The Ministry of Finance issued Circular No 21/2014/TT-BTC (February 14, 2014) promulgating regulations on the activities of the authorised representative (Representative) of State capital invested in an enterprise in which the State holds over 50 per cent of the charter capital, or an enterprise in which the State holds not more than 50 per cent of the charter capital in the form of a joint-stock company or a limited liability company with two or more members (Enterprise).
Representative of State capital in Enterprises
The Representative is an individual authorised in writing by the owner of State capital — being ministries and provincial people's committees (Owner) — to exercise the rights and perform the responsibilities and obligations of the Owner in the Enterprise. The Representative may work only in the Enterprise or work as a government official in the State agency in a ministry or a provincial people's committee in addition to holding a position in the Enterprise.
The Representative's authorization term is determined by the Owner, subject to the term of the Member Board or the Management Board. The Representative must not authorise another person, on behalf of the Representative, to opine, vote and decide on matters the Owner has authorised.
Representative's rights and responsibilities
The Representative is appointed to participate in the Member Board or is nominated to participate in the Management Board. The Representative is authorised to opine and vote in meetings based on the capital ratio authorised that he or she represent; is entitled to a salary, a bonus, an allowance and other benefits; is trained to upgrade the profession; is updated with information by the Owner; and has other rights under the law and the Enterprise's charter (Charter).
The Representative is responsible for executing the rights of shareholders or members contributing capital under the law and the Charter.
(1) In the Enterprise in which the State holds more than 50 per cent of the Charter capital, the Representative must seek the Owner's consent in writing to opine, vote and decide on important matters in meetings.
(2) In the Enterprise in which the State holds no more than 50 per cent of the Charter capital, the Representative has the right to opine, vote and decide on important matters in meetings. The Representative must seek the Owner's consent in writing before the Representative opines, votes and decides on matters that may change State benefits, such as reducing the State capital or reducing the State capital rate and other State benefits in the Enterprise.
The Enterprise's important matters include the Enterprise's objectives, tasks, business lines, reorganisation, dissolution and bankruptcy; the Enterprise's Charters, amendments and supplementations thereto; increase or reduction in Charter capital; and nomination for election. Other matters important to the Enterprise are proposed relief from office; dismissals; commendations and handling of violations; remuneration; salaries; bonuses; and other benefits of members and chairpersons of Member Boards, Management Boards, Control Boards, and (general) directors, as well as production and business strategies and plans and other matters.
The Representative shall
(1) Comply with the Charter and the Owner's policies to perform the assigned responsibilities and rights;
(2) Follow up, collect information on business operations and results, supervise financial matters, and produce periodical (annually or quarterly) and extraordinary reports requested by the Owner and the State agencies;
(3) Promptly report and propose solutions to the Owner on the Enterprise's loss-making operation, insolvency, failure of investment in compliance with strategy or plan, failure to achieve objectives and duties, or other wrongdoings or violations.
Representative's relationship with the Owner and Enterprise
The Owner is responsible for the appointment, nomination, dismissal, commendation and handling of violations of the Representative; asking for the Representative's periodical or extraordinary report; supervising the Representative's activities; assigning the Representative to protect State benefits and the like.
The Enterprise must provide the Representative all documents and information related to business operations, investments, financial status and other matters, as requested. The Representative must send the reports to the Owner and the State agencies and must forward a copy of these to the Enterprise. If the Enterprise has a different opinion on the report, the Enterprise will send its opinion to the Owner. In the Enterprise in which the State holds more than 50 per cent of the Charter capital, the Representative must seek the Enterprise's opinion on the report before sending it to the Owner.
The Circular will take effect on April 1, 2014.