DECREE

On exercise of rights and performance of obligations of the state-owner to State Companies

THE GOVERNMENT

                                                            DECREES:

Article 1.- Scope of regulation

This Decree provides for the exercise of the rights and the performance of the obligations of the state-owner to state companies, including independent state companies and state corporations, defined in the Law on State Enterprises.

Article 2.- Exercise of rights and performance of obligations of the state-owner to state companies

1. The state is the owner of state companies. The Government shall perform uniform state management of, and organize the exercise of the rights and performance of the obligations of the state-owner to, state companies. The Government shall directly exercise the rights and perform the obligations of the state-owner or authorize ministries, ministerial-level agencies or Government-attached agencies (hereinafter collectively referred to as ministries); decentralize the People's Committees of provinces or centrally run cities (hereinafter collectively referred to as provincial-level People's Committees); or assign the managing boards of state corporations or independent state companies with managing boards (hereinafter collectively referred to as managing boards) to do so.

2. The Prime Minister shall directly exercise a number of rights and perform a number of obligations of the state-owner to state corporations and specially important independent state companies established under his decisions or authorize relevant ministries to do so.

3. Ministries and provincial-level People's Committees shall act as the owner's representatives for state companies established under their respective decisions; and exercise a number of rights and perform a number of obligations of the state-owner to state corporations and specially important independent state companies established under the Prime Minister's decisions according to his authorization.

4. The Ministry of Finance and functional ministries shall exercise a number of rights and perform a number of obligations of the owner to state companies according to their assigned domains.

5. Managing boards shall act as the state owner's direct representatives in state companies with managing boards and as the owner's representatives for companies having charter capital wholly invested by them.

Article 3.- Rights of the state-owner to state companies

1. To decide on the establishment of new state companies, on their organizational structure and management mechanisms, and their reorganization, dissolution or ownership transformation.

2. To decide on the objectives, strategies, long-term plans and business lines of state companies.

3. To approve the charters of state companies and amendments and supplements thereto.

4. To decide to invest capital in forming and adjusting the charter capital of state companies.

5. To decide on the investment, contribution of investment capital, joint-venture capital or partnership capital of state companies according to its competence; approve their borrowing, lending, renting and lease proposals.

6. To decide on the financial regime applicable to state companies, the distribution of incomes, setting up and use of their funds.

7. To decide on the appointment, dismissal, demotion, commendation or disciplining of managing board chairmen or members, general directors or directors of state companies.

8. To provide for the regime of salaries, salary-based allowances and bonuses in state companies; decide on the levels of salaries and salary-based allowances for managing board chairmen or members, general directors or directors of state companies.

9. To promulgate regulations on the placement of orders, bidding or assignment of tasks, selling prices and loss-offsetting levels for the production of public-utility products and the provision of public-utility services.

10. To inspect and supervise state companies in the realization of their objectives and tasks and the execution of decisions made by the state-owner, and evaluate their operational efficiency.

Article 4.- Obligations of the state-owner to state companies

1. To invest sufficient charter capital in state companies.

2. To properly implement the provisions of state companies' charters concerning the owner.

3. To take responsibility for liabilities and other property obligations of state companies within the limit of their charter capital.

4. To take responsibility before law for decisions on investment projects; approval of purchase, sale, borrowing, lending, renting and lease proposals according to its competence.

5. To ensure the right of state companies to business autonomy and self-responsibility before law; to refrain from illegally intervening in their business activities.

6. To perform other obligations as specified by law.

Section 1. RIGHTS OF THE STATE-OWNER TO STATE COMPANIES

Article 5.- Decision on the establishment, reorganization, dissolution and ownership transformation of state companies

1. The Government shall promulgate regulations on the establishment of new state companies; branches, domains and geographical areas where the establishment of new state enterprises is considered; dissolution and ownership transformation of state companies.

2. The Prime Minister:

a/ To approve schemes on the establishment of new state companies under the Government's Decree No. 180/2004/ND-CP of October 28, 2004, on the establishment, reorganization and dissolution of state companies.

b/ To approve plans on the reorganization, dissolution or ownership transformation of state companies in the whole national economy at the proposal of ministries or provincial-level People's Committees with regard to independent state companies and state corporations set up under decisions of ministries or provincial-level People's Committees or independent state companies set up under decisions of the Prime Minister; and at the proposal of managing boards with regard to state corporations set up under decisions of the Prime Minister, after obtaining opinions of the Ministry of Planning and Investment, the Ministry of Finance and branch-managing ministries.

c/ To decide on the establishment of new state corporations of special importance and independent state companies of special importance at the proposal of branch-managing ministries.

d/ To decide on the reorganization, dissolution or ownership transformation of specially important state corporations established under decisions of the Prime Minister at the proposal of their managing boards.

e/ To decide on the reorganization and dissolution of important state companies directly serving defense and security.

3. Ministers, presidents of provincial-level People's Committees:

a/ To decide the establishment of new state companies (other than state companies established under decisions of the Prime Minister) after the schemes thereon have been approved by the Prime Minister.

b/ To consider and submit to the Prime Minister schemes on reorganization, dissolution or ownership transformation of state corporations established under their decisions at the proposal of the managing boards of the state corporations.

c/ To formulate plans on the reorganization, dissolution or ownership transformation of independent state companies established under their decisions and independent state companies established under decisions of the Prime Minister and submit them to the Prime Minister for approval.

d/ To decide on the reorganization, dissolution or ownership transformation of state companies (other than those specified at Point d and e, Clause 2 of this Article) according to the plans approved by the Prime Minister and organize the implementation thereof.

4. Managing boards of state corporations:

a/ To formulate plans on the establishment, reorganization, dissolution or ownership transformation of the corporations and submit them to persons who have decided on their establishment; organize the implementation of the plans after they are approved.

b/ To admit enterprises that voluntarily participate in the corporations as their members after getting the approval thereof from persons who have decided on their establishment.

Article 6.- Decision on objectives, strategies, long-term plans and business lines of state companies

1. The Prime Minister shall approve the objectives, strategies, long-term plans and business lines of state companies with managing boards, which have been established under decisions of the Prime Minister at the proposal of the managing boards, and some other specially important state companies at the proposal of branch-managing ministries, after obtaining opinions of such ministries (for cases proposed by the managing boards) and the Ministry of Planning and Investment.

The list of the above-said state companies shall be decided by the Prime Minister.

2. Ministries, provincial-level People's Committees:

a/ To approve the objectives, strategies, long-term plans and business lines of state companies with managing boards, which have been established under their decisions, at the proposal of the managing boards.

b/ To decide on the objectives, strategies, long-term plans and business lines of independent state companies without managing boards, which have been established under decisions of the Prime Minister, after they are approved by the Prime Minister, and of independent state companies without managing boards, which have been established under their decisions.

3. The managing boards shall decide on the objectives, strategies, long-term plans and business lines of their companies after they are approved by competent authorities and of enterprises having charter capital wholly owned by their companies.

Article 7.- Approval of charters of state companies, approval of amendments and supplements thereto

1. The Prime Minister shall approve the charters as well as amendments and supplements to the charters of state companies established under his decisions, at the proposal of their managing boards and on the basis of opinions of branch-managing ministries, the Ministry of Finance and the Ministry of Planning and Investment.

On a case-by-case basis, the Prime Minister may authorize branch-managing ministries or provincial-level People's Committees to approve amendments and supplements to the charters of state companies established under his decisions.

2. Ministries or provincial-level People's Committees shall approve the charters as well as amendments and supplements to the charters of state companies established under their decisions and of state companies without managing boards established under decisions of the Prime Minister.

3. The managing boards shall approve the charters of member companies having charter capital wholly owned by their corporations, and amendments and supplements thereto.

Article 8.- Decision on investment of capital in forming or adjusting the charter capital of state companies

1. The Prime Minister shall decide on the investment of capital to form or adjust the charter capital of state companies established under his decisions, at the proposal of their managing boards, branch-managing ministries or provincial-level People's Committees after obtaining opinions of branch-managing ministries (if it is so proposed by the managing boards or provincial-level People's Committees), the Ministry of Finance and the Ministry of Planning and Investment.

The Ministry of Finance shall invest sufficient charter capital under decisions of the Prime Minister.

2. Ministries or provincial-level People's Committees shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, determining the level of charter capital for state companies established under their decisions.

The Ministry of Finance shall invest sufficient charter capital for state companies under decisions of ministries or provincial-level People's Committees, at the proposal of branch-managing ministries.

Provincial-level People's Committees shall invest sufficient charter capital for state companies established under their decisions.

3. The managing boards of corporations shall decide on the use, investment and adjustment of capital and other resources invested by the corporations in their member companies while must ensure the level of charter capital required for newly established enterprises or the level of legal capital required for business lines under the provisions of law.

Article 9.- Decision on investment, contribution of investment, joint-venture and partnership capital; approval of borrowing, lending, renting or lease proposals

1. The Prime Minister shall decide on investment projects of state companies and investment projects outside state companies falling within the scope of his deciding competence according to the provisions of law on investment.

2. Ministries, provincial-level People's Committees:

a/ To decide on investment projects of state companies under the provisions of Clause 4, Article 66 of the Law on State Enterprises and the provisions of law on investment.

b/ To approve capital contribution plans of state companies established under their decisions for establishing state-owned joint-stock companies, state-owned one-member limited liability companies or state-owned limited liability companies with two or more members outside the branches, domains or geographical areas defined in Article 6 of the Law on State Enterprises.

c/ To decide on state companies' projects on contribution of capital to or purchase of shares from other companies under the provisions of Clause 5, Article 66 of the Law on State Enterprises.

d/ To decide on state companies' proposals on sale of property, borrowing, lending, renting or lease under the provisions of Clause 6, Article 66 of the Law on State Enterprises.

e/ To approve state companies' plans on acquisition of companies of other economic sectors.

3. Managing boards:

a/ To decide on or authorize general directors to decide on investment projects in, contribution of capital to or purchase of shares from other companies, sale of their companies' property, borrowing, lending, renting, lease and other economic contracts under the provisions of Point b, Clause 2, Article 30 of the Law on State Enterprises and the provisions of law on investment.

b/ To decide on the use of their corporations' capital for investment in establishing member units with their charter capital wholly owned by their corporations, which must not exceed the level of investment capital falling under the managing boards' deciding competence, after getting the approval of persons who have decided on the establishment of their corporations.

c/ To approve capital contribution plans of member companies having charter capital wholly owned by their corporations for establishing state joint-stock companies, state-owned one-member limited liability companies or state-owned limited liability companies with two or more members outside the branches, domains or geographical areas defined in Article 6 of the Law on State Enterprises.

d/ To decide on or authorize general directors to decide on projects on contribution of capital to joint ventures with foreign investors, and on overseas investment projects of member companies having charter capital wholly owned by their corporations.

Article 10.- Providing for the financial regime applicable to state companies, income distribution, setting up and use of their funds

1. The Government shall provide for the financial regime applicable to state companies, income distribution, setting up and use of their funds, the reporting and financial publicity regime applicable to state companies, consolidated financial statements of corporations, and implementation inspection mechanisms.

2. The Ministry of Finance shall submit to the Government for promulgation and organize the implementation of the financial and reporting regimes stated in Clause 1 of this Article.

3. The managing boards of state companies shall issue financial management regulations applicable within their companies; adopt their companies' annual financial statements, approve plans on the use of after-tax profits or the handling of losses incurred in their companies' business operations.

Article 11.- Decision on appointment, dismissal, demotion, commendation and disciplining of managing board chairmen and members, general directors or directors of state companies

1. The Prime Minister:

a/ To decide on the appointment, dismissal, demotion, commendation or disciplining of chairmen or members of the managing boards of state companies with managing boards established under his decisions, at the proposal of branch-managing ministries and on the basis of the evaluation of the Ministry of Home Affairs.

b/ To give approval for the managing boards of state companies with managing boards established under his decisions to decide on the appointment, dismissal, demotion, signing of contracts with, commendation or disciplining of the companies' general directors.

c/ To give approval for the ministers of branch-managing ministries to decide on the appointment, dismissal, demotion, commendation or disciplining of general directors (directors) of state companies without managing boards established under his decisions.

2. Ministries, provincial-level People's Committees:

a/ To decide on the appointment, dismissal, demotion, commendation or disciplining of chairmen or members of managing boards of state companies with managing boards established under their decisions.

b/ To give approval for the managing boards of state companies with managing boards established under their decisions to decide on the appointment, dismissal, demotion, signing of contracts with, commendation or disciplining of the companies' general directors or directors.

c/ To decide on the appointment, dismissal, demotion, signing of contracts with, commendation or disciplining of directors, deputy directors or chief accountants of independent state companies without managing boards established under their decisions or of independent state companies without managing boards established under decisions of the Prime Minister.

3. Managing boards:

a/ To decide on the appointment, dismissal, demotion, signing of contracts with, commendation or disciplining of general directors of state companies after getting the approval of persons who have decided on the establishment of such companies.

b/ To decide on the appointment, dismissal, demotion, signing of contracts with, commendation or disciplining of deputy general directors or chief accountants of state companies at the proposal of general directors.

c/ To give approval for general directors of state companies to decide on the appointment, dismissal, demotion, signing of contracts with, commendation or disciplining of directors or chief accountants of member companies and non-business units having charter capital wholly owned by the state companies and of other key managerial positions defined in the companies' charters.

d/ To decide to appoint representatives for the companies' capital amounts contributed to other enterprises at the proposal of general directors.

4. The Ministry of Home Affairs shall guide the order and procedures for appointment, dismissal, demotion, commendation and disciplining of chairmen and members of managing boards, general directors or directors, deputy general directors or deputy directors, chief accountants and other key managerial positions in state companies.

Article 12.- Providing for the regime of salaries, salary-based allowances and bonuses in state companies; decision on salaries and salary-based allowances of chairmen and members of managing boards, general directors or directors of state companies

1. The Government shall provide for the regime of salaries, salary-based allowances and bonuses in state companies; provide for salaries, bonuses, allowances and other benefits of chairmen and members of managing boards, general directors or directors of state companies.

2. Persons who have decided on the appointment of personnel defined in Article 11 of this Decree shall decide on the grading and raising of salaries and salary-based allowances for such personnel.

Article 13.- Providing for the regime of bidding, order or assignment of tasks of producing and providing public-utility products or services

1. The Government shall provide for the lists of public-utility products and services in service of socio-economic development; state companies established and registered to realize their major, regular and stable objectives of providing public-utility products and/or services; and state companies directly serving defense or security.

The Prime Minister shall provide for mechanisms of bidding, order or assignment of tasks of producing and providing public-utility products or services.

2. Branch-managing ministries and provincial-level People's Committees shall manage public-utility products or services and assign tasks of providing public-utility products and/or services to eligible state corporations or independent state companies for performance or organization of bidding or placement of orders.

State corporations shall perform the tasks of producing and providing public-utility products and/or services or assign such tasks to eligible member companies for performance.

Article 14.- Inspection and supervision of the achievement of objectives, performance of tasks and execution of decisions of the owner, and efficiency assessment of operation of state companies

1. The Prime Minister shall provide for the regime of inspection and supervision of state companies in the achievement of assigned objectives and performance of assigned tasks; the regime of inspection and supervision of the use of capital in state companies; criteria for the efficiency assessment of the operation of companies, management activities of their managing boards and execution activities of their general directors or directors.

2. Branch-managing ministries and provincial-level People's Committees shall formulate regulations on the inspection and supervision of state companies according to their competence; assume the prime responsibility for, and coordinate with the Ministry of Finance in, conducting efficiency assessment of the operation of companies, management activities of their managing boards and execution activities of their general directors or directors under the Prime Minister's regulations; consider and evaluate annual financial statements; evaluate the situation of finance, labor, production and business capability and operation efficiency of companies at the end of every fiscal year.

3. The Ministry of Finance shall inspect and supervise the management and use of capital and the distribution of incomes, setting up and use of funds of state companies.

4. The managing boards shall inspect and supervise general directors and directors of member units in the performance of their functions and tasks under the provisions of the Law on State Enterprises and the company charters.

Section 2. OBLIGATIONS OF THE STATE-OWNER TO STATE COMPANIES

Article 15.- The obligation of the state-owner to invest sufficient charter capital in state companies

1. Branch-managing ministries shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, accurately and sufficiently determining the charter capital of state companies established under their decisions so as to ensure their operation efficiency.

2. The Ministry of Finance shall invest and supplement charter capital for state companies defined in Clause 1 and 2, Article 8 of this Decree and other provisions of law.

3. Provincial-level People's Committees:

a/ To assume the prime responsibility for, and coordinate with the Ministry of Finance in, accurately and sufficiently determining the charter capital of state companies established under their decisions so as to ensure their operation efficiency.

b/ To invest sufficient capital in new state companies established under their decisions.

c/ To supplement capital to ensure sufficient charter capital as determined by provincial-level People's Committees for state companies established under their decisions.

Article 16.- The obligation to properly and fully comply with the provisions of the charters of state companies concerning the owners

1. Ministers, presidents of provincial-level People's Committees, and managing boards of state companies shall be responsible for organizing according to their respective competence proper implementation of the provisions of the companies' charters.

2. For matters not yet stipulated in the charters of state companies, ministers or presidents of provincial-level People's Committees shall decide the implementation thereof under the provisions of law, then request the companies to revise their charters as soon as possible for approval according to regulations.

3. Ministers, presidents of provincial-level People's Committees, and managing boards of state companies shall be responsible before law for making wrong decisions or giving wrong approvals, making decisions or giving approvals ultra vires, causing losses of state capital to the companies and resulting in their inefficient operation.

Article 17.- Responsibilities of the owner for liabilities and other financial obligations

1. The owner shall be responsible for liabilities and other property obligations within the limit of the charter capital of companies.

2. Ministers, presidents of provincial-level People's Committees, and managing boards shall inspect and evaluate periodically or without advance notice liabilities and property obligations of companies; if detecting that the ability of companies to pay their liabilities and other property obligations is low, they shall request such companies to work out plans to overcome the problems and report them to the owner for approval.

3. Where companies fail to fully pay due liabilities and other property obligations, ministries, presidents of provincial-level People's Committees or managing boards must direct their general directors or directors to report on the financial status of the companies to all creditors; request the general directors or directors to file applications for opening bankruptcy procedures or file such applications by themselves under the provisions of Article 16 of the June 15, 2004 Law on Bankruptcy.

4. Ministers, presidents of provincial-level People's Committees, and managing boards of state companies shall be responsible before law for non-compliance with the requirements stated in Clauses 2 and 3 of this Article.

Article 18.- Responsibilities of the owner for decision on investment or loan guarantee; approval of purchase, sale, borrowing, lending, renting and lease proposals according to its competence

1. Ministers, presidents of provincial-level People's Committees, and managing boards of state companies shall be responsible for making decision according to their competence and law on investment projects or loan guaranty; approval of purchase, sale, borrowing, lending, renting and lease, investment, joint-venture or partnership capital contribution proposals; or approval of state companies' plans on acquisition of companies of other economic sectors; and for supervising the execution of their decisions and compliance with their approvals.

2. Managing boards and directors of state companies shall be responsible for making decision according to their competence and law and with efficiency on investment projects or loan guarantee; approval of purchase, sale, borrowing, lending, renting and lease, investment, joint-venture or partnership capital contribution proposals; or approval of state companies' plans on acquisition of companies of other economic sectors; and for supervising the execution of their decisions and compliance with their approvals.

3. When failing to meet the above-said requirements and apply timely remedies, resulting in inefficient investment projects or purchase, sale, borrowing, lending, renting and lease, investment, joint-venture or partnership capital contribution activities, failure to recover investment capital, failure to pay debts, damage to their companies' property or losses in their operation. Ministers, presidents of provincial-level People's Committees and managing boards shall bear joint responsibility therefor.

Article 19.- The obligation to ensure companies' right to business autonomy and self-responsibility; refrain from illegally intervening in their business activities

The heads of agencies that exercise the state-owner's rights shall formulate regulations on the exercise of the state-owner's rights assigned, decentralized and delegated to them, ensuring state companies' right to business autonomy and self-responsibility in the process of their operation.

Agencies that exercise the state-owner's rights must not illegally intervene in the affairs run by managing boards, general directors or directors of state companies.

Article 20.- Implementation effect

This Decree takes effect 15 days after its publication in "CONG BAO." All previous regulations contrary to this Decree are hereby annulled.

Article 21.- Implementation responsibilities

Ministers, heads of ministerial-level agencies, heads of Government-attached agencies, and presidents of People's Committees of provinces and centrally-run cities shall have to implement this Decree.