Who May Not Purchase an Enterprise with 100% State Capital?

Which cases may sell an entire enterprise in which the State holds 100% of charter capital?

Under Article 22 of Decree 23/2022/ND-CP, the cases of selling an entire enterprise in which the State holds 100% of charter capital are:

• Falling under equitization as prescribed but not meeting the conditions to carry out equitization, and decided by the Prime Minister to convert to the form of selling the entire enterprise.
• Other cases decided by the Prime Minister upon the proposal of the owner’s representative agency.

What principles must be observed when selling an entire enterprise in which the State holds 100% of charter capital?

Under Article 24 of Decree 23/2022/ND-CP, the principles to observe when selling an entire enterprise in which the State holds 100% of charter capital are:

• Financial handling, determination and adjustment of the enterprise value, hiring a consulting organization to determine the enterprise value, determination of the starting price and the plan for selling the entire enterprise are carried out under the Government’s regulations on converting enterprises in which the State holds 100% of charter capital into joint-stock companies.
• The starting price for selling the entire enterprise is determined on the principle of not being lower than the total value of the state capital portion as determined under Clause 1 of this Article.

Which persons may not purchase an enterprise in which the State holds 100% of charter capital?

Under Article 23 of Decree 23/2022/ND-CP, there are 06 groups of persons who may not purchase an enterprise in which the State holds 100% of charter capital, including:

• Persons without civil act capacity, persons who have lost or have limited civil act capacity, persons with difficulties in cognition or in controlling their behavior, or persons who at the time of registering to participate in the auction are unable to perceive or control their behavior.
• Financial intermediary organizations, auditing agencies determining the enterprise value, and individuals of such organizations directly appraising, valuing or auditing the enterprise; and the father, mother, wife, husband, children, biological brothers and sisters of persons directly appraising, valuing or auditing the enterprise.
• Enterprise auction organizations and persons working in the enterprise auction organization conducting the auction; and the father, mother, wife, husband, children, biological brothers and sisters of the auctioneer conducting the auction.
• Persons authorized by the owner’s representative agency to handle the enterprise sale; persons with the right to decide the enterprise sale; persons signing the enterprise auction service contract;
• The father, mother, wife, husband, children, biological brothers and sisters of the persons prescribed in Clause 3 of this Article;
• Persons not entitled to establish and manage enterprises as prescribed by law.
• Foreign investors under investment law relating to market access conditions, national defense and security assurance, and land law.

What is the procedure for selling an entire enterprise in which the State holds 100% of charter capital?

Under Article 25 of Decree 23/2022/ND-CP, the procedure for selling an entire enterprise in which the State holds 100% of charter capital is as follows:

Step 1: Building the plan for selling the entire enterprise, including:

• Preparing dossiers and documents, including: legal dossiers on the enterprise’s establishment; legal dossiers on assets, capital sources and liabilities; financial statements and tax finalization reports up to the enterprise value determination date; the land-use plan of the enterprise under management consistent with land law and law on rearrangement and handling of state-owned houses and land of each period, approved by the competent state authority; the labor rearrangement plan; estimated costs of selling the entire enterprise; the method, form and timing of enterprise value determination and other relevant documents (if any);
• Organizing inventory, handling financial issues and determining the enterprise value;
• Deciding and publishing the enterprise value;
• Finalizing the plan for selling the entire enterprise for approval by the competent authority. The plan for selling the entire enterprise must include basic contents such as: the company’s actual situation at the enterprise value determination date; the enterprise value determination results; determination of the sale price and sale method, estimated implementation costs; the land-use plan of the enterprise approved by the competent authority; the plan for using managed labor and settling redundant labor.

Step 2: Organizing implementation of the plan for selling the entire enterprise by auction.

Step 3: Completing the sale of the entire enterprise: finalizing sale costs and proceeds from the sale; payment; handover of assets, books and related dossiers to the winning bidder; and notification of completion of the sale of the entire enterprise.

Decree 23/2022/ND-CP on establishment, rearrangement, ownership conversion, and transfer of owner’s representation rights at enterprises in which the State holds 100% of charter capital officially took effect from 01/6/2022.

Notes on applying current legal provisions

This article belongs to the Enterprise Knowledge & M&A group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

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

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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