Is state-owned enterprise referring to a business in which all capital is directly held and owned by the State? How does the law regulate the business model of a state-owned enterprise? In this article, LSX legal firm will help you answer the question: “Are state-owned enterprises owned by the state in Vietnam?”
Legal ground
- Law on Enterprise 2020
Definition and characteristics of a state-owned enterprise
Clause 11, Article 4 of the Law on Enterprise 2020 defines state-owned enterprise as an enterprise with more than 50% charter capital or voting shares held by the State as prescribed in Article 88 of this Law.
State-owned enterprises carry a number of stricter management and control mechanisms than other types of enterprises:
Owner: the State or the State together with other individuals and organizations owns a state-owned enterprise.
Capital ownership: According to the provisions of Point A, Clause 1, Article 88 of the Law on Enterprise 2020, State enterprises own 100% of the charter capital or hold more than 50% of the charter capital or voting shares.
Business form: Based on the percentage of capital that the state holds, state-owned enterprises can exist in many different forms. Specifically:
- Wholly state-owned enterprises include:
- Single-member limited liability companies have 100% of charter capital held by the State that are parent companies of state-owned corporations or parent companies in groups of the parent company – subsidiary companies;
- Independent single-member limited liability companies have 100% of charter capital held by the State.
- Partially state-owned specified in Point b Clause 1 of this Article include:
- Multiple-member limited liability companies and joint stock companies over 50% of charter capital or voting shares held by the State as parent companies of state-owned corporations or parent companies in groups of the parent company – subsidiary companies;
- Independent multiple-member limited liability companies and joint stock companies over 50% of charter capital or voting shares held by the State.
Legal status: All state-owned enterprises have legal status.
Classification of state-owned enterprise based on business types
The Law on Enterprise 2020 classifies state-owned enterprises into the following types:
- Wholly state-owned company: an enterprise owned by the state with the entire charter capital, established, organized, managed, and exists in the form of an independent state company and a state corporation.
- State-owned joint-stock company: a joint-stock company in which all shareholders are state companies or organizations authorized by the state to contribute capital. Organized and operated under the Law on Enterprise 2020.
- State-owned single-member limited liability company: a limited liability company in which the state owns the entire charter capital and organizational management.
- State limited liability company with two or more members: a limited liability company in which all members are state companies or whose members are state companies, members are authorized capital contributors. Organized and operated in accordance with corporate law.
- Joint-stock enterprise with a dominant capital contribution of the State: an enterprise in which the state’s shares or contributed capital accounts for more than 50% of the charter capital. The state retains the right to fully control the enterprises.
Classification of state-owned enterprise based on organizational structure
- Company President, Director or General Director, Board of Controllers.
- Board of Members, Director or General Director, Board of Controllers.
All rights to manage and run the business as well as control capital and profits belong to the state, so this business model is quite inefficient. However, at the same time, businesses also enjoy many legal and financial benefits such as taxes.
Rights and obligations of the Board of Members
The Board of Members shall, in the name of the company, perform the rights and obligations of the owner, shareholders/members of other companies owned by the company, or whose shares/stakes are owned by the company.
The Board of Members has the following rights and obligations:
- Decide the matters prescribed in the Law on Management and use of State Investment in Enterprises;
- Decide establishment, reorganization, and dissolution of the company’s branches, representative offices, and dependent units;
- Organize internal audits and decide establishment of the company’s internal audit unit;
- Decide the company’s annual business plan, and policies on market development, marketing, and technology;
- Other rights and obligations prescribed by the company’s charter, the Law on Enterprise 2020, and relevant laws.
Rights and obligations of members of the Board of Members
- Participate in meetings of the Board of Members; discuss, propose, and vote on the issues within the jurisdiction of the Board of Members;
- Inspect, access, and extract logbooks; monitor contracts, transactions, accounting books, financial statements, minutes of meetings of the Board of Members, and other documents of the company;
- Other rights and obligations prescribed by the company’s charter, the Law on Enterprise 2020, and relevant laws.
Rights the Board of Controllers
The Board of Controllers has the rights to:
- Participate in meetings of the Board of Members, official and unofficial discussions between the state ownership representative body with the Board of Members; question the Board of Members, its members, the company’s President, and the Director/General Director about the plans, projects, development programs and other decisions in management and administration of the company.
- Examine accounting books, reports, contracts, transactions, and other documents of the company; inspect the management and administration by the Board of Members and its members, the company’s President, and the Director/General Director where necessary or at the request of the state ownership representative body.
- Request the Board of Members and its members, the company’s President and Director/General Director, Deputy Directors/Deputy General Directors, chief accountant, and other executives to submit reports or provide information about the company’s management, investment, and business operation.
- Request the company’s executives to submit reports on the subsidiary companies’ finance and business performance if they are necessary for the performance of their duties prescribed by law and the company’s charter.
- Request the state ownership representative body to establish an audit unit that will advise and assist the Board of Controllers in the performance of its rights and obligations.
- Other rights and obligations prescribed by the company’s charter.
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Contact LSX
Finally, hope this article is useful for you to answer the question about “Are state-owned enterprises owned by the state in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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Related questions
Because the Law on Enterprise 2020 does not have a separate regulation on the dissolution of state-owned enterprises, the same procedures will be applied as other types of enterprise dissolution.
1. Freely engage in any business line that is not banned by law.
2. Freely run the business and choose a type of business organization; choose business lines, area of operation, and type of operation; change the scale of business and business lines.
3. Choose the method of mobilizing, distributing, and using capital.
4. Freely find markets, customers and enter into contracts.
5. Export and import.
6. Hire employees in accordance with employment laws.
7. Apply technological advances to improve business efficiency; have intellectual property rights protected in accordance with intellectual property laws.
8. Acquire, use, and dispose of their assets.
9. Reject unlawful requests for the provision of resources from other organizations and individuals.
10. File complaints and participate in proceedings as prescribed by law.
11. Other rights prescribed by law.
Regarding obligations, state-owned enterprises must meet the general obligations of enterprises in Article 8 of the Law on Enterprise 2020.
Conclusion: So the above is Are state-owned enterprises owned by the state in Vietnam?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
