stated in the budget plan to be allocated to the enterprise right after it is established.

The certification of the statutory capital of the State enterprise at the time of its establishment shall comply with guidances of the Ministry of Finance.

d/ The draft Statute on the organization and operation of the enterprise;

e/ The proposal on the form of organization of the enterprise: State corporation, independent cost-accounting member unit of a State corporation, independent State enterprise with a Managing Board, independent State enterprise involved in business activities or public utility activities and dependent economic units of such State enterprise.

f/ The written opinions of the ministry in charge of economic-technical branch on the main business line; the written opinions of the agency competent to grant certificates of business eligibility on conditional business lines. With regard to business lines mentioned in Point 1.1, Item 1, Part IV of this Circular, opinion of the Prime Minister is required;

g/ The report on solutions to the environmental protection;

h/ The written opinions of the president of the provincial People�s Committee on the land use right and other issues related to the locality where the enterprise�s head office and its business as well as production establishments are located;

4.2. The dossier proposing the establishment of the State enterprise shall be sent to the person competent or empowered to sign the decision on the establishment of the State enterprise as prescribed in Item 3, Part I of this Circular.

5. Appraisal of the establishment of State enterprises

Before deciding the establishment of a State enterprise, the person competent or empowered to sign the decision on the establishment of the State enterprise (the person signing the decision to establish the enterprise for short) shall have to set up an appraisal council, composed of experts knowledgeable about the contents to be appraised for consideration of the dossier proposing the establishment of the enterprise. The contents of the appraisal of the dossier proposing the establishment of the State enterprise are prescribed in Item 2, Article 7 of Decree No.50-CP.

The Central Steering Committee for the Renewal of Enterprises shall assume the main responsibility in receiving and handling plans on the establishment of State enterprises to be submitted to the Prime Minister, and dossiers proposing the establishment of State enterprises to be decided by the Prime Minister. The Steering Sub-Committees for the Renewal of Enterprises under the ministries and provincial People�s Committees shall assume the main responsibility in receiving and handling plans on the establishment of State enterprises, which the ministers or the presidents of the provincial People�s Committees have power to decide or are empowered to sign the establishment decisions.

Depending on the characteristics, scope and area of operation of the State enterprise proposed to be established, the agency that assumes the main responsibility in receiving and handling the dossier shall propose to the person signing the decision to establish the enterprise a list of members of the appraisal council and send copies of the dossier proposing the establishment of the State enterprise to such members.

The Chairman of the Appraisal Council shall have to make a sum-up of independent opinions of the Council�s members on the enterprise proposed to be established and submit it to the person signing the decision to establish the enterprise.

Within 20 days (twenty days) after receiving the full valid dossier from the proposer of the establishment of the State enterprise, the agency that assumes the main responsibility in receiving and handling the dossier shall have to complete the collection of the Appraisal Council�s opinions.

Within 10 days (ten days) after receiving the report from the Chairman of the Appraisal Council, the person competent to sign the decision to establish the enterprise shall have to decide whether to establish or not to establish the proposed enterprise. The person signing the decision to establish the State enterprise shall ratify the Statute on the organization and operation of such enterprise.

Decisions on the establishment of a State enterprise shall be sent to the Central Steering Committee for the Renewal of Enterprises, the Ministry of Planning and Investment, the Ministry of Finance and the Ministry in charge of the related economic-technical branch for monitoring.

II. BUSINESS REGISTRATION

1. Business registration dossier for a State enterprise

Within 45 days (fourty five days) after the signing of the decision on the establishment of an enterprise, such enterprise shall have to submit a business registration dossier at the Planning and Investment Service of the province or city where its head office is located, including:

1.1. The decision to establish the State enterprise issued by the competent person mentioned in Item 3, Part I of this Circular (the original);

For the State enterprises defined in Point 3.2, the business registration dossier must be enclosed with a written mandate of the Prime Minister, and for the State enterprises defined in Point 3.5 the dossier must be enclosed with a written consent of the Minister of Planning and Investment (the copies).

1.2. The Statute on the organization and operation of the enterprise, that has been already ratified by the competent agency (the original);

1.3. The certificate of the statutory capital of the enterprise at the time of establishment, issued by the agency managing the State�s capital and property at enterprises (the original);

1.4. The certificate of business eligibility as required by the current regulations for conditional business lines (the copy) or the written agreement of the agency competent to grant different types of certificate of business eligibility (the original);

1.5. The certificate of the enterprise�s lawful right to use houses and/or land where its head office and business production establishments are located (the copy):

- The certificate of the enterprise�s lawful right to use houses may be one of the following: the house renting contract; the house construction permit (if the enterprise has built houses by itself but not yet filled the procedures for the house ownership right certificate); the house ownership right certificate; the document on the transfer of houses to the enterprise by the competent agency.

- The certificate of the enterprise�s lawful land use right may be one of the following: the land use right certificate; the land-leasing contract; the document on the assignment of land to the enterprise by the competent agency in accordance with the land legislation.

- The address of the enterprise�s head office, its phone, fax and telex numbers.

1.6. The decision on the appointment of the President and members of the Managing Board, for State Corporations and large-scale independent State enterprises with the Managing Board; the decision on the appointment of the General Director or the Director of the enterprise (the original).

All copies attached to the dossier must be certified by the agency that has granted the originals or the State Notary Public.

2. Business lines in the business registration dossier

Business lines in the business registration dossier shall be determined in accordance with Decree No.75-CP of October 27, 1993 of the Government promulgating the system of national economic branches and Decision No.143-TCTK/PPCD of December 12, 1993 of the General Director of the General Department of Statistics on the promulgation of the system of grade II, III and IV economic branches.

3. Time-limit for the granting of business registration certificate

Within 15 days (fifteen days) after receiving full valid dossier, the provincial/municipal Planning and Investment Service shall have to grant a business registration certificate to the enterprise. The time-limit for the granting of the business registration certificate must not exceed 60 days (sixty days) from the date of signing the decision to establish the enterprise; after granting the business registration certificate to the enterprise, the provincial/municipal Planning and Investment Service shall send copies of such certificate to the agencies defined in Item 6, Article 9 of Decree No.50-CP.

The enterprise shall have to announce its establishment on newspapers in accordance with Article 10 of Decree No.50-CP.

4. Business registration of dependent economic units:

4.1. Dependent economic units of an enterprise are the dependent cost-accounting units directly attached to such enterprise, that perform the tasks assigned by the enterprise within the scope of business lines stated in the enterprise�s business registration certificate. The enterprise shall be responsible for all activities of its dependent economic units.

The enterprise�s dependent economic units may be branches, centers, stations, farms, factories, mines, state farms or afforestation camps... and shall be specified in the enterprise�s Statute.

4.2. A business registration dossier includes:

- The written agreement of the People�s Committee of the province or city where the head office of the dependent economic unit is located (the original);

- The decision on the establishment of the dependent economic unit issued by the competent person defined in Items 1 and 2, Article 11 of Decree No.50-CP (the original);

- The document defining functions and tasks of the dependent economic unit (the original);

- The document on the appointment of the head of the dependent economic unit (the original);

- The certificate of the dependent economic unit�s lawful right to use houses and/or land (the copy);

- The address of head office of the dependent economic unit, its phone, fax, and telex numbers.

- The business registration certificate of the enterprise (the copy).

4.3. Within 30 days (thirty days) after the signing of the decision to establish the dependent economic unit, the enterprise shall have to submit the business registration dossier of the dependent economic unit at the Planning and Investment Service of the province or city where the head office of the dependent economic unit is located.

Within 15 days (fifteen days) after receiving full valid dossier, the provincial/municipal Planning and Investment Service shall have to grant business registration certificate to the enterprise�s dependent economic unit.

4.4. If the enterprise proposes to place its dependent economic units in the same province where the head office of the enterprise is located, its proposal must be approved in writing by the People�s Committees of the districts where the head offices of the dependent economic units are located. The enterprise shall have to make declaration at the provincial/municipal Planning and Investment Service or make business registration for its dependent economic units according to the business registration dossier provided for in Point 4.2, Item 4, Part II of this Circular (as for the written approval of the provincial/municipal People�s Committee, it shall be replaced by the written approvals of the People�s Committees of the districts where the head offices of the dependent economic units are located).

4.5. An enterprise�s representative office shall perform only the transaction function at the mandate of the enterprise and must not engage in business activities.

The enterprise�s representative office shall not have to fill procedures for business registration certificate but only to register its operation at the provincial/municipal Planning and Investment Service after it is approved in writing by the People�s Committee of the province or city where the representative office is located.

III. REORGANIZATION OF STATE ENTERPRISES

1. The amalgamation of the independent State enterprises into a new independent State enterprise; the splitting of an independent State enterprise into various new independent State enterprises; the transformation of a dependent economic unit of a State enterprise or a non-business unit into an independent State enterprise shall be decided by the person who has signed the decision to establish such enterprises in accordance with the procedures for the establishment of State enterprises and business registration prescribed in Parts I and II of this Circular.

In the course of the amalgamation or splitting of independent State enterprises, the person who has signed the decision to establish such enterprises shall have to decide the deletion of the names of the amalgamated or split independent State enterprises before signing the decision to establish new State enterprises, and at the same time inform the relevant agencies thereof for the withdrawal of the business registration certificates and seals.

2. The merger of one or several enterprises (called as the merged enterprises) into another independent State enterprise must be decided by the person who has signed the decision to establish such enterprises, with respect to the merger plan and the deletion of the names of the merged enterprises. An independent State enterprise, after admitting the merged enterprises, shall still retain its legal person status and shall not have to re-fill the establishment procedures but to register changes of its statutory capital and business lines (if any) with the agency that has granted it the business registration certificate.

3. The transformation of a State enterprise into a non-business unit shall be decided by the person who has signed the decision to establish such enterprise following a written consent of the competent agency in charge of non-business activities related to the transformation of the enterprise.

4. The amalgamation, merger or splitting of member units of a State Corporation; the transformation of member units of a State corporation; the admission of new member units or the settlement of member units� requests to leave a State corporation shall be proposed by the Managing Board of the corporation, and considered then decided by the person who has signed the decision to establish the corporation. If the reorganization leads to the formation of new member units which are independent cost-accounting State enterprises, the procedures for the establishment of State enterprises and for business registration prescribed in Parts I and II of this Circular shall apply.

If an independent enterprise outside a corporation wants to join the corporation, such enterprise must submit its application for the membership of the corporation to the Managing Board, which must be approved in writing by the person who has signed the decision to establish the enterprise.

IV. CHANGES AFTER BUSINESS REGISTRATION

1. Change, addition of business lines:

1.1. For business lines that require permission of the Prime Minister:

The business lines that require permission of the Prime Minister include:

- Production and circulation of explosives, poisons, toxic chemicals and radioactive substances;

- Exploitation of precious minerals or radioactive ore;

- Large-scale production and supply of electricity or water;

- Production of radio transmitters, postal and telecommunications services, radio and television broadcasting, and publishing;

- Sea shipping, air transport;

- Production and repair of weapons and military gears.

When a State enterprise requests the addition of either of the above-said business lines, the person who has signed the decision to establish the enterprise shall have to ask for the permission of the Prime Minister. Only after a written consent of the Prime Minister is obtained, shall the person who has signed the decision to establish the enterprise approve the addition of eitehr of these business lines for the enterprise.

1.2. For business lines that require business permit or certificate of business eligibility as prescribed by the current regulations:

When a State enterprise requests the addition of one of the said business lines, the person who has signed the decision to establish the enterprise shall have to submit a written proposal to the agency competent to grant business permit or certificate of business eligibility for consideration. Only after such agency grants the business permit or certificate of business eligibility to the enterprise or issues a written approval thereof, shall the person who has signed the decision to establish the enterprise approve the addition of either of these business lines for the enterprise.

1.3. If a State enterprise requests any change or addition of a business line, that leads to the change of its grade I business lines as prescribed in Decree No.75-CP of October 27, 1993 of the Government promulgating the system of national economic branches or leads to the change of its tasks or main business lines already stated in its establishment decision, such a request must be considered and approved by the person who has signed the decision to establish the enterprise.

1.4. After the issue of a decision on the change or addition of one of the above-said business lines by the person who has signed the decision to establish the enterprise, the enterprise shall have to register such change or addition with the agency that has already granted it the business registration certificate.

1.5. In cases where an enterprise requests a change or addition of a business line not defined in Points 1.1, 1.2 and 1.3, Item 1, Part IV of this Circular, it shall only have to register the change or addition with the agency that has granted it the business registration certificate. After having registered its business-line change or addition, the enterprise shall have to report to the person who has signed the decision on its establishment.

1.6. A business line change or addition must conform with the establishment�s statutory capital; if the enterprise requests the addition of a business line that requires a prescribed capital larger than its existing statutory capital, such enterprise shall be allowed to add such business line only after its statutory capital has been added to ensure that it is not lower than the prescribed capital set for the added business line.

1.7. The change or addition of the business lines of member enterprises of a State corporation set up by decision of the Prime Minister shall be considered and decided by the President of the Managing Board of the Corporation under the authorization of the Prime Minister according to the statutory capital and technological conditions of each enterprise.

For business lines that require permission from the Prime Minister, business permit or certificate of business eligibility as prescribed by the current regulations, the President of the Managing Board shall decide the change or addition of such business lines for the member enterprises only after obtaining a written agreement from the Prime Minister or the agency competent to grant business permit or certificate of business eligibility. After deciding the change or addition of the business lines for the member enterprises, the President of the Managing Board shall have to report it to the Prime Minister; the member enterprise shall have to register such changes with the agency that has granted it the business registration certificate.

2. Renaming enterprise:

The person who has signed the decision to establish an enterprise shall consider and decide the renaming of an enterprise at the request of the Managing Board (for enterprises with the Managing Board) or the Director (for enterprises without the Managing Board), provided that the new name doe not contravene the enterprise�s business lines and comply with guidances of the relevant branch.

After obtaining a decision to change its names, the enterprise shall have to register with the agency that has granted it the business registration certificate, make a new seal and make newspaper announcement as prescribed.

The renaming of a member enterprise of a State Corporation set up under decision of the Prime Minister shall be considered and decided by the President of the Managing Board under the authorization of the Prime Minister who shall be briefed thereon by the former.

3. Changing the statutory capital:

In case of any change in its statutory capital, the enterprise, after obtaining a written certification from the agency that manage the State�s capital and assets at enterprises, shall have to register its new statutory capital with the agency that has granted it the business registration certificate.

V. IMPLEMENTATION PROVISIONS

1. This Circular shall apply to the State enterprises defined in Articles 1 and 2 of the Law on State Enterprises.

2. The order and procedures for the establishment of enterprises shall be followed by State enterprises that have together made contributions to the statutory capital in accordance with the Law on Companies.

3. The procedures for the establishment of enterprises with capital contributed by Party organizations and socio-political organizations (referred to as mass organizations) shall be applied in accordance with the provisions of Decree No.50-CP and the relevant guiding documents.

A dossier proposing the establishment of an enterprise of a central-level Party or mass organization shall be sent to the Minister of the Ministry in charge of the economic-technical branch which the enterprise�s main business line belongs to for appraisal and decision. Dossiers proposing the establishment of enterprises of Party and mass organizations in the provinces and cities directly under the Central Government shall be sent to the Presidents of the People�s Committees of the provinces and cities directly under the Central Government for appraisal and decision. The business registration of enterprises of Party and mass organizations shall be conducted in accordance with the provisions of this Circular.

4. This Circular takes effect 15 days from the date it is signed and replaces Inter-ministerial Circular No.01-TT/LB of February 13, 1992, Inter-ministerial Circular No.04-TT/LB of June 11, 1992 of the State Planning Committee and the Ministry of Finance guiding the implementation of the regulation on the establishment and dissolution of State enterprises issued together with Decree No.388-HDBT of November 20, 1991 of the Council of Ministers. The earlier provisions which are contrary to this Circular are now annulled.

If any problem arises in the course of implementation, agencies and enterprises are requested to promptly report it to the Ministry of Planning and Investment for study, appropriate amendments or supplements.

The Minister of Planning

and Investment