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Government Socialist Republic of Vietnam
No. 120/CP Independence-freedom-Happiness
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Hanoi, September 17, 1994
- On the proposal of the Minister of finance and the Heads on concerned branches;
Decrees :
Article 1 :
To promulgate hereby in connection with this Decree the temporary regulation on the issuance of bonds and stocks of State - owned enterprises, except for the enterprises being the State - owned banks, as an experiment.
Article 2 :
The Minister of finance shall be responsible for providing guidance for the implementation of this Decree and for selecting the enterprises for the trial.
The Governor of the State Bank of Vietnam shall select and provide guidance for the Commercial Bank, the State - owned Investment and Development bank to issue bonds as an experiment.
After a trial year, the Minister of finance and the Governor of the State Bank of Vietnam shall conclude, draw experience for adding to and completing the legal document so that the Government can consider and officially issue together with other legal d ocuments on stock and stock exchange market.
Article 3 :
This Decree shall come into effect from October 1st, 1994
Article 4 :
The Ministers, Heads of the ministerial - ranking bodies, the Heads of the offices belong to the Government, the Chairman of the provinces and cities under central authority shall be responsible for the implementation of this Decree.
for The Government Vice Prime Minister PHAN VAN KHAI (Signed)
Government The Socialist Republic of Vietnam
Independence-freedom-Happiness
Article 1 :
The State - owned enterprise's bond is a loan borrowing certificate with a fixed period of time and an interest rate issued by a state - owned enterprise so as to borrow capital for investment to expand the production business operation scale and to renew equipment and technology of the enterprise.
Article 2 :
The state - owned enterprise's stock is a capital recognizing certificate of the stock owner. It is issued by a state - owned enterprise in order to mobilize capital for an operating state - owned enterprise or for the establishment of a new enterprise pr ojected by the State.
Article 3 :
The buying and liquidating of State - owned enterprise's bonds and stock are carried out completely in Vietnamese dong. In the case that the bond buyer has only fold or foreign currencies, he must exchange to Vietnamese dong at the exchange rate and gold price announced by the State Bank at the time of buying.
Article 4 :
Bonds and stocks of a State - owned enterprise are sold, bough, transferred, inherited and can be used as collateral for properties, mortgages in credit relations; but not to replace money in circulation or to pay taxes to the State.
Article 5 :
People who are eligible to buy state - owned enterprise's bonds and stocks include :
a. Vietnamese nationals residing both in and out of the country, the foreigners living and working in Vietnam.
b. Vietnamese enterprises of all economic fields and sectors.
for the State - owned enterprises, the Commercial Banks the financial Companies, the credit organizations, the Insurance Companies, the Insurance funds, the Investment funds, the buying of the State - owned enterprises' bonds and stocks is conducted in a ccordance with the regulations of the Ministry of finance and the State Bank of Vietnam.
c. Mass association and organizations
d. Enterprises with foreign invested capital operating in accordance with the law on foreign investment in Vietnam are allowed to buy bonds and stocks.
e. To prohibit the state offices, the armed forces, the social associations from using capital provided by the State budget to buy bonds and stocks of State - owned enterprises.
Article 6 :
A State - owned enterprises which issued bonds and stocks shall be responsible for :
- Liquidating fully and timely (both principal and interest for the bond-owners.
- Liquidating share - incomes and the remaining value of the stocks in case the enterprise is disbanded, merged or bankrupted for the stock - owners.
Article 7 :
The bonds and stocks of the State - owned enterprises are distributed by the following ways :
a. Directly in the State - owned enterprises
b. Through agents being the intermediate financial organizations : The Commercial Banks, the financial Companies, the Insurance Companies. The Agents distributing bonds and stocks of State - owned enterprises shall enjoy a distribution fee in accordance with the guidance of the Ministry of finance.
c. The distribution of the State - owned enterprises bonds can be carried out by bidding in accordance with the regulation issued by the Ministry of finance. The bid winner is allowed to sell bonds to the objects prescribed in Article 5 of this Regulation .
Article 8 :
State - owned enterprises which want to issued bonds and stocks ought to have enough conditions prescribed in Article 18 and 25 of this Regulation and have to send to the Ministry of finance a complete set of dossier of application for the issuance of bo nds and stocks prescribed in Article 19 and Article 26 of this Regulation.
Article 9 :
Within 45 days sine the receipt of the dossier of application for the issuance of State - owned enterprise bonds and stocks, the Ministry of finance considers and grants licenses to the enterprise to issue bonds and stocks. In the case that the enterpris es is not eligible to issue bonds and stocks, the Ministry of finance has to clearly inform it of the reasons.
Article 10 :
Within 30 days since the receipt of the license for issuing bonds and stocks, the State - owned enterprises has to announce publicly via mass media the contents relating to the issuance of bonds as approved.
Article 11 :
In the case that a period of time for one or many occasions of issuing bonds and stocks as prescribed in the license expires but the State - owned enterprises has not mobilized enough capital, the Ministry of finance can consider and renew its license, however it is not necessary that the license shall be prolonged until sufficient capital has been mobilized.
Article 12 :
When an occasion of issuing bonds, and stocks comes to an end, the State - owned enterprises has to submit reports on the issuance of bonds and stocks to the Ministry of finance and the enterprise's immediate upper level of State management.
Article 13 :
The total amount of revenue from the issuance of State - owned enterprises bonds and stocks shall be accounted for in accordance with the existing regulations of the State and used correctly for the purposes of the approved projects. It must be periodical ly reported to the Ministry of finance.
Article 14 :
Bond and stock owner bears responsibility for the loss or damage to the State - owned enterprise bonds and stocks which he has bought. In the case of a signature bearing bond is lost. If its owner benefited by another client it shall be paid when its term comes to an end.
Bond and stock owner can have their bonds and stocks kept and preserved in Commercial Banks and for that they have to pay storage fees as prescribed by the Ministry of finance.
Article 15 :
All acts of issuing and distributing fraudulent bonds and stocks shall be dealt with in accordance with the laws, just as act of forging and distributing counterfeit money.
Chapter II Issuing bonds of State - owned enterprises
Article 16 :
Bonds of State - owned enterprises include those with or without a name on and with a term of one or more years. The buyers of State - owned enterprises bonds are free to choose the appropriate types of bonds with an unlimited quantity.
Article 17 :
The State - owned enterprises has to assure that bond buyers receive plus interest in comparison to the price index figure and the business efficiency of the enterprise.
The Ministry of finance shall discuss with the State Bank of Vietnam to decide on the interest rate of the State - owned enterprises bonds in accordance with one of the following formulas :
1. A fixed interest rate applied for the whole term of the bond.
2. A fixed interest rate applied yearly within the term of the bond
3. An interest rate for holding a bid to choose an interest rate of the bond.
Article 18 :
The State - owned enterprises wishing to issue bonds ought to accumulate the following conditions:
1. Having been granted license for doing business
2. The investment project is a profit - yielding business and before that it was considered and approved by the guaranty organization.
3. The production business operations of the enterprise during 3 years before issuing the bonds are profit - yielding, all the financial activities are health and it has a prospect for development.
4. It has not violated the State's Laws and financial disciplines.
5. It is guaranteed by the Ministry of finance or a prestigious intermediate financial organization.
6. It has to pay the registered money to the guaranty organizations. The formalities for paying and returning the registered money are stipulated by the Ministry of finance.
Article 19 :
The State - owned enterprises wishing to issue bonds have to submit to the Ministry of finance the following documents:
1. The investment project approved by the authoritative level
2. The plan for issuing bonds of State - owned enterprises
3. Application for issuing bonds
4. Request paper for the guaranty from the Ministry of finance in accordance with the prescribed from of the Ministry of finance or the contract of guaranty with a financial institution.
5. Reports of finance of 3 consecutive years before applying for the issuance of bonds with ratification of the auditing office or the authoritative office for the approval of financial accounting.
Article 20 :
The transference of ownership of bonds with a name on and end liquidation of types of bonds whose terms are going to expire are executed at the issuing place or at a location convenient for the bond owners. The principal the bond is paid in time. The inte rest of the bond is paid periodically or once at the deadline.
Article 21 :
The financial source for paying bonds of State - owned enterprises generates from the amount of basis deduction and profits earning from the project invested by capital source from issuing the bonds after paying taxes as prescribed by the laws. In the case, that the fixed time for paying the bonds comes and the revenue from those sources is not enough, the State - owned enterprise has to use other funds and legal source of money for payment. If may not issue new bonds to get money for paying the bonds whose terms have come to an end. If all the sources it has mobilized are not enough for paying the bonds, the guaranty establishment shall undertake the responsibility for paying in time to the bond owners.
Article 22 :
The interest of State - owned enterprise bonds and the cost of issuing State - owned enterprises bonds are counted in the cost of the project invested by the funds from issuing bonds.
Chapter III The issuance of State - owned enterprises stocks
Article 23 :
Stocks owner (stock - holder) has the following interest and responsibilities :
1. Having rights to take part in stock - holders meeting to vote for the board of managers, to vote on important issues of amendment of and addition to the by - law, business plan, profit sharing etc.
2. Enjoying share interest on the basis of production output of the enterprise.
3. Enjoying tax preferences on the revenues from share interest in accordance with the existing tax law.
4. Taking risk when the enterprise is disbanded (or bankrupt) in accordance with the enterprise's by -law and law on enterprise bankruptcy.
Article 24 :
Each shareholder can buy one or more stocks but he can not own more than the number limited by the enterprise's by - law.
Article 25 :
State - owned enterprises having permission to issue stocks have to assure the following conditions :
1. The operating enterprises wishing to issue stocks must be those having licenses of production business and having been allowed to privatize.
2. for newly founded enterprises, they must have decisions authorizing their establishment from competent administrative levels in accordance with the existing regulation of the state and the total value of state stocks must be not be less than 30 per ce nt of total capital of the enterprises.
The capital mobilized from stocks while not in use must be deposited in state treasury store. In the case that the amount of money mobilized from issuing stocks is not enough for the demand of the project, the enterprise has to repay both principal and in terest according to the stock interest rate of the state treasury store for stock buyers.
Article 26 :
State - owned enterprises wishing to issue stocks have to submit to the Ministry of finance the following documents :
1. Applications for issuing stocks
2. Enterprise's by - law
3. Plan for production and business or economic and technical justification approved by a competent body.
4. Plan for the issuance of stocks
5. The draft of announcement of issuing stocks in accordance with the content prescribed by the Ministry of finance.
Article 27 :
State - owned enterprises having permission to issue stocks has to :
- Implement regulation and procedures on financial man - agreement and financial reporting in accordance with the existing laws.
- Announce the statement on issuing stocks, enterprise's by - law output of financial activities, morality of the executive board of managers and other information on mass media.
- Pay the costs of printing stocks, issuing license, fees for distributing agent and stock storage as prescribed by the Ministry of finance.
Chapter IV Responsibilities and powers of the concerned bodies
Article 28 :
The Ministry of finance bears the following responsibilities :
- To coordinate with the ministries and branches which govern the production business industry and with the chairmen of the People's Committees of provinces and cities belonging to the central government to select the State - owned enterprises with adequa te conditions for issuing bonds, stocks and to grant licenses for issuing bonds and stocks of State - owned enterprises.
- To stipulated forms and procedures for issuing bonds and stocks.
- To stipulate the content and examine the honesty of information of the enterprises which issue bonds and stocks
- To supervise the process of issuing, using capital and paying the bonds.
- To inspect and supervise the sharing of profits among stock holders and paying interest of the stocks.
- To control the issuance of bonds and stocks.
- To stipulated the fee rate for distributing agents (article 7) fee rate for bond and stock storage (article 14) and the costs for the issuance and payment of State - owned enterprises bonds and stocks.
- To suspend the issuance of bonds and stocks of the enterprises which violate this Regulation.
- To consider and extend the issuance of bonds and stocks of enterprises.
- To investigate the guaranty of payment for State - owned enterprise bonds.
- To compromise with the State Bank of Vietnam on the announcement of interest rate of State - owned enterprise bonds.
Article 29 :
The direct bodies for State management of the enterprises bear the following responsibilities :
- To investigate and decide or forward to the competent bodies to decide on the project for production - business operations of the State - owned enterprises.
- To approve the plan for issuing bonds, stocks of enterprise sent to the Ministry of finance.
- To supervise the issuance and use of capital to assure it is used efficiently and in accordance with the prescribed purpose.
- To inspect and supervise the recovery of capital, the legislation of premature bonds and the sharing of bond interests.
- To joint the Ministry of finance and the State bank of Vietnam to summarize and draw experience from the experiment of the issuance of State - owned enterprises bonds and stocks.
Article 30 :
The State Bank in Vietnam bears the following responsibilities :
- To provide guidance for the Commercial Banks, the financial companies in conducting operations of distributing agents of bonds and stocks.
- To stipulate the buying of bonds and stocks of the Commercial Banks and the financial Companies.
- To issue regulations on collateral and mortgage of bonds and stocks in credits relations.
for The Government Vice Prime Minister
PHAN VAN KHAI