Is an SOE’s Subsidiary a State-Owned Enterprise in Vietnam?

Is a subsidiary of a state-owned enterprise a state-owned enterprise? How is the management organizational structure of a state-owned enterprise regulated?

1. Is a subsidiary of a state-owned enterprise in which the State does not directly invest a state-owned enterprise?

Whether a subsidiary of a state-owned enterprise is a state-owned enterprise is determined under Article 88 of the Law on Enterprises 2020 as follows:

State-owned enterprises

1. State-owned enterprises are organized and managed in the form of limited liability companies or joint-stock companies, including:

a) Enterprises with 100% state-held charter capital;

b) Enterprises with over 50% state-held charter capital or total voting shares, except enterprises prescribed in Point a, Clause 1 of this Article.

2. Enterprises with 100% state-held charter capital as prescribed in Point a, Clause 1 of this Article include:

a) Single-member limited liability companies with 100% state-held charter capital that are parent companies of state economic groups, parent companies of state corporations, or parent companies in parent-subsidiary groups;

b) Single-member limited liability companies that are independent companies with 100% state-held charter capital.

3. Enterprises with over 50% state-held charter capital or total voting shares as prescribed in Point b, Clause 1 of this Article include:

a) Multi-member limited liability companies and joint-stock companies with over 50% state-held charter capital or total voting shares that are parent companies of economic groups, parent companies of state corporations, or parent companies in parent-subsidiary groups;

b) Multi-member limited liability companies and joint-stock companies that are independent companies with over 50% state-held charter capital or total voting shares.

4. The Government shall detail this Article.

Where an enterprise is a subsidiary of a state-owned enterprise but the State does not directly invest in the enterprise, the enterprise is not a State enterprise.

2. Do business trip allowances for employees of a subsidiary of a state-owned enterprise in which the State does not directly invest follow Circular 40/2017/TT-BTC?

Whether business trip allowances for employees of a subsidiary of a state-owned enterprise must follow Circular 40/2017/TT-BTC is determined under Article 1 of Circular 40/2017/TT-BTC as follows:

Scope of regulation and subjects of application

1. Scope of regulation:

This Circular prescribes the business trip allowance regime and conference expenditure regime of state agencies, public non-business units, political organizations, socio-political organizations, and associations using funds supported by the state budget (hereinafter referred to as agencies and units).

2. Subjects of application:

a) For the business trip allowance regime:

– Cadres, civil servants, public employees, and contract laborers as prescribed by law working at state agencies, public non-business units, political organizations, socio-political organizations, and associations using funds supported by the state budget.

– Deputies of People’s Councils at all levels when participating in activities of the People’s Council.

b) For the conference expenditure regime:

– Professional conferences, preliminary and thematic review conferences; annual review conferences; training conferences for implementing work tasks organized by state administrative agencies as prescribed in Decision No. 114/2006/QD-TTg dated 25/5/2006 of the Prime Minister promulgating the meeting regime in the activities of state administrative agencies (hereinafter referred to as Decision No. 114/2006/QD-TTg dated 25/5/2006); sessions of People’s Councils, sessions of the Standing Committee of People’s Councils, and meetings of the Committees of People’s Councils.

– Professional conferences, preliminary and thematic review conferences, annual review conferences, and training conferences for implementing tasks of public non-business units.

– Professional conferences, training conferences for implementing tasks, or conferences organized under the charters of political organizations, socio-political organizations, and associations using funds supported by the state budget.

c) The National Congress of Delegates of the Communist Party of Vietnam, Party Congresses at all levels leading to the National Congress of Delegates, conferences of agencies of the Communist Party of Vietnam, sessions of the National Assembly, meetings of the Ethnic Council and Committees of the National Assembly, and sessions of the Standing Committee of the National Assembly shall follow separate regulations of the competent authority.

Your enterprise does not fall within the scope regulated by Circular 40/2017/TT-BTC prescribing the business trip allowance regime and conference expenditure regime issued by the Minister of Finance, and is not required to follow any business trip allowance levels; the enterprise may decide this matter itself according to its actual situation and its financial regulations or charter to have the costs recognized.

3. How is the management organizational structure of a state-owned enterprise regulated?

The management organizational structure of a state-owned enterprise is prescribed in Article 90 of the Law on Enterprises 2020 as follows:

The owner’s representative agency decides the management organization of a state-owned enterprise in the form of a single-member limited liability company under one of the following two models:

– Company President, Director or General Director, Board of Controllers;

– Members’ Council, Director or General Director, Board of Controllers.

Notes on Applying Current Legal Regulations

This article belongs to the Corporate & M&A Knowledge series and is presented for reference purposes, helping readers understand the legal issue at an overview level before preparing dossiers or carrying out transactions.

Legal regulations may change over time, by locality, dossier type, and specific circumstances. If you need to determine the exact legal basis applicable to your dossier, please contact an ANT Legal lawyer at 0966.475.966 for verification and advice before proceeding.

Common Risks to Watch Out For

• Applying legal instruments that have been amended, supplemented, or replaced.
• Preparing incomplete dossiers, documents, or evidence.
• Misunderstanding the conditions, procedures, time limits, or competent authority.
• Signing, filing, or carrying out transactions without fully assessing legal risks.

How Can ANT Legal Help?

ANT Legal helps review your specific situation, check dossiers, determine the applicable legal basis, advise on handling plans, and represent clients in dealings with individuals, organizations, or competent authorities when necessary.

For quick advice, please contact our lawyers at 0966.475.966.

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