New regulations on establishment and transformation of enterprises in which 100% charter capital is held by the State

19/04/2022

The Government has just issued Decree No. 23/2022/ND-CP on the establishment, rearrangement, ownership transformation, transfer of the right to represent the owner in enterprises in which 100% charter capital is held by the State.

Conditions for establishing a business

The Decree stipulates that enterprises with 100% charter capital held by the State may only be considered for establishment when fully meeting the following conditions:

1- Have their business lines within the scope of state capital investment to establish an enterprise in accordance with the law on management and use of state investment capital in production and business in enterprises.

2- Ensure sufficient charter capital as prescribed.

3- Have a valid dossier as prescribed.

4- The establishment of the enterprise must conform to the national socio-economic development strategy and plan, and the national planning.

Charter capital is not less than VND 100 billion

Enterprises must have a charter capital of not less than VND 100 billion when established.

In the case of business lines and trades that require legal capital, in addition to the above conditions, the charter capital of the enterprise upon establishment must not be lower than the legal capital level prescribed for such business lines.

For enterprises providing essential public utility products and services, ensuring social security, or operating in a number of industries, fields or geographical areas that require capital investment from the State to establish an enterprise, the charter capital may be less than VND 100 billion but not lower than the legal capital level prescribed for business lines and industries requiring legal capital.

Re-arrangement, transformation of business ownership

In addition, the Decree also clarifies regulations on rearrangement and conversion of ownership of enterprises in which 100% of charter capital is held by the State.

According to the regulations, two or several enterprises with 100% charter capital held by the State (consolidated company) can merge into one enterprise with 100% new charter capital held by the State (consolidating companies) and terminate the existence of the consolidated companies.

One or several enterprises in which 100% charter capital is held by the State (the merged company) may merge into another enterprise in which 100% charter capital is held by the State (the merged company) by transferring all assets, rights, obligations, and legitimate interests to the merged company, and at the same time terminate the existence of the merged company.

Furthermore, the Decree stipulates that an enterprise with 100% charter capital held by the State can divide the assets, rights, and obligations of the existing company (divided company) to establish two or more enterprises with 100% new charter capital held by the State, and at the same time, the existence of the divided company will be terminated.

An enterprise with 100% charter capital held by the State may be separated by transferring part of the assets, rights, and obligations of the existing company (the separated company) to establish one or several enterprises owned by the State, holding 100% of the charter capital (separated company) without terminating the existence of the separated company.

Conditions for consolidation, merger, division, or separation of enterprises

Enterprises in which 100% of charter capital is held by the State may be consolidated, merged, divided, or separated when fully meeting the following conditions:

1- The merger, consolidation, division, or separation of the enterprise must conform to the document on enterprise arrangement and renewal approved by the Prime Minister. If not specified in these documents, the agency representing the owner must submit documents for Prime Minister’s consideration and decision.

2- New enterprises formed after division or separation must satisfy the same conditions as for enterprise establishment.

3- Enterprise consolidation and merger must comply with the provisions of the Competition Law on business consolidation and merger.

Source: Chinhphu.vn

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