Socialist Republic of Vietnam

DECREE ON TRANSFER, SALE, CONTRACTUAL MANAGEMENT OR LEASE OF STATE OWNED ENTERPRISES

No.103-1999-ND-CP, Hanoi, 10 September 1999



THE GOVERNMENT

Pursuant to the Law on the Organization of the Government dated 30 September 1992;

Pursuant to the Law on State Owned Enterprises dated 20 April 1995;

On the proposal of the Minister of Planning and Investment,


DECREES:


Chapter I
GENERAL PROVISIONS

Article 1 The aim of the transfer, sale, contractual management or lease of the whole of a State owned enterprise

The transfer, sale, contractual management or lease of the whole of a State owned enterprise are methods to continue the arrangement and renovation of small scale State owned enterprises which have been trading at a loss over a long period, or in respect of which it is not necessary to maintain State ownership, and are aimed at:

1. Facilitating the re-structure of State owned enterprises, and increasing the economic effectiveness and competitiveness of the State economic sector;

2. Ensuring work for employees; changing enterprise management methods; creating the motivation for employees to be able to exercise their right of ownership; using more effectively the assets which have already been invested, and exploiting the latent potential of all economic sectors to invest in the development of production and business;

3. Reducing the State's responsibility for commercial operations and reducing its' expenses; and ensuring the general interests of the State and employees.

Article 2 Scope of Applicability


1. This Decree shall regulate the transfer, sale, contractual management or lease of the whole of a State owned enterprise and shall be applicable to the following State owned enterprises:

a) Independent State owned enterprises and enterprises which are members of a Corporation with State capital recorded in their books of account of less than 1 billion dong, which have been trading at a loss over a long period, or where the State doesn't need to maintain its shares; but excluding State run farming enterprises, forestry enterprises, and State enterprises in the fields of consultancy, design and valuation;

b) The Prime Minister of the Government shall make a decision, depending on the particular circumstances of each enterprise, on the following enterprises: independent State owned enterprises and enterprises which are members of Corporations not covered by clause a of this Article, which have State capital recorded in their books of account from 1 to below 5 billion dong, which have run at a loss over a long period but which are not yet bankrupt, and which have implemented all the necessary measures [to resolve problems] but have still been unable to overcome them.

c) The following matters are not within the regulatory scope of this Decree: the contractual management of State owned enterprises internally; the lease, sale or transfer of a section of a State owned enterprise, and the lease, sale or transfer of the individual property of a State owned enterprise.

Article 3 In this Decree, the following terms shall have the meanings ascribed to them hereunder:

1. Transfer of a State owned enterprise to a labour collective (referred to as the transfer of an enterprise) means the transfer of the State owned enterprise and the State assets in the enterprise to the ownership of a labour collective on binding conditions.

2. Sale of a State owned enterprise (referred to as the sale of an enterprise) means a fee-collecting transfer of ownership of the whole of the assets of a State owned enterprise to the ownership of a collective, an individual or some other legal entity.

3. Contractual management of a State owned enterprise (referred to as contractual management) means the method of managing a State owned enterprise where the managing party is transferred the right to manage the enterprise, has obligations to reach a number of targets, ensures certain conditions are met and enjoys certain benefits as set out in the management contract.

4. Lease of a State owned enterprise (referred to as lease of an enterprise) means the form of transfer to a lessee of the right to use the assets and labour force of an enterprise in accordance with the conditions of the lease.


5. Transferee, purchaser, contractual manager, lessee of an enterprise mean the representative of the legal entity, collective, group of people or the individual who receives the transfer, who purchases, who takes over management under the contract or who leases the enterprise.

6. Transferor, seller, contractor, lessor of an enterprise mean the representative of the body or enterprise implementing the transfer, sale, contractual management or lease of the enterprise.

7. Sale, contractual management or lease of an enterprise by the direct method means the form of negotiation, agreement and signing of a contract directly between the seller, the party contracting out the management or the lessor of the enterprise with the purchaser, the contractual manager or the lessee of the enterprise in cases where only one person registers.

8. Sale, contractual management or lease of an enterprise by tender means choosing a purchaser, a contractual manager or a lessee of an enterprise by the method of tendering where two or more persons register.

9. Minimum price means the lowest price that the seller, lessor or contractor may accept and set when he/she decides to sell, offer for contractual management or lease an enterprise.

10. Lease rental, selling price of an enterprise means the price which the lessor and lessee, or the seller and purchaser agree either by the direct method or fix by the method of tendering.

11. Book value of an enterprise means the total value of assets appearing in the balance sheet of the enterprise in accordance with the currently applicable accounting system.

12. Actual value of an enterprise means the total value of the net assets of an enterprise based on the market price at the time of valuation of the enterprise.

13. Labour collective means the total number of employees the enterprise presently has, or the collective of those employees who have voluntarily implemented the resolution of a General Meeting of the workers and officials of the enterprise to accept the transfer, purchase, contractual management or lease of the enterprise represented by the Executive Committee of the Trade Union of the enterprise, or by the person voted by a General Meeting of all the workers and officials in the enterprise to implement the acceptance of the transfer, purchase, contractual management or lease of the enterprise.

14. Ministry includes Ministries, Ministerial equivalent bodies and Government bodies.

15. People's Committee means People's Committees of provinces and cities under central authority.


16. Corporations 90, Corporations 91 mean State corporations established under the model set out in Decisions No.90-TTg and No.91-TTg dated 7 March 1994 of the Prime Minister of the Government.

17. Committee for Reform of an Enterprise means the Committee for Reform of Management of the enterprise established pursuant to the decision of Ministries, provinces, cities or Corporations 91.

18. Committee for Reform of Enterprise Management means the Committee for Reform of Enterprise Management under a Ministry, province, city or Corporation 91.

Article 4 Subjects who may be transferees, purchasers, contractual managers or lessees of a State owned enterprise

1. Subjects who may be transferees of an enterprise are the labour collective working at the enterprise as represented by the Executive Committee of the Labour Union, or the person elected by the Annual General Meeting of all the workers and officials in the enterprise.

2. Subjects with the right to purchase a State owned enterprise:

a) A labour collective or an individual employee in the enterprise;

b) Enterprises from all economic sectors, except for foreign invested enterprises;

c) Vietnamese citizens with the capacity for civil acts, except for those people who may not establish and manage an enterprise as provided in clauses 2,3,4,5,6,7 and 8 of Article 9 of the Law on Enterprises.

3. Subjects with the right to contractually manage or lease a State owned enterprise:

a) A labour collective or an individual employee in the enterprise;

b) Enterprises from all economic sectors, except for foreign invested enterprises;

c) An individual with business registration.

Article 5 Principles of transfer, sale, contractual management or lease of enterprises

1. The transfer, sale, contractual management or lease of an enterprise is done in order to continue its commercial production; the transferee or purchaser shall not resell the enterprise within the time fixed in the contract.


2. When implementing a transfer, sale, management contract or lease, all of the assets of the enterprise shall be valued. The value of the enterprise shall be calculated on the basis of the actual market value.
3. Priorities in the transfer, sale, contractual management or lease of an enterprise:

a) The transfer of an enterprise shall only apply to the labour collective in the enterprise;

b) In respect of the sale, contractual management or lease of an enterprise, priority shall be given to the person who undertakes to use the highest number of employees in the enterprise to ensure commercial continuation.

4. Public notice of the transfer, sale, contractual management or lease of an enterprise:

a) The transfer, sale, contractual management or lease of an enterprise must be publicly announced at the enterprise and on mass media for the information of all interested parties, 30 days prior to implementation [of the transfer etc];

b) Where only one person registers to purchase, lease or contractually manage [the enterprise], there must be a public announcement at the enterprise of the results of the agreement reached directly between the purchaser and seller, the lessee and lessor, or the contractual manager and the person contracting out management;

c) Where two or more people register to purchase, lease or contractually manage the enterprise, a tender must be organized.

5. The period of contractual management or the term of lease of an enterprise shall be agreed between the two parties, but must not be less than 5 years.

6. Implementation of the signing of a contract for the transfer, sale, contractual management or lease of an enterprise:

The transfer, sale, contractual management or lease of an enterprise must be implemented via a written contract. The contract is the basis on which both parties carry out their undertakings, and it ensures that there is a legal foundation for the payment and for the resolution of any problems that arise.

Article 6 Use of the proceeds of sale, or of lease rental of the enterprise

1. After deducting expenses of the sale of the enterprise and after paying all secured debts and all due and payable debts, the proceeds of sale of the enterprise shall be used as provided in Decision No.177-1999-QD-TTg dated 30 August 1999 "On the organization and operation of an Assistance Fund for the arrangement and equitization of State owned enterprises".

2. Proceeds received from the lease of an enterprise:


a) Where at the end of the lease term the lessee purchases the enterprise or the enterprise terminates its operations, then after deducting the expenses of the lease of the enterprise, the proceeds received from the lease of the enterprise shall be used as provided in clause 1 of this Article.

b) Where the lease is for a fixed term and the enterprise continues its operations [at the end of the term], and is registered as a State owned enterprise, then the proceeds received from the lease of the enterprise shall be accounted for as part of the turnover of the leased enterprise.

Article 7 Expenses for the organization of the transfer, sale, contractual management or lease of enterprises

All items of expenditure which are valid, necessary and actually incurred during the organization of the transfer, sale, contractual management or lease of an enterprise shall be applied at the same level of expenditure as if the State owned enterprise was being equitized and shall be accounted for as follows:

1. In the case of the transfer of an enterprise: the expenses shall be deducted from the value of the enterprise;

2. In the case of the sale or lease of an enterprise: the expenses shall be deducted from the proceeds of the sale or lease of the State owned enterprise;

In the case of the contractual management of an enterprise, the expenses shall be counted as regular operating expenses of the enterprise.

Article 8 Conversion among the forms of transfer, contractual management, sale or lease of State owned enterprises

Where a contract for the contractual management or for the lease of an enterprise is in the course of implementation but it is desired to change it to a different form, then the current contract must be liquidated and there must be direct negotiations for the signing of a new contract in accordance with the provisions of this Decree.

Article 9 Protection by the State

1. The State shall protect the ownership rights and the valid interests of the transferee, purchaser, contractual manager or lessee of an enterprise, according to the law;

2. The State shall ensure the interests of employees in enterprises which implement transfer, sale, contractual management or lease of the enterprise according to the labour laws.



Chapter II
THE TRANSFER OF A STATE OWNED ENTERPRISE
TO A LABOUR COLLECTIVE
Article 10 The conditions for transferring an enterprise to a labour collective

The labour collective in an enterprise may be the transferee of the enterprise where the following conditions are met:

1. The labour collective in the enterprise as represented by the Executive Committee of the Trade Union or the person elected by the Annual General Meeting of all the workers and officials in the enterprise voluntarily registers to accept the transfer of the enterprise.

2. [The labour collective] undertakes to make further investment in order to develop the business or production; it guarantees employment for at least three or more years, and it takes out full insurance for the employees in the enterprise (except for those who voluntarily terminate their labour contract);

3. It inherits those transferred liabilities (excluding bad debts) of the enterprise in accordance with the agreement between the transferor and the transferee of the enterprise;

4. It undertakes that it will not lease, transfer or voluntarily dissolve the enterprise within a minimum period of 3 years from the date of transfer;

5. If it meets all the conditions for transfer, it must repay to the State 30% of the share value as at the date it accepts the transfer of the enterprise.

Article 11 Principles for dealing with assets, finances and debts on the transfer of an enterprise

The Committee for Reform of the Enterprise shall carry out an inventory of, and determine the quantity and current condition of: all of the assets; the long-term and short-term investments; leased assets, borrowed assets, assets held on behalf of others, assets sold on behalf of others, consigned assets, appropriated assets being used, leasehold assets or assets on loan to others; [it shall] compare and classify all categories of debts; create a list of creditors with the amounts of debts payable, a list of outstanding debtors and the sums receivable, distinguishing clearly the recoverable debts and the irrecoverable debts; and carry out a classification of assets and deal with:


1. Leased assets, borrowed assets, assets held on behalf of others, assets held on consignment: the enterprise shall return them to the owner, liquidate the contract, or else continue to lease, borrow, hold on behalf of others or hold on consignment according to an agreement [reached] between the enterprise [on the one hand] and the lessor, the lender or the owner of the consigned assets [on the other hand].

2. Appropriated assets being used: the transferor of the enterprise shall make an immediate decision when the enterprise is transferred.

3. Debts shall be dealt with on the following principles:
a) Bad debts shall be highlighted and a clear decision made about who is responsible to resolve them according to the current regulations;

b) The transferee inherits the receivable debts and the payable debts and must deal with them. Where the debts payable exceed the value of the assets of the enterprise, they shall be written off the budget; in respect of bank debts the Assistance Fund for the Arrangement and Equitization of State Owned Enterprises shall be used to assist in dealing with them;

c) Outstanding social insurance liabilities to the social insurance body prior to the transfer of the enterprise shall be deducted from the value of the enterprise for the purpose of payment or shall be paid by the Assistance Fund for the Arrangement and Equitization of State Owned Enterprises.

4. The residual assets, after payment of the necessary expenses of the transfer of the enterprise, shall be transferred to the ownership of the labour collective in the enterprise.

Article 12 Order and procedures for the transfer of enterprises

1. The Executive Committee of the Trade Union together with the Director of the enterprise shall organize a meeting of all the workers and officials in order to take a majority vote on the voluntary acceptance of the transfer of the enterprise; to prepare and pass a plan for accepting the transfer of the enterprise; to implement the [necessary] conditions to accept the transfer of the enterprise, including an undertaking to employ all the employees in the enterprise (except those employees who voluntarily terminate their labour contract); and to appoint a representative to carry out the procedures for accepting the transfer of the enterprise.

2. To carry out the classification of assets; to determine and classify debts; to prepare a financial report; to deal with problems relating to assets, finances and debts in accordance with the principles for dealing with assets, finances and debts set out in Article 11 of this Decree.

3. The Executive Committee of the Trade Union of the Enterprise or the person elected by a General Meeting of workers and officials to act as representative shall prepare a list classifying the employees and prepare related files for the employees; and shall prepare a production - business plan and undertake to accept the enterprise.


4. The representative of the labour collective shall send a file applying for transfer of the enterprise to the Committee for Reform of Enterprise Management. The file shall include:

a) An application for the transfer of the enterprise;

b) The production - business plan;
c) The proposed organizational form of the new enterprise;

d) The undertakings of the labour collective in the enterprise.

5. The authority shall approve the application to accept the enterprise and issue a decision on the transfer of the enterprise to the labour collective; this decision shall be sent to the following bodies: the Finance Department of the enterprise, the tax office in charge of the enterprise, the Ministry of Planning and Investment, the Department of Statistics at the place where the enterprise has its head office; and to the Central Committee for Reform of Enterprise Management.

6. The organization of the signing of the contract to accept the transfer of an enterprise shall be between the representative of the labour collective on the one hand, and the person appointed by the Ministry or by the Chairman of a provincial People's Committee or by the General Director of a Corporation 91 on the other hand. The contract for the transfer of a State owned enterprise shall include the following main matters:

a) The name and address of the enterprise to be transferred to the labour collective;

b) The name, surname and address of the representative of the labour collective;

c) The value of the enterprise to be transferred and the method of transfer;

d) The undertakings of the labour collective in the enterprise;

dd) The rights and obligations of the labour collective accepting the transfer.

The contract shall have as attachments lists of declarations of the transferred assets making up the value [of the enterprise], and a list of the [members of the] labour collective accepting the transfer.


7. The Committee for Reform of Enterprise Management together with the Director of the Enterprise shall organize the handover of the enterprise to the labour collective according to the approved plan. The Chairman of the Trade Union of the Enterprise, or the person elected by the General Meeting of the workers and officials, shall act as representative to accept the handover and management, and the handover shall be witnessed by a representative of the authority issuing the decision for transfer and also by the financial department of the enterprise.

8. The Committee for Reform of Enterprise Management shall publicly announce via the mass media the transfer of the enterprise and the termination of operations of the State owned enterprise no later than 15 days after the date of the decision to transfer.

9. The representative of the labour collective shall organize business registration in the form of a Co-operative or a Shareholding company.
Article 13 Ownership rights in the enterprise after the transfer

1. The whole of the assets of the enterprise shall be calculated [at their true] value, shall belong to the labour collective after the transfer, and shall be divided into shares for allocation to the employees who were listed on the payroll and for whom social insurance was paid by the enterprise up until the date of the transfer.

2. Each employee in the enterprise shall receive the transfer of ownership rights to a part of the value of the enterprise in shares in proportion to the number of years he/she has worked for the State. The employees shall be entitled to dividends on the shares transferred to them, which shares can be inherited, but shall not be transferrable for at least 3 years after the date of transfer of the enterprise; when shares are transferred, the enterprise must be repaid 30% of their value as at the date of the transfer of the enterprise.

Article 14 Rights and obligations of the transferee of the enterprise

1. The enterprise transferred to the labour collective shall be registered as a business in the form of a Co-operative or a Shareholding company.

The business registration file shall include:

a) The decision of the authorized body on the transfer of the enterprise;

b) The contract of transfer and the minutes of the handover of the enterprise to the labour collective of the enterprise;

c) The charter on the organization and operations of the enterprise;

d) The minutes electing the management of the enterprise.

dd) The business registration licence of the State owned enterprise prior to the transfer (if any).


2. It [the transferee] shall be permitted to initiate the use of the whole of the transferred assets, organize business and production and distribute income in accordance with the charter on the organization and operations of the enterprise.

3. It shall be permitted to inherit the rights of the State owned enterprise in accordance with the agreement in the contract for the transfer of the enterprise; it shall inherit the contracts of the former enterprise for land lease, for electricity supply and for water supply in accordance with the law. Land use rights of the enterprise after the transfer shall be implemented according to the laws on land.

4. It shall be facilitated in organizing re-training to create new jobs for employees via the Assistance Fund for the Arrangement and Equitization of State Owned Enterprises.
5. The enterprise shall be responsible to employ all the employees it currently has, and to guarantee work for them for a minimum of 3 years except for those who voluntarily terminate their employment contract. After that 3 year period, if the re-organization of the commercial operations or if technological changes lead to loss of jobs, then the policy in respect of such employees shall be one of resolution according to the current regulations of the Government.

6. The undertakings in the contract for the transfer of the enterprise and the obligations to the State shall be implemented in accordance with the law.


Chapter III
SALE OF A STATE OWNED ENTERPRISE

Article 15 Announcement of the sale approval decision and registration of the purchase of the enterprise

Based on the approval decision of the authorized body for the sale of the enterprise, the Director of the enterprise shall make an announcement to all employees of the enterprise and also on the mass media; and shall organize the registration of the list of persons who wish to purchase the enterprise within the time limit of 30 days.

Article 16 Organization of the sale of an enterprise by tender

1. Where two or more people register to purchase, the sale of the enterprise must be conducted by tender.


2. The person deciding to sell the enterprise shall establish a Tendering Council. The Tendering Council shall notify the people who have registered to purchase to submit their tender, and notify them of the minimum sale price, the amount of the deposit required and the time limit for submitting their application file; and shall publicly announce the sale of the enterprise by tender on the mass media and by posting a notice at the enterprise headquarters.

3. The [prospective] purchasers shall submit their purchase tender in the form provided for by the Tendering Council and shall pay the deposit;

The Tendering Council shall receive the tenders and the deposits, and create a list of tenderers and issue them with a certification of participation in the tender.

4. The tenderers shall have the right to go to the enterprise to make enquiries into the accounting books and the declarations of assets, and to investigate the current condition of the enterprise.

5. Thirty days after the date of announcing submission of applications, the registered purchasers must send their tenders to the Tendering Committee.

The tender shall include:

a) The application to purchase the enterprise (in the stipulated form);

b) An employment plan for the employees currently working at the enterprise;

c) The proposed form of the new enterprise;

d) Suggested purchase price of the enterprise.

The tender shall be placed in a sealed envelope.

6. Five days after the deadline for submitting tenders, the Tendering Council shall send a notice of the time and place for the tendering to each tenderer. The Tendering Council shall place a public notice of the list of tenderers at the place for tendering 2 days before the tenders are opened.

7. The tender shall be opened in not more than one day and implemented as follows:

a) The Tendering Council shall inspect the seal and publicly open the envelope of each tenderer, and announce the employment plan and the tender price of each tenderer to record them in the minutes; and announce the highest employment plan for employees and the highest tender price of each tenderer;

b) The Chairman of the Tendering Council and the tenderers shall sign minutes of the tender opening.

8. Evaluation of the tender:


a) The Tendering Council shall discuss the employment plan for employees combined with the tender price in order to vote to choose the successful tenderer;

b) The Tendering Council shall make minutes of the evaluation of the tender and send them to the Committee for the Reform of Enterprise Management and to the person who made the decision to sell the enterprise.

Article 17 Organization of the sale of an enterprise by the direct method

1. When only one person registers to purchase, the sale of the enterprise shall be conducted by the direct method.

2. The person who has registered to purchase shall submit an application file to the Director or to the Committee for Reform of Enterprise Management; the contents of the application file shall be the same as is provided for the sale of an enterprise by tender.

3. The person who has registered to purchase shall have the right to go to the enterprise to make enquiries into the accounting books and the declarations of assets, and to investigate the current condition of the enterprise.

4. The Director of the Enterprise shall report to the Committee for Reform of Enterprise Management so that they can together directly exchange views with the representative of the purchaser on the employment plan for the employees and the selling price, and discuss the contents of a sale/purchase contract.

The Committee for Reform of Enterprise Management shall send the application file and the minutes to the person who made the decision to sell the enterprise.

Article 18 Responsibilities of the enterprise being sold

1. To carry out an inventory of, and to determine the quantity of current assets of the enterprise, including fixed assets and long-term investments, floating assets and short-term investments, property leased out, leasehold property, assets held on behalf of others, assets sold on behalf of others, consigned assets, and appropriated assets being used; and shall estimate the current condition of all these types of assets and recover all debts receivable.

2. To classify the current assets of the enterprise into the following categories:

a) Assets which can continue to be used;

b) Assets which can no longer be used;

c) Assets sourced from a bonus fund or from a welfare fund.


3. To compare and classify categories of debts; to create a list of creditors with the amounts of debts payable, the amounts of debts receivable, dividing the latter list into recoverable and irrecoverable debts;

4. To prepare a financial report up until the time of the sale;

5. To prepare a list and classify the number of current employees in the enterprise at the time of the decision to sell:

a) The number of employees for whom social insurance has been taken out ;

b) The number of employees currently receiving social insurance benefits due to illness, for reasons of pregnancy or maternity leave, for work-related accidents or for occupational disease;

c) The number of employees the performance of whose labour contract has been suspended;

d) The number of employees who have terminated their labour contract;

dd) The number of employees the term of whose labour contract is still current.

6. To handover the assets, the books of the enterprise and all related files to the purchaser of the enterprise in accordance with the agreement set out in the contract for sale/purchase.

Article 19 Principles for dealing with the assets and finances of the enterprise prior to sale

1. Assets not included in the value of the enterprise sold shall be dealt with as follows:

a) The body authorizing the sale of the enterprise shall decide how to deal with unusable assets : to transfer them, to sell them, to liquidate them or to give them to the purchaser to hold on trust for up to 90 days;


b) In respect of assets leased, borrowed assets, or assets held on behalf of others: the enterprise shall return them to their owner and liquidate the contract, or else continue to lease or hold on trust as agreed between the purchaser [of the enterprise] and the owner of the assets. The body authorizing the sale of the enterprise shall decide how to deal with appropriated assets being used;

c) A separate inventory shall be made of assets sourced from a bonus fund or from a welfare fund so that they can be transferred to the labour collective;


4) The seller and purchaser shall agree on a solution appropriate to the interest of each party for costs of works in progress which were suspended before the time of valuation of the enterprise.

dd) Receivable debts and bad debts: the body authorizing the sale of the enterprise shall highlight the debts and take responsibility to resolve [how to deal with them] according to the current regulatory system.

2. Provisions accounts: the following accounts must be dealt with before determining the selling price of the enterprise: discounted goods in stock, receivable debts and bad debts, discounted securities, exchange rate balances and undistributed interest accounts.

3. The cash balances in the bonus fund and in the welfare fund shall be shared amongst the employees who were working in the enterprise prior to its sale.

Article 20 Principles for dealing with debts of the enterprise

1. The enterprise must make a decision on all receivable debts and on all debts payable. Where the purchaser undertakes to take over the receivable debts and the debts payable, this must be recorded in the contract of sale/purchase and announced for the information of all related parties.

2. Where the proceeds from the sale of the enterprise are insufficient to liquidate all the debts of the enterprise, the problem shall be resolved as follows:

a) Write off tax debts and any debts owing to the State budget;

b) Deal with social insurance debts, bank debts, enterprise debts and individual debts in accordance with specific guidelines from the Ministry of Finance.

Article 21 Resolution of issues relating to the labour force and to the management team of the sold enterprise


1. The purchaser of the enterprise shall be responsible to continue to employ the number of employees set out in the employment plan and as the purchaser undertook to do when he/she purchased the enterprise. The employees who voluntarily terminate their labour contract shall be dealt with in accordance with the current regulatory system.

2. The system for employees shall be as follows:

a) In respect to employees in receipt of social insurance benefits, the Director of the enterprise and the social insurance office of the locality where the enterprise pays social insurance shall resolve the rights of these employees in accordance with the current system;

b) Where the labour contract of an employee is terminated, the employee must be paid a retrenchment allowance in accordance with Article 42 of the Labour Code, and with Decree No.198-CP dated 31 December 1994 of the Government for the earlier period during which the employee worked in the State sector but has not yet received any retrenchment allowance;

c) In respect to employees who continue to work in the new enterprise, the Director of the enterprise shall be responsible to carry out the procedures for the social insurance office to issue social insurance books in accordance with law, and to transfer to the new enterprise the list and files of employees which the enterprise manages.

3. The Director of the enterprise shall be responsible to pay all social insurance debts (including the employees' contributions) to the social insurance office of the locality where the enterprise contributes social insurance according to the law.

If the proceeds from the sale of the enterprise are insufficient to pay out the social insurance debts and the retrenchment allowances for the employees, the amount of the deficit shall be drawn from the Assistance Fund for the Arrangement and Equitization of State Owned Enterprises in order to make these payments.

4. The Director, the Deputy Director and the Chief Accountant of the enterprise shall issue a decision to sell the enterprise and shall consider specific circumstances in order to organize the work or else resolve it according to the work systems.

If the irresponsibility of any manager leads to the enterprise suffering losses or losing its State capital, that person shall not hold a management position at any other State owned enterprise or State body.


5. If any employees are retrenched or lose their jobs after there has been a decision to sell an enterprise:

a) The new enterprise shall pay retrenchment allowances for the time the employee has worked at the new enterprise;

b) In respect of any previous period when an employee worked in the State sector and has not yet received a retrenchment allowance for that period, he/she shall be paid a retrenchment allowance in accordance with the law. Funds to pay the retrenchment allowance shall be drawn from the Assistance Fund for the Arrangement and Equitization of State Owned Enterprises or from the State budget.

Article 22 Principles for determining the selling price of an enterprise

1. The determination of the selling price of an enterprise shall be based on the following:

a) The actual value of the enterprise as agreed between the seller and the purchaser;

b) A reduction for a purchaser who undertakes to invest in the enterprise in order to maintain commercial production, and who guarantees work for the employees and the other conditions as agreed with the seller;

2. The bases for determining the selling price of an enterprise shall be:

a) Where the purchase of the enterprise includes taking over the rights and obligations of the enterprise:

- The data in the accounting books of the enterprise as at the time of sale;

- The actual value of the State capital in the enterprise as at the time of sale after deducting the debts payable which have been agreed between the purchaser and the seller.

b) Where the purchaser of the enterprise does not take over the rights and obligations of the enterprise, the selling price of the enterprise shall be the actual selling price of the whole of the current assets of the enterprise which shall be determined based on their current quality, their current technological value, the usage requirements of the purchaser and their market value as at the time of the sale.

3. When determining the actual value of an enterprise, it shall not be necessary to engage an auditor. In respect to enterprises which are not strictly implementing the provisions of the Ordinance on Auditing and Statistics, the authority making the decision to sell shall consider whether or not to engage independent auditors to make a valuation. The costs of engaging auditors shall be included in the expenses of the sale of the enterprise.


Article 23 Approving the sale plan, the selling price, the signing of the contract and the making of the decision to sell a State owned enterprise.

Based on the proposals of the Committee for Reform of Enterprise Management, Ministers, Chairmen of People's Committees of provinces and Boards of Management of Corporations 91 shall carry out the following tasks:

1. Approve the plan for the sale of the enterprise and the making of the decision to sell the enterprise; the decision shall include the following matters:

a) The name and address of the enterprise being sold;

b) The name and address of the purchaser;

c) The selling price and the form of the sale; the method and the time of payment;

d) The time limit for signing the contract and for selling the enterprise;

dd) The responsibilities of the enterprise, of the Committee for Reform of Enterprise Management and of other related bodies to deal with existing problems and with any other problems which may arise.

2. Organize the signing of the contract with the purchaser. The contract for the purchase of the enterprise shall include the following:

a) The name and address of the enterprise being sold and its account number;

b) The name and address of the person purchasing the enterprise and his/her account number (if any);

c) The selling price of the enterprise;

d) The undertakings of the purchaser and of the seller of the enterprise;

dd) The method of transferring the assets, the method of payment of the purchase price of the enterprise, and the time limit for handing over the enterprise;

e) How problems which arise and contractual disputes shall be dealt with.

Lists of the assets and the estimates of the condition of the assets as agreed between the purchaser and the seller shall be attached to the contract.


Article 24 Announcement of the decision to sell and of the termination of the operations of the State owned enterprise

Within 15 days from the date of signing of the decision to sell the enterprise, the Committee for Reform of Enterprise Management shall carry out the following tasks:

1. Announce the termination of the operations of the State owned enterprise via the mass media in accordance with the law.

2. Send the decision to sell the enterprise to the following:

a) The Central Committee for Reform of Enterprise Management;

b) The Financial Department of the enterprise;

c) The Department of Taxation;

d) The body which registered the enterprise;

dd) The Department of Statistics of the locality where the enterprise registered its head office.

3. Return deposits to the people who took part in the tender (if any).

Article 25 Handover of the enterprise

The Committee for Reform of Enterprise Management shall organise the handover of the enterprise to the purchaser within the time limit agreed in the contract.

If during the handover the quantity and actual condition of the assets does not correctly match the quantity and actual condition of the assets as set out in the contract of sale/purchase, the purchaser shall have the right to request a readjustment to the contract already signed.

Article 26 Payment of the purchase price for the enterprise

The purchaser of the enterprise shall make payment of the purchase price within the time limit provided for in the contract of sale/purchase, but within a maximum of 3 years from the time of the decision to sell the enterprise.

Article 27 Business registration of an enterprise after it has been sold


The purchaser of the enterprise must carry out business registration at the business registration authority in the place where the enterprise has its registered head office (if the purchaser does not yet have a business licence) in one of the forms provided by the Law on Enterprises, or must carry out additional registration (if the purchaser already has a business licence).

Article 28 Rights and obligations of the purchaser of the enterprise

1. To initiate use of the assets purchased, to select a business trade, to re-organize production, to make new investments, to change the management apparatus, to decide on the form of the enterprise and to continue to lease land according to the law.

2. In cases of the continuation and maintaining of investments in production and business development of the enterprise, the purchaser shall inherit the interests of the enterprise in accordance with the agreements in the contracts of sale/purchase of the enterprise and in all economic contracts already signed.

3. The purchaser has these obligations: to pay the purchase price of the enterprise within the time limit and in accordance with the conditions in the contract of sale/purchase of the enterprise; to strictly carry out the [contract] conditions and his/her undertakings with respect to the seller of the enterprise; to inherit the obligations of the enterprise in accordance with the contract and with the regulations of the law.

Article 29 Inspection and monitoring of the implementation of the contractual undertakings

The person who made the decision to sell the enterprise shall be responsible to organize the monitoring and inspection of the implementation of the undertakings given in the contract for sale/purchase of the enterprise; and if the purchaser breaches the contractual undertakings, to deal with those breaches or propose that the State authorized bodies deal with them in accordance with the law.

Chapter IV
CONTRACTUAL MANAGEMENT OR LEASE OF A STATE OWNED ENTERPRISE

Section I
CONTRACTUAL MANAGEMENT

Article 30 Contents and targets of, and conditions for contractual management

Based on the particular characteristics of each trade and on the business results of the enterprise, the person making the decision on contractual management shall regulate the contents of, the targets of, and the conditions for contractual management, but must consider the following requirements:

1. To keep the State capital intact;


2. To find jobs for the employees and to contribute full social insurance for them;

3. To increase the profits of the enterprise or else reduce losses;

4. To carry out the policies of the State and to implement the contracts already signed.

Article 31 Negotiating and reaching agreement on the contents and targets of, and the conditions for contractual management

The contents of the contractual management, the conditions for it, the specific rights and obligations of the parties on a transfer of contractual management and the contents of the contract must be negotiated and agreed between the contractual manager and the person handing over contractual management.

Article 32 The contract for contractual management

The contents of the contract for contractual management shall include the following main items:

1. The names and addresses of the State owned enterprise transferring contractual management and of the contractual manager;

2. The contents of, the form of, the targets of, the conditions for, and the period of the contractual management;

3. The rights and obligations of both parties throughout the period of the contractual management; the parties to the contract may decide the period of the contractual management, but it shall not be less then 5 years;

4. Settlement of breaches, penalties and bonuses throughout the period of implementation of the contractual management;

5. Other matters relevant to contractual management.

Article 33 Rights and obligations of the contractual manager

1. To manage and use the capital and assets of the enterprise and to continue to employ its labour force in accordance with the provisions in the contract for contractual management and in accordance with the provisions of the law ; to inherit the rights and obligations of the enterprise.


2. To decide on the business organization and the method of paying salaries and bonuses in the enterprise.

3. To be entitled to income in excess of the level of [fees for] contractual management, and to himself decide on the distribution of that excess. In respect to that part of the profits which exceeds the level of fees for contractual management, the contractual manager may himself decide on its use after corporate income tax has been paid and after a reserves fund has been established and payments made into it.

4. To accept a reduction in income if all the fee levels and the other requirements of the contractual management as set out in the contract are not fully met.

Article 34 Rights and obligations of the person making the decision on contractual management

1. To inspect and monitor the implementation of the undertakings given in the contract for contractual management, and to deal with any breaches of those contractual undertakings.

2. Not to interfere in the operational management by the contractual manager, and to facilitate the latter's implementation of the undertakings given in the contract for contractual management.


Section II
LEASE OF STATE OWNED ENTERPRISES

Article 35 Forms of lease of an enterprise

The lessee may choose to lease the enterprise in the following forms:

1. A lease of the assets of the enterprise: the lessee receives a lease of the whole of the assets constituting the basis of the production and business of the enterprise, including leasing the labour force, but doesn't take over the rights and obligations of the leased enterprise.

2. A lease of the operations of the enterprise: the lessee implements a lease of the assets
constituting the basis of the production and business of the enterprise, including a lease of the labour force and at the same time takes over the loans, debts, economic contracts and all the other rights and obligations of the enterprise as agreed between the two parties concerned.


Article 36 Organization of the lease of an enterprise by tender

1. Where two or more people register to lease, a tender must be organized.

2. The person who made the decision to lease the enterprise shall establish a Tendering Council. The Tendering Council shall notify the people who have registered to lease of the time limit for submitting applications to take part in the tendering, the minimum lease rental and the amount of the deposit required; and shall make a public announcement on the mass media and post notice of the tendering to lease the enterprise at the enterprise headquarters.

3. The people who have registered to lease shall submit their tenders to lease the enterprise to the Tendering Council, and pay their deposit to the Tendering Council.

The Tendering Council shall receive the applications and the deposits, and create a list of tenderers and issue them with a certificate of participation in the tender.

4. The tenderers shall have the right to go to the enterprise to make enquiries into the accounting books and the declarations of assets, and to investigate the current condition of the enterprise.

5. Thirty days after the date of announcing registration to tender, the people who have registered to lease the enterprise must send their tenders to the Tendering Council.

A tender shall include:

a) The application to lease setting out clearly the name, surname and address, the
civilian identity card number, the account number (if any) and the business registration certificate of the lessee;
b) The form of lease and the term of the lease;

c) An employment plan for the employees currently working in the enterprise;

d) Suggested rental price of the enterprise;

dd) A report on the financial capacity of the lessee.

The tender shall be placed in a sealed envelope.


6. Five days after the deadline for submitting tenders, the Tendering Council shall send notice of the time and place for the tendering to each tenderer, and shall place a public notice of the list of tenderers at the place for the tendering 2 days before the tenders are opened.

7. The tender shall be opened in not more than one day and implemented as follows:

a) The Tendering Council shall inspect the seal and publicly open the envelope of each tenderer, and announce the employment plan and the tender price of each tenderer to record them in the minutes; and announce the highest employment plan for employees and the highest tender price of each tenderer;

b) The Chairman of the Tendering Council and the tenderers shall sign minutes of the tender opening.

8. Evaluation of the tender:

a) The Tendering Council shall discuss the employment plan for employees combined with the tender price in order to vote to choose the successful tenderer;

b) The Tendering Council shall make minutes of the evaluation of the tender and send them to the Committee for the Reform of Enterprise Management and to the person who made the decision to lease the enterprise.

Article 37 Organization of the lease of an enterprise by the direct method

1. Where only one person registers to lease, the lease of the enterprise shall be conducted by the direct method.

2. The person who has registered to lease shall have the right to go to the enterprise to make enquiries into the accounting books and the declarations of assets, and to investigate the current condition of the enterprise.

3. The person who has registered to lease shall submit an application file to the Committee for Reform of Enterprise Management. The contents of the application file shall be the same as is provided for the lease of an enterprise by tender.

4. The Committee for the Reform of Enterprise Management together with the Director of the enterprise shall have the following duties:

a) To prepare a plan for the lease of the enterprise;

b) To fix a minimum rental as the basis for negotiation and agreement with the lessee;

c) To negotiate directly with the lessee the employment plan for employees, the rental, the term of the lease and the contractual conditions for the lease of the enterprise;


d) To reach agreement with the lessee on the rental figure and the contract for the lease of the enterprise;

dd) To submit the application, the minutes and the draft contract to the person who made the decision to lease the enterprise.

Article 38 Responsibilities of the enterprise being leased

1. To carry out an inventory of, and to classify the whole of the current assets of the enterprise: property leased out, leasehold property, borrowed assets, assets held on behalf of others and appropriated assets being used; and to make an estimate of the current condition of these assets.

2. To create a list of creditors and the amounts of debts payable; a list of outstanding debtors and debts receivable and dividing that list into recoverable debts and irrecoverable debts. The enterprise shall be obliged to resolve what are the debts receivable and what are the debts payable before a decision to lease the enterprise is made.

3. To prepare a financial report up until the time of the decision to lease the enterprise.

4. To prepare a list of employees in the enterprise and to prepare employee related files.

5. To handover the assets, the employees, the files and the related accounting books to the lessee in accordance with the agreements set out in the contract of lease of the enterprise.

6. To manage the accounting books, the records, the files on assets and employees of the enterprise during the term of the lease.

7. To implement all State obligations, policies and systems in respect to employees in accordance with the law and the contract of lease of the enterprise.

8. [The enterprise] shall have the right to request that the person who made the decision to lease the enterprise terminate the contractual lease before the expiry of the lease term (if the lessee breaches the contract).

Article 39 Principles for dealing with the assets and finances of an enterprise upon lease

When an enterprise is leased, the assets and finances shall be dealt with as follows:


1. An inventory shall be carried out of the current assets in the enterprise in order to determine their quantity and their current condition, including: fixed assets and long-term investments; floating assets and short-term investments; assets leased out, borrowed assets, leasehold assets, assets held on behalf of others, assets sold on behalf of others, consigned assets and appropriated assets being used:

An inventory shall be done classifying the following assets separately: Assets leased out, borrowed assets, assets held on behalf of others, leasehold assets, processed goods in stock, consigned goods in stock and appropriated assets being used.

2. Current assets of the enterprise shall be classified and dealt with as follows:

a) Leasehold assets shall be classified and an estimate made of their value in their current condition, their quality, their current technological value and their actual value;

The actual value of leasehold assets shall be determined on the basis of the accounting books of the enterprise as at the time of the lease, the usage requirements of the lessee and their market price as at the time of the lease;

The actual value of all the assets as at the time of the lease shall be used as the basis for determining the level of rent for the lease of the enterprise;

b) Assets not in the list of leasehold assets must be dealt with before the lease is entered into, by the following means: by transfer, liquidation, sale or preservation pending a decision on how to deal with them;

c) Floating assets shall be dealt with as agreed between the lessor and the lessee;

d) Assets sourced from a bonus fund or from a welfare fund shall be transferred to the labour collective under the management of the Trade Union of the enterprise, or dealt with as agreed between the lessor and the lessee.

3. The enterprise shall compare and determine all types of debts, create a list of creditors and the amounts of debts payable, listing the outstanding debtors and debts receivable and classifying the latter into recoverable and irrecoverable debts.

Where the lessee does not take over the receivable debts and the debts payable, the person making the decision to lease shall arrange for the remaining management section of the enterprise to monitor the lease contract, and it shall be responsible to recover the receivable debts and to pay out all the debts payable.

4. In the case of a lease of the operations of the enterprise: the lessor together with the lessee and all concerned parties shall negotiate the issue of the taking over of all the rights and obligations of the legal entity (the enterprise) for lease.

Article 40 Resolution of problems relating to the labour force on the lease of an enterprise


1. The enterprise for lease shall prepare a list of the current employees in the enterprise at the time of the decision to lease, classifying the employees, and shall also create files relating to the employees [as follows]:

a) The number of employees for whom social insurance has been taken out ;

b) The number of employees currently receiving social insurance benefits due to illness, for reasons of pregnancy or maternity leave, for work-related accidents or for occupational disease;

c) The number of employees the performance of whose labour contract has been suspended;

d) The number of employees who have terminated their labour contract;

dd) The number of employees the term of whose labour contract is still current, shall transfer to work in the leased enterprise;

2. If the lease of the enterprise includes a lease of the labour force, the lessee shall be responsible to continue to employ and to organize jobs for the employees, and to ensure their rights in accordance with the lease and the labour laws .

The Director of the enterprise shall be responsible to carry out the procedures [necessary] for the social insurance office to issue social insurance numbers in accordance with the law, and to transfer the list of employees and their related files which the enterprise manages to the new enterprise.

3. In respect to employees in receipt of social insurance benefits, the Director of the enterprise and the social insurance office of the locality where the enterprise contributes social insurance shall resolve the rights of the employees in accordance with the regulations governing social insurance.

4. In cases of loss of jobs:

a) The Director of the enterprise shall carry out the procedures [necessary] for the social insurance office of the locality where the enterprise contributes social insurance to resolve the social insurance rights of the employees and to transfer their social insurance in accordance with the regulations governing social insurance;


b) The Director of the enterprise shall pay retrenchment allowances in accordance with Article 42 of the Labour Code and the current regulations of the Government.

5. In the case of the lease of an enterprise where the lessee does not agree to employ all of the current employees, the person making the decision to lease and the enterprise being leased shall be responsible to organize jobs for those remaining employees or else to resolve the problem in accordance with the [current] policy.

Article 41 Principles for determining the lease rental of the enterprise

1. The determination of the lease rental of the enterprise shall be based on the following: the form of the lease; the minimum rental as provided by the person making the decision to lease; the actual value of the enterprise; direct negotiations on the rental between the lessor and the lessee (in the case of a direct lease), or the successful tender rental (in the case of a tender), but the rental shall not be less than the minimum lease rental fixed by the person making the decision to lease.

2. The minimum lease rental shall be fixed on the following principles:

a) Ensuring that depreciation costs of the fixed assets the subject of the lease are covered;

b) Payment of valid expenses of the lessor incurred during the process of organizing, managing and inspecting the assets the subject of the lease;

c) Calculating a profit [component] in the rental of the lease of the enterprise, depending on the financial status and business effectiveness of the enterprise prior to the lease;

In respect of enterprises earning a profit: the rental for the lease of the enterprise shall not be less than the minimum level of profit as decided by the lessor.

In respect of enterprises suffering a loss or which have not yet made a profit: when leasing, a profit [component] shall not be included in the minimum lease rental.

Article 42 The decision to lease a State owned enterprise

[The decision] shall be based on the proposal of the Committee for the Reform of Enterprise Management and the body authorized to make the decision to lease the State owned enterprise.

The decision shall include the following main matters:

a) The name, address and account number of the State owned enterprise for lease and of the lessee;


b) The contents, the form and the term of the lease;

c) The lease rental and the method of payment;

d) The duties of the Committee for Reform of Enterprise Management and of the person in the enterprise's organization authorized to sign the contract;

dd) The responsibilities of the enterprise being leased and of other related bodies in dealing with labour issues, and in dealing with existing problems and other problems which may arise.

Article 43 Contract for the lease of the enterprise

The contract for the lease of the enterprise shall be settled by the lessee and the person authorized to make the decision to lease and authorized to sign, and shall include the following main matters:

1. The name, address and account number of the leasing enterprise and of the lessee;

2. The lease rental for the enterprise and the method of payment of the rent;

3. The term of the lease of the enterprise as agreed between the parties signing the contract but not less than 3 years;

4. The powers and responsibilities of the lessor and of the lessee of the enterprise;

5. The resolution of labour, assets and financial [issues]; and the rights and obligations of the enterprise which are taken over, in the case where the lease is of the operations of the enterprise;

6. The return/refund or [provisions] dealing with the enterprise at the conclusion of the contract [term];

7. The undertakings of the parties signing the contract;

8. The principles for dealing with problems which arise and with labour disputes.

The lease contract shall have as attachments lists of the assets belonging to the enterprise, estimates of the value of the residual assets, and a list of employees (if it is a lease of the operations of the enterprise).

Article 44 Notice of the decision to lease a State owned enterprise


Within 15 days from the date of signing the decision to lease the enterprise, the Committee for Reform of Enterprise Management shall carry out the following tasks:

1. Make an announcement on the mass media of the lease of the enterprise.

2. Send the decision to lease the enterprise to the following bodies:

a) The Central Committee for Reform of Enterprise Management;

b) The Finance Department of the enterprise;

c) The tax office;

d) The business registration office;

dd) The Department of Statistics at the place where the enterprise has its head office;

3. Repay deposits to the people who took part in the tender (if any).

Article 45 Handover of the enterprise

The lessor shall be responsible to handover the assets, the accounting books, the labour force and all related files to the lessee within the time agreed in the contract for the lease of the enterprise.

The Committee for the Reform of Enterprise Management together with the person signing the contract for the lease of the enterprise and the Director of the enterprise shall handover the enterprise to the lessee.

If during the handover the quantity and value of the assets of the enterprise do not correctly match the quantity and value of the assets as set out in the contract, the lessee shall have the right to postpone the acceptance of the handover and to request a readjustment of the contract already signed.

Article 46 Rights and obligations of the lessee of the enterprise

In addition to implementing all the rights and obligations of a lessee of assets provided for in Section 5, Chapter II, Part 3 of the Civil Code , the lessee shall also have the following rights and obligations:

1. Rights of the lessee of the enterprise:


a) To initiate the management and use of all the assets and employees leased in the enterprise for the purpose of the business operations in accordance with the contractual agreements and with the law;

b) To change and re-organize production; to make new investments; to up-date and improve technology; to maintain, repair, replace and mend assets damaged in the course of the production and business operations. Any sub-lease must have the consent of the person making the decision to lease;

c) To itself decide on the organization of the management apparatus, the organization of business, and of the method of payment of salaries and bonuses in the enterprise;

d) To be entitled to the profits resulting from the lease of the enterprise after all obligations to the State and to the lessor have been fulfilled;

dd) To take over all the contracts for land lease and for electricity and water supply of the State owned enterprise being leased (if the lessee so requires).

2. Obligations of the lessee of the enterprise:

a) To pay the rent for the enterprise strictly in accordance with the agreements set out in the contract;

b) To use the assets strictly in accordance with the aims and agreements in the lease; not to mortgage the leasehold assets (except for that part of any new investment from the lessee's own capital); not to sub-lease land use rights;

c) To preserve the value of the assets of the leased enterprise when paying out contracts;

d) Together with the lessor, to resolve problems which arise relating to rights and obligations under contracts for land lease, contracts for the supply of electricity, water, materials and raw materials, contracts for the sale of products and labour contracts; to improve working conditions for employees and to improve hygienic and environmental conditions;

dd) To agree to inspection and investigation by the lessor concerning the use of the leased assets;

e) To carry out all the other obligations in the contract for the lease of the enterprise.
3. In addition to the general rights and obligations provided for in clauses 1 and 2 of this Article, the lessee shall also have the following rights and obligations:


a) Where the enterprise is leased by another State owned enterprise, in addition to the contractual rights and obligations similar to those provided for in clauses 1 and 2 of this Article and in other provisions of the law, after paying all types of taxes, the State owned enterprise being the lessee shall have full rights to use the profits gained from the operations of the enterprise which it has leased;

b) Where the lessee being a State owned enterprise registers the business under the Law on Enterprises or the Law on Co-operatives, it shall have the right to use the leasehold assets and the labour force towards the business aims according to the mechanisms provided for the [particular] type of business registered, and at the same time shall ensure that the provisions in the contract for lease and the provisions in clauses 1 and 2 of this Article [are fulfilled].

c) Where the lessee is the labour collective or an individual employee in the enterprise, it/he/she must have personal capital, and shall register and establish the enterprise of the labour collective or of the individual and shall have the right to use the State owned enterprise being leased according to the mechanisms provided for the [particular] type of business registered.

4. If the lessee of the enterprise breaches the contractual undertakings causing the enterprise being leased to suffer losses, in addition to the responsibilities agreed in the contract of lease, the person making the decision to lease shall have the right to terminate the contract and bind the lessee to pay compensation for the losses the lessee has caused.

Article 47 Rights and responsibilities of the person making the decision to lease the enterprise and of the person signing the contract for the lease of the enterprise

1. The person making the decision to lease the enterprise shall have the right to provide instructions on how to carry out the contract for the lease of the enterprise; to resolve proposals from the Committee for the Reform of Enterprise Management and from the person signing the contract; to decide on the lease rental; and to decide to take back the enterprise being leased on the recommendation of the person signing the contract for the lease of the enterprise.

2. The person signing the contract for the lease of the enterprise shall have the [following] rights and responsibilities:

a) To organize the implementing process of all the matters and undertakings in the contract for the lease of the enterprise;


b) To organize the monitoring, investigation and inspection of the implementation of the contract; not to interfere in the production and business operations of the enterprise; to facilitate the lessee's proper implementation of all the undertakings in the contract for the lease of the enterprise;

c) To deal with problems which arise within the scope of his/her authority; to recommend that a lessee not implementing the contractual undertakings be dealt with in accordance with the provisions of the law.

Article 48 Conclusion of the contract of lease of the enterprise

1. At the end of the term of the lease of the enterprise as set out in the contract, the lessee shall handover the value of the enterprise to the lessor; the two parties shall together estimate the current status and value of the residual assets, the newly invested assets and the additional assets, and compare them with the contract, and determine the responsibilities of all parties and agree on settling the value of the newly invested assets and carry out the liquidation of the contract.

2. Where during the course of the lease or at its' conclusion the lessee wishes to purchase the enterprise, both parties shall liquidate the contract of lease and carry out the procedures set out in this Decree for a direct purchase.


Chapter V
INCENTIVES FOR ENTERPRISES, TRANSFEREES, PURCHASERS, LESSEES OF ENTERPRISES, AND EMPLOYEES

Article 49 Incentives for enterprises which transfer, sell or lease

1. Enterprises which transfer to the labour collective; enterprises which sell to a collective, an individual or to a legal entity:

a) They shall be granted the same incentives as newly established enterprises and as provided for in the Law on Promotion of Domestic Investment (amended). If they do not satisfy all the conditions to be granted incentives under the Law on Promotion of Domestic Investment, they shall be entitled to a 50% reduction of corporate income tax for 2 years from the commencement of operations;

b) They shall be entitled to an exemption from business registration fees, and from registration fees for those assets under the power of management and use of the State owned enterprise which are transferred to the new enterprise;

c) They shall continue to maintain contracts for the hire of plant and for the lease of land of the former enterprise in accordance with the Law on Land and in accordance with the other provisions of the current law;


d) They shall be entitled to retain capital from the State Commercial Bank, the State Financial Company and from other State credit institutions in accordance with the interest mechanism applicable to State owned enterprises;

dd) They shall be entitled to continue to import and export goods in accordance with the current regulatory mechanism similar to that applicable to State owned enterprises;

e) Prior to the actual transfer, sale or lease, the enterprise shall be entitled to use the cash reserves in the reward fund and in the welfare fund to divide amongst the employees working in the enterprise (who need not pay income tax [on it]);

g) They shall be entitled to maintain and develop the reward fund in the same form [as before], cultural works, clubs, infirmaries and sanatoriums to ensure the same welfare benefits for employees who continue to work at the enterprise transferred sold or leased. These assets belonging to the labour collective shall be organized and managed by the Trade Union of the enterprise.

2. The enterprise being leased shall be entitled to the incentives provided for in sub-clauses c, d, dd, e and g of clause 1 of this Article.

Article 50 Incentives for a purchaser being the labour collective of the enterprise

When a labour collective which falls within the definition provided in clause 13 of Article 3 of this Decree purchases an enterprise, the President of the Trade Union or the person elected by the General Meeting of workers and officials of the enterprise to be the representative of the labour collective shall implement the procedures to purchase the enterprise and shall be entitled to the following incentives:

1. In respect of a labour collective which purchases an enterprise in order to maintain production and business and to ensure work for itself, and where it undertakes to continue to employ all of the current employees in the enterprise (except for those who voluntarily terminate their labour contracts): When it purchases an enterprise which has been trading at a level of loss where it is unable to pay its debts and it is forecast that the proceeds from the sale of the enterprise will not be sufficient to settle all the debts:

a) If the labour collective guarantees that from 50% to 100% of the current employees in the enterprise will transfer to work in the new enterprise, and guarantees work for that number for from one or more years continuously, it shall be entitled to a 70% reduction of the sale price.

b) If the labour collective only guarantees that less than 50% of the current employees in the enterprise will transfer to work in the new enterprise, and guarantees work for that number for from one or more years continuously, it shall be entitled to a 50% reduction of the sale price.

2. In respect of a labour collective which purchases an enterprise in order to maintain production and business and to ensure work for itself, and where it undertakes to continue to employ all of the current employees in the enterprise (except for those who voluntarily terminate their labour contracts): when it purchases an enterprise which is making a profit, or not trading at a loss, and it is forecast that the proceeds from the sale of the enterprise will be sufficient to settle all debts:

a) If the labour collective guarantees that from 50% to 100% of the current employees in the enterprise will transfer to work in the new enterprise, and guarantees work for that number for from one or more years continuously, it shall be entitled to a 50% reduction of the sale price.

b) If the labour collective only guarantees that less than 50% of the current employees in the enterprise will transfer to work in the new enterprise, and guarantees work for that number of employees for from one or more years continuously, it shall be entitled to a reduction of 40% of the sale price.

3. Where the purchaser is an individual or a group of employees in the enterprise which does not recognize [the validity of] the representative of the labour collective in the enterprise, they shall not be entitled to the incentives granted to the labour collective of the enterprise.

4. Each employee in the collective which purchases the enterprise shall have the right of ownership to that part of the value of the enterprise equivalent to the share of capital they contribute, and shall have the rights and obligations of a person contributing capital, but shall not transfer shares to someone outside the enterprise for [at least] one year from the date of purchase of the enterprise.

Article 51 Incentives for a purchaser not being the labour collective

1. If it employs all of the employees in the enterprise (except for those who voluntarily terminate their labour contract) and guarantees work for them for from one or more years continuously, it shall be entitled to a 50% reduction of the sale price.

2. If it only employs from 50% to !00% of the employees in the enterprise to transfer to work in the new enterprise and guarantees work for them for from one or more years continuously, it shall be entitled to a 30% reduction of the sale price.

3. If it only employs from 20% to 50% of the employees in the enterprise to transfer to work in the new enterprise, and guarantees work for them for from one or more years continuously, it shall be entitles to a 20% reduction of the sale price.

Article 52 Incentives for a purchaser who pays the purchase price immediately


If the purchaser of the enterprise pays the purchase price immediately in a lump sum after it/he/she purchases, the purchaser shall be entitled to a maximum reduction of 20% of the sale price; if the purchase price is paid in instalments within one year of the date of purchase of the enterprise, the purchaser shall be entitled to a maximum reduction of 10% of the sale price.

Article 53 Policy in respect of employees who leave the enterprise

Employees who are not employed by the purchaser or who voluntarily terminate their labour contracts:

1. Prior to the sale, the enterprise shall divide the cash reserves in the reward fund and in the welfare fund amongst the employees;

2. They shall be entitled to the other benefits as provided by the laws on labour.


Chapter VI
IMPLEMENTATION OF THE TRANSFER, SALE, CONTRACTUAL MANAGEMENT OR LEASE OF STATE OWNED ENTERPRISES

Article 54 Authority to choose and to decide on the applicability of a transfer, sale, contractual management or lease of a State owned enterprise

Based on the plan for the overall arrangement of the State owned enterprise as approved by the authorized body:

1. The Minister of the Ministry managing the sector, the Chairman of the provincial People's Committee shall decide on the transfer, sale, contractual management or lease in respect of an enterprise which is under its management including enterprises which are subsidiaries of Corporations 90.

2. The Board of Management of a Corporation 91 shall decide of the transfer, sale, contractual management or lease of an enterprise which is a subsidiary of the Corporation.

Article 55 Responsibility to organize the transfer, sale, contractual management or lease of a State owned enterprise


1. The Committee for Reform of Enterprise Management under a Ministry, province or city under central authority and Corporations 91 shall be the bodies assisting the Minister, the Chairman of the provincial People's Committee and the Board of Management of a Corporation 91 to organize the implementation of the transfer, sale, contractual management or lease of a State owned enterprise.

Depending on the nature of the [particular] trade, the form of the transfer, sale, contractual management or lease, and the current financial status of the enterprise, the Committee for Reform of Enterprise may invite additional members to take part namely representatives from the Bank, the enterprise, the employees of the enterprise and from other related bodies.

2. The enterprise being transferred, sold, subject to contractual management or being leased shall agree to the Ministry, the provincial People's Committee and the Corporation 91 deciding to establish a Committee for Reform at the enterprise in order to implement the preparatory work, the draft plan, the preparation of lists of declaration of assets, capital and debts; and in order to create lists of employees in the enterprise and carry out all the other necessary procedures in accordance with the guidelines of the Committee for Reform of Enterprise Management mentioned above.


Article 56 Duties of the Committee for Reform of Enterprise Management under Ministries, provinces and cities, and Corporations 91 in the organization of the transfer, sale, contractual management or lease of enterprises

1. In the case of a transfer of an enterprise:

a) To prepare a plan for the transfer of the enterprise; to announce to all of the employees of the enterprise the transfer of the enterprise and to announce it on the mass media;

b) To evaluate the value of the enterprise, to determine the current condition of the assets, their quality and future technological value and their cash market value;

c) To make a comparison of the debts; to create a list of creditors and outstanding debtors of the enterprise, the amounts owing to each creditor and all debts payable; to prepare a plan to deal with existing financial [problems] and with the employees of the enterprise;

d) To prepare a contract for the sale of the enterprise and to report to the Minister, the Chairman of the provincial People's Committee and to the Board of Management of the Corporation 91 for their decision;


dd) To provide guidance to, and to inspect and investigate the new Committee for Reform at the enterprise in its implementation of the recovery of assets of the enterprise, the return of leasehold assets, of borrowed assets and of assets held on behalf of others; [and in its implementation of ] the recovery of debts and the payment of debts of the enterprise; the handover of the assets, books of account and all other related files to the transferee in accordance with the agreement in the contract for the transfer of the enterprise;
e) To deal, within the scope of its authority, with any problems which arise during the transfer of the enterprise.

2. In the case of the sale of an enterprise:

a) To prepare a plan for the sale of the enterprise; to announce to all of the employees of the enterprise the sale of the enterprise and to announce it on the mass media;

b) To evaluate the value of the enterprise, to determine the estimated selling price of the enterprise based on the book value, the current condition of the assets, their quality, future technological value and their cash market value;

c) To make a comparison of the debts; to create a list of creditors and of outstanding debtors of the enterprise and of the amounts owing to each creditor; to prepare a plan to deal with existing financial [problems] and with the employees of the enterprise;

d) To organize the direct sale or the sale by tender of the State owned enterprise; to analyse and evaluate the tenders, to recommend a sale price (in the case of a direct sale) and to choose the successful tenderer (in the case of a tender) in order for the person selling the enterprise to make a decision;

dd) To prepare a contract for the transfer of the enterprise and to report to the Minister, the Chairman of the provincial People's Committee and to the Board of Management of the Corporation 91 for their decision;

e) To provide guidance to, and to inspect and investigate the new Committee for Reform at the enterprise in its recovery of assets of the enterprise, the return of leasehold assets, of borrowed assets and of assets held on behalf of others; [and in its implementation of ] the recovery of debts and the payment of debts of the enterprise; and in the handover of the assets, books of account and all other related files to the purchaser in accordance with the agreement in the contract for the sale of the enterprise;

g) To deal, within the scope of its authority, with any problems which arise during the sale of the enterprise.

3. In the case of lease of an enterprise:

a) To prepare a plan for the lease of the enterprise; to determine the targets and the conditions for the lease of the enterprise; to announce to all of the employees of the enterprise the lease of the enterprise and to announce it on the mass media;


b) To provide guidance to the new Committee for Reform at the enterprise to make declarations of the whole of the assets belonging to the enterprise, to determine their current financial condition and the assets of the enterprise which will be converted into a value prior to the lease;

c) To determine the minimum lease rental and to recommend the lease rental of the enterprise;

d) To analyse and estimate the value of the leasing plan; to negotiate and agree directly the contract of lease with the lessee or to organize the tender of the lease of the enterprise. To put forward [the name] of the person accepting the direct lease (in the case of a lease by the direct method) and the successful tenderer (in the case of a tender) in order for the person deciding to lease the enterprise to make the decision;

dd) To prepare a contract for the lease of the enterprise and to report to the Minister, the Chairman of the provincial People's Committee and to the Board of Management of the Corporation 91 for their decision;

e) To deal, within the scope of its authority, with any problems which arise during the lease of the enterprise.

4. In the case of contractual management of the enterprise:

a) To determine the targets and the conditions for the contractual management of the enterprise; to organize the preparation of a plan for the contractual management of the enterprise;

b) To agree directly with the contractual manager or to organize a tender to choose a contractual manager;

c) To prepare a contract for the contractual management of the enterprise and to report to the Minister, the Chairman of the provincial People's Committee and to the Board of Management of the Corporation 91 for their decision.

Article 57 Responsibilities of the Committee for the Reform of Enterprise Management under Ministries, provinces and cities, and of Corporations 91

The Committee for the Reform of Enterprise Management under Ministries, provinces and cities, and of Corporations 91 shall be responsible for the matters involved in, and for the results of the work of transferring [the enterprise] before the person making the decision for the transfer, sale, contractual management or lease, and before the law.

Article 58 Authority to approve the plan for the transfer, sale, contractual management or lease of an enterprise


1. Based on the proposal of the Committee for the Reform of Enterprise Management, the Minister, the Chairman of the provincial People's Committee and the Board of Management of the Corporation 91 shall decide upon [the following;] the targets and conditions of the contractual management, the lease rental, the sale price of the enterprise; and shall approve the plan for the transfer, sale, contractual management or lease of an enterprise which has State capital in the books of account of less than 1 billion dong.

2. In the case of enterprises which have State capital in the books of account of from 1 billion dong to below 5 billion dong, the Minister, the Chairman of the provincial People's Committee and the Board of Management of the Corporation 91 shall report to the Prime Minister of the Government for his consideration.

Article 59 Authority to sign the contract for the transfer, sale, contractual management or lease of the enterprise

1. The contract for the transfer, sale, contractual management or lease of a State owned enterprise under the management of a Ministry shall be signed by the Minister of the line Ministry or by the person authorized to sign by the Minister of the line Ministry.

2. The contract for the transfer, sale, contractual management or lease of a State owned enterprise under local management shall be signed by the Chairman of the provincial People's Committee or by the person authorized to sign by the Chairman of the provincial People's Committee.

3. The General Director of a Corporation 91 shall sign the contract for the transfer, sale, contractual management or lease of an enterprise which is a subsidiary of a Corporation 91.

Article 60 Responsibility to organize and monitor the implementation of a contract for the transfer, sale, contractual management or lease of an enterprise

The person signing the contract for the transfer, sale, contractual management or lease of an enterprise shall have the following responsibilities:

1. To organize the implementation of the contract for the transfer, sale, contractual management or lease of an enterprise;

2. To organize the monitoring, the investigation and the inspection of the implementation of the contract and dealing with problems which arise;


3. Any problem occurring during the course of the implementation of the contract for the transfer, sale, contractual management or lease of an enterprise shall be resolved by the parties signing the contract, otherwise any remaining dispute shall be referred to the provincial Commercial Court for its decision.

Article 61 Proclamation and registration of the transferee, purchaser, contractual manager or lessee of the enterprise

The Committee for the Reform of Enterprise Management under Ministries, provinces and cities, and Corporations 91 shall announce for the information of the enterprise and give public notice on the mass media of the policy for transferring enterprises applicable to [any particular] form of transfer, sale, contractual management or lease of an enterprise, and shall register the list of transferees, purchasers, contractual managers or lessees of the enterprise within 30 days from the date of issue of the approval of the plan for the transfer of the enterprise by the authorized body.

If no-one is registered under any of the above forms within the time limit stated above, the Committee for the Reform of Enterprise Management shall propose that the authorized body carry out the procedures to dissolve the enterprise; in a case where the enterprise is already insolvent, the Director of the enterprise must lodge an application with the provincial Commercial Court for it to resolve the bankruptcy procedures in respect of the enterprise.


Chapter VII
IMPLEMENTING PROVISIONS

Article 62 Effectiveness, responsibility for providing implementing guidelines

This Decree shall be of full force and effect 15 days after the date of its signing. All previous legal instruments which are inconsistent with this Decree are hereby repealed.

Within 30 days from the date this Decree takes effect, the following bodies shall provide implementing guidelines: The Ministry of Finance; the Ministry of Labour, War Invalids and Social Affairs; the Ministry of Planning and Investment; the State Bank of Vietnam; the government Price Committee; the General Department of Land Administration; and all other Ministries concerned.

Article 63 Responsibility for organizing implementation


Ministers, Heads of ministerial equivalent bodies, Heads of Government bodies, Chairmen of People's Committees of provinces and cities under central authority, and Boards of Management of Corporations 91 shall be responsible for the implementation [of this Decree], and for reporting once every three months to the Prime Minister of the Government and making recommendations on ways to better implement this Decree.

Signed for THE GOVERNMENT

PRIME MINISTER

PHAN VAN KHAI