Article 1.- To amend and supplement a number of articles of the Government's Decree No. 63/2001/ND-CP of September 14, 2001, on conversion of state enterprises, enterprises of political organizations or socio-political organizations into one-member limited liability companies as follows:

The name of Decree No. 63/2001/ND-CP is amended into "Decree on conversion of state companies, enterprises of political organizations or socio-political organizations into one-member limited liability companies".

All phrases "state enterprises" in Decree No. 63/2001/ND-CP are amended into "state companies".

"Article 1.- Scope of regulation and objects of application

1. This Decree provides order and procedures for conversion of state companies; enterprises of political organizations or socio-political organizations; independent cost-accounting member companies of state corporations; dependent cost-accounting units and dependent units of state corporations or state companies shifting to operate after the parent company-subsidiary company model into one-member limited liability companies, and provides the organization and management of one-member limited liability companies.

2. State companies, independent cost-accounting member companies of state corporations, enterprises of political organizations or socio-political organizations, when converted into one-member limited liability companies, must be enterprises where the State or concerned political organizations or socio-political organizations decide to hold 100% of their charter capital.

3. Dependent cost-accounting units and dependent units of state corporations or state companies defined in Clause 1 of this Article shall be converted only when the companies are separated and the separated sections must all be those where the State needs to hold 100% of their charter capital."

"2. The following organizations shall be representatives of owners of one-member limited liability companies converted from state companies:

a/ The State Capital Investment and Business Corporation shall be the representative of owners of one-member limited liability companies converted from independent state companies attached to ministries or provincial-level People's Committees;

Pending the transfer of the right to represent the companies' owners to the State Capital Investment and Business Corporation, ministries, ministerial-level agencies, Government-attached agencies or provincial-level People's Committees shall be representatives of such companies' owners.

b/ State corporations shall be representatives of owners of one-member limited liability companies converted from their independent cost-accounting member companies, dependent cost-accounting units or dependent units;

c/ Independent state companies, independent cost-accounting member companies of state corporations shall be representatives of owners of one-member limited liability companies converted from their dependent units."

"1. A converted enterprise shall have the responsibility:

a/ To inventory and determine the quantity of current assets of its own and its dependent cost-accounting units, including fixed assets and long-term investments, working assets and short-term investments, leased or rented assets, assets kept for others or in deposit or appropriated assets.

b/ To classify current assets of the enterprise and its dependent cost-accounting units into the following types: assets which the enterprise needs to use; assets which the enterprise needs not to use, which are stockpiled or awaiting liquidation; assets formulated from the reward fund or the welfare fund (if any); assets rented from outside, supplies and goods kept for others, received for processing or agency, or in deposit;

c/ To cross-check and classify debts; make lists of creditors and payable debt amounts, clearly analyzing due debts, overdue debts, debt principals and interests, payable debts which need not be paid; and receivable debts, to be classified into recoverable debts and irrecoverable debts;

d/ To make financial statements for the quarter next to the time of conversion of the enterprise or its dependent cost-accounting units; to work out plans for handling assets, financial obligations and debts according to the principles provided for in Clause 5, Article 7; to determine the amount of capital to be registered as charter capital of the company;

e/ To work out plans for arrangement of current laborers of the company and dependent cost-accounting units of the enterprise at the time its conversion is decided;

f/ To handle assets, financial obligations, debts and labor issues according to the plans approved by competent authorities;

g/ To draft charter of the one-member limited liability company;

h/ To report to the owner or organization authorized to represent the owner of the company for approval the dossiers defined at Points a, b, c, d, e and g of this Clause."

"5. Principles for financial and debt settlement:

a/ For redundant properties: Enterprises are allowed to account them as the increase of the owners' capital at enterprises;

b/ For diminished and lost properties as well as other property damage incurred by enterprises or their dependent cost-accounting units: It is necessary to clearly determine the reasons and responsibilities of collectives and individuals therefor, and request the involved parties to pay damages according to the provisions of law. The difference between the booked remaining value of the damaged properties and the compensation amount paid by concerned individuals, collectives or insurance agencies (if any) shall be made up for by the financial reserve fund. The deficit, if any, shall be accounted into the business results. If due to the accounting of this deficit into its business results, an enterprise suffers losses, it may decrease the owner's capital but the decreased capital amount can be equal to its loss amount at most;

c/ For receivable debts: The companies shall have to accept receivable debts of the converted enterprises or their dependent cost-accounting units and recover the recoverable due debts. For irrecoverable debts, after determining the reasons and responsibilities of collectives and individuals and requesting the involved parties to pay damages according to the provisions of law, enterprises may use their bad debt provisions and financial reserve funds for offsetting after deducting the compensation amounts paid by relevant individuals and/or collectives. If the said amounts are insufficient for offsetting, the deficit shall be accounted into business results. If due to the accounting of this deficit into its business results, an enterprise suffers losses, it may decrease the owners' capital but the decreased capital amount can be equal to its loss amount at most;

d/ For payable debts: The companies shall have to inherit and pay such debts to their creditors according to commitments, including tax and budget debts, debts owed to officials or public employees; and settle due debts. Payable debts with no one to claim and value of assets with unidentified creditors shall be accounted into the owners' capital. Where enterprises meet with difficulties in settling overdue debts, such debts shall be settled according to the State's current regulations on the settlement of outstanding debts.

6. The converted enterprises shall have to arrange and use laborers according to the provisions of law on labor and restructuring of state companies."

"7. All expenses for conversion of companies shall be accounted into their business results. The contents and levels of conversion expenses shall comply with the guidance of the Finance Ministry."

"4. To appoint, relieve from office, dismiss, sign contract with, and decide on the wage level for, the general director (director) of the company. To appoint, relieve from office and dismiss deputy general directors (deputy directors) of the company at the proposal of the general director (director). To decide on the wage scale, payroll and wage-based subsidies for use as bases for wage arrangement and payment to laborers of the company as for other enterprises operating under the Enterprise Law."

"6. To propose the company owner to decide on the following matters which fall beyond the competence of the Managing Board:

a/ The approval of the final financial settlement reports and plans on the use of the company's after-tax profits according to the owner's investment capital sources and capital sources mobilized by the company; the deduction percentages for the development investment fund and the reward fund of the company, and the bonus fund for its management and executive board."

"10. To request the general director (director) to file an application for opening of bankruptcy procedures when the company falls into the state of bankruptcy."

"11. Other powers and tasks as prescribed by law and the company's charter".

"Article 16.- Members of the Managing Board

1. Depending on the company's size, its owner shall decide on the number of members and composition of the Managing Board.

2. Members of the Managing Board must satisfy all the following criteria and conditions:

a/ Being Vietnamese citizens and permanently residing in Vietnam;

b/ Having university degree, management and business capabilities. The chairman of the Managing Board must have at least three-year experience in managing and administering enterprises in the principal business lines of the company;

c/ Having good health and good morals, being honest and incorrupt, having law knowledge and sense of law observance;

d/ Being other than subjects banned from holding managerial and executive posts in enterprises under the provisions of law.

3. The chairman and members of the Managing Board shall be appointed, relieved from office, rewarded or disciplined by the company owner. The term of office of members of the Managing Board shall be defined in the company's charter but shall not exceed five years. Members of the Managing Board may be re-appointed and replaced.

4. Members of the Managing Board shall be relieved from office in the following cases:

a/ Being convicted under court judgments or legally effective decisions;

b/ Being incapable and unqualified to undertake the assigned tasks, having lost the civil act capacity or having a restricted civil act capacity;

c/ Being dishonest in performing tasks or exercising powers or abusing their positions and/or powers for self-seeking purposes or for others' benefits; untruthfully reporting on financial situation of the company;

d/ The company suffers losses for two consecutive years or fail to achieve the set ratio of profit to the state investment capital for two consecutive years or falls into the state of having both profits and losses, which cannot be redressed, except for losses or decrease in the said ratio already approved by competent authorities or due to objective causes already explained by the company and accepted by competent authorities, and for investments in production expansion or technological renovation;

e/ The company falls into the state of bankruptcy but its Managing Board does not request the general director to file an application for opening of bankruptcy procedures.

5. Members of the Managing Board shall be replaced in the following cases:

a/ Being relieved from office in the cases mentioned in Clause 4 of this Article;

b/ Asking for resignation;

c/ Being transferred to, or assigned with, new jobs under decisions.

6. Members of the Managing Board must jointly take responsibility before the person who has issued appointment decisions and before law for decisions of the Managing Board; and perform the obligations defined in Clause 2, Article 23 of this Decree."

"Article 20.- Conditions for the Managing Board chairman and the general director (director) to take part in management of other enterprises

1. The Managing Board chairman and the general director (director) of the company may set up other limited liability companies or joint-stock companies only when such is approved in writing by the company owner.

2. The Managing Board chairman and the general director (director) of the company may hold the managerial or executive posts in other limited liability companies or joint-stock companies only when they are recommended to such posts or appointed as legal representatives of the company's capital contributions to other enterprises, by the company owner.

3. The wife or husband, father, mother, offsprings or blood siblings of the Managing Board chairman or the general director (director) must not hold the post of chief accountant or cashier of the same company. The wife or husband, father, mother, offspring or blood siblings of the Managing Board chairman must not be the general director (director) of the same company.

4. The contract concluded by the company with a member of the Managing Board or the general director, or with his/her wife or husband, father or adoptive father, mother or adoptive mother, child or adopted child or a blood sibling must be notified to the person who has appointed such member or general director or the person signing the contract to hire the general director; in cases where the person who has appointed the Managing Board member or the general director or the person signing the contract to hire the general director finds out that the to be-concluded contract is for self-seeking purposes, he/she may request such member or general director not to sign the contract; if the contract has been concluded, it shall be considered invalid and the concerned Managing Board member or the general director must pay compensation to the company and be handled according to the provisions of law."

"Article 21.- General director (director) and assisting apparatus

1. Criteria and conditions for a general director:

a/ Permanently residing in Vietnam;

b/ Being capable of doing business and organizing the management of the company; having a university degree; having professional qualifications in the major business lines of the company; having at least three-year experience in management and administration of enterprises in the major business lines of the company;

c/ Having good health and good morals, being honest and incorrupt; having law knowledge and sense of law observance.

2. The following subjects shall not be selected for appointment or signing of contracts to be directors:

a/ Persons who had been directors of state companies but disciplined in form of dismissal or relief from office or let their companies fall into the state defined at Point a, Clause 3, Article 25 of the State Enterprise Law;

b/ Subjects prohibited to hold managerial and executive positions in enterprises under the provisions of law.

3. The Managing Board shall decide to select one of its members or another person for definite-term appointment of, relieve from office or sign a term contract, or terminate the contract with, the general director (director) of the company.

The general director (director) shall take responsibility before the Managing Board and before law for running the company's daily activities. In cases where the company's charter does not provide that the Managing Board chairman is concurrently the company's representative at law, the general director (director) shall be such representative.

The general director shall enjoy wage on a yearly basis and bonuses corresponding to the efficiency of operations of the company.

4. Deputy general directors (deputy directors) shall be selected, appointed, relieved from office by, sign term contracts with, or have their contracts terminated by, the Managing Board at the proposal of the general director (director).

Deputy general directors (deputy directors) shall assist the general director (director) in running the company under the latter's assignment and authorization; take responsibility before the general director (director) and before law for their assigned or authorized tasks.

5. The general director (director), deputy general directors (deputy directors) shall be appointed or enter into contracts for a maximum term of five years and may be re-appointed or have their contracts renewed.

6. The office and professional sections and departments shall have the function of advising and assisting the Managing Board and the general director (director) in managerial and executive work."

"Article 23.- Obligations, responsibilities of, and relationship between, the Managing Board and the general director (director)

1. The Managing Board chairman and members shall jointly take responsibility before the person who has issued appointment decisions and before law for decisions of the Managing Board, the results and efficiency of operations of the company. The general director (director) shall be obliged and answerable to the Managing Board and before law for running the company's daily activities, for the exercise of his/her rights and performance of his/her assigned tasks.

2. The Managing Board chairman and members and the general director (director) shall have the obligations:

a/ To exercise their rights and perform their assigned tasks honestly and diligently, for the benefit of the company;

b/ Not to abuse their positions and powers or use the company's properties for the benefits of their own or others; not to give the company's properties to other persons; not to disclose the company's secrets while performing tasks of the Managing Board members or the general director (director) and for at least three years or for a period of time as defined in the company's charter after they cease to be the Managing Board members or the general director (director), except for cases approved by the Managing Board;

c/ When the company fails to fully pay its due debts or fulfill other property obligations, the general director (director) must report such to the Managing Board and seek measures to overcome financial difficulties and notify all creditors of the company's financial situation; the Managing Board chairman and members as well as the general director (director) must neither decide to raise wages nor deduct the company's profits to pay bonuses to managerial staff and laborers of the company;

d/ To bear personal responsibilities for damage caused to creditors when the company fails to fully pay its due debts or fulfill other property obligations but do not comply with the provisions of Point c of this Clause;

e/ In cases where the Managing Board chairman or members or the general director (director) violate the company's charter, make ultra vires decisions or abuse their positions and/or powers, causing damage to the company and the State, they must pay compensation therefor according to the provisions of law and charter of the company;

f/ If due to their poor management and administration, the company fails to achieve the set targets on business results as assigned by the owner or agreed upon in the contract or suffers losses or loss of capital; if they decide on inefficient investment projects, leading to the failure to retrieve investment capital or pay debts; if they fail to ensure wages and benefits for laborers under the provisions of labor law, let violations in capital and asset management, of accounting, auditing or other regimes prescribed by the State occur, they shall not be rewarded and be handled according to the seriousness of their violations and provisions of law;

g/ In the following cases, depending on the seriousness of their violations and consequences, the Managing Board chairman or the general director (director) shall have his/her wage lowered or be dismissed, and at the same time, have to pay compensation according to the provisions of law: failing to accomplish tasks or achieve targets assigned by the person who has appointed or recruited him/her or failing to fulfill his/her obligations under the contract; being dishonest in performing his/her duties, and/or in exercising his/her powers or abusing his/her position and/or powers to seek profits for himself/herself or for others; reporting untruthfully on the financial situation of the company; letting the company fall into the state of bankruptcy without filing an application for bankruptcy declaration; letting the company suffer from losses for two consecutive years or not achieve the set ratio of profit to the owner's investment capital for two consecutive years or fall into the state of having both losses and profits, which cannot be redressed, except for cases where such losses or ratio decrease have been approved by the owner; where losses or decrease of the ratio of profit to the owner's investment capital were attributed to objective causes, which have been explained and approved by the owner; or new investments in production expansion or technological renewal;

h/ Other obligations prescribed by law and charter of the company.

3. Relationship between the Managing Board and the general director (director) in management and administration of the company:

a/ When organizing the implementation of resolutions or decisions of the Managing Board, if detecting any matters unfavorable for the company, the general director (director) shall report them to the Managing Board for consideration and adjustment of such resolutions and decisions. The Managing Board must consider proposals of the general director (director). In cases where the Managing Board does not adjust its resolutions or decisions, the general director (director) shall still have to abide by such resolutions or decisions but have the right to reserve his/her opinions and make proposals to the company's owner;

b/ At the end of each month, quarter or year, within the time limit prescribed by the company's charter, the general director (director) must send reports on the company's business situation and orientations for the coming period to the Managing Board;

c/ The Managing Board chairman shall attend or nominate the Managing Board representatives to attend briefings and meetings in preparation for schemes to be submitted to the Managing Board, which are chaired by the general director (director). The Managing Board chairman or representatives attending such meetings shall have the right to raise opinions but no right to conclude meetings. The general director (director), who is not member of the Managing Board, shall be invited to attend meetings of the Managing Board, have the right to raise opinions but no right to vote."

"2. The company president shall have the following rights and tasks:

a/ To decide on the annual business plan of the company. To submit to the owner for decision the plan on distribution of after-tax profits according to the owner's investment capital sources and capital sources mobilized by the company; and the deduction percentages for the company's development investment fund, reward fund as well as bonus fund for its executive board;

b/ To decide on appointment, relief from office, dismissal as well as wage level and other benefits of the company's director after obtaining consent of the company's owner;

c/ To appoint, relieve from office, reward and discipline deputy directors of the company at the proposal of the director;

d/ To decide on organizational structure and the internal regulation on management of the company as well as the managerial staff payroll; to decide on the salary scale and levels as well as salary subsidies for use as bases for arrangement and payment of salaries to laborers of the company like other enterprises operating under the Enterprise Law;

e/ To request the general director to file an application for declaration of bankruptcy when the company falls into the state of bankruptcy.

3. The company president must satisfy the criteria and perform the obligations prescribed in Article 16 of this Decree; comply with the conditions for participation in management of other enterprises according to the provisions of Article 20 of this Decree."

"12. The company director shall perform the obligations provided in Article 23 of this Decree; abide by the conditions on participation in management of other enterprises provided for in Article 20 of this Decree.

13. Relationship between the company president and director in management and administration of the company:

a/ When organizing the implementation of decisions of the company president, if detecting any matters unfavorable for the company, the director shall report them to the company president for consideration of adjustment of such decisions. The company president must consider the director's proposals. Where the company president does not adjust the decisions, the director shall still have to abide by such decisions but have the right to reserve his/her opinions and make proposals to the owner of the company;

b/ At the end of each month, quarter or year, within the time limit defined in the company's charter, the director must send reports on the company's business situation and orientations for the subsequent period to the company president;

c/ The company president shall attend or nominate the company's representatives to attend briefings and meetings chaired by the director in preparation for schemes to be submitted to the company president. The company president or representatives who attend such meetings shall have the right to raise opinions but no right to conclude the meetings."

Article 2.- Implementation effect

This Decree takes effect 15 days after its publication in "CONG BAO." All previous regulations on conversion of state enterprises and enterprises of political organizations or socio-political organizations into one-member limited liability companies, which are contrary to this Decree, shall cease to be effective.

Article 3.- Responsibilities for organization of implementation

1. The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with the Ministry of Finance, the Ministry of Labor, War Invalids and Social Affairs and relevant agencies in, guiding the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of Government-attached agencies, presidents of provincial/municipal People's Committees, and Managing Boards of state corporations shall have to implement this Decree.