New rules on the founding and transition of firms in which the state owns 100 percent of the charter capital

DNHN - The government recently issued Decree No. 23/2022/ND-CP, which governs the formation, reorganization, conversion of ownership, and transfer of the right to represent the owner in firms in which the state owns 100 per cent of the charter capital.

Establishing Business Requirements. The Decree states that firms with 100 per cent charter capital owned by the state may only be considered for formation if all of the following conditions are met:

1. 1- Possessing an operational industry or field within the purview of state capital investment to create an enterprise by the legislation on the management and use of state capital invested in production and business enterprises.

2. 2 - Make sure you have enough charter capital.

3. 3 - Possessing a proper dossier by the requirements.

4. 4 - The formation of a business must be by the national socio-economic development strategy and plan, as well as the national sector plan.

The charter capital must be at least 100 billion VND. When created, enterprises must have a charter capital of at least 100 billion VND. For businesses that need legal capital, the charter capital of a company when it is formed can't be less than the legal capital level that is set for those businesses.

The charter capital for enterprises providing essential public utility products and services, ensuring social security, or operating in several industries, fields, or geographical areas that require capital investment from the state to establish an enterprise may be less than 100 billion dongs, but not less than the legal capital level prescribed for business lines and industries requiring legal capital.

Business organization and transformation Decree also clarifies procedures governing the reorganization and transfer of ownership of firms in which the state owns 100 per cent of the charter capital.

Two or more firms with 100 per cent of charter capital held by the state (consolidated company) may combine into one entity with 100 per cent of new charter capital owned by the state, according to the rules (the new company holds 100 per cent of charter capital).

combining firms), and the merged companies' existence is terminated.

One or more enterprises with 100 per cent of charter capital held by the state (the merged company) may merge into another enterprise with 100 per cent of charter capital held by the state (the merged company) to transfer all assets, rights, obligations, and legitimate interests to the merged company while also terminating the merged company's existence.

Furthermore, the Decree states that an enterprise with 100 per cent of charter capital held by the state may divide the assets, rights, and obligations of the existing company (the divided company) to establish two or more enterprises with 100 per cent of new charter capital held by the state, and the existence of the divided company will be terminated at the same time.

An entity with 100 per cent of its charter capital held by the state may be split by transferring a portion of the current company's assets, rights, and responsibilities to the separated company to form one or more companies controlled by the state.

nation owning 100 per cent of the charter capital (split business) without ending the separated firm's existence.

Consolidation, merger, division, or separation of businesses all of the following requirements are met, enterprises in which the state owns 100 per cent of the charter capital may be consolidated, merged, split, or separated:

1. 1 - A business's merger, consolidation, division, or separation must adhere to the Prime Minister's document on enterprise arrangement and renewal. if it isn't in these papers, an agency for the owner must send it to the Prime Minister for review and decision.

2. 2 - New businesses created as a result of a split or separation must meet the same requirements as new firms established.3-Enterprise consolidation and merger shall adhere to the Competition Law's rules on company consolidation and merger.

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