Powers and responsibilities of the representative of state ownership in Vietnam

Vietnam law has regulations on powers and responsibilities of the representative of state ownership in the enterprises of which 100% charter capital is held by the state. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what are powers and responsibilities of the Government in the enterprises of which 100% charter capital is held by the state in Vietnam? What are regulations on auditor of enterprises of which 100% charter capital is held by the State? Thanks for answering me!”

Legal grounds

• 2014 Vietnam Law on Management and Utilization of State capital invested in the enterprise’s manufacturing and business activities

Powers and responsibilities of the Government

– Adopting regulations on the form, content, process and procedure pertaining to the restructuring of state capital in the enterprise.

– Issuing the charter and revise that charter for enterprises which have their whole charter capital held by the State and are established under the Prime Minister’s decision.

– Regulating the financial management, applied to enterprises of which 100% charter capital is held by the State, including: method of determining the charter capital; capital mobilization; investment, development, sale, purchase, management and utilization of fixed assets; management of receivables and payables; external investment and disposal of capital out of the enterprise; distribution of after-tax profit, setting up and use of corporate funds; preservation and development of corporate capital; authority over the introduction of financial rules in enterprises of which 100% charter capital is held by the State.

– Setting criteria for evaluating the result of working towards pre-determined objectives, assigned tasks, operating outcome, efficiency in manufacturing and business activities at enterprises of which 100% charter capital is held by the State as well as the performance of the enterprise’s managers and auditors; regulating supervision and inspection over activities pertaining to investment, management and utilization of state investment in the enterprise; regulating the disclosure of information about corporate business activities.

– Introducing policies on recruitment, appointment, re-appointment, dismissal, commendation, reward and penalties for corporate managers, auditors and representative of state capital share in the enterprise.

– Adopting policies on salary, wage, remuneration, bonus and other benefits paid to enterprise managers, auditors and representatives of state capital.

– Adopting regulations on activities of auditors working for enterprises of which 100% charter capital is held by the State.

– Adopting regulations on recruitment, salary, bonus and other benefits for employees working for enterprises of which 100% charter capital is held by the State in accordance with legal regulations on employment.

– Report on the prior year’s nationwide investment, management and utilization activities of state capital in enterprises to the National Assembly at the year-end plenary session.

Powers and responsibilities of the Prime Minister

– Granting the decision on investment of state capital in corporate establishment as prescribed in Clause 1, 3 Article 11 hereof.

– In respect of enterprises established under the Prime Minister’s decision:

+ Granting the decision on ownership transfer and corporate rearrangement;

+ Granting the decision on charter capital for corporate establishment and adjustment to charter capital during their operations;

+ Granting the approval for the strategy and plan for investment and development, and the plan for production and business within the period of 5 years;

+ Granting the decision on appointment, re-appointment, dismissal, commendation, reward and penalties for the Chairperson of the Board of Members.

– Granting the approval for the proposal for corporate establishment, general arrangement and reform for enterprises established under the decision made by the owner’s representative agency.

– Granting the decision to approve intention to transfer state investment in the enterprise between the owner’s representative agencies, and between the owner’s representative agencies and enterprises specializing in state capital investment and business.

Powers and responsibilities of the owner’s representative agency for enterprises of which 100% charter capital is held by the State

– Granting the decision on investment of state capital in corporate establishment as prescribed in Clause 2 Article 11 hereof.

– With regard to enterprises established under the decision made by the owner’s representative agency:

+ Granting the decision on the restructuring, ownership transfer, dissolution and bankruptcy;

+ Granting the decision on transfer of state investment in the enterprise between the owner’s representative agencies and enterprises specializing in state capital investment and business after obtaining the Prime Minister’s consent to such intention or policy;

+ Introducing and revising the charter; deciding and adjusting the charter capital.

+ Granting the approval for the 5-year strategy and plan for investment and development, and the annual plan for production and business;

+ Granting the decision on appointment, re-appointment, dismissal, commendation, reward, penalties, salary, remuneration, bonus and other benefits for the Chairperson and members of the Board of Members, the President of the enterprise, auditors, representatives of state capital share; granting the decision on funds for salary, remuneration annually paid to corporate managers and auditors.

Approving the request of Board of Members or the enterprise’s President for appointment, re-appointment, dismissal, commendation, reward, penalties for the General Director or Director;

+ Approving the plan for capital mobilization and projects for investment, development, purchase and sale of fixed assets, external investment projects, outward investment projects of the enterprise as prescribed in Article 23, 24, 28 and 29 hereof;

+ Funding the investment of state capital in enterprises after obtaining the competent management’s consent; deciding the disposal of invested capital in joint-stock companies and multiple-member limited liability companies if the value of disposed capital stays lower than its book value recorded on the enterprise’s accounting books after setoff or deduction of provisions against any loss on invested capital;

+ Deciding policies on capital contribution, increase, reduction in capital amount, disposal of the enterprise’s invested capital in joint-stock companies and multiple-member limited liability companies; deciding the intention to acquire joint-stock companies and multiple-member limited liability companies to become subsidiary companies and associate companies of the enterprise;

+ Approving financial statements, plan to distribute profits and set up annual funds for the enterprise;

+ Supervising, examining and inspecting the management, utilization, preservation and development of capital, implementing the strategy and plan for investment and development, and policies on recruitment, payroll, bonus; advising on the supervision, examination and inspection conducted by other competent agencies or organizations over the investment, management and utilization of state capital in enterprises;

+ Evaluating the operating outcome, efficiency in manufacturing and trading activities of the enterprise; evaluating the performance of the enterprise’s managers and auditors.

– In respect of enterprises assigned to practise their management authority, the owner’s representative agency shall exercise their rights and assume their responsibilities stipulated in Clause 1 and 2 of this Article, except for those regulated in Article 41 hereof.

– The Government shall adopt specific regulations on rights and responsibilities that must be accepted and assumed by the owner’s representative agency.

Rights and responsibilities of the owner’s representative agency for the state investment in joint-stock companies and multiple-member limited liability companies

– Adopting regulations on appointment, dismissal, discharge, commendation, reward, penalties and deciding on salary, responsibility allowance, bonus and other benefits for the representative of state capital share.

– Exercising their delegated decision-making authority over an increase in capital, disposal of stocks and state investments in joint-stock companies and multiple-member limited liability companies.

– Controlling the divestment of invested capital, collection of distributable profits and dividends from joint-stock companies and multiple-member limited liability companies.

– Requesting the representative of state capital share to perform their assigned tasks regulated in Article 48 hereof; giving written advice on issues that the representative is responsible to report and advise on.

– Examining, monitoring and evaluating the performance of the representative of state capital share.

– Bearing responsibility for the efficiency in utilization, preservation and development of state capital.

– Exercising other powers and performing other duties in accordance with regulations laid down in the Enterprise Law, the charter of enterprises and other relevant laws.

Powers and responsibilities of the Board of Members or the President of the enterprise at enterprises of which 100% charter capital is held by the State

– The Board of Members or the President of the enterprise shall have the right to request the corporate management stipulated in Article 40, 41 and 42 to decide any adjustment, modification and supplementation to the charter; restructuring, ownership transformation, dissolution and bankruptcy.

The Board of Members shall be vested the right to request the corporate management stipulated in Article 40, 41 and 42 hereof to appoint, re-appoint, dismiss, reward, impose penalties on, pay salary, remuneration and bonuses as well as other benefits to the Chairperson and members of the Board of Members.

– The Board of Members or the President of the enterprise shall have the right to grant their decisions after obtaining the consent from the owner’s representative agency on the following contents:

+ 5-year strategy and plan for investment and development, and annual plan for production and business of the enterprise;

+ Appointment, re-appointment, dismissal, commendation, reward, penalties for the General Director or Director;

+ Capital mobilization, investment, development, purchase and sale of fixed assets, external investment projects out of the enterprise, outward investment projects of the enterprise in accordance with Article 23, 24, 28 and 29 hereof;

+ Capital contribution, increase, decrease in contributed capital, disposal of invested capital of the enterprise in joint-stock companies and multiple-member limited liability companies;

+ Acquisition of joint-stock companies and multiple-member limited liability companies as subsidiary companies and associate companies of the enterprise;

+ Financial statements; distribution of profits and setting up of annual funds in the enterprise.

– The Board of Members or the President of the enterprise shall have the right to grant their decisions on the following contents:

+ Internal rules and regulations of the enterprise;

+ Salary, remuneration, bonus and other benefits paid to the General Director or Director, or others appointed by the Board of Members;

+ Appointment, re-appointment, dismissal, commendation, reward, penalties, salary, remuneration, bonus and other benefits for the Deputy Director General or Vice Director, Chief Accountant;

+ Grant of decisions on or delegated decision-making authority to the General Director or Director over the plan for capital mobilization and projects for investment, construction, purchase and sale of fixed assets managed under his/her authority.

– The Board of Members or the President of the enterprise shall be vested with the right to manage and control the enterprise in accordance with laws and decision made by the owner’s representative agency.

– The Board of Members or the President of the enterprise shall be held accountable to the owner’s representative agency for management, utilization, preservation and development of invested capital; submit on-time reports to the owner’s representative agency whenever that enterprise makes losses and does not have payment capability or fails to fulfill assigned tasks as well as commits other violations.

– The Board of Members or the President of the enterprise shall be legally responsible for any violation causing any loss on or damage to the capital and assets of the enterprise.

– The Board of Members, Chairperson and members of the Board of Members or the President of the enterprise shall exercise their rights or assume their responsibilities in accordance with regulations laid down in the Enterprise Law, the enterprise’s charter and other relevant laws.

Auditor of enterprises of which 100% charter capital is held by the State

– Auditors shall be appointed, re-appointed and dismissed by the owner’s representative agency and competent authorities.

– Criteria, requirements, working regime, rights and responsibilities of Auditors must conform to legal regulations on enterprises and other relevant laws.

– With regard to salary, remuneration and bonus paid to Auditors:

+ Salary, remuneration and bonus of Auditors shall be determined on the basis of performance of assigned tasks or efficiency in manufacturing and business activities of the enterprise;

+ Salary, wage, remuneration and bonus shall be decided and paid to Auditors by the owner’s representative agency or the competent authority.

Please see more:

• Instructions for exclusive registration of company logos in Vietnam
• Service of changing the legal representative of Vietnamese enterprises

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