What Is the Procedure for Division and Separation of Enterprises with 100% Charter Capital Held by the State Established by Decision of the Prime Minister?

1. What is the current legal framework for the division and separation of state-owned enterprises?

From 13/02/2026, the division and separation of enterprises with 100% charter capital held by the State are governed by Decree 57/2026/ND-CP dated 12/02/2026 of the Government on restructuring state capital at enterprises (effective from 13/02/2026). Under Clause 3, Article 99 of Decree 57/2026/ND-CP, this Decree entirely replaces the provisions in Chapter III, Chapter IV, and Clause 3, Article 54 of Decree 23/2022/ND-CP. Accordingly, the provisions on division and separation of enterprises in Decree 23/2022/ND-CP are no longer a legal basis for procedures carried out from this point onward.

Where a reorganization (division or separation) plan was approved by the competent authority in accordance with law before Decree 57/2026/ND-CP took effect, it may continue to be implemented under the approved plan (Clause 11, Article 100 of Decree 57/2026/ND-CP).

2. What are the division and separation of enterprises with 100% charter capital held by the State?

Under Clauses 3 and 4, Article 59 of Decree 57/2026/ND-CP:

– Division of an enterprise: an enterprise with 100% 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 new enterprises with 100% charter capital held by the State, while terminating the existence of the divided company.

– Separation of an enterprise: an enterprise with 100% charter capital held by the State may separate by transferring part of the assets, rights, and obligations of the existing company (the separated company) to establish one or more enterprises with 100% charter capital held by the State (the new company or companies) without terminating the existence of the separated company.

Consolidation, merger, division, and separation of enterprises are carried out on the principle of not revaluing the enterprise’s value (Point a, Clause 5, Article 59 of Decree 57/2026/ND-CP). The financial statements of the enterprise after division or separation are prepared based on the results of the division or separation of the enterprise’s capital and assets under the division/separation plan prescribed in Clause 2, Article 62 of Decree 57/2026/ND-CP.

3. What are the conditions for dividing or separating enterprises with 100% charter capital held by the State?

Under Article 60 of Decree 57/2026/ND-CP, an enterprise may be divided or separated when it fully meets the following conditions:

– The new enterprises formed after division or separation must satisfy all of the following conditions:

+ Having lines and fields of operation within the scope of state capital investment as prescribed by laws on management and investment of state capital at enterprises;

+ Ensuring sufficient charter capital as prescribed upon enterprise establishment;

+ Having a valid dossier as prescribed in Article 62 of Decree 57/2026/ND-CP;

+ The establishment of the enterprise must be consistent with the socio-economic development strategy and plan and the national sectoral planning.

4. Who has the authority to decide on the division and separation of enterprises with 100% charter capital held by the State?

Under Article 61 of Decree 57/2026/ND-CP, the authority to decide on the consolidation, merger, division, and separation of enterprises is allocated as follows:

– The Prime Minister decides on the consolidation, merger, division, and separation of Groups, Corporations, and state enterprises listed in Appendix III issued together with Decree 57/2026/ND-CP, upon proposal of the owner representative agency. For division and separation, the Prime Minister’s authority covers the division and separation of parent companies of state Groups and Corporations.

– The owner representative agency, based on the plan for restructuring state capital at enterprises under its management, decides on the consolidation, merger, division, and separation of enterprises with 100% charter capital held by the State under its management, except for cases falling under the Prime Minister’s authority.

– The Members’ Council / Company President of an enterprise with 100% charter capital held by the State decides on the consolidation, merger, division, and separation of enterprises in which the state enterprise holds 100% of charter capital.

5. What are the steps for dividing or separating an enterprise decided by the Prime Minister?

Under Clause 1, Article 64 of Decree 57/2026/ND-CP, the procedure for dividing or separating an enterprise decided by the Prime Minister is carried out through the following steps:

Step 1: The owner representative agency directs the enterprise to prepare the Dossier requesting division or separation as prescribed in Article 62 of Decree 57/2026/ND-CP and sends 01 set of original Dossier to the Ministry of Finance for appraisal.

Step 2: Upon receipt of a complete Dossier requesting division or separation, the Ministry of Finance takes the lead in consulting the Ministry of Home Affairs, the Ministry of Justice, the sector-managing Ministry, and relevant agencies (where necessary). Within 15 working days from receipt of the Dossier requesting division or separation, the relevant agencies send written comments to the Ministry of Finance on matters within their management scope.

Step 3: Within 10 working days from receipt of the relevant agencies’ comments, the Ministry of Finance reports the appraisal report to the Prime Minister and simultaneously sends it to the owner representative agency to acknowledge and explain the appraisal comments. Where there are differing opinions on the main contents of the Dossier, the Ministry of Finance organizes a meeting with the relevant agencies before reporting the appraisal to the Prime Minister; the time may be extended by no more than 10 working days.

Step 4: The owner representative agency acknowledges and explains the Ministry of Finance’s appraisal comments, finalizes the Dossier, and submits it to the Prime Minister for consideration and decision on the division or separation.

Step 5: After the division or separation decision is issued, the enterprise is responsible for implementing the division/separation plan. Enterprises established on the basis of division or separation carry out enterprise registration procedures as prescribed by law.

6. What does the dossier requesting division or separation of an enterprise include?

Under Clause 1, Article 62 of Decree 57/2026/ND-CP, the dossier requesting division or separation of an enterprise includes:

– The submission requesting division or separation of the enterprise;

– The enterprise division/separation plan;

– The audited financial statements of the immediately preceding year and the financial statements of the quarter closest to the time of division or separation;

– The draft Charter of the new enterprise(s) formed after division or separation;

– Other documents related to the division or separation of the enterprise (if any).

The enterprise division/separation plan must contain the principal contents: names and addresses of the enterprises before and after division or separation; the necessity of the division or separation; consistency with the socio-economic development strategy and plan and the national sectoral planning; the charter capital of the enterprise after division or separation; the plan for arranging and using employees; the financial plan, conversion, handover of capital and assets, and settlement of the rights and obligations of the relevant enterprises; the implementation time limit; and contents on the plan for establishing the new enterprise under the Government’s regulations on management and investment of state capital at enterprises (Clause 2, Article 62 of Decree 57/2026/ND-CP).

7. What must the decision on division or separation of an enterprise stipulate?

Under Article 65 of Decree 57/2026/ND-CP:

– The decision on division or separation of an enterprise must clearly stipulate the succession of the rights and obligations of the divided or separated enterprise.

– The decision on division or separation of an enterprise must be sent to all creditors and notified to employees within 15 working days from the date of issuance.

8. What are the policies for employees upon division or separation of a state-owned enterprise?

Under Article 66 of Decree 57/2026/ND-CP:

– Employees who continue working at the enterprise after conversion shall enter into new labor contracts.

– Employees eligible for retirement benefits are handled under social insurance laws and other rights under labor laws.

– Employees terminating labor contracts are entitled to job-loss or severance allowances under labor laws or the policy for redundant employees upon division or separation of enterprises with 100% charter capital held by the State.

– The President and members of the Members’ Council or the Company President, General Director (Director), and Controllers working under the appointment regime are considered by the owner representative agency on a case-by-case basis for job arrangement; where no job can be arranged, the downsizing regime shall apply as prescribed.

Legal update note

The provisions on division and separation of enterprises in Decree 23/2022/ND-CP (including the steps for submitting dossiers to the Ministry of Planning and Investment, the conditions under Article 14, and the procedure under Article 18 of Decree 23/2022/ND-CP) are no longer a legal basis from 13/02/2026, when Decree 57/2026/ND-CP took effect and replaced the contents on consolidation, merger, division, and separation of enterprises in Chapter III, Chapter IV, and Clause 3, Article 54 of Decree 23/2022/ND-CP. Under the new framework, the dossier requesting division or separation decided by the Prime Minister is sent as 01 set of original Dossier to the Ministry of Finance for appraisal (no longer 06 sets to the Ministry of Planning and Investment).

Notes on applying current legal provisions

This article provides an overview of legal information under current regulations. Legal provisions may change depending on timing and the specific circumstances of each enterprise. Where it is necessary to determine precisely the applicable legal basis, decision-making authority, and procedural order for your enterprise, please contact ANT Legal’s lawyers at 0966.475.966 for verification and advice before proceeding.

Common risks to note

– Applying expired provisions (Decree 23/2022/ND-CP) to prepare dossiers, build plans, and carry out the division or separation procedure.

– Sending the appraisal dossier to the wrong agency (under the old regulations to the Ministry of Planning and Investment; under current regulations, 01 set of original Dossier to the Ministry of Finance).

– Failing to properly distinguish the authority among the Prime Minister, the owner representative agency, and the Members’ Council / Company President in each case of division or separation.

– Failing to clearly stipulate the succession of rights and obligations in the division or separation decision, or failing to promptly notify creditors and employees within 15 working days.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, determining the applicable legal basis and authority, advising on enterprise division and separation plans, and representing you in working with competent authorities when necessary. For prompt advice, please contact our lawyers at 0966.475.966.