Chapter VII
GROUP OF COMPANIES
Article 146.- Group of companies
1. Group of companies is a combination of companies which have long-term interrelations in terms of economic benefits, technology, market and other business services.
2. Groups of companies include:
a/ Parent company - subsidiary company;
b/ Economic conglomerate;
c/ Other forms.
Article 147.- Rights and responsibilities of the parent company with respect to its subsidiary companies
1. Depending on the legal form of a subsidiary company, the parent company shall exercise rights and perform obligations as a member, an owner or a shareholder in the relation with the subsidiary company according to relevant provisions of this Law and other laws.
2. Except the case mentioned in Clause 1 of this Article, all contracts, transactions and other relationships between the parent company and its subsidiary companies must be established and performed independently and equally under conditions applied to independent legal entities.
3. In case the parent company interferes beyond its competence as the owner, member or shareholder, or forces the subsidiary companies to carry out business activities that run counter with normal business practices or to conduct unprofitable activities without proper compensation in the fiscal year, causing losses to the subsidiary companies, the parent company must be liable for such losses.
4. Managers of the parent company who are responsible for making interferences or forcing the subsidiary companies to conduct business activities defined in Clause 3 of this Article shall be jointly liable with the parent company for such losses.
5. If the parent company refuses to make compensation to its subsidiary companies as provided for in Clauses 3 of this Article, the creditors, members or shareholders who hold at least 1% of the company's charter capital may, on behalf of themselves or the subsidiary companies, request the parent company to compensate for any losses caused to the subsidiary companies.
6. In case the business activities mentioned in Clause 3 of this Article are conducted by subsidiary companies and yield profits for other subsidiary companies of the same parent company, such subsidiary companies shall be jointly with the parent company responsible for returning such profits to the subsidiary companies suffering from losses.
Article 148.- Financial statements of the parent company and its subsidiary companies
1. By the end of a fiscal year, apart from reports and materials as required by law, a parent company must also make the following reports:
a/ Consolidated financial statement of the group of companies as provided for by the law on accounting;
b/ General report on annual business results of the group of companies;
c/ General report on the management and direction of the group of companies.
2. Those who are responsible for making reports defined in Clause 1 of this Article shall not make or submit such reports if they do not receive all financial statements from all subsidiary companies.
3. At the request of the representative-at-taw of the parent company, the representatives-at-law of its subsidiary companies must provide necessary reports, documents and information as prescribed for making the consolidated financial statement and general report for the group of companies.
4. If being unaware of or having no doubt that there is untrue, inaccurate or fake information in the reports made and submitted by subsidiary companies, the manager of the parent company may use these reports to make the consolidated financial statement and general report for the group of companies.
5. If the manager of the parent company has taken all necessary measures within his/her power but still receive no necessary reports, materials and information as prescribed from subsidiary companies, he/she shall still make and submit the consolidated financial statement and general report of the group of companies. Such reports may or may not contain information from such subsidiaries but must include necessary explanations to avoid misunderstanding or misleading.
6. All annual financial statements and financial settlement documents of the parent company and subsidiaries and all consolidated financial statements of the whole group shall be kept at the head office of the parent company. Copies of all statements and materials defined in this Clause must be available in all branches of the parent company in the territory of Vietnam.
7. For subsidiary companies, apart from reports, statements and materials as provided by law, they shall have to make and submit a general report on purchases, sales and other transactions to the parent company.
Article 149.- Economic conglomerates
Economic conglomerate is a large group of companies. The Government shall stipulate and guide the criteria, organization, management and operation of economic conglomerates.
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