Seven principles of handing over assets and indebtedness when transforming state enterprise

The Debt Trading Company inherits all rights and obligations of creditors and property owners with respect to the debt and received assets as prescribed from the date of signing the handover minutes. Source: Internet

Regarding the scope of regulation, this Circular guides the handing over of debts and assets, which are excluded from the value of enterprises and public non-business units when converting business ownership with 100% charter capital held by the State, the public non-business unit is transformed into a joint stock company, and debts and assets are received and handled as designated by the Government and the Prime Minister.

Regarding the principles of handing over debts and assets, this draft Circular prescribes seven specific principles.

The first principle is that debts and assets excluded when handing over must have adequate documents (for debts) and in-kind (for assets). In case the debt does not have sufficient records and the property is no longer in kind, the Debt Trading Company shall send a written notice to the representative agency of the owner and the enterprise to notify the reason of not accepting for the enterprise to continue to manage, monitor or handle in accordance with current regulations on business ownership conversion.

The second principle is that the handover of debts and excluded assets is made based on the decision of disclosure of enterprise value of the representative agency complying with the law on enterprise’s ownership conversion and public non-business units. The decision announcing the enterprise value must specify the value of the debt and the excluded assets, as a basis for the Debt Trading Company to accept.

The third principle is that in case the owner's representative agency decides to announce the adjustment of the enterprise value: If the enterprise has not signed the Debt Handover Minute and the excluded assets with the Debt Trading Company, the handing over of debt and exclusion of assets should be carried out following discussions on adjustment of the enterprise value.

If the enterprise has signed the Minutes of handing over the debts and exclusion of assets with the Debt Trading Company under the decision of disclosure of enterprise value, the agency representing the owner shall send a request to the Debt Trading Company to notify the current status of debts and exclusion of assets in accordance with the handover minutes based on the following criteria: handled, recovered, and unresolved, recovered before announcing the decision to adjust the enterprise value. Within 10 working days from the date of receiving the request from the representative agency, the Debt Trading Company shall send a document to reply to the representative agency. In case the debts and excluded assets have been handled and recovered by the Debt Trading Company, the adjustment shall not be made in the decision announcing the adjustment of enterprise value. In case the excluded debts and assets have not yet been handled and recovered, the handover minutes shall be adjusted in accordance with the decision on the announcement of adjustment of the enterprise value. Within 15 working days from the date the Debt Trading Company sends a written reply to the representative agency about the status of received debts and excluded assets, the parties must complete the adjustment of the Minutes of the handover.

The next principle is when handing over debts and excluded assets, the representative agency of the owner, the Debt Trading Company and the enterprise must make handover minutes following the form in the attached appendix of this Circular and signed by the parties. The agency representing the owner may authorize (in writing) the Chairman of the Members' Council/General Director/Legal representative of the enterprises owing debts and excluded property to hand over to Debt Trading Company.

The fifth principle is that the Debt Trading Company inherits all rights and obligations of creditors and property owners with respect to the debt and received assets as prescribed from the date of signing the handover minutes. Within 10 days from the date of signing the Handover Minute, the enterprise is responsible for handing over to the debtor and relevant agencies about the handover of creditor rights to debt trading companies.

The sixth principle is that, for excluded debts and assets designated by the Government, the Prime Minister, the Debt Trading Company, the owner's representative agency and the handover enterprise should hand over and handle debts and assets like debts and assets excluded from the value of the converted enterprise and appropriate with the direction of the Government and the Prime Minister. In case of any difficulties or problems, the Debt Trading Company shall report to the representative agency of the owner of the enterprise owing debt and assets for consideration and settlement in accordance with its competence or report to the Government or the Prime Minister for consideration.

As a final principle, the enterprise shall carry out financial settlement for excluded assets in accordance with the provisions of law for each form of ownership conversion.