Decree No.116/2015/ND-CP providing amendments, supplements to Decree No. 159/2011/ND-CP on conversion of 100% State-owned Enterprise into Joint Stock Company
On 11 November 2015, the Government issued Decree No.116/2015/ND-CP (Decree 116) providing amendments, supplements to Decree No. 159/2011/ND-CP on conversion of 100% State-owned Enterprise into Joint Stock Company (Decree 59) with the highlighted points as follows.
Regarding the investment capital of the enterprise undergoing equitization in other economic organizations, it is noticeable that in case there is a difference between the value recorded in the accounting books and the actual value of the re-assessment, i.e. the former is lower than the latter, the value of the re-assessment shall be the final statistic.
With regard to the determination of the initial share structure, the Decree 116 does not provide any restriction in the number of shares to be sold to strategic shareholders and other investors, which is in contrast with the Decree 59 where the number of shares to be sold was stipulated to be not less than 25% of charter capital for strategic shareholders not less than 50% for other investors.
With respect to large scale enterprises in which State owned capital is above 500 billion Dong operating in sensitive sectors and industries (such as insurance, banking, post and telecommunications, aviation, coal mining, petroleum and other rare mineral mining) and parent companies belonging to State Economic Groups and Corporations, the ratio of shares auctioned to investors shall be considered and specifically decided by the Prime Minister or by an agency authorized by the Prime Minister.
Decree 116 also provides that in case equitization of State Economic Group, State Corporation or enterprise operating in aforementioned sensitive sectors is subject to the approval authority of the Prime Minister, the Ministers, Head of Ministerial equivalent or Government agency or Chairman of the provincial people’s committee shall select the Stock Exchange or hire an intermediary financial institution to hold the auction.
Decree 116 takes effect from 11 November 2015 and revokes Article 1.2 of Decree No. 189/2013/ND-CP dated 20 November 2013.
By Vietnam Law Insight
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