Is a subsidiary of a state-owned enterprise a state-owned enterprise?

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

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

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

State-owned enterprise

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

a) Enterprises with 100% charter capital held by the State;

b) Enterprises in which the State holds more than 50% of charter capital or total number of voting shares, except for enterprises specified in Point a, Clause 1 of this Article.

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

a) A single-member limited liability company with 100% charter capital held by the State is the parent company of a state economic group, the parent company of a state corporation, the parent company in the group of parent companies – subsidiaries;

b) A one-member limited liability company is an independent company with 100% charter capital held by the State.

3. Enterprises in which the State holds more than 50% of the charter capital or the total number of shares with voting rights as prescribed in Point b, Clause 1 of this Article include:

a) Limited liability companies with two or more members, joint stock companies in which the State holds more than 50% of charter capital, the total number of shares with voting rights is the parent company of an economic group, the parent company of a state corporation, the parent company in the group of parent companies – subsidiaries;

b) Limited liability company with two or more members, joint stock company is an independent company in which the State holds more than 50% of charter capital, total number of shares with voting rights.

4. The Government regulates this Article in detail.

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

2. Are per diems for employees of subsidiaries of state-owned enterprises but the State does not directly invest in accordance with Circular 40/2017/TT-BTC?

Are per diems for employees of subsidiaries of state-owned enterprises required to comply with Circular 40/2017/TT-BTC, based on Article 1 of Circular 40/2017/TT-BTC stipulating determined as follows:

Scope of regulation and applicable subjects

1. Scope of regulation:

This Circular regulates the regime of business travel expenses and conference expenses of state agencies, public service 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 per diem regime:

– Officials, civil servants, public employees, contract workers according to the provisions of law working at state agencies, public service units, political organizations, socio-political organizations, and associations using funds supported by the state budget.

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

b) For conference expenses:

– Professional conferences, preliminary and summary conferences; year-end conference; Training conferences to deploy work tasks organized by state administrative agencies are specified in Decision No. 114/2006/QD-TTg dated May 25, 2006 of the Prime Minister promulgating regulations on meeting regimes in the activities of state administrative agencies (hereinafter referred to as Decision No. 114/2006/QD-TTg dated May 25, 2006); sessions of the People’s Council, sessions of the Standing Committee of the People’s Council and meetings of the Committees of the People’s Council.

– Professional conferences, preliminary and final thematic conferences, year-end conferences, training conferences to deploy the tasks of public service units.

– Professional conferences, training conferences to deploy the tasks or conferences organized according to regulations in the charters of political organizations, socio-political organizations, and associations using funds supported by the state budget.

c) Particularly for the National Congress of the Communist Party of Vietnam, Party Congresses at all levels leading up to the National Congress, conferences of agencies under the Communist Party of Vietnam, sessions of the National Assembly, meetings of the Nationalities Council, committees of the National Assembly, sessions of the Standing Committee of the National Assembly shall comply with separate regulations of the competent authority.

Your enterprise is not within the scope of regulation. by Circular 40/2017/TT-BTC stipulating the per diem and conference expense regime issued by the Minister of Finance, it does not have to comply with any regulations on per diem expenses, so this content can be decided by the enterprise according to the actual situation of the enterprise and the provisions in the financial regulations or charter of the enterprise in order to record expenses.

3. How is the organizational and management structure of state-owned enterprises regulated?

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

The owner’s representative agency decides to organize the management of state-owned enterprises in the form of a one-member limited liability company according to one of the following two models here:

– Company President, Director or General Director, Supervisory Board;

– Board of members, Director or General Director, Supervisory Board.