DECREE

ON PILOT ESTABLISHMENT, ORGANIZATION, OPERATION AND MANAGEMENT OF STATE ECONOMIC GROUPS

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the November 26, 2003 Law on State Enterprises;
Pursuant to the November 29, 2005 Law on Enterprises;
At the proposal of the Minister of Planning and Investment,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Objectives and requirements of pilot establishment of state economic groups

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2. State economic groups are tasked to maintain the major balances in the national economy, apply high technologies and create a motive force for development of other branches and industries and the whole economy.

3. Promoting linkage in the value-added chain and developing other economic sectors.

4. Enhancing the effective management and supervision of state capital and assets invested in enterprises of the groups.

5. Creating grounds for further improvement of mechanisms, policies and laws on economic groups.

Article 2. Scope of regulation

This Decree provides for:

1. Establishment of state economic groups;

2. Organization, operation, management and governance of state economic groups;

3. Management and supervision of the exercise of rights and the performance of obligations of the state owner of state economic groups.

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This Decree applies to state economic groups established under the Prime Minister's decisions in the following major business sectors and industries:

1. Post, telecommunications and information technology;

2. Ship building and repair;

3. Electricity generation, transmission, distribution and trading;

4. Petroleum survey, exploration, exploitation and processing:

5. Coal and mineral survey, exploration, exploitation and processing;

6. Textile and garment;

7. Rubber tree plantation and rubber latex exploitation and processing;

8. Fertilizer and chemical production and trading;

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10. Construction industry and manufacturing mechanical engineering;

11. Finance, banking and insurance;

12. Other sectors and industries as decided by the Prime Minister.

Article 4. State economic groups

1. A state economic group to be established on a pilot basis under this Decree means a group of large-sized companies which are related as parent companies and affiliate companies or otherwise to form a conglomerate of enterprises which are closely and permanently interconnected in terms of economic interest, technology, market and other business services.

2. A state economic group consists of:

a/ Parent companies (below referred to as grade-1 enterprises) which are enterprises whose charter capital is wholly owned or controlling right is held by the State under the Prime Minister's decision;

b/ Affiliate companies of grade-I enterprises (below referred to as grade-II enterprises) which are enterprises whose controlling right is held by grade-I enterprises and organized as joint-stock companies, one-member or two-plus-member limited liability companies, corporations after the parent-affiliate company model, joint-venture companies (not yet re-registered under the Law on Enterprises), or overseas subsidiaries;

c/ Affiliate companies of grade-II enterprises and lower-grade enterprises:

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3. Parent companies and member enterprises of the group have the legal entity status, their own capital and assets, and the right to possess, use and dispose of their assets under law and the group's general agreement. The State is the owner of state capital directly invested in parent companies. Parent companies are owners of state capital in affiliate companies and associated enterprises.

Article 5. Names and business registration

1. State economic groups have their own names, logos and brands. The Prime Minister shall decide on names of state economic groups and parent companies established on a pilot basis under this Decree.

2. Member enterprises shall make the business registration under law. The naming of member enterprises organized as joint-stock companies or limited liability companies shall comply with the Law on Enterprises and relevant laws.

Article 6. Interpretation of terms

In this Decree, the terms below are construed as follows:

1. "Main business line of an enterprise" means the business line determined by the enterprise owner on the basis of the enterprise's investment objective and development strategy and assigned to the enterprise to conduct upon its establishment and throughout its operation.

2. "Business lines related to the main business line of an enterprise" (below referred to as related business lines) means those allied to or deriving from the main business line on the basis of the conditions and advantages, or utilizing the advantages and competitive edge of the main business line, and directly serve the main business line.

3. "Business lines unrelated to the main business line of an enterprise" (below referred to as unrelated business lines) means those neither deriving nor developed from the main business line or from related business lines.

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5. "Affiliated entities of a parent company" means organizations and individuals directly or indirectly related to the parent company under Clause 17, Article 4 of the Law on Enterprises.

6. "Member enterprises of a group" means enterprises whose charter capital or controlling shares or contributed capital portions are directly held by parent companies, parent companies' affiliate companies or affiliate companies of lower grades, which hold the right to control these enterprises.

7. "Controlling right" means the right of an enterprise to another, including at least one of the following rights:

a/ Right of the sole owner of the other enterprise;

b/ Right of shareholders or capital contributors that hold the controlling share or contributed capital portion of the other enterprise;

c/ Right to directly or indirectly appoint the majority of or all members of the Board of Directors or the Members' Council, or the director general of the other enterprise;

d/ Right to decide on approval and revision of the charter of the other enterprise;

e/ Other cases of control under an agreement between the controlling enterprise and the controlled enterprise which are stated in the charter of the controlled enterprise.

Article 7. Party organizations and socio­political organizations in state economic groups

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2. Socio-political organizations in state economic groups shall operate under the Constitution, laws and their respective statutes in compliance with law.

3. State economic groups shall create conditions and provide supports for Party and Trade Union organizations and other socio­political organizations to operate under law and their respective statutes.

Article 8. Application of relevant laws and treaties

1. The establishment, organization, operation and management of state economic groups comply with this Decree, the Law on Enterprises, the Law on State Enterprises, the Law on Competition and other relevant laws.

2. In case a treaty to which the Socialist Republic of Vietnam is a contracting party contains provisions different from those of this Decree, the treaty prevails.

Chapter II

ESTABLISHMENT OF STATE ECONOMIC GROUPS

Article 9. Mode of establishment of state economic groups

The Prime Minister decides on the establishment of state economic groups on the basis of state corporations and companies which satisfy the conditions specified in Article 10 of this Decree.

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A state economic group planned to be established must satisfy the following conditions:

1. Having a main business line as specified in Article 3 of this Decree and the potential for development on the basis of the main business line and related business lines;

2. Satisfying the conditions on the business line structure specified in Article 16 of this Decree;

3. The parent company must satisfy the following conditions:

a/ Its charter capital is at least equal to the minimum capital level prescribed for parent companies of state economic groups in each business sector or industry under the Prime Minister's decisions:

b/ It is staffed with persons who are professionally qualified and experienced and capable of conducting the main business line and related business lines, managing investment capital and administering, managing and coordinating operations of member enterprises and associated enterprises;

c/ It is capable of utilizing technological know-how, brands and markets to control affiliate companies and associate with other associated enterprises;

d/ Having financial resources or worked out feasible plans to mobilize financial resources, ensuring investment of sufficient capital in affiliate companies and other associated enterprises.

4. Enterprises intending to become members of state economic groups may transform themselves or work out transformation plans or must have transformed themselves into or made business registration as joint-stock companies or limited liability companies under the Law on Enterprises.

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1. Permission for scheme elaboration: Pursuant to the Government's regulations on sectors and industries in which state economic groups will be established on a pilot basis, the Prime Minister shall decide on agencies or organizations responsible for elaborating schemes on pilot establishment of state economic groups.

2. Elaboration and submission of schemes: Agencies or organizations tasked by the Prime Minister to elaborate schemes on pilot establishment of state economic groups shall organize the elaboration of these schemes and gather opinions of ministries specified at Point d of this Clause on these schemes, then submit them to the Prime Minister for approval. A dossier of a scheme to be submitted to the Prime Minister for approval comprises:

a/ A report on the scheme on establishment of a state economic group;

b/ The scheme on establishment of a state economic group.

A scheme must contain the following principal details: The necessity and objectives of establishment of the state economic group; actual organization, management and operation of the state corporation; structure of member enterprises and associated enterprises; method of building, maintenance and development of forms of association between the corporation or parent company and member enterprises and associated enterprises; method of formation of the parent company; legal states, name and organizational and managerial structure of the parent company; names, legal states and organizational structures of member enterprises; the main business line and related business lines; structure of investment in the main business line, related business lines and unrelated business lines within the group; plan on use and development of leading and managerial human resources in the parent company; the human resource to function as the representative of the parent company's owner at member enterprises; plan on arrangement and use of human resources; plan on business operation of the group after its establishment; strategic orientations for long-term development of the group; organization, management and governance within the group; the representative of the state owner at the parent company of the group; proposals to the state owner in the formation of the group; and plan and schedule on the transformation, formation of the group;

c/ Draft charter of the parent company of the group;

d/ Comments of the Ministry of Planning and Investment, the Ministry of Finance, the Justice Ministry, the line ministry (in case the scheme submitter is a corporation established under the Prime Minister's decision), the Ministry of Home Affairs and the Ministry of Labor, War Invalids and Social Affairs, on the scheme.

3. Approval of schemes: The Prime Minister shall consider and decide to approve schemes on establishment of state economic groups. A decision approving a scheme on establishment of a state economic group must clearly detail the supervision of the scheme implementation and responsibilities of agencies, organizations and individuals for the supervision and settlement of problems arising from the scheme implementation and the adjustment of the scheme (when necessary).

4. Implementation of schemes on establishment of state economic groups:

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b/ Boards of Directors of parent companies shall directly organize the implementation of the schemes; develop forms of association between parent companies and affiliate companies and among member enterprises in the course of implementation of the schemes and operation of the groups.

Chapter III

MANAGEMENT AND ADMINISTRATION WITHIN STATE ECONOMIC GROUPS

Section I. ORGANIZATION OF MAN A CEMENT AND ADMINISTRA TION OF STATE ECONOMIC GROUI'S

Article 12. Principles on management and administration of state economic groups

Management and administration of a state economic group shall be performed by one or several of the following methods:

1. Management and administration through parent companies;

2. Management and administration through different forms of investment and association;

3. Management and administration under agreements or cooperation on the use of common services within the group; observance of common regulations, standards and norms within the group not in contravention of law; mutual use of products and services according to market rules;

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Article 13. Management and administration of state economic groups through parent companies

1. Parent companies represent state economic groups in conducting common operations of these groups in relation to third parties at home or abroad or other operations in the name of these groups under agreements among member enterprises and relevant laws.

2. Parent companies use rights and obligations of the capital owner in member enterprises and rights of shareholders and members to coordinate and direct operations of their economic groups:

a/ To use their management and administration apparatuses or set up separate sections to study and elaborate strategies and propose solutions to coordinating and directing activities specified in Clause 3 of this Article, then submit them to their Boards of Directors for approval. To carry out coordinating and directing activities specified in Clause 3 of this Article through their authorized representatives in member enterprises and associated enterprises;

b/ To coordinate and direct operations of their economic groups through performing economic contracts or association contracts together with member enterprises and associated enterprises;

c/ To elaborate uniform regulations of their economic groups.

3. Coordinating and directing activities of a parent company include:

a/ Elaborating and organizing the implementation of development strategies and general business coordination plans of the group; providing guidelines on business strategies of affiliate companies under the development strategy and general business coordination plan of the group; elaborating and organizing the implementation of management and administration regulations and standards and norms for uniform application within the group;

b/ Classifying member enterprises according to their positions and importance in the general development strategy of the group: drawing up a list of main business lines and a list of key member enterprises; directing member enterprises according to main business lines; managing and guiding its representatives in securing its controlling right in key member enterprises against the annexation by other economic groups or enterprises;

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d/ Directing the determination of operation and investment objectives, production and business targets; the assignment of tasks, specialization, cooperation, marketing, market expansion and sharing, export, use of brands, information, scientific and technological research and application and training services and other operations of member enterprises in line with common policies of the group;

e/ Elaborating and implementing regulations on management of brands of the group; providing guidance on the common element in proper names of member enterprises and associated enterprises;

f/ Directing the organization and staffing of affiliate companies;

g/ Providing guidance on the charters and controlling the charter capital structure of affiliate companies;

h/ Appointing its authorized representatives to participate in the management and administration of affiliate companies. Issuing and implementing regulations on appointment, replacement, supervision and evaluation of activities of authorized representatives: specifying issues which must be approved by the parent company before authorized representatives decide or taking part in making decisions thereon in member enterprises and associated enterprises:

i/ Acting as a focal point to pool up resources of member enterprises and associated enterprises for bidding for and implementing common projects as agreed upon by member enterprises and associated enterprises;

j/ Providing technological research and transfer, marketing, trade promotion and other services for member enterprises and associated enterprises;

k/ Coordinating the setting up, management and efficient use of common funds; conducting financial supervision and risk control; providing supports for financial operations of member enterprises of the group at the request of these enterprises;

l/ Coordinating the performance of administrative affairs and transactions with partners of member enterprises of the group at the request of these enterprises; performing public-utility duties and tasks assigned by the State to the group;

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n/ Making consolidated financial statements of the parent company and affiliate companies:

o/ Consulting member enterprises and associated enterprises in performing common activities;

p/ Organizing the directed supervision, regulation and coordination of its sections;

q/ Conducting other activities relevant to characteristics of each slate economic group in accordance with relevant laws and the charters of the parent company, member enterprises and associated enterprises.

4. Parent companies, member enterprises and associated enterprises have the rights and obligations of an enterprise provided for by law; take responsibility before law for their production and business operations; and are bound to exercise rights and perform obligations under association contracts and agreements among them.

5. Coordination and direction work within a group must comply with law, charters of members enterprises and associated enterprises, conform to the rights of the owner in parent companies or agreements between parent companies and member enterprises and associated enterprises, and reflect the position of parent companies in each activity of coordination with member enterprises and associated enterprises.

In case a parent company abuses its position to intervene beyond the powers of the owner in the operation of members or shareholders, or to act in contravention of association contracts and agreements among member enterprises of a group, harming interests of member enterprises or related parties, this parent company and its affiliated persons shall bear responsibility under Clauses 3.4, 5 and 6, Article 147 of the Law on Enterprises and other relevant laws.

Article 14. Responsibilities of parent companies for management and administration of state economic groups

1. To be answerable to the state owner for achieving objectives of main business lines and other objectives assigned by the State to their groups. To submit to supervision by the state owner's representatives of investment portfolios, investment projects in the sectors of finance, banking, insurance, securities and real estate (except groups operating in these sectors).

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3. To provide information and report on contents specified in Clause 2, Article 41 of this Decree.

4. To set up organizations to provide services for members of economic groups.

5. To report to the competition management agency and submit to the latter's supervision of economic concentration in their groups.

6. To perform the obligations of an enterprise suitable to their registered legal forms and other law-prescribed obligations.

7. To build and operate systems for assessment of operation effectiveness of authorized representatives in member enterprises. Such a system must satisfy the following requirements:

a/ Having principal criteria for each post;

b/ Performing periodical assessment of operation effectiveness:

c/ Having a stimulating mechanism;

d/ Having penalties against violations.

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a/ Management experience and skill criteria;

b/ Methods and process of selection (including selection through examination) and appointment of leading and managerial posts within the parent company's competence; selection and nomination of candidates for selection and appointment by competent authorities to leading and managerial posts of the parent company; selection and nomination of candidates for election by enterprises with the parent company's capital contributions to their Boards of Directors or Members' Councils; selection (including selection through examination) and appointment of representatives of the parent company's capital contributions in other enterprises;

c/ A system for assessment of management effectiveness applicable to key leaders and managers of the parent company, affiliate companies and authorized representatives in member enterprises in the entire group;

d/ Principles on and methods of salary and bonus payment to promote competition among employees;

e/ Penalties against violations.

9. To guide affiliate companies in forming consolidated funds and uniform administration and accounting systems.

Article 15. Management and administration in state economic groups through different forms of investment, association, transaction or information exchange

Member enterprises of a state economic group may use the following forms to ensure their interconnection in management and administration within the group:

1. Investment in. purchase and sale of products and services; technological assistance; development of brands among them.

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3. Organization of conferences or consultation meetings:

a/ Between the parent company's managers and executive officers and its authorized representatives in member enterprises to direct, regulate and coordinate activities specified in Clause 3, Article 13 of this Decree, and implement the group's important development strategies and orientations;

b/ Between functional units of the parent company and those of member enterprises for handling professional matters.

4. Transfer of authorized representatives who are leading officials among affiliate companies.

Article 16. Provisions on investment limitations and business lines of state economic groups

1. Controlled enterprises may not purchase shares from or contribute capital to controlling enterprises within the same state economic group.

2. The outward capital investment by parent state companies complies with the Regulation on financial management of state companies and management of state capital invested in other enterprises promulgated together with the Government's Decree No. 09/2009/ND-CP of February 5, 2009.

3. Parent companies and member enterprises of groups may register business lines under law but shall concentrate their investment on and conduct business operations within main business lines and related business lines; submit to supervision by state owner representatives of investment in main business lines, related business lines and unrelated business lines as well as investment capital ratio and efficiency.

State owner representatives shall decide on business operations within main business lines; adjustment of or change in main business lines; supervision of business operations within main business lines, related business lines and unrelated business lines.

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a/ It has fulfilled the task of conducting the main business lines assigned by the owner; conducting unrelated business lines will cause no impact on the performance of the main business lines as well as on their expansion and development;

b/ It uses business operations and results in unrelated business lines to support and develop the main business lines;

c/ It performs the reporting obligation and submits to supervision by the state owner representative of investment, investment efficiency and impacts of business operations in unrelated business lines.

Section II. FUNCTIONS, RIGHTS. OBLIGA TIONS AND MAN A GERIA L ORGANIZATION OF PARENT COMPANIES

Article 17. Functions, managerial organization and operation of parent companies

1. Parent companies shall perform the function of directly conducting production, business and financial investment or conducting financial investment only.

2. Managerial organization and operation of parent companies comply with their charters approved by the Prime Minister, financial management regulations approved by competent state agencies, and relevant laws.

Article 18. Rights of parent companies

1. Rights of parent companies to capital and assets:

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b/ To dispose of their capital and assets under law;

c/ To use capital and assets under their management for outward investment under this Decree and the investment law;

d/ To manage and use assets and resources which are land and natural resources allocated or leased by the State under the law on land and natural resources;

e/ The State does not transfer state capital invested in parent companies and their capital and assets without payment, unless it decides on reorganization of parent companies or sets the objective of provision of public-utility products and services for these companies.

2. Rights of parent companies in business:

a/ To take the initiative in organizing production and business, working out plans on production and business coordination, organizing their management apparatuses according to business requirements to ensure business efficiency;

b/ To conduct business operations in sectors, industries or domains indicated in their business registration certificates; to scale up their business according to their capability, domestic and overseas market demands and this Decree;

c/ To seek domestic and overseas markets and customers and enter into contracts;

d/ To decide on purchase and sale prices of products and services, except those for public utility and those subject to pricing by the State;

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f/ To select contractors under the bidding law's provisions applicable to pilot state economic groups under Clause 5 of this Article;

g/ To use state capital gained from equitization, or sell part or the whole of capital amounts they have invested in their attached units, affiliate companies or associated companies under law;

h/ To decide on investment in establishing affiliate companies or reorganization, dissolution or ownership transformation of existing affiliate companies being one-member limited liability companies whose charter capital accounts for up to 50% of total assets stated in their latest financial statements; or one-member limited liability companies owned by affiliate companies with 100% charter capital held by them; their attached units; their domestic and overseas branches and representative offices under law after obtaining the Prime Minister's approval;

i/ To coordinate with affiliate companies and other investors in establishing new affiliate companies or associated companies at home or abroad in the form of limited liability companies, joint-stock companies or foreign-invested companies with shareholding rate or capital contribution portion of a parent company in each of these companies accounting for up to 50% of total assets stated in the latest financial statement of the parent company. In case of use of investment capital from the state budget, the Prime Minister's approval is required;

j/ To decide to hire part or whole of other companies: to purchase part or whole of other companies whose capital accounts for up to 50% of total assets stated in their latest financial statements after obtaining the Prime Minister's approval: to admit other companies which voluntarily become associated companies of their groups;

k/ To recruit employees and sign labor contracts with them: to arrange, employ, train, commend, discipline employees or terminate labor contracts; to select modes of payment of salaries and bonuses to employees based on production or business efficiency and regulations on labor, salaries and remunerations and Clause 5 of this Article;

l/ To elaborate, issue and apply standards, processes, economic-technical and labor norms, unit items of salary and other expenditures, assuring business efficiency and compliance with law;

m/ To exercise other production and business rights according to market demand and law.

3. Rights of parent companies regarding financial matters:

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The raising of capital for business purposes shall be conducted on the principles of repayment by parent companies themselves and assurance of the effective use of raised capital without changing the form of ownership of parent companies. Capital raising by parent companies for their ownership transformation must be approved by their owner and conducted in accordance with law;

b/ To take the initiative in using capital for their business operations: to set up. use and manage funds in accordance with law and particularities of their sector and main business lines;

c/ To decide on depreciation of fixed assets on the principle that the minimum depreciation rate must ensure the offsetting of tangible and intangible wear of fixed assets and must not be lower than the Government-prescribed minimum depreciation rate;

d/ To enjoy allowances and price subsidies or other incentives provided by the State when performing the tasks of public-utility operation, defense, security, natural disaster prevention and combat, or supply of products and services at state-fixed prices lower than their production costs;

e/ To give rewards for technical innovations or improvements, ideas of management or technology renewal, increased labor productivity or economical use of supplies and financial sources. These rewards shall be accounted as a business expense of parent companies and given in lump sum but must not exceed the level of benefits brought about by these technical innovations or improvements, ideas of management or technology renewal, increased labor productivity or economical use of supplies and financial sources in a year;

f/ To be entitled to investment or reinvestment incentives provided for by law; to exercise the owner right to capital amounts invested in affiliate companies and other enterprises;

g/ To be exempt from enterprise income tax for profits earned from capital contributions to affiliate companies and other enterprises if these companies and enterprises pay enterprise income tax before sharing profits to capital contributors, and to be free from other forms of double or aggregate taxation;

h/ To reject and denounce all requests of any individuals, agencies or organizations for provision of resources not prescribed by law, except voluntary contributions for humanitarian and public-utility purposes;

i/ To share and use net profits under law after fulfilling the tax obligations and offsetting losses under the Law on Enterprise Income Tax and other financial obligations under law, and setting up financial reserve funds. In case they still have some due debts, they may raise salaries and give bonuses for their employees, including managerial staff only, after they pay off these debts;

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k/ To guarantee, make mortgage or trust collateral for affiliate companies to borrow loans from domestic and overseas credit institutions and banks under law;

l/ To exercise other financial rights provided for by law.

4. Rights of parent companies to participate in public-utility activities:

a/ To produce and provide public-utility products and services through bidding. For public-utility activities under orders placed or plans assigned by the State, to sell or provide public-utility products and services to proper subjects and at prices or charge rates prescribed by the State;

b/ To be provided with physical facilities corresponding to public-utility tasks assigned by the State;

They shall pay expenses for the production and provision of products and services by bidding according to their winning bids;

They may use charges collected for or turnover earned from the provision of public-utility products and services under the State's orders to pay reasonable expenses for these public-utility activities and ensure their employees' interests. In case these charge or turnover amounts are insufficient to cover expenses, the Slate will offset the deficit;

c/ To elaborate and apply expense norms and salary unit items in the course of production and provision of public-utility products and services.

5. Other rights of parent companies:

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Their affiliate companies may participate in bidding for implementation of projects in their main business lines and those of other affiliate companies in the group;

b/ They may decide on salary ranks, payrolls, unit items and mechanisms of salary payment for their employees and managerial officers, except posts of chairman and member of the Board of Directors, director general, deputy director general and chief accountant, under the State's regulations on minimum salary. They enjoy autonomy in deciding salary unit items on the principle that the average salary increase rate is lower than the labor productivity increase rate and in registering them with the state management agency in charge of labor and salary;

c/ For economic groups whose main business line is exploiting important mineral resources on a large scale, parent companies will be assigned to manage these mineral resources (mine owners) under the Prime Minister's decisions in order to organize the exploitation by member enterprises in line with their economic groups' general planning and strategies. Parent companies shall submit to the state management by the state management agency in charge of mineral resources and ensure the rights of member enterprises to trade in. exploit and use mineral resources under the law on mineral resources:

d/ For economic groups that are allocated land by the State for growing perennial industrial trees, parent companies shall uniformly manage and allocate such land to member enterprises for production under the land use planning approved by the Government. Parent companies shall submit to the state management by the state management agency in charge of land and ensure the rights of member enterprises of their groups to trade in. exploit and use land under the land law.

Article 19. Obligations of parent companies

1. To achieve main objectives and perform major tasks assigned by the State; to rationally and effectively manage and use natural resources assigned or leased to them; to protect the environment; and to observe relevant laws.

2. Obligations with respect to capital and assets:

a/ To preserve and develop state capital invested in them and capital they have raised by themselves;

b/ To be held responsible for their debts and other asset obligations within the limit of their assets' value;

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3. Obligations of parent companies in doing business:

a/ To conduct business according to registered business lines; to assure quality of products and services they produce or provide according to registered standards;

b/ To renew and modernize technologies and management methods in order to raise effectiveness and competitiveness;

c/ To ensure rights and benefits of employees and their right to participate in corporate governance provided for by law;

d/ To comply with the State's regulations on defense, security, culture, social order and safety, natural resource and environmental protection;

e/ To conduct accounting and auditing and make financial and statistical reports under law and at the request of the state owner;

f/ To be answerable to the Government and the Prime Minister for the investment of capital in establishing other enterprises;

g/ To manage risks and have their assets, liabilities and personnel insured in production and business operations under law;

h/ To submit to the state supervision of their observance of regulations on salary ranks, tables and unit items and mechanisms of salary payment for employees, chairman and members of the Board of Directors, director general, deputy directors general, chief accountants and other managerial officers;

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j/ To perform other obligations in business under law.

4. Financial obligations of parent companies:

a/ To practice the financial autonomy and self-balancing of revenues and expenditures; to conduct efficient business operations, achieving the target ratio of profit to state-invested capital assigned by the state owner; to register, declare and fully pay taxes: to perform obligations toward the owner and other financial obligations under law;

b/ To manage and use effectively business capital, including also capital invested in other companies: natural resources, land and other resources allocated or leased by the State;

c/ To use capital and other resources for performing special tasks assigned by the State;

d/ To fully observe regulations on management of capital, assets and funds, accounting, cost-accounting and audit: to take responsibility for the truthfulness and lawfulness of their financial operations;

e/ To make annual financial statements and practice annual financial publicity and provide necessary information for accurate assessment of their operation effectiveness:

f/ To perform other obligations specified in their financial management regulations and by other laws.

5. Obligations of parent companies when participating in public-utility activities:

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b/ To undertake public-utility tasks assigned or public-utility orders placed by the State and subsequently re-assign part or whole of these public-utility tasks to affiliate companies for performance under the State's regulations;

c/ To enter into contracts and conduct business cost-accounting under law: to take responsibility before the State for results of their public-utility operations: to take responsibility before their customers and law for public-utility products and services they directly produce and provide;

d/ To provide public-utility products and services in sufficient quantity, of proper quality, to proper subjects, and within prescribed time limits;

e/ To perform other public-utility obligations prescribed by law.

Article 20. Managerial organization structure of parent companies

1. A parent company has its Board of Directors, director general. Control Board and assistant apparatus, except the case specified in Clause 2 of this Article.

2. For parent companies operating in special sectors or industries, their managerial organization structure shall be decided by the Prime Minister.

Article 21. Boards of Directors of parent companies

1. The Board of Directors is a body directly representing the state owner in a parent company, exercising the rights and performing the obligations of the owner towards enterprises whose charter capital is wholly invested by the parent company and to the parent company's capital contributions to other enterprises.

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3. The Board of Directors of a parent company shall be held responsible directly before the Prime Minister and law for all operations of the parent company.

4. A Board of Directors is composed of between 5 and 9 members appointed, reappointed, dismissed or replaced, commended, rewarded or disciplined by the Prime Minister at the request of line ministers. The term of office of a member of Board of Directors is 5 years. Members of a Board of Directors may be reappointed. The Prime Minister shall decide on the membership and number of full-time or part-time members of the Board of Directors of each state economic group.

Article 22. Tasks and powers of the Hoard of Directors of a parent company

1. To receive, manage and efficiently use capital, land, natural resources and other resources invested by the owner in the parent company and the state economic group.

2. To elaborate and submit to the Prime Minister for approval or decision and organize the implementation of, the parent company's strategies and long-term plans; to decide on the parent company's annual plans after obtaining the line ministry's comments; to decide on strategies, long-term plans and business lines of affiliate companies whose charter capital is wholly owned by the parent company.

3. To decide on investment projects included in the state economic group's development planning and long-term plans already approved by the Prime Minister; to authorize the parent company's director general or representatives of the parent company's capital portions in other enterprises to decide on investment in projects included in plans it has approved.

4. To decide on projects on investment in. contribution of capital to. or purchase of shares from other companies, and on sale, under law. of the parent company's assets which are valued up to 50% of the remaining total asset value stated in the parent company's latest financial statement.

5. To decide on borrowing, lending, hire or lease contracts and other economic contracts of a value exceeding the parent company's charter capital under law.

6. To decide on plans on organization of management and business operations, state payroll and use of the management apparatus, the company's internal management regulations, employee training planning and setting up of the parent company's branches and representative offices at the request of the director general.

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8. To decide on appointment, re-appointment, dismissal, removal from office, commendation, disciplining of members of Members' Councils or presidents or controllers of one-member limited liability companies whose charter capital is wholly held by the parent company at the request of the parent company's director general; to approve proposals of Members' Councils or presidents of one-member limited liability companies on appointment, re-appointment, dismissal, removal from office, commendation, disciplining of these companies' directors general or directors.

9. To appoint representatives of their capital contributions in other enterprises at the request of the director general.

10. To decide on or authorize the director general to decide on plans on raising capital for business operations without changing the form ownership.

11. To adopt the following annual financial statements:

a/ Annual financial statements of the parent company;

b/ Annual financial statements of affiliate companies being one-member limited liability companies;

c/ Annual financial statements of attached units, scientific and technological research institutions and training institutions;

d/ Consolidated financial statements of the state economic group.

12. To decide on salary ranks, payroll and unit items and mechanisms of salary payment for employees and managerial officers pursuant to Point b, Clause 5, Article 18 of this Decree; to decide on setting up and use of the parent company's consolidated funds under the parent company's charter and financial management regulation.

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14. To inspect and supervise the director general, deputy directors general, directors of attached units, directors or principals of scientific research and training institutions in performing their functions and tasks under the Law on State Enterprises, the Law on Enterprises and the parent company's charter.

15. To inspect and supervise the Members' Council or presidents and controllers of one-member limited liability companies whose charter capital is wholly held by the parent company, representatives of the parent company's capital contributions in other enterprises in performing their functions and tasks assigned by the owner representative under the parent company's charter and in compliance with the charters of one-member limited liability companies and enterprises in which the parent company has capital contributions, and relevant laws.

16. To decide on issues falling under the parent company's competence as specified at Point h, Clause 2, Article 18 of this Decree after obtaining the Prime Minister's approval.

17. To exercise the rights and perform the obligations of the owner towards companies whose charter capital is wholly held by the parent company; or of owners of shares or capital contributions in enterprises in which the parent company has shares or capital contributions.

18. To propose the owner to decide on or approve decisions on issues falling under the state owner's competence regarding the parent company.

19. To adopt the following for the director general's decision:

a/ Entry into economic contracts or cooperation agreements according to its authority;

b/ Guarantee for each loan of an affiliate company which is bigger than the charter capital of this company which requests guarantee for such loan for implementation of an approved investment project or a plan on production or business coordination under a signed contract;

c/ Contribution of capital for establishing new joint-stock companies or limited liability companies with two or more members according to its authority;

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e/ Appointment of managerial and executive posts according to its authority.

20. To promulgate regulations on decentralization of authority according to each domain of operation to the director general, directors of attached units, scientific and technological research institutions and training institutions of companies and representatives of the parent company's capital contributions in enterprises.

21. To organize the reorganization or transformation of the parent company and the groups under plans approved by the Prime Minister; to decide on and organize the exercise of the parent company's rights under Clause 5, Article 18 of this Decree.

Article 23. Chairman of the Board of Directors of a parent company

1. The chairman of the Board of Directors may not concurrently work as director general of the parent company.

2. The chairman of the Board of Directors has the following powers and tasks:

a/ To sign on the behalf of the Board of Directors the receipt of capital, land, natural resources and other resources invested by the owner in the parent company and the state economic group; to manage the parent company under resolutions and decisions of the Board of Directors;

b/ To work out programs and plans on operation of the Board of Directors; to decide on agenda and documents of meetings of the Board of Directors and convene and chair such meetings;

c/ To sign on the behalf of the Board of Directors or authorize other members of the Board of Directors to sign resolutions and decisions of the Board of Directors;

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e/ To organize study and elaboration of development strategies, long-term plans and investment projects falling under the deciding competence of the Board of Directors or for submission by the Board of Directors to the Prime Minister for decision; and of plans on reorganization or change in key staffs of the parent company for submission to the Board of Directors:

f/ To exercise other rights according to authority decentralization or authorization by the Board of Directors and the Prime Minister;

g/ To authorize in writing one member of the Board of Directors to perform his/her functions and tasks when he/she is absent:

h/ To cooperate on behalf of the Board of Directors of the parent company with third partners in case the parent company represents the state economic group in conducting common operations of the group or other operations in the name of the group under agreements among member enterprises.

Article 24. Members and working regime of the Board of Directors of a parent company

1. A member of the Board of Directors must fully satisfy at least the following criteria and conditions:

a/ Being a Vietnamese citizen permanently residing in Vietnam;

b/ Possessing a university degree; being capable of managing and conducting business activities. The chairman of the Board of Directors must have at least three years' experience of corporate management and administration in the main business line or related business lines of the group:

c/ Being physically fit. honest, upright and knowledgeable, and having good ethical quality and a good sense of law observance;

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2. Cases of dismissal, disciplining or replacement of members and working regime of the Board of Directors; salaries, allowances and bonuses of full-time and part-time members of the Board of Directors comply with the parent company's charter approved by the Prime Minister, (he Law on State Enterprises, this Decree and relevant laws.

Article 25. Participation in the management of other enterprises by the chairman and members of the Board of Directors and director general of a parent company

1. The chairman and members of the Board of Directors and the director general may hold management posts of other enterprises only when being nominated by the parent company or a competent state agency as candidates for these management posts or as representatives of the parent company's capital contributions in these enterprises. Spouses, parents, children and blood siblings of the chairman and members of the Board of Directors may not hold posts of chief accountant and cashier in these enterprises.

2. Economic, labor and civil contracts signed by the parent company with members of the Board of Directors, the director general or with spouses, parents, children or blood siblings of members of the Board of Directors and the director general must be notified to the person who has appointed members of the Board of Directors or the director general. In case the person who has appointed members of the Board of Directors or the director general detects that a contract which has not yet been signed is established for self-seeking purpose, he/she may request members of the Board of Directors or the director general not to sign that contract. A contract already signed for self-seeking purpose shall be considered invalid and members of the Board of Directors or the director general shall pay compensations for damage caused to the parent company and be handled under law.

Article 26. Control Board of a parent company

1. The Control Board shall be set up by the Board of Directors and composed of between 3 and 5 members, with its head being a member of the Board of Directors and assigned by the latter. Other members of the Control Board shall be selected, appointed, re-appointed or dismissed by the Board of Directors. The chairman of the Board of Directors or the director general may not concurrently act as head of the Control Board.

2. The term of office of a member of the Control Board is 5 years. Members of the ('ontrol Board may be re-appointed and are entitled to salaries, bonuses or allowances decided by the Board of Directors under this Decree and the law on salaries and remunerations.

3. The Control Board shall operate under a regulation approved by the Board of Directors, and has the following tasks, powers and responsibilities:

a/To inspect and supervise the lawfulness and truthfulness of the management and administration of business operations, recording of accounting books and financial statements, and observance of the parent company's charter, the Board of Directors' resolutions and decisions, and decisions of the chairman of the Board of Directors concerning the parent company and affiliate companies: to take responsibility before the Board of Directors for the exercise of its vested rights and assigned tasks;

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c/ To refrain from disclosing inspection and supervision results before obtaining the permission of the Board of Directors: to take responsibility before the Board of Directors and law for its acts of tolerating or covering up violations.

4. A member of the Control Board must fully satisfy the following criteria and conditions:

a/ Permanently residing in Vietnam:

b/ Being physically fit, honest and upright, and having good ethical quality and a good sense of law observance;

c/ Possessing a university or higher degree and being an expert in the accounting, audit, economics or finance domain or having professional expertise relevant to the parent company's business lines; being knowledgeable about law; having a service seniority of at least 5 years in the said domain; having no previous conviction or criminal charge for economic crimes;

d/ Being not a spouse, child, parent or blood sibling of a member of the Board of Directors, the director general, the chief account or cashier of the parent company;

e/ Working on a full-time basis and not concurrently holding a leading post in the state apparatus.

5. The operating fund, including salaries, allowances and working conditions of the Control Board, is allocated by the parent company.

Article 27. Director general of a parent company

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2. The director general is appointed, re­appointed, dismissed, commended or disciplined by the Board of Directors, which also may sign or terminate a labor contract with him/her. after obtaining the Prime Minister's written approval. The parent company's charter must specify criteria and conditions for the director general.

3. The director general is appointed or enters into a labor contract for a term of office of 5 years. The Board of Directors shall decide on re-appointment of or renewal of the labor contract with the director general after obtaining the Prime Minister's approval.

4. The Board of Directors shall decide on dismissal of or early termination of the labor contract with the director general after obtaining the Prime Minister's approval in the following cases:

a/ He/she lets the parent company suffer from losses for two consecutive years or fail to achieve the set target ratio of profit to the owner capital assigned by the owner for two consecutive years or in an intermingled loss and profit-making state without any remedy, except for cases in which a loss or lower ratio of profit to state-invested capital has been approved by a competent authority; loss has been anticipated due to investment in production expansion or technology renewal under resolutions or decisions of the Board of Directors; a loss or lower ratio of profit to state-invested capital is caused by objective circumstances which have been explained to and approved by a competent authority;

b/ The parent company falls into bankruptcy but fails to file bankruptcy requests under the law on business bankruptcy;

c/ He/she fails to fulfill obligations or targets assigned by the Board of Directors; repeatedly and systematically violate resolutions and decisions of the Board of Directors and operation regulation of the parent company;

d/ He/she dishonestly exercises his/her powers or abuses his/her position and powers to earn profits for him/herself or for another person; has made untruthful reports on the parent company's financial status;

e/ He/she has lost his/her civil act capacity or had limited civil act capacity;

f/ He/she has been convicted under a legally effective court judgment or ruling.

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a/ He/she voluntarily resigns and his/her resignation is approved in writing by a competent authority under law;

b/ There is a decision on his/her transfer, retirement or assignment to another job.

Article 28. Tasks and powers of the director general of a parent company

1. To organize the elaboration of development strategies of the parent company; a planning on development of projects in the business lines of the parent company and the entire state economic group; long-term and annual plans of the parent company, plans on coordination in production and business within the group; plans on capital raising and use; preparation of investment projects, distribution of resources, preparation of organization and management schemes; drafting of the parent company's charter and amendments thereto, financial regulation, internal management rules and regulations; elaboration of human resource development plans; elaboration and inspection of the realization of the system of economic-technical targets, standards and norms, product quality, salary unit items and product unit prices; preparation of economic and civil contracts; preparation of periodical reports, statistical reports and financial statements of the parent company, consolidated financial statements of the group; and other schemes and projects.

2. To submit to the Board of Directors for subsequent submission to the Prime Minister or a competent state agency for decision or approval issues falling under the owner's powers to the parent company.

3. To submit to the Board of Directors for consideration and decision issues falling under the Board of Directors' powers.

4. To decide on issues assigned or authorized by the Board of Directors under this Decree.

5. To decide on projects on investment in or sale of the parent company's assets: loan borrowing or provision, hire or lease contracts and other economic contracts; plans on use of the parent's capital and assets for capital contribution to or purchase of shares from enterprises as decentralized or authorized by the Board of Directors and relevant laws.

6. To decide on the selection of, entry into or termination of labor contracts with, appointment, reappointment, dismissal, commendation, disciplining, salaries and allowances of key personnel as decentralized by the Board of Directors.

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8. To decide on the assignment of tasks to deputy directors general.

9. To send cadres, staff members, workers and employees of the parent company, members of the Members' Council or presidents, controllers, directors general or directors of affiliate companies whose charter capital is wholly owned by the parent company or attached units on working missions, study tours or personal trips abroad; to receive foreign individuals and delegations entering Vietnam to work with the parent company; to authorize presidents, directors general or directors of affiliate companies whose charter capital is wholly owned by the parent company or attached units to send their cadres, staff members, workers and employees on working missions, study tours or personal trips, and receive foreign individuals and delegations entering Vietnam to work with their units.

10. To organize the implementation of business plans, investment plans, day-to-day operations and plans on business coordination within the group; to organize audit, inspection and safeguarding activities, decide on solutions to market development, marketing and technology renewal and other works in order to effectively implement resolutions and decisions of the Board of Directors and the owner; to administer the parent company's operations in implementing resolutions and decisions of the Board of Directors.

11. To enter into civil and economic contracts of the parent company. For contracts of a value exceeding the level decentralized to the director general, to enter into these contracts only after the Board of Directors issue resolutions or decisions thereon.

12. To report to the Board of Directors on results of the parent company's business operation; to publish financial statements under law.

13. To submit to inspection and supervision by the Board of Directors, the Control Board and competent state management agencies of the performance of his/her functions and tasks under law.

14. To monitor, inspect and supervise operations of attached units as decentralized or authorized by the Board of Directors.

15. To apply necessary measures beyond his/ her competence in cases of emergency and promptly report such to the Board of Directors and competent state agencies.

16. To have other rights and tasks under law, this Decree and decisions of the Board of Directors.

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1. In the course of implementation of a resolution or decision of the Board of Directors, if detecting a matter unbeneficial to the parent company, the director general shall promptly report it to the Board of Directors for consideration and modification of that resolution or decision. The Board of Directors shall consider the director general's report. In case the Board of Directors does not modify the resolution or decision, the director general shall still implement it but he/she may reserve his/her opinion and report it to the Prime Minister.

2. Within fifteen days after the end of a month, quarter or year, the director general shall report in writing to the Board of Directors on business operations and business orientations of the parent company in the coming period.

3. The chairman of the Board of Directors shall attend or send a representative of the Board of Directors to attend briefing meetings and meetings for preparation of schemes for submission to the Board of Directors which are chaired by the director general. The chairman of the Board of Directors or a representative of the Board of Directors attending meetings may contribute his/her opinions but may not make meeting conclusions.

Article 30. Obligations and responsibilities of the chairman and members of the Board of Directors and the director general of a parent company

1. The chairman and members of the Board of Directors and the director general of a parent company have the following obligations:

a/ To exercise their vested powers and perform their assigned tasks in an honest and responsible manner in the interest of the parent company and the State;

b/ To refrain from abusing their posts and powers in using the parent company's capital and assets for self-seeking purpose or in others' interests; from giving the parent company's assets to others; from disclosing the parent company's secrets while performing their responsibilities and for at least 3 years after resigning from their posts, except for cases in which these acts are approved by the Board of Directors;

c/ When the parent company fails to fully pay debts and fulfill other financial obligations which are due. the director general shall report such to the Board of Directors for adoption of measures to remedy financial difficulties and inform the financial status to all creditors. Upon the occurrence of this case, the Board of Directors and the director general may neither decide to increase salaries nor appropriate profits for giving bonuses to related managerial officers and employees;

d/ When the parent company fails to fully pay debts and fulfill other financial obligations which are due and fails to implement the provisions of Point c of this Clause, they shall bear personal liability for damage caused to creditors;

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f/ To refrain from allowing their spouses, parents, children and blood siblings to hold the post of chief accountant or cashier of the parent company.

2. Members of the Board of Directors shall take joint responsibility before the Prime Minister and law for decisions of the Board of Directors and results and effectiveness of the parent company's operation.

3. The director general shall take responsibility before the Board of Directors and law for administering the parent company's day-to-day operations, exercising his/her vested powers and performing his/her assigned tasks.

4. When committing any of the following violations which are not serious enough for penal liability examination, the chairman and members of the Board of Directors and the director general are not entitled to bonuses and salary increase, and shall be disciplined depending on the severity of their violations:

a/ Letting the parent company suffer from losses;

b/ Letting the state capital be lost;

c/ Deciding on ineffective investment projects, failing to recover investment capital or pay debts;

d/ Failing to fully pay salaries and other entitlements to the parent company's employees under the labor law:

e/ Letting violations occur in the management of capital and assets or in the implementation of accounting and audit regulations and other regulations of the State.

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6. If letting the parent company fall into a state specified at Point a. Clause 4 of Article 27 of this Decree, the chairman of the Board of Directors and the director general shall, depending on the severity and consequences of their violations, be lowered in salary rank or dismissed, and at the same time pay compensations for damage under law.

7. In case the parent company falls into the state of bankruptcy but the director general fails to file a bankruptcy request, he/she shall be dismissed or has his/her labor contract terminated and bear responsibility under law. If the director general fails to file a request but the Board of Directors does not request him/her to file a bankruptcy request, the chairman and members of the Board of Directors shall be dismissed.

8. In case the parent company is subject to reorganization, dissolution or ownership transformation but its reorganization, dissolution or ownership transformation is not carried out according to prescribed procedures, the chairman and members of the Board of Directors and the director general shall be dismissed.

9. Members of the Board of Directors and the director general enjoy salaries on an annual basis and bonuses based on results and effectiveness of production and business operations of the enterprise in the year and management and administration results throughout their term of office: are entitled to an advance equal to 70% of the total annual salary amount. The remaining 30% of their salaries shall be accounted and paid upon the expiration of their term of office. In case results of enterprise ranking and assessment of the management and administration by the Board of Directors and the director general are unsatisfactory under Point a. Clause 2. Article 43 of this Decree, members of the Board of Directors and the director general of the parent company are not entitled to the remaining 30% of their salaries and bonuses for the year.

Article 31. Deputy directors general, assisting apparatus and participation of employees in the management and administration of the parent company

1. The parent company has deputy directors general and a chief accountant who are appointed, re-appointed, dismissed, removed from office, commended or disciplined at the request of the director general.

2. Deputy directors general shall assist the director general in administration work; exercise the powers vested and perform the tasks assigned by the director general: and take responsibility before the director general and law for their powers and tasks.

3. Deputy directors general are appointed for a term of office of up to 5 years and may be re­appointed. Salaries, responsibility allowances and bonuses of deputy director general and the chief accountant shall be decided by the Board of Directors at the request of the director general and under Clause 9, Article 30 of this Decree.

4. The assisting apparatus consists of the office and professional sections which function to advise and assist the Board of Directors and the director general in managing and administering the parent company and the economic group. The organizational structure, functions, tasks and powers of the assisting apparatus shall be decided by the director general after obtaining approval of the Board of Directors.

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Section III. RELATIONSHIP BETWEEN PARENT COMPANIES AND ENTERPRISES JOINING GROUPS

Article 32. Relationship of general coordination within state economic groups

The parent company, member enterprises, associated enterprises, enterprises voluntarily joining the association and other enterprises joining a group have the relationship of general coordination by the following modes:

1. Elaboration of a common operation regulation based on an agreement between the parent company and enterprises joining the group.

2. Based on its powers and responsibilities provided for by law. the parent company shall act as a focal point for performance of several or all of the following jobs of operation coordination among enterprises in the group:

a/ Coordinating planning work and administering business coordination plans;

b/ Directing the assignment of operation areas and production and business lines of member enterprises of the group;

c/ Organizing financial, accounting and statistical operations;

d/ Setting up, managing and using consolidated funds of the group;

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f/ Labor, salaries, health care, training and human resource development;

g/ Labor safety, natural disaster prevention and combat and environmental protection;

h/ Scientific and technological application;

i/ Naming units of the group; using the name and brand of the group;

j/ Performing administrative and external relations of the group;

k/ Managing emulation, commendation, cultural, sport and social affairs;

l/ Other jobs as agreed upon by member enterprises of the group.

Article 33. Relationship between the parent company and grade-II enterprises whose charter capital is wholly owned by the parent company

1. The Board of Directors of the parent company shall exercise the rights and perform the obligations of the parent company as the owner of grade-II enterprises whose charter capital is wholly owned by the parent company.

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a/ Receive and examine dossiers sent by grade-II enterprises to the parent company for subsequent submission to the Board of Directors for consideration and approval or decision;

b/ Organize the implementation of resolutions and decisions of the Board of Directors in relation to grade-II enterprises;

c/ Inspect, urge and supervise the implementation of production and business coordination plans by grade-II enterprises.

3. Grade-II enterprises whose charter capital is wholly owned by the parent company shall:

a/ Be assigned by the parent company to perform production and business contracts on the basis of economic contracts; be provided with information and entitled to services and benefits from general operations of the economic group under this Decree, the agreement between them and member enterprises of the group and relevant laws;

b/ Be obliged to perform the general agreement of the economic group and commitments in economic contracts with the parent company and member enterprises of the economic group; to implement lawful decisions falling under the powers of the parent company as the owner of enterprises; and participating in implementing the plan on business coordination with the parent company and member enterprises of the group.

Article 34. Relationship between the parent company and grade-II enterprises with controlling shareholdings or capital contributions of the parent company

1. The parent company has the rights and obligations of a shareholder, capital contributor or joint-venture party of grade-II enterprises under relevant laws. The Board of Directors of the parent company shall directly exercise the following rights and perform the following obligations:

a/ To exercise the rights and perform the obligations of a shareholder, capital contributor or joint-venture party through representatives managing the parent company's shareholdings or capital contributions in these enterprises under law and the enterprises' charters;

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c/ To request representatives managing the parent company's shareholdings or capital contributions lo make periodical or extraordinary reports on the financial status, business results and other issues of the enterprises;

d/ To assign tasks to and request representatives managing the parent company's shareholdings or capital contributions in the enterprises to collect opinions on important issues before putting them for voting in the enterprises; to report on the exercise of the rights of a controlling shareholder or capital contributor in realizing the development orientations and objectives of the parent company and the state economic group;

e/ To receive profits and bear risks from the parent company's capital contributions in the enterprises;

f/ To supervise and inspect the use of capital contributions in the enterprises;

g/ To take responsibility for the use, preservation and development of capital contributions in the enterprises.

2. In relationship with grade-II enterprises with controlling shareholdings or capital contributions of the parent company, the director general of the parent company has the following responsibilities:

a/ To receive and examine dossiers sent by the enterprises to the parent company for subsequent submission to the Board of Directors for consideration and approval or decision;

b/ Organize the implementation of resolutions and decisions of the Board of Directors in relation to the enterprises;

c/ Inspect, urge and supervise the implementation of plans on production and business coordination by the enterprises.

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a/ To participate in implementing plans on business coordination on the basis of economic contracts with the parent company and member enterprises of the group; to be assigned by the parent company to perform production and business contracts on the basis of economic contracts with the parent company; to be provided with information and entitled to services and benefits from general operations of the economic group under this Decree, the agreement between them and member enterprises of the group and relevant laws;

b/ To perform the general agreement of the economic group and commitments in economic contracts with the parent company and member enterprises of the economic group; to implement lawful decisions of the parent company as controller of the enterprises.

Article 35. Relationship between the parent company and associated companies

1. The parent company shall exercise its rights and perform its obligations towards associated enterprises under law, these associated enterprises' charters and the association agreement.

2. The parent company is related to associated companies under contractual agreements on brands, markets, technologies, research, human resource training and development and other agreements.

Article 36. Relationship between the parent company and companies voluntarily joining the association

1. Enterprises of all economic sectors may voluntarily associate with a group under law. Voluntarily associated companies have no share or capital contribution of the parent company, and are established and organized and operate under law relevant to their legal form.

2. Voluntarily associated companies are bound in terms of rights and obligations with the parent company and member enterprises of the group under the association agreement.

3. The parent company is related to voluntarily associated companies under contractual agreements on brands, markets, technologies, research, human resources training and development and other agreements.

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Article 37. Attached units of a parent company

Attached units of a parent company shall conduct business operations and take charge of accounting, organization and personnel matters decentralized by the parent company to them under a regulation on organization and operation of dependent-accounting units and non-business units elaborated by the parent company's director genera] and approved by the Board of Directors. The parent company shall take responsibility for financial obligations arising from commitments of its dependent-accounting units and non-business units.

Chapter IV

MANAGEMENT AND SUPERVISION OF STATE ECONOMIC GROUPS

Article 38. Rights and obligations of the state owner towards parent companies:

1. Rights of the state owner towards a parent company:

a/ To decide on establishment, organizational structure, management mechanism, reorganization, dissolution or ownership transformation of the company;

b/ To decide on objectives, strategies, long-term plans and business lines of the. company;

c/ To approve the company charter and amendments and supplements thereto;

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e/ To decide on investment, contribution of capital for investment, joint venture or association according to its competence; to approve policies on the company's borrowing or provision of loans, hire or lease;

f/ To promulgate financial regulations applicable to the company, distribution of incomes, appropriation and use of funds of the company;

g/ To decide on appointment, re-appointment, dismissal, removal from office, commendation or disciplining of the chairman and members of the Board of Directors and the director general;

h/ To promulgate regulations on salaries, salary-based allowances and bonuses, and decide on salaries and salary-based allowances for the chairman and members of the Board of Directors;

i/ To promulgate regulations on order placement, bidding or assignment of tasks, sale prices and price subsidies for production of public-utility products or provision of public-utility services;

j/ To inspect and supervise the achievement of objectives, performance of tasks and implementation of the owner's decisions, and assess the operation effectiveness of the parent company.

2. Obligations of the stale owner towards a parent company:

a/ To fully invest in the parent company's charter capital:

b/ To strictly comply with the provisions of the parent company's charter concerning the owner;

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d/ To take responsibility before law for its decisions on investment projects; to approve policies on purchase, sale, loan borrowing and provision, hire and lease according to its competence;

e/ To guarantee the parent company's right to business autonomy and responsibility before law; not to illegally intervene in the parent company's business operations;

f/ To perform other obligations specified by law.

Article 39. The state owner and its representative in a state economic group

1. The Government uniformly exercises the rights and performs the obligations of the state owner towards a parent company.

2. The state owner's direct representative in a parent company of a state economic group is a person appointed by the Prime Minister as a member of the Board of Directors of the parent company.

Article 40. Assignment of tasks and decentralization of powers to exercise the state owner's rights towards parent companies of state economic groups

1. The Government shall:

a/ Uniformly exercise the state owner's rights towards parent companies and the state capital portions in state economic groups;

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c/ Supervise and assess the exercise of the state owner's rights and obligations towards parent companies and state-invested capital in state economic groups by agencies already authorized or assigned tasks by it under this Decree;

d/ Request agencies, organizations and individuals that are authorized or assigned tasks to exercise the state owner's rights and obligations towards parent companies and state-invested capital in state economic groups to report on the performance of authorized or assigned tasks and operation of state economic groups.

2. The Prime Minister shall:

a/ Decide on establishment of parent companies under Article 11 of this Decree; decide on reorganization, dissolution or ownership transformation of parent companies at the request of line ministries and based on opinions of the Ministry of Finance and the Ministry of Planning and Investment;

b/ Approve objectives, strategies, long-term plans and business lines of parent companies at the request of their Boards of Directors and based on opinions of line ministries, the Ministry of Finance and the Ministry of Planning and Investment:

c/ Approve charters of parent companies and amendments and supplements thereto at the request of their Boards of Directors and based on opinions of line ministries, the Ministry of Finance and the Ministry of Planning and Investment;

d/ Decide on capital investment for the formation of charter capital of parent companies and adjustment of charter capital in the course of their operation at the request of their Boards of Directors and based on opinions of line ministries, the Ministry of Finance and the Ministry of Planning and Investment;

e/ Decide on investment projects of parent companies and outward investment projects which fall under the Prime Minister's deciding competence under the investment law and this Decree:

f/ Decide on appointment, re-appointment, dismissal, removal from office, commendation and disciplining of chairpersons and members of Boards of Directors of parent companies at the request of line ministries and according to verification by the Ministry of Home Affairs;

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3. Line ministries shall:

a/ Propose to the Prime Minister for decision the establishment, reorganization, dissolution or ownership transformation of parent companies; the appointment, re-appointment, dismissal, removal from office, commendation and disciplining of chairpersons of the Boards of Directors of parent companies;

b/ Give their opinions on charters of parent companies or amendments and supplements thereto; appointment, re-appointment, dismissal, commendation or disciplining of. and entry into labor contracts with directors general, before the Prime Minister approves them: or on objectives, strategies, long-term plans, business lines, charter capital and adjusted charter capital of parent companies before the Prime Minister decides on them;

c/ Direct the implementation and realization of objectives, strategies and long-term plans of parent companies and the inspection thereof;

d/ Take responsibility for the observance of processes, procedures, standards, qualities and capacity of members of the Boards of Directors and directors general of parent companies before proposing ihem to the Prime Minister for appointment.

4. The Ministry of Finance shall:

a/ Give its opinions, before the Prime Minister considers and decides, on the establishment, reorganization, dissolution and ownership transformation of parent companies: approval of charters of parent companies and amendments and supplements thereto; capital investment for the formation of charter capital and adjustment of charter capital in the course of operation of parent companies;

b/ Fully invest in charter capital of parent companies under the Prime Minister's decisions;

c/ Approve financial management regulations of parent companies at the request of the Boards of Directors of parent companies, unless otherwise prescribed by the Government.

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6. The Ministry of Home Affairs shall:

a/ Assess the observance of processes, procedures, standards and conditions for appointment, re-appointment, dismissal, removal from office, commendation and disciplining of chairpersons and members of Boards of Directors as proposed by line ministries to the Prime Minister;

b/ Guide the order and procedures for appointment, re-appointment, dismissal, removal from office, commendation and disciplining of chairpersons and members of Boards of Directors, directors general or directors, deputy directors general or deputy directors, chief accountants and other key managerial posts of parent companies.

7. The Boards of Directors of parent companies may be authorized by the Prime Minister to exercise the rights and perform the obligations of the state owner towards parent companies and state-invested capital in state economic groups, except for rights and obligations specified in Clauses 1 thru 6 of this Article.

Article 41. Rights and obligations of the state owner's direct representatives in parent companies

1. Members of Boards of Directors shall exercise the rights and perform the obligations specified in Articles 21 and 22, Clause 7, Article 40 of this Decree, and the following rights and obligations:

a/ To monitor, supervise and report, on a periodical basis or at the request of the Government, the Prime Minister and agencies assigned or decentralized to exercise the state owner's rights, on business operation, financial status and business operation results of parent companies and member enterprises under law and enterprise charters;

b/ To harmonize and coordinate or direct member enterprises through activities specified in Clause 3. Article 13 of this Decree; to propose solutions to putting parent companies and. member enterprises on the right track to realize assigned objectives and orientations;

c/ To guarantee the State's interests and state economic groups' operation effectiveness;

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e/ To be answerable to the Government and Prime Minister for their assigned tasks. In case they show irresponsibility or abuse their tasks and powers to cause damage to the State, they shall bear liability and pay material compensations therefor under law.

2. The Board of Directors of a parent company shall make annual reports and extraordinary reports at the request of the Government and the Prime Minister on the following:

a/ The direction and results of direction of its economic group to realize objectives, including business objectives in its main business lines, and fulfill tasks assigned by the state owner to its groups:

b/ Portfolios and the structure of investment in main and unrelated business lines;

c/ The raising of capital for investment in finance, banking real estate and securities;

d/ Forms and levels of association among enterprises of its economic group;

e/ Organization and personnel work of the parent company: human resources engaged in main, related and unrelated business lines;

f/ Regulations of the parent company on issues which must be adopted by the parent company before its authorized representatives in member enterprises decide or participating in deciding on them.

3. Members of the Boards of Director of a parent company shall report to the parent company and member enterprises of its group the following information and related benefits:

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b/ Names and addresses of head offices, business lines, serial numbers and dates and places of issuance of business registration certificates of enterprises in which their affiliated persons jointly or separately hold shares or capital contributions equal to over 35% of the charter capital.

Article 42. Management, supervision and assessment of state economic groups by the state owner

1. The management and supervision of a state economic group by the state owner through supervision of the parent company cover:

a/ Management and supervision of organization and personnel work, covering organization, establishment, reorganization and dissolution of and admission into the group: the process of changing the ownership structure of affiliate companies leading to their transformation into enterprises with capital below the parent company's controlling level; observance of the parent company's charter; appointment, re-appointment, dismissal, payment of salaries and bonuses for. performance of tasks and operation results of the parent company's Board of Directors;

b/ Management and supervision of business operations, covering business objectives, orientations and strategy of the group; the parent company's investment and financial plans; investment portfolio, main business lines and unrelated business lines; investment in risky sectors, industries, geographical areas and projects; performance of public-utility tasks;

c/ Financial management and supervision, covering capital preservation and development: financial operations and their results: profit ratio to state capital: investment and business efficiency: expenses for salary payment: loans, debts and solvency; charter capital, increase or decrease in charter capital, and change in the charter capital structure; investment projects beyond the powers decentralized to the parent company.

2. Assignment of tasks to perform supervision jobs specified in Clause 1 of this Article:

a/ The Ministry of Finance shall supervise and assess financial operations, business results and effectiveness of the parent company and the entire group; supervision of issuance of stocks, increase in the charter capital of the parent company and member enterprises: expenses for salary payment; supervision of borrowing of loans for investment in financial, banking, real estate and securities areas; supervise the movement of capital, investment and resources within the group and from the group to the outside or vice versa: and monitor consolidated financial statements of the groups;

b/ The Ministry of Labor. War Invalids and Social Affairs shall supervise state economic groups in implementing regulations on the average salary increase rate which is lower than the labor productivity increase rate;

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d/ The Ministry of Planning and Investment shall monitor and supervise the implementation of schemes on establishment of state economic groups; supervise parent companies in establishing new enterprises, contributing capital to other enterprises in risky sectors, industries, geographical areas and projects; supervise and assess the performance of the state owner's function towards parent companies in state economic groups: assess results of implementation of these schemes; analyze advantages and risks of development of economic groups: supervise and assess the implementation of development strategies of state economic groups;

e/ Other supervision jobs not specified at Points a. b, c and d of this Clause shall be performed by the Government or the Prime Minister or agencies and organizations authorized by the Government or the Prime Minister.

3. Ministries, agencies and organizations defined in Clause 2 of this Article shall annually report on their supervision and assessment and supervision and assessment results to the Prime Minister. The Ministry of Finance shall sum up supervision and assessment reports of authorized ministries, agencies and organizations, then, report to the Government and the Prime Minister.

Article 43. Methods of management and supervision of state economic groups

1. The management and supervision of state economic groups shall be conducted by the following methods:

a/ Through reports of Boards of Directors of parent companies;

b/ Through the audit of parent companies and member enterprises;

c/ Through periodical or extraordinary reports of parent companies;

d/ Through inspection, supervision and assessment by the agencies defined in Article 42 of this Decree.

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a/ The Government shall promulgate regulations on management, supervision and assessment of state economic groups; specify norms and prescribe annual assessment and ranking of state economic groups; specify norms and prescribe the assessment of operations of Boards of Directors, directors general, deputy directors general and chief accountants of parent companies:

b/ Supervision and assessment results specified at Point a of this Clause serve as a basis for deciding on salaries, bonuses, appointment, re-appointment, dismissal, commendation, disciplining or handling of responsibility of presidents, members of Boards of Directors, directors general, deputy directors general and chief accountants of parent companies.

Chapter V

IMPLEMENTATION PROVISIONS

Article 44. Effect

1. This Decree takes effect on December 20, 2009.

2. State economic groups established on a pilot basis before the effective date of this Decree shall review their organization, management, modes of establishment and development, mechanisms of association and other related issues in light of this Decree, then report them to the Prime Minister and concerned agencies under Article 40 of this Decree.

3. Other economic groups which are not subject to this Decree and are organized and operate under the Law on Enterprises and relevant laws may apply relevant provisions of this Decree to their organization and operation.

Article 45. Implementation responsibilities

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2. The Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Justice, the Ministry of Labor. War Invalids and Social Affairs, the Ministry of Home Affairs and the Ministry of Industry and Trade shall guide the implementation of this Decree.

The Ministry of Planning and Investment shall monitor the implementation of this Decree.

3. Ministries, ministerial-level agencies, government attached agencies and People's Committees at all levels shall perform the state administration of state economic groups in the sectors specified by law.

4. Ministers, heads of ministerial-level agencies and government-attached agencies, chairpersons of provincial-level People's Committees, chairpersons of Boards of Directors, and directors general of state economic groups and corporations shall implement this Decree.

ON BEHALF OF THE GOVERNMENT
PRIME MINISTER




Nguyen Tan Dung