We know that in recent time, the Prime Minister has just issued a Decision regulating on Auction of State companies. Please advise us about the main contents of this Decision.
On December 13, 2005, the Prime Minister issued Decision No. 330/2005/QD-TTg promulgating Regulation on Auction of State Companies (“Auction”). The main contents of the Regulation are provisions on conditions and procedures for auction of State companies (“Enterprises”). Concretely as follows:
1. Conditions for auctioning enterprises:
- Enterprises to be auctioned are those which had their financial problem solved; were given financial supports for employing all their labourers and implementing the policies toward labourers redundant due to the reorganization of state enterprises according to the provisions of law.
- After the financial settlement and revaluation of assets, the reserve prices (exclusive of land use right value) for auctioning enterprises must be positive figures, in case of sale with inheritance of debts. In case of non-inheritance of debts, the reserve prices must be sufficient to pay at least payable debts.
2. Auctioning procedures:
- Within 30 working days after the decision on enterprise auction is issued, the Director of enterprises have to send assessment documents on financial situation, labourers, technology and other necessary documents to the enterprise auction steering board and the finance agency of the same level.
- Within 5 working days after receiving above-said documents of the enterprise, the enterprise auction steering board shall have to organize the valuation of the enterprise.
- The auction steering board shall base itself on the results of valuation of the enterprise to consider and propose the agency having decided on enterprise sale to announce the reserve price for the enterprise auction.
- Within 5 working days after the agency having decided on enterprise sale announces the reserve price, the auctioning organization shall have to announce necessary information on the enterprise and the auction on mass media at the auctioning organization and the enterprise’s headquarters at least 45 working days before the auction is held.
- Investors shall carry out procedures for registration of purchasing enterprise with the auctioning organization. If the investors keep their desire to participate in auction after conducting a survey of the enterprise’s actual state, they shall submit applications for purchase of an enterprise to the auctioning organization at least 5 working days before the auction is held. A deposit to be paid shall be equal to 10 per cent of the reserve price but must not be lower than 50 (fifty) millions Vietnam Dong.
- An auction session shall be held on the condition that at least 2 (two) persons have submitted valid applications for enterprise purchase.
3. Post-auction procedures:
- Within 2 working days after the end of a successful auction session, the seller and the buyer shall have to sign a contract on enterprise sale and purchase;
- The payment time limit shall be stated in the sale and purchase contract, but must not exceed 6 months counting from the date of signature and not exceed 2 years counting from the time of issuance of decision on auction. The buyer may make payment in several installments, provided that the first installment is equal to at lease 70 per cent the contract value;
- For duration regulated in the contract, if the buyer has paid full of 70 per cent the contract value and has sufficient assets to be mortgaged as security for the unpaid value or is provided with guarantees in strict compliance with the provisions of law, the agency having decided on the enterprise auction shall organize the handover of the enterprise to the buyer. The two parties shall jointly sign the handover minutes;
- Within 15 working days after the signing of the handover minutes, the agency having decided on the enterprise auction shall announce the sale and termination of operation of the enterprise on the mass media.
This Decision shall take effect after 15 days counting from the date of publication in Official Gazette. Regulations previously issued contrary to this Decision shall be null and void.
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