Consolidating 100% State-Owned Enterprises: Authority Rules

What is the consolidation of enterprises with 100% state-held charter capital?

The consolidation of enterprises with 100% state-held charter capital is prescribed in Clause 1, Article 13 of Decree 23/2022/ND-CP as follows:

Consolidation, merger, division, and split of enterprises

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1. Consolidation of enterprises with 100% state-held charter capital:

Two or more enterprises with 100% state-held charter capital (hereinafter referred to as the consolidated companies) may consolidate with each other into a new enterprise with 100% state-held charter capital (hereinafter referred to as the consolidating company), while terminating the existence of the consolidated companies.

2. Merger of enterprises with 100% state-held charter capital:

One or more enterprises with 100% state-held charter capital (hereinafter referred to as the merged companies) may merge into another enterprise with 100% state-held charter capital (hereinafter referred to as the merging company) by transferring all assets, rights, obligations, and lawful interests to the merging company, while terminating the existence of the merged companies.

3. Division of enterprises with 100% state-held charter capital:

An enterprise with 100% state-held charter capital may divide the assets, rights, and obligations of the existing company (hereinafter referred to as the divided company) to establish two or more new enterprises with 100% state-held charter capital, while terminating the existence of the divided company.

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Thus, under the regulations, the consolidation of enterprises with 100% state-held charter capital means two or more enterprises with 100% state-held charter capital consolidating with each other into a new enterprise with 100% state-held charter capital, while terminating the existence of the consolidated companies.

Who is competent to decide on the consolidation of enterprises with 100% state-held charter capital?

The authority to decide on the consolidation of enterprises is prescribed in Article 15 of Decree 23/2022/ND-CP as follows:

Authority to decide on consolidation, merger, division, and split of enterprises

1. For consolidation, merger, division, or split of enterprises decided to be established or assigned for management by the same individual or agency (hereinafter referred to as the establishing agency or individual), the agency or individual that decided to establish the enterprise shall decide on the consolidation, merger, division, or split of the enterprise.

2. For merger of enterprises decided to be established by different individuals or agencies, the individual or agency that decided to establish the merging company shall decide on the merger based on the written agreement of the agency or individual that decided to establish the merged company. Where the merging or merged company is an enterprise decided to be established by the Prime Minister, the Prime Minister shall decide on the merger.

3. For consolidation of enterprises decided to be established by different individuals or agencies, the agency assigned by the Prime Minister to exercise the rights and obligations of the owner’s representative of the consolidating company shall decide on the consolidation. Where the consolidated enterprises were decided to be established by the Prime Minister, the Prime Minister shall decide on the consolidation.

Thus, the authority to decide on the consolidation of enterprises with 100% state-held charter capital is specifically prescribed for each of the following cases:

(1) For consolidation of enterprises decided to be established or assigned for management by the same individual or agency, the agency or individual that decided to establish the enterprise shall decide on the consolidation of the enterprise.

(2) For consolidation of enterprises decided to be established by different individuals or agencies, the agency assigned by the Prime Minister to exercise the rights and obligations of the owner’s representative of the consolidating company shall decide on the consolidation.

(3) For consolidation of enterprises decided to be established by the Prime Minister, the Prime Minister shall decide on the consolidation.

What are the principal contents of a consolidation plan for enterprises with 100% state-held charter capital?

Pursuant to Clause 2, Article 16 of Decree 23/2022/ND-CP, a consolidation plan for enterprises with 100% state-held charter capital includes the following principal contents:

(1) Names and addresses of the enterprises before and after consolidation;

(2) The necessity of the enterprise consolidation;

Consistency with socio-economic development strategies and plans, and national sectoral planning;

(3) The charter capital of the enterprise after consolidation;

(4) The plan for arranging and using employees;

(5) The plan for financial handling, conversion, handover of capital and assets, and settlement of rights and obligations of the enterprises related to the consolidation;

(6) The time limit for implementing the enterprise consolidation.

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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