Chương III Nghị định 87/2015/NĐ-CP: Giám sát tài chính , đánh giá hiệu quả hoạt động và xếp loại đối với doanh nghiệp nhà nước

Chapter III

FINANCIAL SUPERVISION, PERFORMANCE ASSESSMENT AND RATING OF STATE ENTERPRISES

Section 1. FINANCIAL SUPERVISION

Article 8. Supervisory body

1. The representative agency:

a) The specialize Ministry shall chair and coordinate with the Ministry of Finance to carry out the financial supervision and performance evaluation of production and business activities of enterprises which are parent companies, single-member limited liability companies established under the specialized Ministry or assigned to be managed under its authority;

b) The People’s Committee shall chair and coordinate with the Ministry of Finance to carry out the financial supervision and performance evaluation of production and business activities of enterprises which are parent companies, single-member limited liability companies established under its decision.

2. The financial institution:

a) The Ministry of Finance in collaboration with the representative agency shall carry out the financial supervision over parent companies, single-member limited liability companies established by the specialize Ministry or assigned to be managed under its authority; compile an aggregate report on results of financial supervision carried out by the representative agency, the Board of Members of an economic groups and state-owned incorporations for submission to the Government;

b) The Department of Finance in cities or provinces shall assist the provincial People’s Committee in the financial supervision and performance evaluation of production and business activities of enterprises and compile an aggregate report on results of financial supervision over enterprises established under the decision of the provincial People’s Committee.

Article 9. Supervisory contents

1. Supervise capital conservation and development.

2. Supervise utilization and management of state-owned capital and assets invested in enterprises according to the following issues:

a) State capital investment in investment projects, including mobilized capital, progress of project execution and invested capital disbursement;

b) Outward investment activities, including contents regarding the financial supervision over subsidiary companies, associate companies through the investment portfolio of parent companies in compliance with regulations stated in Section 2 Chapter III hereof; supervision of foreign investment activities of enterprises in compliance with regulations laid down in Section 3 Chapter III hereof;

c) The current state of mobilization of capital and use of mobilized capital, and bond issue;

d) The current state of asset management, debt management at enterprises, the enterprise’s solvency and debt-to-equity ratio;

dd) The current state of currency flows in enterprises.

3. Supervise an enterprise's operating results.

a) The implementation of the business plan to produce, perform the task of supplying products and services according to the State’s public order or designated plan;

b) Operating results: revenue, profit, return on equity, return on asset;

c) Fulfillment of obligations to the state budget;

d) Profit distribution and setting aside and utilization of funds.

4. Supervise the compliance with laws on investment, management and utilization of state capital invested in enterprises; issue and implement regulations on financial management in enterprises.

5. Supervise the restructuring of state capital invested in enterprises, the restructuring of enterprise’s capital invested in subsidiary companies and associate companies.

6. Supervise the implementation of pay, remuneration, bonus and responsibility allowance schemes and exercise of other rights under an enterprise’s commitment to employees, managers, comptrollers and representative persons of capital of such enterprise in accordance with the Labor Code. 

7. The Ministry of Finance shall provide for forms and templates of supervisory contents stated in Clause 1, 2, 3, 4 and 5 of this Article.

Article 10. Bases for financial supervision

1. Applicable legal regulations on corporate financial management.

2. The charter of organizational structure and operations as well as financial rules and regulations in enterprises.

3. Annual and 5-year business and development investment plan of an enterprise, and supervisory objectives set over periods of time by the representative agency in each enterprise.

4. Annual financial statement of an enterprise which is subject to independent audit and is ratified by the Board of Members; half-year financial statement, quarterly financial statement, periodic professional report and other ad-hoc reports as requested by the representative agency or competent authorities.

5. The result of inspection, examination and audit in enterprises carried out by competent authorities and publicly made known in accordance with regulations or sent in a written form to the representative agency.

6. Relevant information and materials stipulated by laws.

Article 11. Supervisory method

1. Financial supervision shall be carried out by employing the method of direct supervision, indirect supervision, pre-supervision, in-process supervision, post-supervision with particular attention paid to the pre-supervision and post-supervision practices in order to promptly find out financial risks and restrictions of financial management as well as issue alerts or suggest solutions. 

2. Inspection and examination activities shall be performed in a periodic or spontaneous manner in compliance with laws on inspection and examination.

Article 12. Responsibility for supervision

1. Responsibilities of the representative agency:

a) Develop and promulgate regulations on financial supervision and business performance evaluation (which specifies responsibilities and coordination mechanisms, internal reporting in the representative agency, and between the representative agency and involved parties) within six (06) months from the date of this Decree’s entry into force;

b) Assign a unit to act as the focal point of the implementation of financial supervision and business performance assessment;

c) Develop an IT system to collect information directly from enterprises;

d) Identify specific financial supervision criteria (if any) for each enterprise in each period in accordance with the business and financial situation of such enterprise;

dd) Set up the plan for the financial supervision (including the plan for financial inspection and examination) for enterprises. The financial supervision plan must clearly define the supervisory objectives, content, object, scope for specific enterprises. The financial supervision plan must be subject to opinions of financial institutions, relevant Ministries, industrial departments, Government Inspectorate and the State Audit given before December 31 of the previous year in order to make it completed, approved and publicly made known before every January 21; 

e) Set time limit for the representative agency’s submission of reports on the enterprise’s financial situation with assurance that the representative agency shall have enough time to synthesize and prepare half-year reports on financial supervision for submission to the Ministry of Finance before August 31 of the reporting year and the annual financial supervision report for submission to the Ministry of Finance before May 31 of the following year;

g) Collect and manage financial information for each enterprise in a timely, adequate and continuous manner;

h) When discovering the financial situation, the financial management of an enterprise exposed to any risk, issue timely alerts to such enterprise. Direct enterprises to have timely solutions to preventing and mitigating the risks and weaknesses; propose the measures to handle violations regarding the financial management of an enterprise; send reports to the Prime Minister and inform the same-level financial institution of violations against the provisions of the law on the corporate finance;

i) Based on the results of financial supervision and financial management regulations, enterprises and the representative agency shall make the financial supervision report in specific enterprises. Where there are signs of financial insecurity as stated in Article 24 of this Decree, the representative agency shall write their assessment comment such as "enterprise faced with the financial insecurity", and decide whether it is necessary for them to implement regulations on special financial supervision as prescribed in Section 4 Chapter III hereof;

k) Prepare reports on the result of financial supervision on 6-month or annual basis for submission to the Ministry of Finance together with financial supervision reports made by each enterprise. 6-month reports must be sent before August 31 of the reporting year. Annual reports must be sent before May 31 of the following year. The representative agency shall be responsible for the fidelity and accuracy of the results of financial supervision in enterprises established under its decision or assigned to be managed under its authority;

l) Organize the implementation of the guidance provided by the Government, the Prime Minister and the recommendations offered by the financial institutions, inspection, examination and audit bodies on the handling of defaults or violations as well as of measures to intensify the financial supervision in enterprises. Take disciplinary actions against managers who are public servants or public employees in the event of failure to follow reporting procedures in accordance with laws and comply with instructions or directions in the supervision report prepared by the representative agency or the Ministry of Finance.

Where any financial statement has signs of lack of information or inaccuracy, the representative agency are entitled to require enterprises to hire independent accounting and audit firms that meet the conditions of professional conduct to review the financial data of enterprises to provide a basis for supervisory evaluation and conclusion.

2. Responsibilities of the Ministry of Finance:

a) Cooperate with the representative agency in establishing and implementing the plan for supervision in the enterprise; thematic supervision or supervision requested by the Government and the Prime Minister;

b) Develop appropriate information systems to collect, store and process the information and financial supervision reports;

c) Based on the report on the result of financial supervision conducted by the representative agency and report on the result of thematic supervision regarding corporate financial management (prepared by the inspection agency, the State Audit or the financial institution), send an aggregate report to the Government and the Prime Minister on six -month and annual basis on the management and use of state capital invested in enterprises, performance and financial state of enterprises. 6-month reports must be sent before September 30 of the reporting year. Annual reports must be sent before July 31 of the following year;

d) Alert any enterprise that has signs of financial insecurity and bear responsibility for response to recommendations and requests of enterprises;

dd) Discuss and clarify grounds for, and comment on evaluation, alerts or warnings, unless otherwise recommended by enterprises and the representative agency.  If there still exists a discrepancy between the representative agency and enterprises, the Ministry of Finance shall synthesize information to make an aggregate report to the Government for consideration and decision;

e) Request the Prime Minister to impose stipulated sanctions against responsible persons of the representative agency and managers of an enterprise who have failed to comply with reporting regime, and abide by given recommendations and directions of the representative agency and the Ministry of Finance.

3. Responsibilities of an enterprise:

a) Develop and issue management process that assists in the financial management and assessment of production and business activities of enterprises, including budget planning and forecasting process, accounting procedures, formulation of the consolidated financial statements, processes for managing financial risks, production and business plans, financial supervision regulations and performance evaluation in subsidiary companies and associate companies;

b) Introduce regulations on the assignment of tasks and responsibilities of the departments; mechanism for cooperation between departments, especially departments with supervisory functions and internal control department; organize financial supervision activities in enterprises. The Board of Members (the enterprise’s Chairperson) shall use the organizational mechanism for performing supervisory tasks.  Enterprises must report the results of internal financial supervision tasks on an annual basis as requested by the representative agency (if any);

c) Develop information technology systems supporting the operation of the internal control department in particular and enterprise in general with assurance that information about the supervisory indicators of corporate finance is collected;

d) Prepare and submit reports to serve the financial supervision purpose as prescribed by the financial institution and the representative agency under the provisions of this Decree;

dd) Have the rights to hire organizations providing financial consultancy services to create specific financial supervision indicators (if any), and send reports to the representative agency for consideration and approval as the basis for implementation;

e) Bear responsibility to hire independent accounting and audit firms as required by the representations representative to revise the financial data provided by enterprises from which costs incurred will be accounted for as expenses of enterprises;

g) Develop and implement immediate measures to prevent and mitigate the risks of unsafe corporate finance, risks incurred during the financial management process if there is any alert issued by the representative agency and financial institution;

h) Fully and promptly implement the direction and recommendations of the representative agency and financial institution in the supervision report. In case there is any discrepancy that may arise, within 15 working days of receipt of directions or recommendations, enterprises must send a report to the representative agency and financial institution. When obtaining final conclusions from the representative agency and financial institution, enterprises shall be responsible for adhering to these conclusions.

Section 2. FINANCIAL SUPERVISION IN SUBSIDIARY COMPANIES AND ASSOCIATE COMPANIES

Article 13. Supervisory body

1. Parent companies shall carry out financial supervision in subsidiary companies and associate companies.

2. The representative agency shall preside over and cooperate with the financial institution in indirect supervision in subsidiary companies and important associate companies through their parent companies.

Article 14. Entities subjected to supervision

1. Entities subjected to parent company’s supervision under the provisions of Clause 1 Article 13 hereof shall include all of subsidiary companies or associate companies.

Entities subjected to supervision carried out by the representative agency and financial institution in accordance with regulations laid down in Clause 2 Article 13 hereof shall include:

a) Subsidiary companies;

b) Important associate companies. The determination of important associate companies shall be selected by the representative agency and parent company according to the following criteria:

- Demonstrate strategic importance (in terms of technology, market or finance) in the development of enterprises;

- Have the capital contributed by the parent company which equals more than 35% of the charter capital;

- Have the permitted amount of charter capital which meets the classification criteria applied to above-group-B projects in accordance with the Law on public investment; 

- Earn proposed profit divided from associate companies which makes up for over 10% of revenue (including revenue generated from sale and provision of services as well as financial operations) of enterprises in the reporting year.

Article 15. Supervisory contents

1. Subsidiary companies

a) Parent companies shall carry out supervision of subsidiary companies on the basis of consulting supervisory contents stipulated in Article 9 hereof;

b) The representative agency shall cooperate with the financial institution and parent company in financial supervision in subsidiary companies under the provisions of Clause 1, 2 and 3 Article 9 hereof.

2. Associate companies

a) Production and business situation: Fluctuation in revenue, profit in comparison with those in the two latest years;

b) Capital investment efficiency: Capital recovery, collection of profit and distributed dividends coming from outward investment activities;

c) Enterprise’s solvency and debt-to-equity ratio;

d) Transfer of invested capital

3. The Ministry of Finance shall decide forms and templates “financial supervision report in subsidiary companies or associate companies" completed by parent companies for submission to the representative agency and financial institution.

4. Parent companies shall be responsible for setting up forms and templates used for carrying out financial supervision in subsidiary companies and associate companies according to the contents stated in Clause 1 and 2 of this Article.

Article 16. Supervisory method

1. Parent companies shall carry out financial supervision in subsidiary companies or associate companies by employing the method of direct supervision, indirect supervision, pre-supervision, in-process supervision, post-supervision with particular attention paid to the indirect supervision practices.

2. The representative agency shall preside over and cooperate with the financial institution in indirect supervision in subsidiary companies and important associate companies.

3. Where any signs of violations against laws on corporate finance have been discovered, the representative agency shall collaborate with the financial institution in considering and deciding direct supervision in parent companies or subsidiary companies of which the charter capital is wholly owned by parent companies. 

Article 17. Responsibility for supervision

1. Responsibilities of the representative agency:

a) Proactively agree with parent companies on the list of subsidiary companies, associate companies that need to be integrated into the plan for financial supervision under the provisions of Point dd Clause 1 Article 12 hereof;

b) Assign parent companies to compile the financial supervision report in subsidiary companies, associate companies in the financial supervision plan;

c) Collect the periodic financial supervision reports of parent companies in subsidiary companies, associate companies in the financial supervision plan;

d) Analyze production and business conditions and financial risks faced by subsidiary companies or associate companies;

dd) Where there is any sign of risk to operating results and effectiveness in capital investment, it is obliged to issue alerts and request parent companies to clarify reasons for this in the financial supervision report in subsidiary companies or associate companies in the latest period.

2. Responsibilities of the financial institution:

a) Cooperate with the representative agency in implementation of the plan for supervision in subsidiary companies and important associate companies;

b) Analyze the financial risks of subsidiary, associate companies to provide warnings and recommendations to the representative agency and parent company.

3. Responsibilities of enterprises: Comply with regulations laid down in Clause 3 Article 12 hereof and the following regulations:

a) Proactively develop indicators of financial supervision, the effectiveness of capital investments which conform to the characteristics and operation state of specific subsidiary and associate companies;

b) Set up the plan for financial supervision in subsidiary, associate companies, and ensure the collection and timely processing of information; agree on the list of subsidiary, important associate companies subjected to supervision conducted by the representative agency;

c) Prepare the 6-month and annual financial supervision report of subsidiary companies and associate companies for submission to the representative agency and the same-level financial institution along with other reports stipulated in Point d Clause 3 Article 12 hereof.

Where the production and business results and effectiveness in capital investment in subsidiary companies and associate companies have not achieved planned objectives set out at the beginning of the reporting period, the parent company must explain and propose measures to correct or deal with each of its subsidiary, associate companies in the financial supervision of these subsidiary, associate companies for submission to the representative agency;

d) Where there is any alert of the representative agency ant the financial institution to financial risks faced by subsidiary companies, associate companies, parent companies are required to formulate and take controlling and remedial measures in an immediate manner.

Section 3. SUPERVISION OF ENTERPRISE’S FOREIGN INVESTED CAPITAL

Article 18. Supervisory body

1. Parent companies shall supervise foreign investment activities of parent companies, subsidiary companies or companies to which capital is contributed (established before July 1, 2010).

2. The representative agency shall preside over and cooperate with the financial institution in supervision of foreign investment projects financed by capital of state enterprises, subsidiary companies of state enterprises through parent companies.

Article 19. Entities subjected to supervision

They are all of foreign investment projects of enterprises, including projects of parent companies, subsidiary companies and those financed by both parent companies and subsidiary companies.

Article 20. Supervisory contents

1. Management and use of enterprise’s foreign invested capital:

a) The progress of project execution in comparison with planned project schedule;

b) Foreign investment activities: investment type, structure of capital invested in projects and fluctuation in investment outlay (if any);

c) Mobilization of capital, management of assets and debts incurred in projects in overseas countries, including loan guarantees and financing in other forms provided by or  enterprises that belong to the parent – subsidiary company.

2. Operating results of projects: revenue, profit, return on equity, return on asset;

3. Capital recovery (including the equity and financing in other forms) and fulfillment of obligations to the state budget: Vietnamese investor’s distributed profits; profits transmitted back to the country and profits used for other purposes.

4. Risks faced at project sites.

5. Issuance and implementation of regulations on operation, management and use of capital and assets of enterprises in overseas countries.

6. The Ministry of Finance shall provide for forms and templates of supervisory contents stated in this Article.

Article 21. Bases for supervision

1. Legislation on foreign investment activities, and legislation on use and management of state capital invested in production and business activities of enterprises.

2. 6-month and annual financial statements of overseas projects.

3. Results of inspection, examination and audit at project sites conducted competent authorities (if any).

4. Rules and regulations on operation, management and use of capital and assets of enterprises in overseas countries.

5. Regulations on economic and technical norms of the industry.

6. Investment report of projects approved by competent authorities.

Article 22. Supervisory method

1. Parent companies shall supervise foreign investments by employing the method of direct supervision, indirect supervision, pre-supervision, in-process supervision, post-supervision with particular attention paid to the indirect supervision practices.

2. The representative agency shall preside over and cooperate with the financial institution in supervision of enterprise’s foreign investment activities with particular attention paid to pre-supervision and indirect supervision practices.

3. Where the representative agency or the financial institution discovers that enterprises make false reports and commit violations during the process of use and management of state capital invested in enterprises relating to foreign investment activities, or foreign investment projects have signs of financial insecurity, the representative agency should collaborate with the financial institution to decide on direct supervision at parent companies or subsidiary companies of which the charter capital is wholly held by parent companies, both of which are involved in foreign investment activities.

Article 23. Responsibility for supervision

1. Responsibilities of the representative agency:

a) Gather periodic financial supervision reports of enterprises on foreign investment projects;

b) Analyze production and business operations as well as financial status of foreign investment projects. Where any signs of risks have been discovered, it must promptly report to parent companies and concurrently to the financial institution for consideration or cooperation in carrying out direct supervision at parent companies or subsidiary companies of which the charter capital is wholly held by parent companies;

c) The representative agency shall be responsible for considering and cooperating with the financial institution in implementation of necessary measures to eliminate difficulties or discrepancies that may arise from foreign investment projects; reporting to the Prime Minister in case the issue falls outside of its competency in accordance with laws.

2. Responsibilities of the financial institution:

a) Cooperate with the representative agency in supervision of foreign investment projects of enterprises;

b) Based on the report of enterprises and the representative agency, analyze production and business operations as well as risks of foreign investment projects. Where signs of violations against legal regulations on corporate finance are found or projects are exposed to potential risks, it must issue alerts to the representative agency.

3. Responsibilities of an enterprise:

a) Formulate rules and regulations on operation, management and use of capital and assets of enterprises in overseas countries;

b) Set up criteria for supervision of production and business activities as well as effectiveness in capital investment in foreign investment projects;

c) Prepare the plan for supervision of financial state and capital investment effectiveness at foreign investment projects;

d) Prepare the 6-month and annual financial supervision report and report on foreign investment effectiveness on 6-month and annual basis for submission to the representative agency and the financial institution. Where operating results and effectiveness in capital investment in projects has not met planned objectives, enterprises must give explanations and propose measures applied to specific projects.  Time limit for submission of reports shall be governed under regulations laid down by the representative agency;

dd) In the course of execution of foreign investment projects, where there is any issue that can cause serious harm to investment and operating activities (including, political, legal, market and financial risks), enterprises should send an accurate and timely report or measure proposal to the representative agency and the financial institution.

Section 4. SPECIAL FINANCIAL SUPERVISION

Article 24. Signs of financial insecurity

1. Signs of financial insecurity shall include:

a) As for enterprises undergoing losses permitted according to the plan: incur losses in the reporting year which are greater than 30% of the permitted losses approved by competent authorities.

b) As for enterprises which have passed the phase of permitted losses according to the plan:

- Incur losses in the reporting year which are more than 30% of the owner’s invested capital, or accrued losses which are greater than 50% of the owner’s invested capital;

- Have debt-to-equity ratio which exceeds the safe standard in accordance with laws on use and management of state capital invested in the enterprise’s production and business activities and regulations set out by the representative agency (if any);

- Have debt coverage ratio which is less than 0.5.

2. Signs of financial insecurity that the representative agency should also consider in the process of identifying financial insecurity signs shall include:

a) As for enterprises undergoing losses permitted according to the plan: incur actual losses which are greater than those permitted according to the plan in 2 consecutive years.

b) As for enterprises which have passed the phase of permitted losses according to the plan:

- Incur losses for more than two consecutive years;

- Generate net income or gross profit which decreases for more than 2 consecutive years;

- Have the low trust factor according to the ranking of credit rating organizations;

- Fail to audit financial statements, or have discontented or rejecting opinions in the audit report, or qualified opinions in the audit report in 2 consecutive years on the same issue which may have substantial impacts on the enterprise’s production and business activities.

3. Signs stipulated in Clause 1, 2 of this Article are considered alerts which may put an enterprise under special financial supervision. When seeing that an enterprise has one of these signs, the representative agency and the same-level financial institution should cooperate in examining signs of financial insecurity, operating results of such enterprise in order to decide whether such enterprise shall be put under special supervision or continue to be subjected to financial supervision under the provisions of Section 1 Chapter III hereof.

Article 25. Decision on special financial supervision

1. When an enterprise is put under special financial supervision, the representative agency shall make its decision on the special financial supervision.  The decision on special financial supervision shall specify the followings:

a) Name of the enterprise subjected to the special financial supervision;

b) Reasons for special financial supervision;

c) Key elements of the special financial supervision.

2. The decision on the special financial supervision shall be made known to the same-level financial institution by the representative agency for collaboration and implementation purposes.

Article 26. Procedures for the representative agency’s dealing with enterprises put under the special financial supervision

1. Cooperate with an enterprise in analyzing and assessing main reasons for the financial insecurity.

2. Cooperate with enterprises in applying measures to deal with financial difficulties. Where such enterprises need to restructure their organizational structure, business and financial activities, the representative agency is obliged to approve the plan for restructuring within less than 30 working days of receipt of that plan.

Corrective and restructuring measures should specify units or individuals bearing responsibility for implementation; specific outcomes; commencement date and propose completion date; sufficient and required conditions for implementation of the plan and demands for assistance within the scope of legal regulations (if any).

The representative agency can hire consultancy service providers to assist it in conducting research and evaluation of such corrective and restructuring measures. Costs incurred from such hiring shall be accounting for as expenses of enterprises.

3. Stipulate reporting frequency, supervisory criteria and information response regime between the representative agency, enterprises and involved parties (when necessary).

4. Supervise enterprise’s implementation of the approved plan.

5. Collaborate with the same-level financial institution on analyzing and assessing the operating result, the financial management and administration of production and business activities in enterprises in order to provide directions for enterprises.

6. Whenever necessary, the representative agency can organize activities to inspect or cooperate with the same-level financial institution to inspect such enterprises in order to determine the accuracy and fidelity of indicators provided in reports; operation and administration of business activities carried out by the enterprise's Executive Board; the work of managing production, business and financial issues as well as other resources in enterprises.

Inspection and examination activities shall be performed in accordance with legislation on inspection and examination. Upon completion of such inspection and examination, conclusions on examining contents should be given and recommendations for the purpose of improving the enterprise’s operating effectiveness should be offered as well.

7. Submit the proposal for dealing with such issues to the Prime Minister in the event that these enterprises have conformed to requirements set out by the representative agency and the financial institution but operating results have yet been improved.

8. Evaluate and decide whether enterprises subjected to special financial supervision have met eligibility requirements for being eliminated from the list of enterprises subjected to the special financial supervision when such enterprises have got full recovery and have no sign of financial insecurity as well as fully comply with supervisory reporting regulations in accordance with regulations laid down in this Decree. The representative agency shall issue the decision on determination of special financial supervision. This decision shall be made known to the same-level financial institution.

9. If enterprises subjected to the special financial supervision, after the permitted duration for application of corrective and remedial measures has expired, fail to restore operating activities, financial status to the state defined in the plan for restructuring of enterprises or remedy plan, they are required to report to competent authorities to transform ownership or make rearrangement in accordance with legal regulations.

Article 27. Responsibilities of the Board of Members (Chairperson), Director General or Director of an enterprise subjected to the special financial supervision

1. Prepare the remedy plan and the plan for organizational restructuring, business and financial operation restructuring for submission to the representative agency within 30 days from the date on which the decision on the special financial supervision was issued.

2. Send a report to the representative agency and the financial institution at the frequency agreed upon with the representative agency on supervisory indicators approved in the remedy plan or the plan for organizational, business and financial operation restructuring in enterprises.

Section 5. PERFORMANCE ASSESSMENT AND ENTERPRISE RATING

Article 28. Criteria for enterprise performance assessment

1. Criteria for enterprise performance assessment shall include:

- Criterion 1. Revenue.

- Criterion 2. Net income and net income-to-equity ratio

- Criterion 3. Overdue debts and capacity to repay debts due.

- Criterion 4. Compliance with laws on investment, management and utilization of state capital invested in enterprises, legislation on taxes and other collections paid to the state budget, and legal regulations on financial reporting regime for the purpose of carrying out the financial supervision.

- Criterion 5. Current state of public products and services.

2. Criteria stipulated in Clause 1 of this Article shall be defined and measured with reference to data provided in audited annual financial statements and periodic statistical reports in accordance with applicable regulations of single-member limited liability companies and parent companies.

Criteria 1, 2, 4 and 5 stipulated in Clause 1 of this Article shall take into consideration and eliminate the impact factors:

- Unexpected events, such as natural disasters, fire, epidemic diseases, wars and other force majeure;

- Investment in manufacturing development according to the planning or proposal approved by competent authorities, which may influence income generated in two first years prior to the year in which projects were brought into operation;

- The state’s price adjustment (applicable to products priced by the state) causing impacts on enterprise's revenue, or obligations to fulfillment of socio-economic objectives under the directions of the Government and the Prime Minister.

3. As for enterprises established and actually operated in a regular and stable manner and mainly providing public products and services, the rating of such enterprises shall be based on criteria 1, 3, 4 and 5 stipulated in Clause 1 of this Article.

4. The assessment of operating results of enterprise’s managers shall be governed under the Government’s regulations and according to the following criteria:

- The level of conformity with objectives assigned by the representative agency in terms of net income and net income-to-equity ratio;

- Enterprise rating results;

- The level of complete implementation of the plan to supply public products or services (applicable to enterprises providing public products and services).

Article 29. Bases for performance assessment and enterprise rating

1. The development investment plan, the production and business plan, and the financial plan on an annual basis;

2. Result of implementation of the 6-month and annual plan;

3. 6-month and annual financial statement;

4. Financial supervision result;

5. Arising issues that may influence the result of implementation of development investment plan, production and business plan and financial plan.

Article 30. Method of performance assessment and enterprise rating

1. Based on criteria for performance assessment as stipulated in Article 28 hereof, the representative agency shall assign indicators for assessment and rating in conformity with specific production and business activities of enterprises. These indicators must be assigned to enterprises in written forms before April 30 of the planning year and shall not be adjusted during the implementation of the plan (except for major force majeure).

Annual production and business and financial plans of enterprises must be based on the strategy and plan of enterprises, development tendency of the industry, changes of legislation and operating results achieved in the previous year, strategic duties or assigned duties in the planning year, and internal and external conditions of enterprises. Annual plans must include specific financial objectives.

2. The assessment of the efficiency and rating of enterprises shall be based on the comparison between plans, objectives and duties assigned by the representative agency, and implementation results.

3. Results of evaluation and rating of enterprises are classified into rank-A, rank-B and rank-C enterprises depending on the level of completion of evaluation criteria assigned by the representative agency to specific enterprises.

a) As for enterprises doing business, based on the results categorized according to criteria 1, 2, 3 and 4 stipulated in Clause 1 Article 28 hereof, enterprises shall be rated as follows:

- Enterprises shall be rated A if there is none of criteria rated C, in which criteria 2 and 4 are rated A;

- Enterprises shall be rated C if criterion 2 is rated C or criterion 2 is rated B and 3 remaining criteria are rated C;

- Enterprises rated B are the rest of enterprises which have not been rated A or C.

b) As for enterprises established and actually operated in a regular and stable manner and mainly providing public products and utilities, the rating of such enterprises shall be based on criteria 1, 3, 4 and 5 stipulated in Clause 1 Article 28 hereof as follows:

- Enterprises shall be rated A if there is none of criteria rated C and criteria 4 and 5 are rated A;

- Enterprises shall be rated C if criterion 5 is rated C or criterion 5 is rated B and 3 remaining criteria are rated C;

- Enterprises rated B are the rest of enterprises which have not been rated A or C.

4. The Ministry of Finance shall provide specific guidance on Method of performance assessment and enterprise rating in accordance with regulations laid down in this Article.

Article 31. Report on performance assessment and enterprise rating

1. Enterprise:

a) Enterprises shall based on criteria for performance assessment stipulated in this Decree and indicators assigned by the representative agency to carry out their own assessment and rating, and prepare and send reports on assessment of rating on an annual basis to relevant bodies stipulated in Point b Clause 1 of this Article to verify and announce enterprise's rating results;

b) Parent companies shall send the report on enterprise assessment and rating to the representative agency and the Ministry of Finance. Single-member limited liability companies established under the decision of the specialized Ministry or the provincial People’s Committee shall send the report on enterprise assessment and rating to the representative agency; 

c) The report on enterprise assessment and rating must be sent within the permitted duration stipulated by the representative agency.

2. The representative agency:

a) Set the time limit for the representative agency’s submission of reports on enterprise assessment and rating with assurance that the representative agency shall have enough time to verify the rating result before every May 31;

b) Publicly disclose the criteria for assessment and rating of enterprises, and concurrently send them to the Ministry of Finance to serve the purpose of cooperation in assessment;

c) Verify performance assessment and enterprise rating reports made by enterprises established on its own or assigned to be managed under its authority;

d) Prepare the report on performance assessment and enterprise rating, and the current state of performance of assigned public tasks of state enterprises and send it to be advised by the Ministry of Finance before May 31 of the following year;

dd) The representative agency shall announce the enterprise rating result before every June 30.

3. The Ministry of Finance:

a) Consult with the representative agency on the enterprise rating within 10 working days of receipt of official dispatches on asking for opinions from the representative agency;

b) Prepare the report on performance assessment and enterprise rating, and the current state of performance of assigned public tasks of state enterprises and report it to the Prime Minister before every July 31.

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