CIRCULAR

GUIDANCE ON STANDARDS, CONDITIONS AND PROCEDURES FOR RECOGNITION OF ENTERPRISE VALUE DETERMINATION SERVICES PROVIDER

Pursuant to Decree No. 118/2008/ND-CP of November 27, 2008 of the Government regulating functions, duties, powers and organizational structure of Ministry of Finance;

Pursuant to Decree 101/2005/ND-CP of the Government of August 03, 2005 of the Government on valuation;

Pursuant to Decree No. 59/2011/ND-CP July 18, 2011 by the Government on the transformation of enterprises with 100% state-owned companies to the joint-stock companies;

At the proposal of the Director of Department of Finance of banking and financial institutions;

Minister of Finance issues Circular guiding the standards, conditions and procedures to recognize the enterprise value determination services provider for equitization as follows:

Chapter 1.

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Article 1. Scope and subject of application

1. This Circular makes guidance for the standards, conditions and procedures to recognize the enterprise value determination services provider to enterprises with 100% state-owned companies transformed to the joint-stock companies (hereafter referred to as valuation and consultation organization)

2. The subjects of this Circular is the valuation and consultation organizations, the competent agencies to decide the equitization plans and other related organizations and individuals.

Article 2. Explanation of terms

In addition to terms defined in Decree No. 59/2011/ND-CP of July 18, 2011 by the Government on the transformation of enterprises with 100% state-owned to joint-stock company (hereinafter referred to as Decree No. 59/2011/ND-CP), in this Circular, the following terms are construed as follows:

1. "The competent agency to decide equitization plan" is the competent agency to decide the equitization plan of enterprises with 100% state capital as stipulated in Decree No. 59/2011/ND-CP.

2. "Competent State agencies to examine and inspect" includes inspection agency of all levels, the State auditing agencies and other competent agencies in the inspection and examination of the operation of enterprise value determination for enterprises with 100% state capital transformed to joint-stock companies.

3. "Enterprise operation Permit" means the certificate of business registration or investment certificate or permit of establishment and operation of the enterprise specified in the Enterprise Law, Investment Law and relevant laws .

Chapter 2.

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Article 3. Standards, conditions of valuation consultation organization

1. The domestic valuation consultation organization register to provide the equitized enterprise value determination consultation services must meet the following criteria and conditions:

a) Being audit companies, securities companies and valuation enterprises having valuation functions and satisfying the conditions for the organization and operation of each type of enterprise in accordance with the laws of Vietnam;

b) There is professional process of enterprise value determination in accordance with Decree No. 59/2011/ND-CP, the relevant guiding documents and other amended and supplemented documents (if any);

c) Having at least five (05) years of experience in one (01) of the following areas of operation: valuation, auditing, accounting, financial consultation, consultation of enterprise ownership transformation. During the three (03) most recent years to the time of submission of enterprise value determination services, performing the service provision implementation business valuation, each year to perform services in the areas mentioned above at least thirty (30) contracts;

d) Having at least three (03) valuators who are granted valuation card by the Ministry of Finance and register the valuation practice in the enterprise;

dd) Meeting the criteria of quantity and quality of staff working in the area and sectors in which the organizations are operating under the provisions of Point a of this clause;

e) Not being sanctioned for administrative violations with aggravating circumstances by the conclusions of the agencies making decision on sanction in the area of valuation and enterprise value determination in five (05) years preceding the year of registration to perform the enterprise value determination.

Where organizations requesting to be provided the enterprise value determination services are inspected and examined and concluded to have committed violations in valuation operation and enterprise value determination and in the process of dossier transfer under the regulations of law shall not be qualified and eligible for registration for valuation consultation organization under the provisions of this Circular.

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a) Being organization operating in the areas of valuation, auditing, accounting, financial consultation and consultation of enterprise ownership transformation under the law of the country where its headquarters is located.

b) Having at least five (05) years of experience in one of the following areas: valuation, auditing, accounting, securities, financial consultation and consultation of enterprise ownership transformation.

Article 4. Dossier for registration to become valuation organization (new registration)

1. Application for registration to become valuation organization under the Form in Annex 1 attached to this Circular.

2. Certified copy of the enterprise operation permit.

3. Professional process of enterprise value determination is expected to apply ensuring the consistency with the provisions of the law.

4. Making report on the results of service provision contracts made in the areas of valuation, auditing, accounting, financial consultation, consultation of  enterprise ownership transformation in three (03) years preceding the year of registration of valuation advisory services under the form in Annex 2 attached to this Circular;

5. List of valuators registering the valuation practice at the enterprise, together with the following documents:

a) Certified copy of valuator card granted by the Ministry of Finance;

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6. Financial statements of the two (02) years preceding the year of registration to become valuation organization. The financial statements must be audited by independent auditing organizations operate legally operating in Vietnam;

7. Written commitment of the legal representative of the enterprise concerning:

a) Ensuring the accuracy, honesty of dossiers and documents registering the implementation of valuation consultation as prescribed in this Article.

b) Application of the professional process for enterprise value determination registered under provisions in Clause 3 of this Article upon recognized as the valuation consultation organization and this professional process is consistent with the regulations of current law.

c) Not committing violations of regulations of the law as prescribed in this Circular.

Article 5. Process and procedures to recognize the newly-registered valuation consultation organization.

1. The recognition of the valuation consultation organization first registered shall be annually considered and announced by the Ministry of Finance.

2. Organizations qualified and eligible as prescribed in Article 3 of this Circular in need of becoming the valuation consultation organization for the following year shall send one (01) set of dossier under the provisions of Article 4 of this Circular to the Ministry of Finance. The time of dossier receipt time is from October 1 to October 31 every year.

3. Within five (05) working days after receiving the dossier, the Ministry of Finance shall check the completeness and validity of the dossier and require the enterprise to supplement it (if any).

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5. The Ministry of Finance shall publish a list of valuation consultation organizations applied from January 01 to December 31 of the following year in writing and on the website of the Ministry of Finance.

Article 6. Annual assessment of operation of valuation consultation organizations.

1. Every year, the valuation consultation organizations recognized by the Ministry of Finance shall be considered and assessed in order to continue providing the enterprise value determination services in the following year. The assessment contents include:

a) Ensuring criteria and conditions of the valuation consultation organizations prescribed at Point a, b, d, dd and e, Clause 1, Article 3 of this Circular.

b) Fully and on schedule implementing the report of operation result to the Ministry of Finance prescribed in Article 9 of this Circular.

2. Assessment process of the operation maintenance of the valuation consultation organizations:

a) From October 01 to October 31 of each year, the valuation consultation organization shall send the report of operation result prescribed in Article 9 of this Circular.

b) Based on reports of the valuation consultation organizations provided at Point a of this Clause, the reports and information of the organizations specified in Article 11, Article 12 and Article 13 of this Circular, the Ministry of Finance shall consider and review the conditions of the valuation consultation organization under Clause 1 of this Article. The qualified valuation consultation organizations shall continue to be provided with the enterprise value determination services in the subsequent year and published in the list of valuation consultation organizations by the Ministry of Finance as prescribed in this Circular.

3. The valuation consultation organization is eliminated from the list of valuation consultation organizations under the provisions of this Article shall be permitted to continue performing the contracts signed and being carried out and not entitled to sign new contract since the Ministry of Finance give the notice from eliminating from the list of valuation consultation organizations

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Article 7. Cases of elimination from the list of valuation consultation organizations

1. The valuation consultation organization shall be automatically eliminated from the list of valuation consultation organizations recognized by the Ministry of Finance in the following cases:

a) Being revoked the enterprise operation Permit.

b) Changing business line and no longer having business functions prescribed at Point a, Clause 1, Article 3 of this Circular.

c) Performing the division, separation, merger, consolidation, transformation or dissolution.

d) Having legal violations with signs of criminal offenses according to the conclusions of the competent State agencies on examination and inspection.

2. Based on the reports of valuation consultation organization prescribed in Article 9 and other documents held by the relevant organizations prescribed in Article 11, Article 12 and Article 13 of this Circular, the Ministry of Finance shall make decision on the elimination of the valuation consultation organization from the list of valuation consultation organizations.

Article 8. Cases not permitted to perform the provision of enterprise value determination services

The valuation consultation organization shall not be entitled to perform the enterprise value determination services in the following cases:

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2. The manager, operator, member of control Board, chief accountant (or accounting in charge), valuator of the valuation consultation organization who is the person related to the enterprise being valuated prescribed in Clause 17, Article 4 of the Enterprise Law dated November 29, 2005;

3. Being organization that is providing or have provided auditing services, accounting record and preparation in two (02) preceding years for the enterprise evaluated.

Chapter 3.

REGULATIONS ON INFORMATION AND REPORT OF VALUATION CONSULTATION ORGANIZATION

Article 9. Regulations on information and report.

1. Annually, the valuation consultation organizations recognized by the Ministry of Finance shall send report to the Ministry of Finance on their operation situation of, particularly:

a) Reporting period

Report of operation result of the valuation consultation organization from October 01 of the preceding year to September 30 of the current year.

b) Reporting content

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- Situation and result of implementation of operations on enterprise value determination consultation in the reporting period.

- Opinions of the competent authority to make decision on the plan of equitization, the steering board of equitization of consulting services quality as prescribed in Article 11 of this Circular.

c) List of documents and dossiers attached to the list.

- List of contracts to provide services within the operation permit of the enterprise and the contract to determine the equitized enterprises value made in the reporting period under the form in Annex 2 and Annex 3 attached to this Circular;

- Financial statement for the fiscal year preceding the reporting year audited by independent auditing organizations legally operating in Vietnam and the 6-month financial statement of the reporting year (if any) certified by  the legal representative of the enterprise.

d) Time to submit periodically report: On October 31 annually at the latest (as certified by post). After this date, the valuation consultation organization is considered not to comply with the regulations on reporting.

2. The valuation consultation organizations are responsible for sending irregular reports to the Ministry of Finance in the following cases:

a) Being revoked the enterprise operation Permit.

b) Performing the division, separation, merger, consolidation, transformation or dissolution or bankruptcy;

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d) Having sanctioning decision of the competent agency and the conclusion of the competent state agency on examination and inspection as prescribed in this Circular.

dd) Other cases as required by the Ministry of Finance to serve the work of management and supervision of the State for the operation to provide enterprise value determination services.

Chapter 4.

RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUAL CONCERNED.

Article 10. Responsibilities of valuation consultation organization.

1. Complying with the provisions of relevant laws on methods, process for enterprise value determination and properly observing the contents under the contracts signed with customers.

2. Taking responsibility before law for the results of the enterprise value determination. The valuation consultation organization must pay damages for breach of the provisions of law in the implementation process of valuation consultation services or shall be handled violations under the regulations of the law.

3. Taking responsibility for managing professional activities of staff under its management and shall promptly report to the Finance Ministry on employees who violate the provisions of law in the course of professional practice as prescribed in this Circular.

4. Explaining or providing information and data relating to the results of enterprise value determination upon there is complaint or a written request of the competent authority deciding on the plan of equitization, the business owner’s representative, the State Auditor, the Finance Ministry and the competent agencies as prescribed in this Circular and related documents.

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6. Fully performing obligations of report as prescribed in Article 9 of this Circular.

Article 11. Responsibilities of the competent authority deciding on the plan of equitization

1. Choosing the valuation consultation organization in the list of valuation consultation organization annually announced by the Ministry of Finance to carry out the consultation of enterprise value determination as prescribed by the law on transformation of enterprises with 100% state-owned capital to joint-stock companies. In case of choice of foreign consultation unit, the agency deciding on the equitization shall base on the provisions of Clause 2, Article 3 of this Circular and other relevant legal documents to choose and take responsibility for this choice.

2. Managing and supervising over the operation to provide enterprise value determination services under the contract signed between the valuation consultation organizations and enterprises with 100% state-owned capital under the managed subjects.

3. Refusing to make payment of the fee of performance of enterprise value determination services to the valuation consultation organization if the result of enterprise value determination does not ensure the consistence with provisions of the State in the Decree No. 59/2011/NĐ-CP and this Circular.

4. Having written opinion on the services quality performed by the valuation consultation organization for each of the contract of enterprise value determination consultation.

5. Making report on the use of enterprise value determination services to the ministries and provincial and municipal People's Committees, the economic groups, the superior State Corporation for these agencies to provide information to the Ministry of Finance as stipulated in Clause 2, Article 12 of this Circular.

6. Promptly notifying the Ministry of Finance of the violations (if any) of the valuation consultation organizations in the process of implementation of the contracts of enterprises value determination under scope of its management to handle as prescribed by the law.

Article 12. Responsibilities of the ministries, People's Committees of centrally-run provinces and cities, the economic groups and State Corporation

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2. Prior to October 31 annually, providing information to the Finance Ministry on the use of enterprise value determination consultation services of the enterprise consulting services business valuation of the affiliated units conducting the equitization under the form attached in Annex 4 attached to this Circular hereof.

Article 13. Responsibilities of the competent state agencies on examination and inspection.

1. Performing the examination and inspection on the areas of operation of the enterprises registering to provide the equitized enterprise value determination consultation services in accordance with the current regulations.

2. Notifying the Ministry of Finance of the conclusions of legal violation of valuation consultation organization as prescribed in this Circular.

Article 14. Responsibilities of the Ministry of Finance

1. Considering and verifying dossier, choosing and annually announcing the List of valuation consultation organizations as prescribed in this Circular.

2. Coordinating with the competent agencies to decide on the plan of equitization and the State competent agencies to manage the operation of valuation consultation organizations as prescribed in this Circular and other relevant legal documents.

Chapter 5.

IMPLEMENTATION ORGANIZATION

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1. The valuation consultation organizations that are being provided with the enterprise value determination services under the decisions of the Ministry of Finance are permitted to provide the enterprise value determination consultation services with 100% state-owned capital for equitization by the end of December 31, 2012.

2. For the recognition of valuation consultation organization for the year 2013:

a) The enterprises meeting the criteria and conditions defined in Article 3 of this Circular (including the organizations specified in Clause 1 of this article) and wishing to provide the enterprise value determination consultation services must submit dossiers for registration as prescribed in this Circular to the Ministry of Finance no later than May 31, 2012

b) Based on records of the business prescribed at Point a, Clause 2 of this Article, the Ministry of Finance shall review and assess the condition of the evaluation consultation organizations as prescribed in this Circular and publish the list of valuation consultation organizations provided with services in 2013 before December 31, 2012.

Article 16. Effect

1. This Circular takes effect as from October 1, 2012.

2. This Circular shall supersede the Decision No. 100/2007/QD-BTC dated December 6, 2007 of the Minister of Finance on the promulgation of the Regulation on selection and monitoring the valuation consultation organizations,

3. During the course of implementation, if there is any problem and difficulty arising, the valuation consultation organizations and agencies concerned should promptly report to the Ministry of Finance for study and settlement

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PP. MINISTER
DEPUTY PRIME MINISTER




Tran Xuan Ha