Vietnam law has regulations on investment of state capital in an enterprise. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what is the scope of state investment in business establishment? What are procedure for state investment in business establishment? Thanks for answering my questions!”
Legal grounds
- 2014 Vietnam Law on Management and Utilization of State capital invested in the enterprise’s manufacturing and business activities
Scope of state investment in business establishment
– State investment in business establishment shall be made within the following scopes:
+ Enterprise providing basic public products and services;
+ Enterprises operating in the direct auxiliary sector for the purpose of national defense and security;
+ Enterprises operating in the natural monopoly sector;
+ Hi-tech enterprises, and those making large-scale investment in and serving as the driving force behind the fast growth of different industries, sectors as well as the entire economy.
– The Government shall provide specific regulations on state investment in business establishment and order placement mechanism of the State, applicable to the enterprise that plays its significant roles in regulating the national macro-economy and maintaining the social security in accordance with provisions laid down in Clause 1 of this Article.
Decision-making authority over state investment in business establishment
– The Prime Minister shall be vested with the authority to grant a decision to make state investment in business establishment as follows:
+ Enterprises having operating capital acquired from the implementation of national important projects approved under the decision on investment policies granted by the National Assembly;
+ Parent companies of state-owned economic corporations and enterprises specializing in the investment and trading of state capital.
– The owner’s representative agency shall have the authority to decide to invest state capital in establishment of enterprises which are not governed by regulations enshrined in Clause 1 of this Article.
– In case state investment in business establishment can meet requirements the same as those applied to national important projects, the Prime Minister shall grant an investment decision after the National Assembly’s consent to investment policies.
Procedure for state investment in business establishment
– The owner’s representative agency shall prepare the proposal for business establishment. The proposal must comprise the main information as follows:
+ Objectives and necessity for business establishment;
+ Name, organization model and operational time; main scope of business;
+ Total investment sum; charter capital; mobilized capital sources;
+ Assessment of socio-economic impacts caused by the business establishment upon the planning and proposal for development of sectors, domains and economic regions;
+ Economic and social efficiency.
– The proposal for business establishment must be evaluated by the competent authorities.
– In respect of business establishment stipulated in Clause 1 Article 11 hereof, the owner’s representative agency shall submit their proposal to the Prime Minister for consideration and establishment decision.
– In respect of business establishment stipulated in Clause 2 Article 11 hereof:
+ The owner’s representative agency shall submit the proposal for business establishment to the Prime Minister.
+ The Prime Minister shall consider and decide to approve the intention to establish an enterprise;
+ The owner’s representative agency shall decide to establish an enterprise.
– The Government shall adopt specific regulations on procedures for state investment in business establishment.
Scope of supplementary investment in the charter capital of an existing enterprise
– Supplementary investment in charter capital shall be applied to enterprises specified in the cases stipulated in Clause 1 Article 10 hereof and classified as one of the cases stipulated in Clause 2 of this Article.
– Cases in which supplementary investment in charter capital takes effect shall include:
+ Enterprises operating in an efficient manner but short of charter capital for their core business after obtaining the approval granted by the competent authorities;
+ Enterprises operating in the direct auxiliary sector for the purpose of national defense and security, but short of charter capital for the purpose of performing tasks assigned by the State.
Decision-making authority over supplementary investment in charter capital for an existing enterprise
– The Prime Minister shall grant the decision to make supplementary investment in the charter capital of the enterprise established under his establishment decision.
– The owner’s representative agency shall decide to make supplementary investment in the charter capital of the enterprise established under their establishment decision or managed within their delegated authority in accordance with regulations laid down in 2014 Vietnam Law on Management and Utilization of State capital invested in the enterprise’s manufacturing and business activities, except for those stipulated in Clause 1 of this Article.
– In case the amount of supplementary investment in the charter capital of an existing enterprise is equivalent to the amount of operating capital of national important projects, the Prime Minister shall grant the decision on such supplementation after obtaining the National Assembly’s consent to investment policies.
Procedure for supplementary investment in the charter capital of an existing enterprise
– The enterprise shall set up the plan for supplementary investment in charter capital. Such plan must consist of the major contents as follows:
+ Evaluate financial status and business outcome of the enterprise;
+ Objective, importance, economic and social efficiency of such supplementation to charter capital;
+ Determination of charter capital after capital supplementation.
– The enterprise shall submit the plan for supplementary investment in charter capital to the owner’s representative agency.
– The owner’s representative agency shall preside over and cooperate with regulatory finance bodies of the same level in carrying out the evaluation of such plan.
– In respect of supplementary investment in charter capital stipulated in Clause 1 Article 14 hereof, the owner’s representative agency shall submit their plan for such supplementation to the Prime Minister for his consideration and decision.
– In respect of supplementary investment in charter capital stipulated in Clause 2 Article 14 hereof:
+ The owner’s representative agency shall submit the plan for supplementary investment in charter capital;
+ The Prime Minister shall consider and decide to approve the intention to make supplementary investment in charter capital;
+ The owner’s representative agency shall decide to make supplementary investment in charter capital.
– The Government shall adopt specific regulations on evaluation criteria for outcome, necessary process of supplementary investment in charter capital of that existing enterprise.
Scope of state supplementary investment in joint-stock companies and multiple-member limited liability companies
– The investment of state capital in supplement to charter capital for the purpose of sustaining the expected ratio of state shares and paid-in capital in joint-stock companies and multiple-member limited liability companies shall be carried out in two following cases:
+ Be incapable of attracting Vietnamese and foreign investors in enterprises providing basic public products and services;
+ Realize the necessity of maintaining that ratio for the purpose of national defense and security.
– The Government shall adopt specific regulations on supplementary state investment for the purpose of sustaining the expected ratio of state shares and paid-in capital in joint-stock companies and multiple-member limited liability companies as stipulated in Clause 1 of this Article.
Decision-making authority over supplementary investment of state capital in joint-stock companies and multiple-member limited liability companies
– Authority to grant a decision to make supplementary investment of state capital in joint-stock companies and multiple-member limited liability companies transformed from the enterprise established under his establishment decision.
– The owner’s representative agency shall decide to make supplementary investment of state capital in joint-stock companies and multiple-member transformed from the enterprise established under his establishment decision or managed within his delegated authority in conformity with 2014 Vietnam Law on Management and Utilization of State capital invested in the enterprise’s manufacturing and business activities, except for those stipulated in Clause 1 of this Article.
– In case the amount of state supplementary capital in joint-stock companies and multiple-member limited liability companies is equivalent to the amount of operating capital of national important projects, the Prime Minister shall grant the decision on such supplementation after obtaining the National Assembly’s consent to investment policies.
Procedure and process for supplementary investment of state capital in joint-stock companies and multiple-member limited liability companies
– The representative of state capital share shall report the plan to make supplementary investment of state capital for the purpose of sustaining the expected ratio of state shares and paid-in capital in joint-stock companies and multiple-member limited liability companies. Such plan must consist of the major contents as follows:
+ Evaluate the financial status, operating and business outcome of these joint-stock companies and multiple-member limited liability companies;
+ Plan for an increase in the charter capital of joint-stock companies and multiple-member limited liability companies;
+ Objective, importance, economic and social efficiency of such supplementary investment;
+ The amount of supplementary investments used for sustaining the expected ratio of state shares and paid-in capital.
– The owner’s representative agency shall preside over and cooperate with finance agencies of the same level in carrying out the assessment of supplementary investment of state capital in joint-stock companies and multiple-member transformed from the enterprise established under the Prime Minister’s establishment decision or their own establishment or managed within their delegated authority.
– In respect of supplementary investment of state capital in joint-stock companies and multiple-member limited liability companies as prescribed in Clause 1 Article 17 hereof, the owner’s representative agency shall submit their plan therefor to the Prime Minister for his consideration and decision.
– In respect of supplementary investment of state capital in joint-stock companies and multiple-member limited liability companies as prescribed in Clause 2 Article 17 hereof, the owner’s representative agency shall be vested with the authority to consider and make their decision on this matter.
– The Government shall introduce specific regulations on procedure and process for supplementary investment of state capital in joint-stock companies and multiple-member limited liability companies.
Procedure and process for investment of state capital in repurchase of a part or the whole of an enterprise
– The owner’s representative agency shall prepare the plan to make investment of state capital in repurchase of a part or the whole of an enterprise. Such plan must consist of the major contents as follows:
+ Evaluate financial status and business outcome of that enterprise;
+ Objective, necessity, economic and social efficiency of such investment in repurchase of a part or the whole of that enterprise;
+ Investment capital amount.
– The owner’s representative agency shall preside over and cooperate with finance bodies of the same level in carrying out the assessment of the plan to make investment of state capital in repurchase of a part or the whole of an enterprise.
– In respect of repurchase of a part or the whole of an enterprise as stipulated in Clause 1 Article 20 hereof, the owner’s representative agency shall submit the aforementioned plan to the Prime Minister for his consideration and decision.
– In respect of repurchase of a part or the whole of an enterprise as stipulated in Clause 2 Article 20 hereof, the owner’s representative agency shall consider and make a decision on the plan.
– The Government shall adopt specific regulations on procedure and process for investment of state capital in repurchase of a part or the whole of an enterprise.
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Frequently asked questions
The Government shall provide specific regulations on state investment in business establishment and order placement mechanism of the State, applicable to the enterprise that plays its significant roles in regulating the national macro-economy and maintaining the social security in accordance with provisions laid down in Clause 1 of this Article.
In case state investment in business establishment can meet requirements the same as those applied to national important projects, the Prime Minister shall grant an investment decision after the National Assembly’s consent to investment policies.
The Government shall adopt specific regulations on procedures for state investment in business establishment.
Conclusion: So the above is Investment of state capital in an enterprise in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
