Chương 3 Nghị định 187/2004/NĐ-CP: Xác định giá trị doanh nghiệp cổ phần hoá

Chapter III

VALUATION OF AN ENTERPRISE TO BE EQUITIZED

Section 1. METHODS OF VALUATION OF AN ENTERPRISE

Article 16. When any State owned company undergoes equitization, it shall apply one of the following methods of valuation of the enterprise:

1. The asset method.

2. The discounted currency method.

3. Other methods.

The Ministry of Finance shall provide guidelines on valuation of an enterprise undergoing equitization in accordance with the above methods.

Section 2. VALUATION OF AN ENTERPRISE IN ACCORDANCE WITH THE ASSET METHOD

Article 17. Value of an enterprise undergoing equitization in accordance with the asset method

1. The actual value of an enterprise undergoing equitization shall be the total value of all existing assets of the enterprise 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 portion of State owned capital in an enterprise shall be the actual value of the enterprise minus (-) debts payable, including balances in reward and welfare funds and balance in the professional funding source (if any).

In the case of equitization of the whole of a corporation for which the State made the decision on investment and establishment, the value of the portion of State owned capital in the whole of the corporation undergoing equitization shall be the actual value of the portion of State owned capital in the office of the corporation, in the member companies, and in the professional units belonging to the corporation (if any).

In the case of equitization of the whole of a corporation for which companies made their own [f on] investment and establishment, the value of the portion of State owned capital [in the whole of the corporation] undergoing equitization shall be the actual value of the portion of State owned capital in the parent company.

2. The following items shall not be included in the value of an enterprise undergoing equitization:

(a) Value of the assets stipulated in clauses 1, 2 and 3 of article 10 of this Decree;

(b) Debts receivable but which the enterprise does not have the ability to collect;

(c) Expenses of unfinished capital construction works in abeyance prior to the time of valuation of the enterprise;

(dd) Long-term investments in other enterprises stipulated in clause 2(b) of article 14 of this Decree.

Article 18. Bases for determining actual value of an enterprise

1. Data from books of account of the enterprise at the time of equitization.

2. Data on the inventory, classification and assessment of quality of assets of the enterprise at the time of equitization.

3. Market value of assets at the time of equitization.

Article 19. Value of land use rights and value of business advantages of enterprise

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 and production and business establishment; or land for the purposes of agriculture, forestry, aquaculture and salt production (including land which has been allocated by the State with or without collection of land use fees), then the enterprise undergoing equitization shall be entitled to select the form of land lease or the form of land allocation pursuant to the Law on Land.

(a) If the enterprise undergoing equitization selects the form of land lease then the value of the land use right shall not be included in the value of the enterprise undergoing equitization;

(b) If the enterprise undergoing equitization selects the form of land allocation then the value of the land use right must be included in the value of the enterprise undergoing equitization. The value of a land use right which is included in the value of an enterprise undergoing equitization shall be the price stipulated by the people’s committee of the province or city under central authority, close to the actual market prices of assignment of land use rights and announced annually on 1 January in accordance with regulations of the Government. The order and procedures for land allocation, payment of land use fees, and issuance of certificates of land use right shall be implemented in accordance with the current law on land.

2. With respect to areas of land which the State has allocated to the enterprise for construction of residential housing for sale or lease, or for construction of infrastructure business for assignment or lease, the value of the land use right must be included in the value of the enterprise undergoing equitization. Such value of land use rights shall be determined in accordance with clause 1(b) of this article.

3. Business advantages of an enterprise shall comprise geographical position, the value of trade names, and the potential for development.

Value of business advantages of the enterprise shall be based on the ratio of after-tax profits over State owned capital in the enterprise prior to equitization and the pre-paid interest rate for long term Government bonds at the most recent date prior to the time of valuation of the enterprise.

Article 20. 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 a State owned company in other enterprises shall be determined on the following bases:

(a) Value of the capital of the owner recorded in the most recent audited financial statements of the enterprise in which the State owned company made its investment;

(b) Investment capital ratio of the State owned company prior to equitization in other enterprises;

(c) Where the State owned company made its investment in foreign currency, when determining the investment capital 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.

2. If the value of the long-term investment capital of a State owned company in other enterprises is determined to be lower than the value in the books of account, then the value in the books of account shall be used as the basis for valuation of the enterprise to be equitized.

3. The value of the capital contribution of a State owned company 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 AN ENTERPRISE IN ACCORDANCE WITH THE DISCOUNTED CURRENCY METHOD

Article 21. Value of an enterprise in accordance with the discounted currency method

1. The actual value of the portion of State owned capital in an enterprise undergoing equitization shall be determined by the discounted currency method based on the ability of the enterprise to be profitable in the future.

Where the whole of a State owned company is valued by this method, the ability of the State owned company to be profitable shall be determined on the basis of the profit of the State owned company pursuant to provisions in the financial regulations of [such] State owned company.

Where the State owned company made capital investments in other enterprises, then the basis for valuation of the enterprise to be equitized shall be the profit brought in from such capital investments in other enterprises.

2. The actual value of the enterprise shall comprise the actual value of the portion of State owned capital, debts payable1, cash balances in reward and welfare funds and balance in the professional funding source (if any).

If the enterprise selects the form of land allocation then the value of the land use right must also be included in the value of the enterprise undergoing equitization in accordance with clause 1 of article 19 of this Decree.

Article 22. Bases for determination

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

2. Plan for production and business operations of the enterprise for from three to five years after conversion to a shareholding company.

3. Interest rate for long term Government bonds at the most recent date prior to the time of valuation of the enterprise and the discounted currency indicator of the enterprise being valued.

Section 4. HOLDING A VALUATION OF AN ENTERPRISE

Article 23. Methods of holding a valuation of an enterprise undergoing equitization

1. If an enterprise undergoing equitization has total asset value in its books of account of thirty (30) billion Vietnamese dong or more then valuation of the enterprise shall be conducted by an organization specializing in valuations such as an auditing company, a securities company, a price evaluation organization or an investment bank, either domestic or foreign, with the capacity to make the valuation (hereinafter referred to as a valuation organization).

The agency authorized to make the decision valuing the enterprise undergoing equitization shall select a valuation organization from the list announced by the Ministry of Finance.

If a foreign valuation organization not yet operating in Vietnam is selected, it must be approved by the Ministry of Finance.

When the valuation organization holds a valuation of an enterprise undergoing equitization, it must comply with current regulations and complete the valuation within the time schedule stipulated in the signed contract, and the valuation organization shall be liable for the accuracy and legality of the results of the valuation.

2. If an enterprise undergoing equitization has total asset value in its books of account of less than thirty (30) billion Vietnamese dong then it shall not be absolutely necessary to hire a valuation organization to value such enterprise, and in such a case the enterprise shall be permitted to conduct its own valuation and shall notify the result to the agency authorized to make the decision valuing the enterprise.

3. The file giving the valuation of the enterprise undergoing equitization must be forwarded to the Ministry of Finance and to the agency authorized to make the decision valuing the enterprise. The agency authorized to make the decision valuing the enterprise shall check the file prior to issuing its decision and announcing the valuation of the enterprise.

Article 24. Use of results of valuation of enterprise

The results of a valuation of an enterprise carried out in accordance with the provisions of this Decree shall be the basis for fixing the scale of charter capital, the structure of shares for the initial issue, and a price as the starting point for holding an auction to sell shares.

Article 25. Adjustment of value of an enterprise undergoing equitization

Up until the time when an enterprise officially converts into a shareholding company, the agency authorized to make the decision valuing the enterprise shall be responsible to inspect and deal with any financial issues arising between the time of the valuation and the time when the business registration certificate is issued to the shareholding company, in order to adjust the value of the portion of State owned capital in the enterprise.

The difference between the actual value of the portion of State owned capital in the enterprise at the time when the enterprise converts into a shareholding company and the actual value of the portion of State owned capital in the enterprise at the time of the valuation shall be dealt with as follows:

1. Where the difference is an increase:

(a) It shall be paid to the State owned corporation or to the independent State owned company when a member of such State owned corporation or a section of such independent State owned company is equitized, and shall be used in accordance with article 35 of this Decree.

(b) It shall be paid to the Assistance Fund for Restructure of Enterprises under the Ministry of Finance when the whole of an independent State owned company or the whole of a State owned corporation is equitized, and shall be used in accordance with article 35 of this Decree.

2. Where the difference is a decrease, the enterprise shall be responsible to report to the agency which made the decision on equitization in order for the latter to check and clarify the reasons, deal with liability to pay compensation for material loss (if such loss was due to subjective reasons), and the remaining difference shall be dealt with as follows:

(a) Money collected from equitization (including any difference in selling prices of shares) shall be used to cover the difference;

(b) If there is insufficient, then there shall be a reduction in the portion of State owned capital in the enterprise and the plan for share sales at incentive rates to employees of the enterprise, and at the same time there shall be an adjustment to the scale and structure of charter capital of the shareholding company;

(c) If after taking the action stipulated in sub-clauses (a) and (b) above there is still insufficient to cover the decrease, then:

- The agency which made the decision on equitization shall consider making a decision on conversion to the form of sale or bankruptcy of the enterprise (where business registration pursuant to the Law on Enterprises has not yet been conducted);

- The board of management shall convene an extraordinary general meeting of shareholders (in a case where business registration pursuant to the Law on Enterprises has already been conducted) in order to vote on:

+ Agreement to inheriting remaining losses so as to continue to operate;

+ Agreement to sell the enterprise on condition that the purchaser inherits debts and losses;

+ Declare bankruptcy and sell assets in order to pay debts.

- In the case of conversion to implementing a sale or bankruptcy, the enterprise shall be responsible to co-ordinate with the relevant authorities to return to all investors the money they paid to purchase shares, prior to paying any other creditors.