Chương 3 Nghị định 109/2007/NĐ-CP: XÁC ĐỊNH GIÁ TRỊ DOANH NGHIỆP CỔ PHẦN HÓA

Chapter III

VALUATION OF ENTERPRISE UNDERGOING EQUITIZATION

Section 1. CONDUCTING VALUATION OF ENTERPRISE

Article 22. Consultancy on valuation of enterprise

1. If an enterprise undergoing equitization has total asset value in its books of account of thirty (30) billion Vietnamese dong or more or has a value of State owned capital in its books of account of ten (10) billion Vietnamese dong or more, or has an advantageous geographical position, it must hire valuation consultants such as an auditing company, a securities company, a price evaluation institution or a domestic or foreign investment bank with the valuation function (hereinafter all referred to as a valuer) to conduct a valuation of the enterprise.

2. It shall not be compulsory for an enterprise undergoing equitization not in the category stipulated in clause 1 of this article to hire a valuer to conduct a valuation of such enterprise; if an enterprise does not hire a valuer then it shall be permitted to conduct its own valuation and shall notify the result to the body authorized to make the decision valuing the enterprise.

3. The body making the equitization decision shall select a valuer from the list announced by the Ministry of Finance. If two or more valuers register to participate in providing valuation consultancy services, tendering shall be held in accordance with current regulations to select one of them.

4. The valuer shall be permitted to select appropriate methods of valuing an enterprise in order to make the valuation, ensuring the principles stipulated in this Decree, and must complete on time all undertakings in the signed contract. The enterprise undergoing equitization shall be responsible to provide complete and truthful information relating to such enterprise for the valuer to use during the valuation process.

The valuer shall be liable for the results of valuation of the enterprise. In a case in which such results do not comply with State regulations, the body making the equitization decision may refuse to pay fees for such services, and if such results cause loss and damage to the State then the valuer must pay compensation and shall be excluded from the list of organizations which satisfy all the conditions for participating in valuations.

5. Domestic and foreign valuers wishing to participate in providing services of valuations of enterprises undergoing equitization must satisfy the criteria stipulated by the Ministry of Finance.

Article 23. Methods of valuation of enterprise

Methods of valuation of an enterprise shall comprise the asset method, the discounted cash flow method, and other methods.

The value of an enterprise as determined and announced shall not be lower than the value of such enterprise determined by using the asset method as regulated in Section 2 of this Chapter.

Article 24. Announcement of the value of the enterprise

1. Based on the valuation file prepared by the valuer (or by the enterprise itself), the Steering Committee for Equitization shall be responsible to examine the order, procedures and compliance with the law on valuation of enterprises and make a submission to the body authorized to make the decision valuing the enterprise to make its decision.

2. The body authorized to make the decision valuing the enterprise shall be responsible to consider the matter, make a decision and announce the value of the enterprise within ten (10) days from receipt of a complete file.

Article 25 Use of results of valuation of enterprise

The results of a valuation of an enterprise announced by the authorized body shall be the basis for fixing the scale of charter capital, the structure of the initial share issue, and the commencement price for holding the auction to sell shares.

Article 26. Adjustment of value of enterprise

1. The enterprise undergoing equitization shall adjust its announced value in the following cases:

(a) Fluctuations in the value of assets of the enterprise due to objective reasons (natural calamity or enemy destruction, change of State policy or other reasons of force majeure);

(b)The enterprise has still not been equitized twelve (12) months after the date of the valuation.

2.The provisions in clause 1 of this article shall only apply when an enterprise undergoing equitization has not yet conducted the share sale.

3. The body making the equitization decision shall be responsible to consider and make a decision on adjustment of the value of the enterprise undergoing equitization and to re-announce it. The decision adjusting the value of the enterprise shall provide the basis for preparing the equitization plan.

Section 2. VALUATION OF ENTERPRISE BY ASSET METHOD

Article 27. Value of enterprise undergoing equitization in accordance with asset method

1. The actual value of an enterprise undergoing equitization shall be the total value of all its existing assets as at the time of equitization, including the profitability of the enterprise as accepted by both the purchaser and the seller of shareholding.

The actual value of the State owned capital portion in an enterprise undergoing equitization shall be its actual value less debts payable, less the balance in the Reward and Welfare Funds, and less the balance (if any) of professional funding sources.

2. In the case of equitization of an entire group or State corporation, the actual value of the State owned capital portion shall be the actual value of the State owned capital fixed in such group or State corporation.

3. In the case of equitization of a parent company in a parent subsidiary company group, the value of the State owned capital shall be the actual value of the State owned capital in the parent company.

4. When the valuation of an enterprise is performed in accordance with the asset method, financial and credit institutions shall be permitted to use the results of audited financial statements in order to value assets in cash and liabilities; however, these institutions must conduct an inventory and assessment of fixed assets, long-term investments and the value of land use rights in accordance with State regulations.

Article 28. Items which shall not be included in the value of an enterprise for equitization purposes:

1. Value of the assets stipulated in clauses 1, 2 and 3 of article 14 of this Decree.

2. Debts receivable but which the enterprise does not have the ability to collect.

3. Expenses of unfinished capital construction works in abeyance prior to the time of valuation of the enterprise pursuant to a decision of the authorized body.

4. Long-term investments in other enterprises stipulated in clause 2(a) of article 18 of this Decree.

5. The body authorized to make the decision valuing the enterprise shall consider and make a decision on excluding the items stipulated in clauses 1, 2, 3 and 4 of this article from the value of the enterprise for equitization purposes, and shall be liable for its decision.

Article 29. Bases for determining actual value of enterprise:

1. Data from the books of account of the enterprise at the time of its valuation.

2. Data from the inventory, classification and assessment of quality of assets of the enterprise at the time of its valuation.

3. Market value of assets at the time of holding the valuation.

4. Value of land use rights assigned or leased, and the value of business advantages of the enterprise.

Article 30. Value of land use rights

1. With respect to areas of land which the enterprise undergoing equitization is currently using as land for construction of its head office, transaction office or production and business establishment, or land for the purposes of agriculture, forestry, aquaculture and salt mining (including land which has been allocated by the State with or without collection of land use fees), the enterprise undergoing equitization shall prepare a land use plan and submit it to the authorized body for approval. The enterprise shall be entitled to the form of land lease or land allocation in accordance with the Law on Land.

If land was allocated to the enterprise but it now selects the form of land lease, it must complete procedures for changing to the form of land lease and send [the results] to the body making the equitization decision and to the local land and housing authority before it officially converts into a shareholding company.

2. If land was allocated to the enterprise undergoing equitization (including any area of land allocated by the State to the enterprise for construction of houses for sale, lease, hotel business, commercial services business, or for construction of infrastructure for assignment or lease), the value of land use rights shall be included in the value of the enterprise in accordance with the land price regulated and announced by the people's committee of the province and city under central authority where the land is situated.

3. If the enterprise undergoing equitization selects the form of land lease:

(a) If the enterprise pays annual rent, such rent shall not be included in the value of the enterprise;

(b) If the enterprise pays rent once for the whole land lease term, such rent shall be included in the value of the enterprise at a price close to the market price at the time of valuation as regulated and announced by the relevant people's committee of the province and city under central authority.

4. If the land price is used to set the value of the land use right and the rent is not close to the actual market price for assigning land use rights in normal market conditions at the time of equitization, then the people's committee of the province or city under central authority shall make a decision on an appropriate specific land price.

Within thirty (30) days from the date of sending a complete file, if a written document on the land price has not been received from the people's committee, then the body authorized to make the decision valuing the enterprise shall be entitled to include the value of the land use right and the rent value in the value of the enterprise in accordance with the equitization plan as proposed, but such values proposed by the enterprise must not be lower than values in accordance with the land price announced and reported to the people's committee of the province and city under central authority.

5. People's committee of provinces and cities under central authority shall be responsible to instruct functional bodies to guide enterprises undergoing equitization to conduct all procedures for issuance of land use rights certificates or for signing land lease contracts in accordance with the current law on land, prior to official conversion to shareholding companies.

Article 31. Value of business advantages of the enterprise

1. The value of business advantages of the enterprise undergoing equitization shall comprise the value of advantages of its geographical position, the value of trade names, and its potential for development.

2. The value of business advantages of the enterprise undergoing equitization shall be considered and decided by the body making the equitization decision, but must not be lower than the value of business advantages determined in accordance with guidelines of the Ministry of Finance.

Article 32. Determining value of long-term investment capital of the enterprise undergoing equitization in other enterprises

1. The value of the long-term investment capital of an enterprise undergoing equitization in other enterprises shall be determined on the following bases:

(a) Investment capital ratio of the enterprise undergoing equitization over the charter capital or total actual capital contribution in other enterprises;

(b) Value of the capital of the owner in other enterprises recorded in the audited financial statements. If the financial statements have not yet been audited, the basis shall be the value of the capital of the owner recorded in the most recent financial statements of such enterprise;

(c) In a case in which capital investment is made in a foreign currency, it must be converted into Vietnamese dong at the average trading exchange rate on the inter-bank foreign exchange market as announced by the State Bank at the date of valuation;

(d) If the value of long-term investment capital of the enterprise undergoing equitization in other enterprises is lower than the value recorded in the books of account, it shall be determined in accordance with the value recorded in the books of account of the enterprise undergoing equitization.

2. The value of the capital contribution of the enterprise undergoing equitization in shareholding companies listed on the securities market shall be determined on the basis of the share trading price on the securities market at the time of valuation of the enterprise.

Section 3. VALUATION OF ENTERPRISE BY DISCOUNTED CASH FLOW METHOD

Article 33. Valuation of enterprise to be equitized in accordance with discounted cash flow method

1. The actual value of the State owned capital portion in an enterprise shall be determined in accordance with the discounted cash flow method on the basis of profitability of the enterprise in the future.

In the case of determination of the value of the whole of a corporation in accordance with this method, the profitability of the corporation shall be determined on the basis of profit earned by the State corporation in accordance with regulations on management of finances of State corporations.

If the enterprise invests capital in other enterprises, profit derived from capital investment in such other enterprises shall also be a basis for determination of the value of the enterprise.

2. The actual value of an enterprise shall comprise the actual value of the State owned capital portion, debts payable, balance in the Welfare and Reward Funds and the balance of professional funding sources (if any).

Where an enterprise selects the form of land allocation [or] land lease with rent payment once [for the whole land lease term], the value of land use rights and the value of rent must be calculated and added to the value of the enterprise in accordance with article 30 of this Decree.

Article 34. Bases for determination of the value of an enterprise in accordance with the discounted cash flow method:

1. Financial statements of the enterprise in the last five consecutive years prior to the time of valuation of the enterprise.

2. Plans for manufacturing or trading activities of the enterprise for the three to five years after conversion into a shareholding company.

3. The rate of interest on Government bonds with a term of five years at the most recent time prior to conducting valuation of the enterprise and the cash flow discount co-efficient of the enterprise to be valued.