SOEs to Be Imposed Special Financial Supervision

On June 25, 2013, the Government issued Decree No. 61/2013/ND-CP issuing the regulations on financial supervision, performance assessment and information publicity on enterprises wholly or partially owned by the State.

 

Accordingly, SOEs will be placed in the status of special financial supervision in the four cases at the time of making annual financial reports or being found with financial conditions as follows: (1) Business loss, with liabilities coefficient on equity in excess of safety limits; (2) new loss in excess of 30 percent or higher of owner’s equity or accumulated losses in excess of 50 percent or higher of owners’ equity; (3) solvency ratio of mature debts standing below 0.5; or (4) incorrect reporting of financials, falsifying business results.

 

Owners are responsible for making decisions on special financial monitoring on such enterprises while informing relevant corporate financial management agencies to coordinate in settling the issue. Member Board, General Director or Director is responsible for setting up restructuring plans for business and financial activities and submitting them to their owners within 20 days after the decision on special financial supervision is made and reporting monthly, quarterly and annual reports in full. Supervised enterprises with no items placed special financial supervision in two consecutive years will have their status removed. Otherwise, they are forced to change ownership or get dissolved.

 

This decree takes effect on August 15, 2013.