I learn that the Ministry of Finance issued a Circular guiding a number of articles of Decree 199/2004/ND-CP on Financial Management Regulation applicable to state companies and management of state capital invested in other enterprises. Please let me know the principal contents of this Circular?
On 29 April 2005, Ministry of Finance issued Circular No. 33/2005/TT-BTC guiding a number of articles on the Financial Management Regulation applicable to state companies, and management of state capital invested in other enterprises attached to Decree No 199/2004/ND-CP (“Financial Regulation”).
The Circular guides two principal contents of Financial Regulation, including: Financial Management applicable to state companies, and management of state capital investing in other enterprises.
Regarding Financial Management applicable to state companies, the Circular guides that financial management applicable to state companies comprises of: (i) managing and using the capital of the state companies; (ii) managing and using the assets of the state companies; (iii) managing and using the revenue and expenditure of the state companies.
On financial management and use capital of state companies, the Circular provides that in 2005, the representative of the owner shall have to review and approve charter capital to state companies. The approval on the initial charter capital and increase charter capital to State Corporation, independent State companies, and parent companies must be in accordance with the opinion in writing of the Ministry of Finance. In addition, the Circular also provides for the mode of definition of legal capital in the case of establishment of new state companies, state companies in operation and state companies that are established for achievement of the objectives of providing public-utility products and/or services. For companies that are established for achievement of the objectives of providing public-utility products and/or services, the transfer of capital and assets must be made between the companies of the same purpose. The mobilization of capital, management of borrowing and preservation of the state capitals are also concretely stipulated in this Circular.
On management and use of the assets. the Circular provides for in detail not only investment, depreciation of fixed assets, transfer, liquidation of fixed assets, but also management over merchandise in stock and debts.
On management of revenue and expenditure, the Circular provides for in detail type of revenue, expenditure, condition, time, mode of definition of revenue, expenditure, and cost for counting and distribution of profits. Also according to the Circular, detailed definition of profits earned in the year and profits after compensation for previous year’s losses shall be implemented in accordance with the Financial Regulation and Law on corporate income. The distribution of profits and establishment of funds for 2004 shall be implemented in accordance with the Circular No.64/1999/TT-BTC on 7 June 1999 of Financial Ministry.
Regarding management over state capital invested in other enterprises, the Circular provides that the sale of State owned stocks shall be implemented in accordance with the provisions on selling stocks for first time upon the equalization of the State companies. For the part of capital invested by the State in liability limited company, joint - stock company, the representative of the owner of the State capital shall have to make plans and make proposal on the selling price of such part of capital.
Apart from those, the Circular also provides for pecuniary rights, regulations and requirements concerning report of representatives of State companies in other enterprises in which the State companies contribute capital.
The Circular shall take effect 15 days after its publication in the Official Gazette. This Circular also replaces all the previously issued regulation on management of capital, assets of State companies and management of State capital invested in other enterprises as listed in the attachment to the Circular.
Consulted by INVESTCONSULT GROUP
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