New regulations on converting state-owned enterprises into joint stock companies

The Government has just issued a Decree amending and supplementing a number of articles of Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government on converting 100% state-owned enterprises into joint stock companies; including a number of new regulations on determining the value of long-term investment capital of equitized enterprises in other enterprises; initial equity capital structure; and supplementing preferential policies for employees in equitized enterprises.

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Regarding the determination of the value of long-term investment capital of an equitized enterprise in other enterprises, the Decree stipulates: The value of the capital contribution of an equitized enterprise to a joint stock company that has been listed and registered for trading on the stock market is determined according to the closing price of the shares traded on the stock market at the time closest to the time of determining the enterprise value. In case the shares of a joint stock company have been listed on the Upcom market but have not been traded within 30 days before the time of determining the enterprise value, they shall be determined according to the provisions at Point a, Point b, Point c, Clause 1, Article 33 of Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government and Clause 5, Article 1 of this Decree. For the value of capital contributed to unlisted joint stock companies that have not been registered for trading on the stock market, based on the determination results of the consulting agency, the Steering Committee for Enterprise Equitization shall consider and submit to the competent authority for decision on enterprise value.

The new Decree also amends the provisions on the initial capital structure. Specifically, the new Decree only provides general provisions on shares sold to strategic investors and other investors, instead of specific provisions on shares sold to strategic investors and other investors not being lower than 25% of charter capital (except in prescribed cases), the number of shares sold to other investors not being lower than 50% of the above shares.

In addition, the regulation remains the same: For large-scale enterprises with state capital of over VND 500 billion operating in specific fields and industries (such as insurance, banking, post and telecommunications, aviation, coal mining, oil and gas, and other rare mineral mining) and parent companies of economic groups and state-owned corporations, the proportion of shares auctioned to investors will be considered and specifically decided by the Prime Minister or an agency authorized by the Prime Minister.

On public auction organization, Decree59/2011/ND-CPThe competent authority deciding to approve the equitization plan shall decide to select a Stock Exchange or hire an intermediary financial institution to conduct the auction. In addition to this provision, the new Decree adds: For economic groups, state-owned corporations and a number of enterprises operating in special fields (such as insurance, banking, telecommunications, aviation, coal mining, oil and gas, and other rare mineral mining) when implementing equitization and the equitization plan is under the approval authority of the Prime Minister, the Ministers of Ministries, Heads of ministerial-level agencies, Government agencies, Chairmen of People's Committees of provinces and centrally run cities shall select a Stock Exchange or hire an intermediary financial institution to conduct the auction.

Supplement preferential policies for employees

In addition, the Decree also supplements preferential policies for employees in equitized enterprises. Accordingly, enterprises that have carried out necessary procedures according to the equitization plan approved by competent authorities but have not yet conducted an IPO within 90 days from the date of the decision approving the equitization plan, the enterprise is allowed to sell shares in advance to employees and trade unions in the enterprise at a share selling price equal to 60% of the starting price in the equitization plan approved by competent authorities.

The difference between the selling price to employees and trade unions (if any) compared to the par value of shares is deducted from the value of state capital when settling at the time the enterprise officially converts into a joint stock company.

According to Chinhphu.vn