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No more funds for firms eligible for equitisation
The Government will not provide more capital for enterprises eligible for equitisation, including those in which the State will continue to hold a 50 per cent stake, a Ministry of Finance's circular warns.
Circular No 202/2011/TT-BTC, which will take effect from February 15, says valuation must be made of a firm before equitisation in accordance with existing laws.
When equitising a State corporation or economic group, the valuation of subsidiaries in in which it holds entire equity must also be done in accordance with this circular's regulations and simultaneously with the valuation of the parent company.
If a firm's debts exceed its assets, it will have to draw up a restructuring plan together with its debtors and debt-settlement companies in order to transform into an equitised company. If restructuring a company is not feasible, other actions prescribed by the law will be considered.
Firms which have a total asset value of VND30 billion (US$1.43 million) and above, or a State capital value of VND10 billion ($476,000) and more, are to hire consulting institutions to define their value.
The Ministry of Finance says valuation of enterprises can be done based on their asset values or money flows, but notes that a firm's valuation results made public can't be lower than the figure defined by its total assets.
The circular also requires the assessment of a company's finances and enterprise value to be done in an open and transparent manner, and the State's interests to be protected.
"If relevant organisations and individuals, when dealing with financial affairs and evaluating firms, do not obey regulations and cause damages or losses to State assets, they will have take administrative responsibility, compensate or bare criminal proceedings," it stipulates.
The process of equitising to transform 100-per-cent State-owned firms into joint stock companies began in 2008 to create a level playing field. 4,000 public enterprises have been equitised, with another 1,000 to be transformed in 2011-15, leaving 650 by 2015.
The Government has instructed all State enterprises to register for equitisation in the period, and many have embarked on the process.
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