"2.2. When obtaining the decision publicizing its value, the enterprise shall:

a/ Adjust the accounting book and the balance sheet based on that decision.

b/ Preserve and hand over its debts and assets (enclosed with relevant records) which have been excluded from its value to the Company Purchasing and Selling Outstanding Debts and Assets of Enterprises within 60 days after the publicization of its value.

c/ Fully account arising expenses related to the equitization.

d/ Depreciate fixed assets in the period from the time of its valuation to the time of its official conversion into a joint stock company as follows:

- When the enterprise has made a financial statement according to the reporting period, it shall not adjust the depreciation level based on the new historical cost.

- When the enterprise has not yet made a financial statement, it shall adjust the depreciation level based on the new historical cost from the time of its valuation.

e/ If the period from the time the investor pays money for the purchase of shares to the time the company is granted a business registration certificate is longer than 3 months, the enterprise may calculate and pay interests on the paid money to the investors on the following principles:

- Interests on the total par value of the purchased shares shall be paid only from the fourth month on.

- The interest rate must not exceed the interest rate of short-term loans of the same term, set by commercial banks at the time of interest calculation.

- The payment of interests must not cause losses to the enterprise.

The enterprise may account these paid interests as its business expense.

f/ The distribution of profits generated from the time of enterprise valuation to the time of official conversion into a joint stock company shall comply with the current provisions of law on state companies."

"2.3. Making of a financial statement as soon as the joint stock company is granted the business registration certificate:

a/ Within 30 days after being officially converted into a joint stock company, the enterprise shall make a financial statement by the time it is granted the business registration certificate and send it to the units as stipulated in the accounting regime.

Within 30 days after receiving the financial statement, the agency competent to decide on the enterprise value shall inspect and handle financial matters arising between the two points of time; re-value the state capital portion and decide on the adjustment of the state capital in the enterprise; organize the hand-over between the enterprise and the joint stock company; and send the result of re-valuation of the state capital portion to the Ministry of Finance.

b/ The director and the chief accountant of the state company shall make and sign the financial statement, the report on valuation of the state capital portion at the time of conversion into the joint stock company, and the report on finalization of equitization expenses and taxes, and take responsibility for the truthfulness and accuracy of those reports.

The management board of the (new) joint stock company shall create conditions for leaders of the (former) state company to fulfill their tasks. The director or chief accountant of the state company who has not yet completed the financial statement may not move to another company or cease working according to regulations.

c/ If the enterprise is valuated in a year while it is officially converted into a joint stock company in the subsequent year, only one financial statement for the whole period, rather than two separate statements by December 31 of the previous year and by the time of official conversion, shall be made."

"6. Land use rights value

The determination of the land use rights value for inclusion into the enterprise value shall comply with Clauses 1 and 2, Article 19 of Decree No. 187/2004/ND-CP, specifically:

6.1. When the enterprise applies the form of renting land:

a/ If the enterprise is renting land, the land use rights value shall not be included in the enterprise value; the joint stock company shall continue signing the land rent contract in accordance with law and manage and use that land for proper purposes but may not transfer or sell it.

b/ If the land has been allocated and the land use levy has been remitted into the state budget, or the land use rights have been purchased by the enterprise from other individuals or legal persons, and the enterprise now shifts to rent land, only the expenses that increase the land use value and the value of landed assets, such as compensation, ground clearance and ground filling-up expenses, shall be included in the enterprise value.

The enterprise shall carry out the procedures for shifting from the form of land allocation to the form of land renting before its official conversion into a joint stock company.

6.2. When the enterprise applies the form of land allocation with payment of land use levy, the land use right value for enterprise valuation shall be determined as follows:

a/ For the land area which is being rented by, and now is allocated to, the enterprise: After the equitization decision is issued, the enterprise shall, simultaneously with the inventory, classification and re-valuation of assets, determine under Article 6 of the Government's Decree No. 17/2006/ND-CP of January 27, 2006, the land use rights value to be remitted into the state budget at the time of valuation and report it to the People's Committee of the province or centrally run city where exists the enterprise's allocated land area for consideration and decision.

Within 30 days after receiving the enterprise's report, the provincial/municipal People's Committee shall decide on the specific land price and notify the enterprise of that price. Past that time limit, if the provincial/municipal People's Committee gives no comment, it shall be regarded as having agreed with the enterprise's plan on determination of the land price. If the equitized enterprise disagrees with the land price re-determined by the provincial/municipal People's Committee, it may continue renting land for the equitization.

The land use rights value determined on the above principles shall be included in the enterprise value and accounted as a state budget remittance but not as an increase in the state capital portion in the enterprise.

The order and procedures for allocation of land, payment of land use levy and grant of land use rights certificates shall comply with the provisions of the Land Law and its guiding documents.

b/ If the enterprise is allocated land for construction of houses or infrastructure facilities for transfer or lease and has remitted the land use levy into the state budget:

- The enterprise shall re-determine the land use rights value at the price set by the provincial/municipal People's Committee at the time of valuation, which must not be lower than the actual land use rights expense reflected in the accounting book. If the re-determined land use rights value is higher the actual land use right expense reflected in the accounting book, the difference shall be included in the actual value of the state capital portion in the enterprise.

- If the state capital portion value (including the land use rights value) exceeds the charter capital of the equitized enterprise under the approved plan, the difference shall be regarded as a revenue from equitization and handled in accordance with Point 1.3, Section VI of Circular No. 126/2004/TT-BTC.

c/ If the equitized enterprise is allocated land for construction of dwelling houses or infrastructure facilities for transfer or lease and uses part of the land area for building public-utility works to be handed over to the locality for management or use, the land use rights value to be included in the value of the equitized enterprise shall be determined as follows:

- If the hand-over is made with payment, only the land use rights value of the land area which has been allocated to the enterprise for commercial operation of houses or infrastructure facilities shall be re-determined for inclusion in the value of the equitized enterprise.

- If the hand-over is made without payment, the whole value of the right to use the allocated land area shall be included in the enterprise value after subtracting the expenses for construction of the handed-over public-utility works.

d/ If the equitized enterprise is allocated land for construction of dwelling houses or infrastructure facilities for transfer or lease and it has regulated the house and land fund under the mechanism provided by the provincial/municipal People's Committee, the land use rights value included in the enterprise value shall be the re-determined land use rights value minus the regulated income.

e/ If the equitized enterprise is allocated land for construction of houses or infrastructure facilities for transfer or lease and transfers part of the area of high-rises to other agencies for use as working offices or for business activities, the re-determined land use rights value must be distributed to the transferred house area based on the co-efficients of house stories or the house selling price applicable to each story. Those co-efficients are set by provincial/municipal People's Committees in accordance with state current regulations.

f/ If the equitized enterprise which is allocated land for construction of dwelling houses for sale has sold the houses, it shall not re-valuate the sold house area corresponding to the proceeds from house sale which have been accounted as incomes, for determining annual business results and paying taxes according to state regulations."

"1.2. Strategic investors defined in Clause 2, Article 26 of Decree No. 187/2004/ND-CP shall be approved by the equitization-deciding agency. Laborers in the equitized enterprise and legal persons in the same corporation shall not be regarded as strategic investors."

"1.4. Members of the Steering Committee for Enterprise Equitization (when auction is conducted in the enterprise) and intermediary financial institutions that valuate or auction shares of the equitized enterprise may not participate in the auction for purchase of shares of that enterprise."

"2.2. The number of preferred shares to be sold is specified as follows:

a/ One hundred shares at most shall be sold to each laborer in the enterprise for every working year in the state sector at a price which is 40% lower than the actual average auction-winning price.

b/ Twenty per cent of the sold shares at most shall be sold to strategic investors at a price which is 20% lower than the actual average auction-winning price.

c/ The total discount value of preferred shares sold to laborers and strategic investors (determined based on the par value of shares) must not exceed the state capital portion in the enterprise after subtracting the value of shares held by the State and equitization expenses according to set norms."

"2.3. The number of shares which are publicly auctioned to investors (including both strategic investors and laborers if they purchase more shares) must be at least 20% of the charter capital. If that number is below 20% of the charter capital, the following handling measures shall be taken:

a/ Reducing the enterprise's shares held by the State if the enterprise dose not have its dominant shares held by the State.

b/ Reducing the number of preferred shares sold to strategic investors; if that number is still below 20%, reducing the number of preferred shares sold to laborers."

"2.5. For equitized enterprises which are eligible for listing and registering transactions in the securities market, their share sale plans must meet the conditions on the number of shareholders for listing or registering transactions in the securities market."

"1.4. For enterprises in deep-lying or remote areas which plan to publicly auction shares valued at between over VND 1 billion and VND 10 billion and have publicly announced its intention to hire share-auctioning organizations but no intermediary financial institution accepts to auction shares of those enterprises, the Steering Committee for Enterprise Equitization shall itself hold the auction."

"d/ To supply information on the equitized enterprise (as stipulated in Appendix No. 7 to Circular No. 126/2004/TT-BTC), the equitization plan, the draft organization and operation charter of the joint stock company; the form of application for auction participation registration; and relevant information on auction (made according to Appendix No. 9 to Circular No. 126/2004/TT-BTC) to investors and investment promotion organizations."

"6. Handling of unsold shares:

6.1. When the auctioned shares cannot be sold out, the Steering Committee for Enterprise Equitization shall report such to the equitization-deciding agency for handling in the following direction:

a/ If the number of unsold shares represents less than 50% of the auctioned shares, to adjust the charter capital or the ratio of capital held by the State for conversion of the enterprise into a joint stock company.

b/ If the number of unsold shares represents 50% or more of the auctioned shares, to adjust the reserve price (which must not be lower than the par value of shares) and hold another auction of these shares.

6.2. If the bid-winning investor refuses to buy or fails to buy up the shares he/she is entitled to buy based on the auctioning results, he/she may not receive back the deposit in proportion to the number of shares he/she refuses to buy. The Steering Committee for Enterprise Equitization shall consider and handle the number of shares the bid-winning investor refuses to buy as follows:

a/ If the number of shares the bid-winning investor refuses to buy represents less than 30% of the total auctioned shares, those shares shall be further sold to auction-participating investors by mode of agreement. The selling prices shall come from high to low but must not be lower than the average auction-winning price (including also the auctioning price offered by the investor that refuses to buy shares).

After the agreement-based sale, if the shares planned for sale have still not been sold out, the Steering Committee for Enterprise Equitization shall report such to the equitization-deciding agency for handling in accordance with Item a, Point 6.1 above.

b/ If the number of shares the bid-winning investor refuses to buy represents 30% or more of the total auctioned shares, the refused shares shall be further auctioned.

If the refused shares are auctioned but cannot be sold out, the Steering Committee for Enterprise Equitization shall report such to the equitization-deciding agency for handling in accordance with Item a, Point 6.1 above.

6.3. If laborers and strategic investors fail to buy up all the preferred shares, the Steering Committee for Enterprise Equitization shall report such to the equitization-deciding agency to decide on adjustment of the charter capital or the ratio of capital held by the State for conversion of the enterprise into a joint stock company.

6.4. The actual average auction-winning price used as a basis for determination of the preferential selling price of shares for laborers and strategic shareholders shall be calculated based on the price and number of shares actually purchased by investors (including the results of agreement-based sale and additional auction, if any).

"8. The expense for auction of shares shall be decided by the equitization-deciding agency and determined as follows:

a/ If the auction is conducted by the Steering Board for Enterprise Equitization, that expense must not exceed 10% of the total equitization expenses.

b/ If the auction is conducted by intermediary financial institutions, that expense must not exceed 15% of the total equitization expenses (including expenses for at least 2 seminars on investment opportunities and introduction of the equitized enterprise to investors).

c/ If the auction is conducted at a securities trading center, that expense must not exceed 20% of the total equitization expenses. The expense distribution between the center and the intermediary financial institutions shall be agreed by the parties."

"After completing the sale of shares of an independent state company under a ministry, ministerial-level agency, government-attached agency or provincial/municipal People's Committee, the share-auctioning agency shall immediately remit the proceeds from the sale of shares belonging to the state capital and the positive difference from share auction to the Enterprise Reorganization Support Fund at the Finance Ministry (but not to enterprises) at the following address:

The money-receiving unit: the Enterprise Finance Department - the Finance Ministry.

Account number: 942.01.00.00000

At: the State Treasury's Transaction Bureau.

After finishing the equitization process, the enterprise shall determine the exact payable amount, finalize expenses paid to laborers and equitization expenses and report them to the equitization-deciding agency. If the payable amount is larger than the paid amount, the enterprise shall pay the deficit to the Fund. If the payable amount is smaller than the paid amount, the enterprise shall notify such to the Fund for getting the difference refunded.

Ministries, ministerial-level agencies or government-attached agencies (for centrally run enterprises) or provincial/municipal People's Committees (for enterprises under provinces or centrally run cities) shall direct and urge the payment of proceeds from share sale to the Enterprise Reorganization Support Fund at the Finance Ministry."

"2.4. Responsibilities of valuating organizations:

To be answerable for the enterprise valuation results. If those results are not compliant with state regulations, the Steering Committee for Enterprise Equitization may refuse to pay for the valuation services and those valuating organizations shall be considered for exclusion from the list of qualified valuating organizations.

2.5. Responsibilities of auctioning agencies:

To be responsible for the information on the enterprise which is publicized before the auction. That information must be approved by the Steering Committee for Enterprise Equitization before being notified to investors.

If the information is inaccurate, distorting the actual situation of the enterprise and causing state capital loss or damage to investors, the auctioning agency shall be wholly responsible for paying compensations for such loss on damage.

2.6. Responsibilities of agencies involved in tax finalization for equitized enterprises are specified as follows:

a/ Time of valuation of enterprises:

- The enterprise shall make and send a tax finalization report by the time of enterprise valuation to the tax office according to regulations. The provincial/municipal Tax Department shall promptly assign its officers to make tax finalization for the enterprise in accordance with the announced time of enterprise valuation.

- If, by the time of enterprise valuation, the tax finalization inspection has not yet been completed, the enterprise may use the financial statement for enterprise valuation (including the determination of the enterprise's obligations related to tax and profit distribution). After the tax finalization is made, the differences (if any) in the enterprise's tax obligations towards the State shall be adjusted when the enterprise is granted the business registration certificate and is officially converted into a joint stock company.

b/ Time when the enterprise is granted the business registration certificate:

- The enterprise shall make and send a tax finalization report for the period from the time of its valuation to the time of its official conversion into a joint stock company to the tax office according to current provisions of law right after being granted the business registration certificate. Within 10 days after receiving the complete dossier, the tax office shall complete the inspection of the enterprise's tax finalization.

- When the enterprise has submitted a complete dossier but the tax office fails to inspect its tax finalization within the set time limit, the equitization-deciding agency shall issue a decision approving the tax finalization, and transfer capital and assets to the joint stock company. The joint stock company shall not be answerable for the tax amount increased against that written in the financial statement which has been approved and transferred by the competent agency."

This Circular takes effect 15 days after its publication in "CONG BAO."

Any problems arising in the course of implementation should be reported to the Finance Ministry for study and solution.