New points in equitization of state-owned enterprises

On 1 January 2018, Decree 126/2017/ ND-CP on transforming State-owned enterprises (SOEs) and one-member limited liability companies with 100% charter capital invested by State-owned enterprises into joint stock companies (“Decree 126”) will take effect and replace Decree 59/2011/ND-CP, Decree 189/2013/ND-CP, and Decree 116/2015/ND-CP.

Accordingly, equitization will apply to one-member limited liability companies invested by State-owned enterprises with 100% charter capital (“Level II Enterprises”).

Decree 126 sets out a number of new provisions to accelerate the equitization process and increase the effectiveness of the sale of State capital in equitized enterprises such as:

a. Adding a completely new form of equitization, namely Booking Building; and

b. Specifying the case in which the actual value of the enterprise is lower than the payables after financial treatment and re-determination of the value of the enterprise in the process of equitization. Instead of letting the enterprise wait for mechanisms and resolutions from the competent agencies, Decree 126 provides a way of treatment for the enterprise to take the initiative to save time and costs, thereby speeding up the process of its equitization.