Perfecting the institution of State capital investment in business and operation in enterprises

According to the draft Law, state capital, after being invested in an enterprise, is defined as the property and capital of the enterprise's legal entity. Photo: ST

State capital invested in enterprises is property and capital of the legal entity of the enterprise

The Ministry of Finance said that the application to develop a Law amending Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities (law 69/2014/QH13) has been sent by the Ministry of Finance to the Ministry of Justice for carrying out procedures for supplementing the Law and Ordinance Development Program 2023 of the National Assembly.

According to the Ministry of Finance, the comprehensive amendment and promulgation of the new Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities aims to perfect the institution and stabilize the legal environment for state capital investment in production and business at enterprises; creating a sufficient and stable legal environment for the management and use of state capital and assets at state agencies and enterprises; ensuring respect and enhancing the autonomy and self-responsibility of enterprises along with strengthening the state's inspection and supervision in the management and use of capital and assets invested in production and business at enterprises; ensure that SOEs operate following the market mechanism in business lines and industries at the request of the State (the owner).

The amendment of Law 69 also fully grasps the content of principles such as clearly stipulating that state capital after being invested in an enterprise is identified as an asset/capital of a legal entity of enterprise; SOEs focus on key and essential areas, important areas and national defense and security, operate under the market mechanism, take economic efficiency as the main assessment criterion, and take self-responsibility and fair competition.

Moreover, the state is the owner of the investment capital, and does not interfere in the operation and management of production and business of enterprises; restructuring and renovating SOEs under the market mechanism is a regular and continuous process with appropriate methods, solutions and roadmaps; to have solutions for transparency in SOE operations in association with improving the effectiveness and efficiency of management, supervision, inspection and control over activities of SOEs; prevent the loss and waste of state capital and assets.

At the same time, improving the qualifications, management capacity and ethical qualities to strengthen the contingent of leaders and managing state-owned enterprises.

Do not manage enterprises by each asset

Regarding the goals and contents of the proposal to develop a Law amending the Law on management and utilization of state capital invested in the enterprise’s manufacturing and business activities, Mr. Pham Van Duc, Deputy Director of the Corporate Finance Department (Ministry of Finance), said that there were four groups of basic policy contents including state capital investment in enterprises; restructuring state capital in enterprises; management of state capital invested in enterprises; and rights and responsibilities of the owner's representative.

In particular, regarding the policy on investment of state capital in enterprises, it should clearly stipulate state capital after being invested in enterprises to fulfill the obligation to contribute state equity capital which is identified as an asset, capital of the legal entity of enterprise in accordance with the provisions of the Civil Code, ensuring the principle of equality and autonomy in the operation of the legal entity.

The State manages the enterprise by the legal entity in which it invests capital and does not manage the enterprise by each asset to which the owner contributes charter capital (which has transferred ownership to the enterprise).

The State is identified as a capital investor and does not directly intervene in the operation and management of production and business of the enterprise, but through the owner's representative agency, the owner's representative directly at the enterprise, capital representative to exercise the rights of capital investors (contributing capital) in the enterprise.

The owner's representative agency and the representative shall fully exercise the rights and obligations of the owner in accordance with the provisions of the Law on Enterprises for enterprises with state capital investment.

From the above provisions, this draft Law also clarifies the concept of the state capital and completes and supplements the concept of capital of enterprises, investment capital of owners (the state) in enterprises; specifying the scope of state capital investment in enterprises, the process of state capital investment in enterprises, the use of resources obtained from the restructuring state capital in enterprises, and the source of profits/dividends divided by the capital portion. State contributions in enterprises to invest capital in enterprises in accordance with the law on state budget.

Enterprises with state-invested capital (referred to as F1 enterprise for short) include SOEs (enterprises with 100% charter capital held by the State and enterprises in which the State holds more than 50% of charter capital or total voting shares) and enterprises with 50% or less of charter capital held by the State.

F1 enterprise fully implements the rights and obligations of the owner in accordance with the Law on Enterprises for enterprises with their own capital contribution (referred to as F2 enterprise). The State and the owner’s representative agency of F1 enterprise do not directly interfere in the operation of F2 enterprise.

For an F2 enterprise operating in the form of a one-member limited liability company with 100% charter capital owned by F1 enterprise, the State and the owner’s representative agency of the F1 enterprise have adjusted regulations to ensure the rights and interests such as regulations on corporate governance, distribution of after-tax profits, decentralization of authority to decide on investment.