Luật doanh nghiệp nhà nước 2003 số 14/2003/QH11

THE NATIONAL ASSEMBLY
——-

SOCIALIST REPUBLIC OF VIET NAM
Independence – Freedom – Happiness
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No: 14/2003/QH11

Hanoi, November 26, 2003

 

LAW

ON STATE ENTERPRISES
(No.14/2003/QH11 of November 26, 2003)

Pursuant to 1992
Constitution of the Socialist Republic of Vietnam, which was amended and
supplemented under Resolution No.51/2001/QH10 of December 25, 2001 of the Xth
National Assembly, the 10th session;
This Law prescribes the State enterprises,

Chapter
I

GENERAL
PROVISIONS

Article
1.- State enterprises

State enterprises are
economic organizations where the State owns the entire charter capital or holds
dominant shares or contributed capital, which are organized in the form of
State companies, joint-stock companies or limited liability companies.

Article
2.- Scope of regulation and subjects of
application

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a) The prescription of
the establishment, reorganization, dissolution, ownership conversion,
organization of management and operation of State companies;

b) Regulation of
relationships between the owner being the State and the representative of the
State’s contributed capital portions at enterprises where the State owns the
entire charter capital or enterprises where the State holds dominant shares or
contributed capital.

2. The subjects of
application of this Law shall include:

a) The State companies;

b) The representatives
of the State’s contributed capital portions at State-run joint-stock companies,
one-member State-run limited liability companies, State-run limited liability
with two or more members;

c) The representatives
of the State’s contributed capital portions at enterprises where the State
holds dominant shares or contributed capital.

For representatives of
the State’s contributed capital portions at enterprises where exists a portion
of State capital, the Government’s regulations shall be complied with;

d) For special State
companies in direct service of defense and/or security, the provisions of this
Law and the Government’s specific regulations shall be complied with.

Article
3.- Term interpretation

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1. State companies are
enterprises where the State owns the entire charter capital, which are set up,
organizationally managed and operationally registered under the provisions of
this Law. The State companies shall be organized in form of independent State
companies, State corporations.

2. The State-run
joint-stock companies are shareholding companies where all shareholders are
State companies or organizations authorized by the State to contribute capital,
which are organized and operate under the provisions of the Enterprise Law.

3. The State-run
one-member limited liability companies are limited liability companies where
the State owns the entire charter capital, which are organizationally managed
and operationally registered under the provisions of the Enterprise Law.

4. The State-run
limited liability companies with two or more members are limited liability
companies where all members are State companies or where some members are State
companies while other members are organizations authorized by the State to
contribute capital, which are organized and operate under the provisions of the
Enterprise Law.

5. Enterprises with
dominant shares or contributed capital of the State are enterprises where the
State’s shares or contributed capital account for more than 50% of the charter
capital and the State holds the dominant powers over such enterprises.

6. Enterprises with a
portion of the State’s capital are enterprises where the State’s contributed
capital portions account for 50% of the charter capital or less.

7. State companies
holding the dominant powers over other enterprises are companies which own the
entire charter capital or have shares or contributed capital accounting for
more than 50% of the charter capital of other enterprises, holding the dominant
powers over such enterprises.

8. The dominant powers
over enterprises mean the powers to decide on operation charters, appointment,
relief from duty, dismissal of key managerial titles, on managerial
organization and other important management decisions of such enterprises.

9. Independent State
companies are State companies which do not belong to the organizational
structure of State corporations.

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11. Legal capital
means the minimum capital amount required for the establishment of enterprises
in a number of production and business lines according to the provisions of law.

12. Public-utility
products and services are products and services essential for the life, economy
and social affairs of the country, population communities of a territorial
region or ensuring defense and security, and the costs of production and
provision thereof under the market mechanism can hardly be covered by
enterprises producing these products or providing such services; hence, the
State shall order, assign plans on, or bid for, the production and/or provision
thereof at prices or charges prescribed by the State.

Article
4.- Application of the Law on State
Enterprises and other relevant laws.

1. State companies
operate under this Law and other relevant laws. In case of disparity between
the provisions of this Law and those of relevant laws on the same issue falling
under the scope of regulation and subjects of application of the relevant laws,
the provisions of such laws shall apply.

2. In cases of
disparity between the provisions of this Law and those of relevant laws on the
rights and obligations of owner being the State over the State companies or the
provisions on the relations between the owner being the State and the persons
authorized to represent the State’s contributed capital, or the disparity
between this Law and the Enterprise Law, the Law on Foreign Investment in Vietnam
or laws corresponding to enterprises with the State capital, the provisions of
this Law shall apply.

Article
5.- Political organizations and
socio-political organizations in the State enterprises

The political
organizations and socio-political organizations in the State enterprises shall
operate within the framework of the Constitution, laws and their own charters
in accordance with the provisions of law.

Chapter
II

ESTABLISHMENT
AND BUSINESS REGISTRATION OF STATE ENTERPRISES

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1. New State
enterprises can be established in the following branches, domains or
geographical areas:

a) Branches and
domains which supply essential products and services for the society;

b) Branches or domains
where high technologies are applied, creating motive forces for fast
development of other branches and domains as well as the entire economy,
requiring big investments;

c) Branches and
domains with high competitive edges;

d) Geographical areas
being under exceptionally difficult socio-economic conditions, where other
economic sectors do not invest in.

2. Branches, domains
and geographical areas defined in Clause 1 of this Article and plannings on
reorganization and development of State companies according to branches,
domains or geographical areas shall be decided and periodically publicized by
the Government.

Article
7.- Proposing the establishment of new
State companies

1. The ministers, the
heads of ministerial-level agencies, the heads of Government-attached agencies,
the presidents of the People’s Committees of the provinces or centrally-run
cities (hereinafter called the provincial-level People’s Committee presidents)
shall be the persons who propose the establishment of new State companies
(hereinafter called the proposers).

2. The proposers must
base on the lists of branches, domains and geographical areas to be considered
for establishment of new companies as prescribed in Article 6 of this Law and
the plannings on reorganization and development of State companies within the
whole national economy, branches, provinces and centrally-run cities, which
have been already approved by the Government according to the provisions at
Point a, Clause 1,
Article 65 of this Law, to elaborate schemes and dossiers for establishment of
new State companies and submit them to the Prime Minister for decision as
provided for in Article 9 of this Law.

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a) The necessity to
set up the companies; lists of products and/or services to be provided by the
companies; the market situation, market demands and prospect for each type of
products, services provided by the companies; the capability to consume the
companies’ products and/or services and the feasibility studies on
competitiveness of the companies’ products and/or services;

b) Locations for the
companies’ headquarters or locations for construction of production and/or
business establishments and the land areas under use;

c) The capability to
provide labor, raw materials, materials, energy and other necessary conditions
for the companies to operate after they are set up;

d) The projected total
investment capital; the initial investment capital sources of the State;
sources and forms of mobilization of the remaining capital amounts; schemes for
repayment of mobilized capital; demands and measures to create working capital
for the companies;

e) The socio-economic
efficiency feasibility study and the compatibility of the establishment of
companies with the plannings, strategies for development of branches, domains
and economic regions;

f) The report on
environmental impact assessment and measures for environmental protection;

g) The projected
organizational and managerial model for the companies and operation duration;

h) For companies which
need to invest in the construction upon their establishment, the establishment
schemes must also include projects on investment in the establishment. The
contents of projects on investment in establishment of new State companies
shall comply with the legislation on investment.

4. The dossiers on
establishment of new State companies shall each include:

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b) The scheme on establishment
of new company prescribed in Clause 3 of this Article;

c) The draft charter
of the company;

d) The written
application for land assignment or land lease;

e) The written
application for investment preferences as prescribed by legislation on investment
promotion (if any).

5. The company’s
charter must at least contain the following contents:

a) The names,
addresses, head-office, telephone numbers, fax numbers, email of the company,
branches, representative offices (if any);

b) Business objectives
and lines;

c) The charter capital;

d) The relationship
between the company and the agency or organization authorized to be
representative of the company’s owner;

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f) The company’s representative
at law;

g) The principles on
use of the company’s profits;

h) Cases of
reorganization, dissolution, ownership conversion and procedures for
liquidation of the company’s assets;

i) The procedures for
amendment, supplementation of the company’s charter;

j) Other regulations
which are decided by the agency or organization authorized to be representative
of the company’s owner but must not contravene law provisions.

Article
8.- Conditions for establishment of new
State companies

The decisions to establish
new State companies must be based on the following conditions:

1. Having valid
dossiers as provided for in Clause 4, Article 7 of this Law;

2. Satisfying all
conditions on capital; charter capital level in conformity with production and
business lines which require legal capital;

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4. The schemes on
establishment of new companies must ensure the feasibility, efficiency,
satisfaction of requirements on advanced technologies prescribed by the State
for branches, domains or geographical areas where new companies can be set up,
the conformity with the State’s strategies and plannings on socio-economic
development, the State’s regulations on environmental protection and other law
provisions.

Article
9.- Competence to decide on the
establishment of new State companies

1. The Prime Minister
shall decide on the establishment of State companies of particular importance,
which dominate key branches and domains and act as core in boosting the
economic growth and make great contributions to the State budget.

2. The ministers, the
heads of ministerial-level agencies, the heads of Government-attached agencies
and the presidents of the provincial-level People’s Committees shall decide on
the establishment of new State companies other than the subjects defined in
Clause 1 of this Article.

3. The persons who
decide on the establishment of new State companies must set up Appraisal
Councils to appraise the schemes on establishment of new State companies. The
scheme-appraising councils are the advisory bodies for the persons who decide
on the company establishment; the establishment deciders bear responsibility
for their decisions to set up new State companies.

4. The decisions to
set up new State companies concurrently serve as the decisions on investment
projects for establishment of State companies. The newly established State
companies are owners of these projects.

5. The appraisal of
investment projects on establishment of State companies and the execution of
investment projects shall comply with the provisions of the legislation on
investment.

6. When deciding on
the establishment of new companies, the establishment deciders must
concurrently proceed with the appointment of the chairman and other members of
the Managing Boards; decide to appoint or sign contracts with directors of the
companies having no Managing Board.

Article
10.- Business registration of State
companies

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1. Within sixty days
as from the date of obtaining the establishment decisions, the companies must
register their business at the business registries according to the provisions
of the Enterprise Law;

2. The State companies
shall have their legal person status as from the dates they are granted
business registration certificates. Only after being granted business
registration certificates can the companies receive investment capital from the
State budget or mobilize capital for investment in construction of enterprises
and business activities; the companies may be engaged in conditional production
and business lines when being granted by competent State bodies permits for
doing business in conditional branches, crafts or meeting all business
conditions as provided for by law;

3. The announcement of
business registration contents, changes in business registration contents, the
supply of information on business registration contents shall comply with the
provisions of the Enterprise Law.

Article
11.- Establishment and business
registration of new State-run joint-stock companies, State-run one-member
limited liability companies, State-run limited liability companies with two or
more members

1. The following
subjects shall be the founding members of new State-run joint-stock companies,
State-run one-member limited liability companies, State-run limited liability
companies with two or more members:

a) Corporations with
investment and establishment decided by the State;

b) Corporations making
investment with, and dealing in, the State capital;

c) State companies
holding dominant powers over other enterprises;

d) Independent
cost-accounting member companies of State corporations;

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f) Economic
organizations entitled to use the State capital for investment in their
business according to law provisions.

2. Founding members
contributing capital to the establishment of new State joint-stock companies,
State-run one-member limited liability companies, State-run limited liability
companies with two or more members outside the branches, domains and
geographical areas prescribed in Article 6 of this Law must have their schemes
on capital contribution to establishment of new companies approved by competent
authorities. Founding members being enterprises set up by decisions of any
authorities shall propose such authorities to approve the capital contribution
schemes. Founding members being member enterprises of corporations shall have
their capital contribution schemes approved by the Managing Boards of the
corporations.

3. The procedures for
business registration of State-run joint-stock companies, State-run one-member
limited liability companies, State-run limited liability companies with two or
more members shall comply with the provisions of the Enterprise Law.

Chapter
III

RIGHTS AND
OBLIGATIONS OF STATE COMPANIES

Article
12.- Capital and assets of State companies

1. The companies’
capital shall include capital invested in the companies by the State, capital
mobilized by the companies themselves and other capital sources as provided for
by law.

2. The State’s capital
invested in the companies shall include State budget capital and accumulated
capital added to the State capital.

3. The land use right
value calculated into capital of the companies according to the provisions of
land legislation. The Government shall guide in detail the determination of
land use right value, methods of calculating and including the land use right
value into the capital according to land use purposes and the particularity of
branches, lines and domains of operation of each type of State companies.

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Article
13.- Rights of State companies over
capital and assets

1. To possess, use the
companies’ capital and assets for business, achievement of legitimate benefits
from capital and assets of the companies.

2. To dispose of the companies’
capital and assets according to the provisions of this Law and other relevant
law provisions.

3. To use and manage
assets being land and/or natural resources, which are assigned or leased by the
State according to the provisions of legislation on land, natural resources.

4. The State shall not
regulate the State’s capital invested in the companies and the capital and
assets of the companies by mode of non-payment, except for cases of deciding to
reorganize the companies or realizing the objectives of providing
public-utility products and/or services.

Article
14.- The State companies’ obligations
towards capital and assets

1. To preserve and
develop the State capital and capital mobilized by the companies themselves, to
take self-responsibility for the debts and other property obligations of the
companies within their assets.

2. The representatives
of owners being the State are responsible for the debts and other property
obligations of the companies within the capital amounts invested in the
companies by the State.

3. To periodically
re-evaluate the companies’ assets according to the Government’s regulations.

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1. To take initiative
in organizing their production and business, to organize their managerial
apparatuses according to business requirements and ensure efficiency in
business.

2. To do business in
production and business lines not banned by law; to expand business scale
according to capability of the companies and demands of domestic and overseas
markets.

3. To look for
domestic and overseas markets, customers and sign contracts.

4. To decide by
themselves the purchase prices and sale prices of products and services, except
for public-utility products and/or services as well as products and/or services
priced by the State, which shall comply with the price levels or brackets set
by the State.

5. To decide on
investment projects according to the provisions of legislation on investment;
to use capital and assets of the companies for joint venture or cooperation
with, or capital contribution to, other enterprises in the country; to hire or
purchase part or whole of other companies.

6. To use capital of
the companies or mobilized capital for investment in the establishment of
State-run one-member limited liability companies; to invest together with other
investors in the establishment of joint-stock companies or limited liability
companies with two or more members.

7. To open branches
and/or representative offices at home and abroad.

8. To formulate and
apply labor and materials norms, wage unit prices and other expenses on the
basis of ensuring the efficiency of companies’ business and the compliance with
law provisions.

9. To recruit, hire,
arrange, employ, train, discipline, sack laborers, to select forms of wage and
bonus payment suitable to business requirements and have other rights as
prescribed by labor legislation.

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Article
16.- Business obligations of State
companies

1. To conduct business
strictly according to the registered production and business lines; ensure the
quality of products and services provided by the companies according to the
registered standards.

2. To renew or
modernize their technologies and managerial modes in order to raise the
efficiency and competitiveness.

3. To ensure the
rights and interests of laborers according to labor legislation, to ensure the
laborers’ rights to participate in the management of companies as provided for
in Section 3,

4. To comply with the
State’s regulations on defense, security, culture, social order and safety,
natural resource and environment protection.

5. To observe the
regimes of book-keeping, audit and financial statements, statistical reports
according to law provisions and at requests of owners being the State.

6. To submit to the
supervision and inspection by owners being the State; to abide by the
inspection decisions of finance bodies and competent State agencies according
to law provisions.

7. To be answerable to
the capital investors for the use of capital for investment in the
establishment of other enterprises.

8. To fulfill other
obligations in business according to law provisions.

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1. To mobilize capital
for business in forms of issuing bonds, credit bills, promissory notes;
borrowing capital of banks, credit institutions and other financial
organizations, of individuals and organizations outside the companies;
borrowing capital of laborers, and other forms of capital mobilization under
the provisions of law.

The mobilization of
capital for business shall comply with the principles of self-responsibility
for debt repayment, assurance of efficiency in the use of mobilized capital and
non-alteration of the form of ownership of the companies.

In cases where
companies mobilize capital for ownership conversion, the provisions in

The
mobilization of capital of foreign individuals and organizations shall comply
with the Government’s regulations on management of foreign loans.

2. To take initiative
in using capital for business activities of the companies; to use and manage
funds of the companies according to law provisions.

3. To decide on
amortization of fixed assets according to the principles that the minimum
amortization level must ensure to cover the tangible wear-out and intangible
depreciation of fixed assets and shall not be lower than the minimum
amortization rates prescribed by the Government.

4. To enjoy allowance
and/or price subsidy regimes or other preferential regimes of the State when
performing the tasks of public-utility, defense, security, natural calamity
prevention and combat or the provision of products and/or services according to
the State’s price policy and failing to offset the production costs of these
products and/or services of the companies.

5. To be entitled to
pay rewards for technical, managerial and/or technological renewal or
innovations; rewards for higher labor productivity; rewards for material and
cost saving. These rewards shall be accounted as business costs on the basis of
ensuring the companies’ business efficiency brought about by such technical,
managerial and/or technological renewal or innovations, higher labor
productivity and/or materials and cost savings.

6. To enjoy investment
and/or reinvestment preference regimes as prescribed by law.

7. To reject and
denounce all requests for the supply of resources, which are not prescribed by
law, of any individuals, agencies or organizations, except for voluntary
contributions for humanitarian and public-utility purposes.

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a) The profits divided
according to the State’s investment capital sources shall be used for
reinvestment to increase the State capital at the companies or to formulate
concentrated funds for investment in other State enterprises in domains which
the State needs to develop or to control according to the Government’s
regulations;

b) The profits divided
according to sources of capital mobilized by the companies themselves shall be
deducted for setting up the development investment funds according to the
Government’s regulations; the remainder shall be channeled into reward funds
and welfare funds by the companies themselves.

Where the companies
have payable due debts, which have not yet been fully repaid, they may raise
wages and make deductions for rewards to the companies’ employees, including
managers, only after they fully repay such due debts.

The distribution of
after-tax profits into development investment funds, reward funds and welfare
funds by State companies operating in the State-monopolized domains, newly set
up State companies shall comply with the Government’s regulations.

Article
18.- Financial obligations of the State
companies

1. To conduct business
with profits, to ensure the ratio of profit to the capital invested by the
State and assigned by the owner’s representatives; to register, declare and pay
tax fully; to fulfill obligations toward the owner and other financial
obligations under the provisions of law.

2. To manage and use
with efficiency the business capital, including capital portions invested in
other companies (if any), natural resources, land and other resources, which
are assigned or leased by the State.

3. To use capital and
other resources for performance of other special tasks when so requested by the
State.

4. To fully comply
with the regimes of management of capital, assets, funds, regimes of accounting
and audit according to law provisions; to be accountable for the honesty and
legality of their financial activities.

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Article
19.- Rights and obligations of State
companies when participating in public-utility activities

Apart from the rights
and obligations of the State companies, which are prescribed in Articles 13,
14, 15, 16, 17 and 18 of this Law, the State companies, when participating in
public-utility activities, shall have the following rights and obligations:

1. To produce and/or
provide public-utility products and/or services on the basis of bidding. For
public-utility activities carried out on orders placed, or under plans
assigned, by the State, the companies are obliged to sell public-utility
products and/or provide public-utility services to the right subjects, at the
prices and charge levels set by the State;

2. To take
responsibility before the State for their public-utility activities; take
responsibility before customers and before law for the public-utility products
and/or services provided by the companies;

3. To be considered
for additional investment corresponding to the assigned public-utility tasks;
to account and have their reasonable expenses for public-utility activities
covered and ensure the laborers’ interests according to the following
principles:

a) For products and/or
services provided by mode of bidding, the companies shall themselves cover the
expenses according to the bid prices;

b) For public-utility
products and/or services, which cannot be implemented by mode of bidding but on
orders placed by the State, the companies may use charges or turnovers from the
provision of products and/or services on the orders placed by the State to
cover up reasonable expenses in service of public-utility activities and ensure
interests for laborers. In cases where the revenues are not enough to make up
for the reasonable expenses, the difference shall be provided by the State
budget and the laborers’ satisfactory interests shall be ensured.

4. To formulate and
apply spending norms, wage unit prices within the bid prices, the cost
estimates according to the orders placed or the plans assigned by the State;

5. To fulfill other
tasks and obligations of the State companies according to the provisions of
this Law;

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a) They shall be
invested by the State with capital for formation of assets in service of the
objectives of providing public-utility products and/or services;

b) When necessary, the
State shall transfer the capital portion and assets in service of the
objectives of providing public-utility products and/or services of the
companies for the achievement of the objectives of providing public-utility
products and/or services in other companies;

c) They are entitled
to transfer, lease, mortgage assets in service of the objectives of providing
public-utility products and/or services, which are under the companies’
management, when so permitted by the persons who decide the establishment of
the companies. The mortgage of land use right value and/or the companies’
assets associated with the rights to use land in service of the objectives of
providing public-utility products and/or services shall comply with the
provisions of the land legislation;

d) They are entitled
to use the assigned resources for organization of additional business
activities when so agreed upon by the persons who decide the establishment of
the companies, but without affecting the achievement of the principal
objectives of providing public-utility products and/or services of the
companies;

e) They shall perform
other tasks and obligations of the companies participating in public-utility
activities according to the provisions of this Law.

The Government shall
prescribe branches and domains with public-utility products and/or services;
guide in detail the mechanism for bidding, order placement, plan assignment,
financial mechanism and accounting for public-utility activities.

Article
20.- Rights and obligations of the State
companies holding dominant powers over other enterprises

Apart from the rights
and obligations of the State companies prescribed in Articles 13, 14, 15, 16,
17, 18 and 19 of this Law, the State companies holding dominant powers over
other enterprises shall also have the rights and obligations prescribed in
Articles 57, 58 and 59 of this Law.

Chapter
IV

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Article
21.- Models of State company-managing
organizations

1. The State companies
are organized and managed after the model of having or having no Managing
Boards. The following State corporations and independent State companies shall
have Managing Boards:

a) Corporations with
investment and establishment decided by the State;

b) Corporation making
investment with, and dealing in, the State capital;

c) Independent State
companies with large capital, holding dominant powers over other enterprises.

2. Based on the
characteristics and sizes of State companies, the persons who decide the
establishment of the companies shall decide on the organizational and
managerial structures of the companies defined in Clause 1 of this Article.

Section
1. STATE COMPANIES HAVING NO MANAGING BOARDS

Article
22.- Managerial organizations of the State
companies having no Managing Board

State companies having
no Managing Boards shall each have a managerial structure comprising the
director, deputy-directors, chief accountant and assisting apparatus.

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1. Directors are the
companies’ administrators and representatives at law and take responsibility
before the persons who appoint them, the persons who sign contracts to hire
them and before law for the performance of assigned tasks and delegated powers.

2. Deputy-directors
shall assist their directors in administering the companies under the
directors’ assignment and authorization, be answerable to the directors and law
for the assigned or authorized tasks.

3. The chief accountants
shall have the tasks to organize the book-keeping work of the companies; assist
the directors in supervising the finance at the companies according to
legislation on finance, accountancy; take responsibility before the directors
and law for their assigned or authorized tasks.

4. The companies’
offices, bureaus, professional boards shall function to advise and assist the
directors, deputy-directors in managing and administering affairs.

Article
24.- Criteria and conditions for selection
of directors

1. Criteria and
conditions for selection of directors

a) Having capability
for business and organization of management of the companies; having university
degree, having profession in the main business domains of the companies; having
at least three years’ experiences in managing and/or administering enterprises
in the main production and business lines of the companies;

b) Having good health,
good moral quality, being honest and not self-seeking; having knowledge about
law and sense of law observance; having permanent residence in Vietnam.

2. The following
subjects shall not be selected for appointment to be, or signing contracts to
act as, directors:

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b) Persons who are
banned from assuming posts of managing or administering enterprises as provided
for by law.

Article
25.- Selection, appointment and dismissal
of, signing and, termination of contracts with, directors, deputy-directors,
chief accountants

1. Persons who decide
on the establishment of companies shall decide on the selection for appointment
and the dismissal of, the signing and termination of contracts with, directors
of State companies; decide on the appointment and dismissal of, the signing and
termination of contracts with, deputy-directors and chief accountants of the
State companies at the proposals of the directors.

2. The procedures for
selection and appointment of, the signing of contracts with directors shall
comply with the Prime Minister’s regulations. Directors shall be appointed or
sign contracts for a duration of not more than five years and may be
re-appointed or renew their contracts.

3. Directors shall be
subject to removal from office or termination of contracts ahead of time in the
following cases:

a) They have let the
companies suffer from losses for two consecutive years or fail to achieve the
ratio of profits to the State’s investment capital for two consecutive years or
fall into the irremediable state of interwoven losses and profits, except for
cases of loss or reduction of ratio of profits to the State’s investment
capital, which have been approved by competent authorities; losses or reduction
of ratio of profit to the State’s investment capital with objective reasons
explained and approved by competent State bodies; investment in expansion of
production, technological renewal;

b) The companies fall
into the state of bankruptcy, but they fail to submit applications for
bankruptcy;

c) They fail to
fulfill the tasks or norms assigned by the persons who have appointed or
selected them or fail to fulfill their contractual obligations;

d) They are dishonest
in performing their tasks and exercising their powers or abuse their positions
and powers to seek profits for themselves or for other persons; untruthfully
report on the financial situation of the companies;

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f) They have lost
their civil act capacity or have restricted civil act capacity.

4. The directors shall
be replaced in the following cases:

a) They apply for
resignation;

b) They are
transferred to, or arranged with, other jobs under decisions.

Article
26.- Tasks and powers of the directors

The directors shall
have the following tasks and powers:

1. To receive and
efficiently use the capital invested by the State and assets, land, natural
resources as well as other resources assigned, lent or leased by the State;

2. To formulate
development strategies and long-term plans of the companies, projects for
investment, joint-ventures as well as schemes on managerial organizations of
the companies for submission to the persons who decide the establishment of the
companies;

3. To decide on
investment projects, contracts on sale of assets valued at up to 30% of the
total remaining assets on the companies’ accounting books or smaller the
percentages prescribed at the companies’ charters; borrowing, lending, renting
or leasing contracts and other economic contracts prescribed by the companies’
charters, but not exceeding the companies’ charter capital;

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5. To promulgate
techno-economic norms, product standards and wage unit prices applicable within
the companies in accordance with the State’s regulations;

6. To submit to the
persons who decide on the establishment of the companies the selection for
appointment or the dismissal of, or the signing or termination of contracts
with, commendation or discipline of deputy directors, chief accountants;

7. To report to the
persons who decide on the establishment of the companies and the finance
agencies on the business and operation results of the companies;

8. To decide the
selection of, signing or termination of contracts with, or appointment,
dismissal, commendation or discipline of section heads and/or deputy-heads as
well as persons holding equivalent titles in the companies, representatives of
the companies’ capital portions contributed at other enterprises; to decide on
wages and allowances for laborers in the companies, including officials under
their appointing competence;

9. To submit to the inspection
and supervisions by competent State bodies according to law provisions;

10. To enjoy the
annual wage regime. The wage and bonus levels shall correspond to efficiency of
the companies’ operation, which are decided by the persons who decide the appointment
or prescribed in the signed contracts. Wages shall be advanced monthly and
settled annually. The annual bonus shall be calculated on the basis of annual
business results of the companies, with a part thereof being paid at the
year-end and the remainder paid after the conclusion of their terms;
particularly, the term-end bonus shall be calculated on the basis of that
year’s results and the growth results of the whole terms;

11. To perform other
tasks and powers, which are prescribed in the companies’ charters.

Article
27.- Obligations and responsibilities of
directors

1. To perform with
honesty and responsibility the delegated powers and assigned tasks for the
interests of the companies and the State; to organize the implementation of law
at the companies.

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3. To compensate for
damage according to law provisions and the companies’ charters if breaching the
companies’ charters, making decisions ultra vires, abusing their positions and
powers, thus causing damage to the companies and the State.

4. When committing one
of the following violations which are, however, not serious enough to be
examined for penal liability, the directors shall not be entitled to bonuses,
wage raising and shall be disciplined according to the seriousness of their
violations:

a) Letting State
companies suffer from losses;

b) Losing the State
capital;

c) Deciding on
inefficient investment projects, failing to recover investment capital;

d) Failing to ensure
wages and other regimes for laborers in the companies according to the
provisions of labor legislation;

e) Letting errors in
capital and asset management, accounting and/or auditing regimes and other
regimes prescribed by the State occur.

5. In case of letting
the companies fall into the state prescribed at Point a, Clause 3, Article 25
of this Law, depending on the seriousness and consequences of their violations,
they shall have their wages lowered and have to pay compensations according to
law provisions.

6. When the companies
fail to fully pay payable due debts and fail to fulfill other due material
obligations,

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b) Directors must not
raise wages for, and deduct profits as bonus payment to, laborers and
managerial officials;

c) They must bear
personal responsibility for the damage caused to creditors by their failure to
implement the regulations at Points a and b of this Clause;

d) They must propose
measures to remedy the companies’ financial difficulties.

7. If their companies
fall into the state of bankruptcy and they fail to submit the application for
bankruptcy, the directors shall have to bear responsibility as provided for by
law.

8. Those State
companies subject to the reorganization, dissolution or ownership conversion
but fail to carry out the procedures for reorganization, dissolution or
ownership conversion, the companies’ directors shall be dismissed or have their
contracts terminated ahead of time.

9. Directors may only
hold managerial titles of limited liability companies, joint-stock companies or
foreign-invested companies when they are nominated by State companies or
competent organizations to be candidates for the managerial titles or
designated to be the companies’ representatives regarding the capital portions
contributed to such enterprises.

Wives or husbands,
fathers, mothers, children, siblings of directors of the companies must not
hold the title of chief accountant, cashier in the same companies. The
companies’ economic, labor and/or civil contracts signed with the directors
must be notified to the persons who appoint or sign contracts to hire the
directors; where the persons who appoint or sign contracts to hire the
directors detect that the contracts aim for self-seeking purposes and are not
yet signed, they are entitled to request the directors not to sign such
contracts; if such contracts were already signed, they shall be considered null
and void, and the directors shall have to pay compensations for the damage
caused to the companies and be handled according to law provisions.

Section
2. STATE COMPANIES HAVING MANAGING BOARDS

Article
28.- Managerial structures of State
corporations, independent State companies having Managing Boards

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Article
29.- The Managing Boards

The Managing Boards
are the bodies directly representing the State owners at the State companies or
independent State companies having Managing Boards, having the right to decide
in the names of the companies on all matters related to the identification and
achievement of the objectives, tasks and interests of the companies, except for
matters falling under the owners’ competence and responsibilities decentralized
to other agencies or organizations being owners’ representatives for
implementation.

The Managing Boards
must be accountable to the persons who decide on the establishment of State
corporations, independent State companies having Managing Boards, to the
appointers and law for all activities of the corporations, companies.

Article
30.- Tasks and powers of the Managing
Boards

1. To receive, manage
and efficiently use capital, land, natural resources and other resources, which
are invested in the companies by the State-owner.

2. To decide on the
following matters:

a) Strategies,
long-term plans, annual business plans, production and business lines of the
companies and enterprises where the companies own the entire charter capital;

b) Investment
projects, capital contribution, purchase of shares of other companies, sale of
the companies’ assets valued at up to 50% of the total remaining asset value on
the companies’ accounting books or other lower percentages prescribed in the
companies’ charters; borrowing, lending, renting, leasing or other economic
contracts in excess of the companies’ charter capital levels; or assign the
general directors to decide thereon;

c) Schemes on
management organization, business organizations, payroll and the use of
managerial apparatuses, regulations on management of the companies, plannings,
labor training; the establishment of branches, representative offices of the
companies; the approval of the charters of State-run one-member limited
liability companies with the companies being owners thereof;

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e) The performance of
powers and tasks of owners of limited liability companies, joint-stock
companies where the companies are owners or co-owners; the reception of
enterprises which voluntarily join the member companies of corporations;

f) Investment and
adjustment of capital and other resources invested by the companies between
member units and the companies where they own the entire charter capital of
according to such companies charters;

g) Schemes on capital
mobilization for business operation but without alteration of ownership form,
or authorization of the general directors to decide thereon;

h) The adoption of
annual financial statements of the companies; schemes on the use of after-tax
profits or the handling of losses in the business process at the proposal of
the general directors; the adoption of annual financial statements of
independent cost-accounting member companies of the corporations;

i) The inspection,
supervision over the general directors, directors of member units in the
performance of their functions and tasks prescribed by this Law;

j) The use of the
companies’ capital for investment in the establishment of member units where
the companies own the entire charter capital which shall, however, not exceed
the investment capital levels which fall under the deciding competence of the Managing
Boards, prescribed at Point b, Clause 2 of this Article; the dissolution,
ownership conversion of these units.

3. To propose the
persons who decide on the establishment of the companies:

a) To approve or amend
the charters of the companies;

b) To decide on
investment projects beyond the extent of decentralization to the Managing
Boards and capital mobilization schemes, which lead to change of company
ownership;

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d) To decide on
investment projects, capital contribution to, and/or purchase of shares of,
other companies, sale of the companies’ assets valued at over 50% of the total
asset values left on the companies’ accounting books or other smaller
percentages prescribed in the companies’ charters;

e) To decide on the
use of the companies’ capital for investment in the establishment of member
units where the companies own the entire charter capital in excess of the
investment capital levels, which fall under the deciding competence of the
Managing Boards as provided for at Point b, Clause 2 of this Article; to
propose to the company establishment deciders for decision the dissolution or
ownership conversion of these units.

5. Other powers and
tasks as provided for by law and the companies’ charter.

Article
31.- Criteria and conditions of the
Managing Board members

The Managing Board
members must fully satisfy the following criteria and conditions:

1. Being Vietnamese
citizens permanently residing in Vietnam;

2. Having the
university degree, managerial and business capability. The Managing Board
chairmen must have at least three years’ experiences in management and
administration of enterprises in the companies’ main production and business
lines;

3. Having good health,
good moral quality; being honest, incorruptible and knowledgeable; having good
sense of law observance;

4. Not being the
subjects banned from undertaking managerial and/or executive posts in the
enterprises as provided for by law.

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1. A Managing Board is
composed of chairman and other members. The Managing Boards comprise full-time
members and possibly part-time members. The Managing Board chairmen and the
Control Board heads must be the full-time members. The general directors may be
Managing Board members. The number of Managing Board members shall not exceed
7, which shall be decided by the company establishment decides.

2. The chairmen and
members of the Managing Boards shall be appointed, removed from duty or
replaced, commended, disciplined by the persons who decide on the establishment
of the companies. The term of office of the Managing Board members shall not
exceed five years. Managing Board members can be re-appointed.

3. Managing Board
members shall be removed from duty in the following cases:

a) Being sentenced by
courts with judgements or decisions, which have already taken legal effect;

b) Being incapable, unqualified
to perform the assigned jobs; losing civil act capacity or having their civil
act capacity restricted;

c) Being dishonest in
the performance of tasks or exercise of powers or abusing positions and/or powers
to seek benefits for themselves or other persons; untruthfully reporting on the
companies’ financial situation;

d) Violating the
provisions at Point a, Clause 3, Article 25 of this Law.

4. The Managing Board
members shall be replaced in the following cases:

a) They apply for
resignation;

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Article
33.- The Managing Board chairmen

1. The Managing Board
chairmen must not concurrently hold the post of general directors of the companies,

2. The Managing Board
chairmen shall have the following powers and tasks:

a) To represent the
Managing Boards in signing the reception of capital, land, natural resources
and other resources invested in the companies by the State-owner; to manage the
companies under the Managing Boards’ decisions;

b) To organize the
research into development strategies, long-term plans, large-scale investment
projects, organizational and staff renewal schemes for submission to the
Managing Boards;

c) To work out programs
and plans on operation of the Managing Boards; to decide on agenda and contents
of meetings and documents in service of meetings; to convene and preside over
meetings of the Managing Boards;

d) To sign on behalf
of the Managing Boards resolutions, decisions of the Managing Boards;

e) To organize the
monitoring and supervision of the implementation of resolutions and decisions
of the Managing Boards; to suspend the general directors’ decisions which are
contrary to resolutions and/or decisions of the Managing Boards;

f) Other powers
decentralized or authorized by the Managing Boards or the persons who decide
the establishment of the companies.

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1. The Managing Boards
work according to the regime of collectivism; meet at least once a quarter to
consider and decide on matters falling within the ambit of their tasks and
powers; for issues requiring no discussion, the Managing Boards may gather
written opinions of the members. The Managing Board may hold extraordinary
meetings to settle urgent issues of the companies at the proposal of the
Managing Board chairmen, general directors or over 50% of the total number of
the Managing Board members.

2. The Managing Board
chairmen or Managing Board members authorized by the Managing Board chairmen
shall convene and preside over meetings of the Managing Boards.

3. Meetings or
gatherings of Managing Board members’ opinions shall be valid when they are
participated by at least two-thirds of the total number of the Managing Board
members. The Managing Boards’ resolutions and decisions shall be effective when
they are voted for by over 50% of the total number of the Managing Board
members; in cases where the number of votes for and the number of votes against
are equal, the side with the vote of the Managing Board chairman shall be
decisive. The Managing Board members are entitled to reserve their opinions.

When discussing the
companies’ affairs which are related to important issues of any localities, the
Managing Boards shall invite representatives of the relevant local
administrations to attend the meetings; in cases where they are related to the
interests and obligations of laborers in the companies, the representatives of
the trade unions in the companies must be invited to attend the meetings. The
representatives of agencies and organizations, who are invited to attend
meetings, may state their opinions but shall not participate in voting.

4. The contents of
issues under discussion, the stated opinions, the voting results, the decisions
adopted by the Managing Boards and conclusions of the meetings of the Managing
Boards must be recorded in writing. The meetings’ chairpersons and secretaries
must jointly bear responsibility for the accuracy and truthfulness of the
minutes of the Managing Boards’ meetings. The resolutions and decisions of the
Managing Boards are binding on the entire companies.

5. The Managing Board
members are entitled to request the general directors, chief accountants and/or
managerial officials in the companies to supply information and documents on
the financial situation and/or operation of the companies according to the
information regulations prescribed by the Managing Boards or according to the
Managing Boards’ resolutions. The persons requested to supply information must
promptly, fully and accurately supply information and/or documents at the
requests of Managing Board members, except otherwise decided by the Managing
Boards.

6. The expenses for
operations of the Managing Boards, including wages, allowances and
remuneration, shall be accounted into the companies’ expenses for enterprise
management.

Article
35.- Regimes of wages, allowances, bonuses
of full-time members and part-time members of the Managing Boards

1. The full-time
members of the Managing Boards shall enjoy the regimes of annual wages and
bonuses corresponding to the production and business results and efficiency of
the companies.

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2. The part-time
members of the Managing Boards shall enjoy responsibility allowances and
bonuses according to the mechanism applicable to the full-timers.

3. The Government
shall guide the regimes of wages, bonuses and responsibility allowances of the
Managing Board members.

Article
36.- Conditions for chairmen and members
of the Managing Boards, and general directors to participate in managing other companies

The Managing Board
chairmen, the Managing Board members, the general directors may only hold
managerial posts in limited liability companies, joint-stock companies or
foreign-invested companies when they are nominated to the managerial posts or designated
to be the companies’ representatives for the capital portions contributed to
such enterprises, by their companies or competent State organizations.

Spouses, fathers,
mothers, children and siblings of the Managing Board chairmen, the Managing
Board members or the general directors of the companies must not hold the post
of chief accountant or cashier at the same companies. The companies’ economic,
labor and/or civil contracts signed with the Managing Board members, the
general directors, with spouses, fathers, mothers, children or siblings of the
Managing Board members or the general directors must be notified to the persons
who have appointed such Managing Board members, general directors, or the
persons who have signed contracts to hire such general directors; in cases
where the persons who have appointed the Managing Board members, the general
directors or the persons who have signed contracts to hire the general
directors detect that the contracts aim for self-seeking purposes and are not
yet signed, they may request the Managing Board members or the general
directors not to sign such contracts; if the contracts have been already
signed, they shall be considered null and void, the Managing Board members or
the general directors must pay damages to the companies and be handled
according to law provisions.

Article
37.- The Control Board

1. The Managing Boards
shall set up the Control Boards to assist them in inspecting and supervising
the legality, accuracy and truthfulness in the management and administration of
business activities, in accounting book recording, financial statements and the
observance of the companies’ charters, the resolutions and decisions of the
Managing Boards, decisions of the Managing Board chairmen.

2. The Control Boards
shall perform the tasks assigned by the Managing Boards, report thereon to, and
take responsibility therefor before, the Managing Boards.

3. A Control Board is
composed of its head being a Managing Board member and a number of other
members to be decided by the Managing Board. The Trade Union organization in a
company shall nominate a representative who satisfies all criteria and
conditions prescribed in Clause 4 of this Article to be member of the Control
Board.

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a) Permanently
residing in Vietnam;

b) Having good health,
good moral quality; being honest, incorruptible; having good sense of law
observance;

c) Being proficient in
economic, financial-accounting, auditing operations or professions;

d) The Control Board
members work on a full-time basis and do not concurrently hold leading
positions in the State apparatus;

e) Spouses, fathers,
mothers, children or siblings of the Managing Board members must not hold the
post of Managing Board member, general director, chief accountant or cashier in
the same companies.

5. The expenses for
operation of the Control Boards, including wages and working facilities, shall
be ensured by the companies.

Article
38.- General directors, deputy-general
directors, chief accountants and assisting apparatuses

1. The general
directors are the companies’ representatives at law, administering the daily
activities of the companies according to objectives, plans and in accordance
with the companies’ charters as well as resolutions and decisions of the
Managing Boards; take responsibility before the Managing Boards and law for the
exercise of their delegated powers and performance of their assigned tasks.

2. The deputy general
directors shall assist their respective directors in administering the
companies under the latter’s assignment and authorization; take responsibility
before the general directors and before law for their assigned or authorized
tasks.

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4. The offices and
professional bureaus and boards shall function to advise and assist the
Managing Boards and the general directors in managing and administering affairs.

Article
39.- Criteria and conditions for selection
of general directors

The criteria and
conditions for selection of general directors shall be the same as those
applicable to directors, prescribed in Article 24 of this Law.

Article
40.- Selection, appointment and dismissal
of, signing and terminating contracts with, general directors, deputy-general
directors, chief accountants

1. The general
directors shall be selected, appointed, dismissed or have their labor contracts
signed or terminated by the Managing Boards after they are approved by the
persons who decide on the establishment of the companies.

2. The deputy general
directors and chief accountants shall be selected, appointed, dismissed or have
their labor contracts signed by the Managing Boards at the proposals of the
general directors.

3. The general
directors, deputy-general directors and chief accountants shall be appointed or
sign contracts for a maximum duration of five years and may be re-appointed or
renew their contracts.

4. The procedures for
selection, appointment, dismissal of, or signing and terminating contracts
with, the general directors shall comply with the Prime Minister’s regulations.

5. The general
directors shall be relieved from duty or have their contracts terminated ahead
of time in the cases prescribed in Clause 3, Article 25; shall be replaced
under the provisions of Clause 4, Article 25 of this Law.

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1. To elaborate the
companies’ annual plans, capital mobilization schemes, investment projects, joint-venture
schemes, managerial organization schemes, internal management regulations,
labor training plannings, schemes on business coordination among member
companies (if any) or with other companies for submission to the Managing
Boards, the Managing Board chairmen.

2. To formulate
techno-economic norms, product standards, wage price units in conformity with
the State’s regulations and submit them to the Managing Boards for approval; to
inspect the units in the companies in implementing the norms, standards and
unit prices set within the companies.

3. To propose the
Managing Boards to appoint, remove from duty, dismiss, sign and terminate
contracts with, commend, discipline and decide the wage raising for, deputy
general directors and chief accountants of the companies; to decide on
designation of representatives of the companies’ contributed capital portions
in other enterprises.

The directors and
chief accountants of member companies and non-business units of the State
corporations, where the corporations own the entire charter capital, shall be
selected by the general directors for appointment or signing and terminating
contracts after they are approved by the Managing Boards.

4. To decide on
investment projects, asset purchase and sale contracts, borrowing, lending,
renting, leasing and other economic contracts, sale and purchase prices of
products and services of the companies according to the decentralization and
authorization by the Managing Boards and the companies’ charters.

5. To sign civil and economic
contracts according to the provisions at Point b, Clause 2, Article 30 of this
Law as well as other economic and civil contracts according to the provisions
of law.

6. To decide on
selection of, signing and termination of contracts with, or appointment,
dismissal, commendation, discipline of, on raising of wages and allowances for,
the following titles:

a) Directors and chief
accountants of the independent cost-accounting member companies and
non-business units of the corporations after getting the Managing Boards’
approvals;

b) Heads of bureaus
(boards), deputy-heads of bureaus (boards) of the corporations;

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d) Other managerial
titles in the companies as decentralized by the Managing Boards.

7. To organize the
implementation of business plans, investment plans; to decide on market
development, marketing and technological solutions; to administer activities of
the companies with a view to realizing the resolutions and decisions of the
Managing Boards.

8. To report to the
Managing Boards on business results of the companies; to effect the publicity
of financial statements according to the Government’s regulations.

9. To submit to the
inspection and supervision by the Managing Boards, the Control Boards and
competent State management bodies of the performance of the functions and tasks
according to the provisions of this Law and other law provisions.

10. To apply necessary
measures in case of urgency and to immediately report such to the Managing
Boards and competent State agencies.

11. To enjoy annual
wage regimes. The wage and bonus levels corresponding to the business
efficiency of the companies shall be decided upon by the Managing Boards or
comply with the signed contracts.

The regime of payment
and settlement of wages and bonuses shall be the same as those applicable to
directors according to the provisions of Clause 10, Article 26 of this Law.

12. Other powers and
tasks as provided for by this Law, the companies’ charters and decisions of the
Managing Boards.

Article
42.- Relationships between the Managing
Boards and the general directors in managing and administering the companies

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2. Within fifteen days
as from the end of the months, quarters and years, the general directors must
send the written reports on the business situation and implementation
orientations of the companies in the following periods to the Managing Boards.

3. The Managing Board
chairmen shall attend or appoint representatives of the Managing Boards to
attend briefings, meetings in preparation for schemes for submission to the
Managing Boards, which are presided over by the general directors. The chairmen
or representatives of the Managing Boards attending the meetings may contribute
their comments but have no right to make conclusions on the meetings. The
general directors who are not Managing Board members shall be invited to attend
meetings of the Managing Boards, may speak but have no right to vote.

4. The
decentralization and authorization of the Managing Boards, the chairmen of the
Managing Boards for the general directors as provided for in Articles 30, 33
and 41 of this Law must be recorded in the companies’ charters.

Article
43.- Obligations and responsibilities of
the chairmen and members of the Managing Boards, the general directors

1. The general
directors take responsibility before the Managing Boards and law for running
daily activities of their companies, for the performance of their delegated
powers and assigned tasks. The Managing Board members must jointly bear
responsibility before the persons who issue decisions on their appointment and
before law for the decisions of the Managing Boards, the results and efficiency
of their companies’ activities.

2. The Managing Board
chairmen and members, the general directors shall have the obligations:

a) To exercise with
honesty and responsibility the delegated powers and assigned tasks for the
benefits of the companies and the State;

b) Not to abuse their
positions and powers to use the companies’ capital and assets for the benefits
of their own and other persons; not to give the companies’ assets to other
persons; not to disclose the companies’ secrets while acting as Managing Board
members or general directors and within at least three years or within the
duration prescribed in the companies’ charters after resigning from the post of
Managing Board member or general director, except for cases where so approved
by the Managing Boards;

c) When the companies
fail to fully repay payable due debts and other property obligations, the
general directors shall have to report such to the Managing Boards, seek
measures to overcome the financial difficulties and notify the companies’
financial situation to all creditors; the Managing Board chairmen and members
as well as the general directors must not decide to raise wages, must not
deduct profits to pay rewards to managerial officials and laborers;

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e) To pay damage
compensations according to the provisions of law and the companies’ charters if
the Managing Board chairmen and/or members or the general directors violate the
charters, make decisions ultra vires or abuse their positions or powers, thus
causing damage to the companies and the State.

3. When committing
violations in one of the following cases but not seriously enough to be
examined for penal liability, the Managing Board chairmen and/or members, and
the general directors shall not enjoy bonuses, wage raising and be disciplined,
depending on the seriousness of their violations:

a) Letting their
companies suffer losses;

b) Losing the State
capital;

c) Deciding on
inefficient investment projects, failing to retrieve investment capital,
failing to repay debts;

d) Failing to ensure
wages and other regimes for laborers in the companies according to the labor
legislation;

e) Letting violations in
the capital and asset management, the accounting, auditing or other regimes
prescribed by the State be committed.

4. The Managing Board
chairmen who show irresponsibility and fail to strictly comply with the
provisions of Clause 2, Article 33 of this Law, thus leading to one of the
violations prescribed in Clause 3 of this Article shall be removed from duty;
and pay compensations for damage according to law provisions, depending on the
seriousness and consequences of their violations.

5. In cases where they
let their companies fall into the state prescribed at Point a, Clause 3,
Article 25 of this Law, the Managing Board chairmen and the general directors
shall have their wages lowered or be dismissed, depending on the seriousness
and consequences of their violations, and at the same time have to pay
compensations for damage according to law provisions.

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7. If the State
companies, which are subject to reorganization, dissolution or ownership
conversion, fail to carry out the procedures for reorganization, dissolution or
ownership conversion, the Managing Board chairmen and members, the general
directors shall be removed from duty or have their contracts terminated.

Section
3. FORMS AND CONTENTS OF LABORERS’ PARTICIPATION IN THE MANAGEMENT OF STATE
COMPANIES

Article
44.- Forms of laborers’ participation in
the management of companies

The laborers shall
participate in the management of their companies through the following forms
and organizations:

1. The general
assembly or the congresses of delegates of workers and employees organized in
from teams, groups, workshops, sections, boards to companies;

2. The companies’
trade union organizations;

3. The people’s
inspection boards;

4. The exercise of
their rights to petitions, complaints and denunciations according to law
provisions.

Article
45.- Contents of laborers’ participation
in the management of companies

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1. Orientations, plan
tasks, measures for production and business development, reorganization of
production in the companies;

2. Schemes on
equitization, diversification of ownership of the companies;

3. The companies’
internal rules and regulations directly related to the interests and
obligations of laborers;

4. Measures for labor
protection, improvement of working conditions, material and spiritual life,
environmental sanitation, training and retraining of laborers of the companies;

5. Casting votes of
confidence on the chairmen and/or members of the Managing Boards (if any),
general directors or directors, deputy general directors or deputy directors,
chief accountants, when so requested by competent State bodies;

6. Through the general
assembly or congresses of delegates of workers and employees and trade union
organizations, the laborers are entitled to discuss and vote to decide on the
following issues:

a) The contents of, or
amendments and supplements to, collective labor agreements for the
representatives of the labor collectives to sign with the general directors or
directors of State companies;

b) The regulations on
the use of welfare and reward funds as well as plan norms of the companies,
which are directly related to the interests and obligations of the laborers in
conformity with the State’s regulations;

c) The evaluation of
the operation results and programs of activities of the people’s inspection
boards;

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Chapter
V

STATE CORPORATIONS

Article
46.- State corporations

The State corporations
constitute a form of economic alignment on the basis of self-investment,
capital contribution among State companies, between State companies and other
enterprises or are formed on the basis of organizing and aligning member units
which are bound together in economic benefits, technologies, markets and other
business services, operate in one or several principal specialized
techno-economic branches with a view to enhancing the business capabilities and
obtaining benefits for member units and the entire corporations.

Article
47.- Types of State corporation

1. Corporations with
investment and establishment decided by the State constitute a form of aligning
and rallying independent cost-accounting member companies which have the legal
person status and operate in one or several principal specialized
techno-economic branches with a view to increasing the capital accumulation and
concentration and the specialization of business of member units and the entire
corporations.

2. Corporations
invested in and set up by companies constitute a form of alignment through
investment, capital contribution of large-sized State companies where the State
owns the entire charter capital with other enterprises, in which the State
companies hold the dominant powers over other enterprises.

3. Corporations which
make investment with and deal in the State capital are those established to
exercise the owners’ rights and obligations towards State-run one-member
limited liability companies converted from independent State companies and
State-run one-member limited liability companies set up by themselves; to
perform the function of making investment with and dealing in the State capital
as well as the owners’ powers and obligations towards the State’s shares and/or
contributed capital in enterprises with ownership or legal forms converted from
independent State companies.

Section
1. CORPORATIONS WITH INVESTMENT AND ESTABLISHMENT DECIDED BY THE STATE

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The corporations with
investment and establishment decided by the State must fully satisfy the
following conditions:

1. Operating in key
branches or domains, acting as the core to boost economic growth and making
great contributions to the State budget;

2. Member companies
operate in one or several principal techno-economic specialized branches, which
are closely bound together in technologies, markets and capital;

3. Having at least two
corporations in one branch or domain, except for branches or domains where
production technologies do not permit the establishment of two or more
corporations;

4. Meeting the
conditions for establishment of new State companies in Article 8 of this Law;

5. Achieving the
objectives of establishment of corporations:

a) Organizing service
activities of seeking markets, information, training, research, marketing and
other service activities in direct support of the member companies;

b) Creating conditions
for technological development, increased capital accumulation and
concentration, assignment of specialization, raising the competitiveness of
member companies and the whole corporations;

c) Having mechanisms to
ensure interests and associate the interests of member companies, which is
consented by the member companies.

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The corporations with
investment and establishment decided by the State may have the following member
units:

1. Units with their
charter capital entirely invested by the corporations:

a) Independent
cost-accounting member companies;

b) Dependent
cost-accounting units;

c) Non-business units;

d) State-run
one-member limited liability companies operating under the provisions of the
Enterprise Law, converted from the types of member units prescribed at Points a
and c, Clause 1 of this Article or newly set up;

e) Depending on business
scale and demands, corporations may have members being financial companies;

2. Joint-stock
companies and limited liability companies where the corporations hold dominant
contributed capital.

Article
50.- Capital and assets of corporations
with investment and establishment decided by the State

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2. The charter capital
of independent cost-accounting companies is the State capital invested therein
by the corporations. The corporations bear responsibility for the debts and
other property obligations of the independent cost-accounting member companies
within the amounts of charter capital of such companies.

3. The corporations’
assets formed from their charter capital, borrowed capital and other lawful
capital sources invested in independent cost-accounting member companies,
non-business units and offices of the corporations.

4. Assets of
independent cost-accounting member companies, formed from the charter capital,
borrowed capital and other lawful capital sources invested in the companies.

5. The State budget
capital can be only invested in the corporations. The corporations are entitled
to decide to invest or not to invest it in independent-cost accounting member
companies.

6. The corporations
shall not transfer their capital and/or assets at member enterprises having the
legal person status and their charter capital fully owned by the corporations
by mode of non-payment, except for cases of deciding on reorganization of the
companies or realizing the target of supplying public-utility products and/or
services.

Article
51.- Managerial organizations of
corporations with investment and establishment decided by the State

1. A corporation is
managerially structured to include the Managing Board, the Control Board, the
general director, the deputy-general directors, the chief accountant and the
assisting apparatus. The functions, tasks, powers and operational organization
of the Managing Board, the Control Board, the general director, the
deputy-general directors, the chief accountant and the assisting apparatus in
the corporation and the internal management of the corporation shall comply
with the provisions in Section 2, Chapter IV of this Law and the Government’s
regulations.

2. The independent
cost-accounting member companies are managerially structured each to have the
director, the deputy directors, the chief accountant and the assisting
apparatus. The functions, tasks, powers and criteria of the directors, deputy
directors, the chief accountants and the assisting apparatuses shall comply
with the provisions in Section 1, Chapter IV of this Law and the Government’s
guidance; the directors, deputy directors and chief accountants maintain
relations with the corporations under the provisions of Clause 1, Article 52 of
this Law.

3. State-run
one-member limited liability companies and companies where the corporations
hold dominant shares or contributed capital portions are managerially organized
under the provisions of the Enterprise Law and other law provisions.

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1. The independent
cost-accounting member companies have the legal person status and business
autonomy under the provisions of this Law, other law provisions and their
charters approved by the Managing Boards of the corporations; and are bound in
rights and obligations to the corporations as follows:

a) They manage and
take initiative in using their capital as well as capital invested by the
corporations; take responsibility before the corporations for the efficiency of
the use of capital and resources invested by the corporations; enjoy financial
autonomy and bear civil liability with their entire property;

b) They implement the
general business plans of the corporations; perform the production and/or
business tasks assigned by the corporations on the basis of the economic
contracts; take responsibility for business activities in coordination with the
corporations;

c) They enjoy autonomy
in signing economic contracts and perform the economic contracts assigned by
the corporations;

d) They decide on investment
projects as decentralized by the corporations; join the corporations in various
forms of investment or are assigned by the corporation to organize the
execution of investment projects under the corporations’ plans on the basis of
economic contracts signed with the corporations; have the right to invest in,
or contribute capital to, other companies;

e) They are entitled
to propose the corporations to decide, or are authorized by the corporations to
decide on the establishment, reorganization, dissolution or merger of dependent
units and decide on the managerial apparatuses of dependent units;

f) After fulfilling
tax payment obligations, carrying forwards losses according to the provisions
of the Enterprise Income Tax Law, performing other financial obligations
according to law provisions, making deductions for setting up the financial
reserve funds, they may divide the remaining profits according to the capital
invested by the corporations and the capital mobilized by the companies
themselves. The profit portions divided according to the capital invested by
the corporations shall be used for re-investment to increase the State capital
at the companies or form the concentrated funds of the corporations according
to the Government’s regulations. The profit portions divided according to
capital mobilized by the companies themselves shall be deducted for
supplementation to the companies’ development investment funds at the rates
prescribed by the Government; the remainder shall be distributed into reward funds
and welfare funds under the companies’ own decisions;

g) When being assigned
plans, given goods production orders by the State or participating in bidding
for performance of public-utility activities, the companies shall have the
rights and obligations prescribed in Article 19 of this Law;

h) They submit to the
supervision and inspection by the corporations; periodically, accurately and
fully report information on themselves and send their financial statements to
the corporations;

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2. Non-business units
shall implement the accounting decentralization regimes prescribed by the
corporations, be entitled to create revenue sources from the performance of
contracts on service provision, scientific research and training for technology
transfer with units within and without the corporations. The non-business units
operate according to regulations approved by the Managing Boards of the
corporations.

3. The relationships
between the corporations and one-member limited liability companies where the
corporations own the entire charter capital shall comply with the provisions of
Article 57 of this Law.

4. The relationships
between the corporations and companies where the corporations hold dominant
capital shall comply with the provisions of Article 58 of this Law.

Article
53.- Transformation of corporations with
investment and establishment decided by the State into corporations invested in
and set up by companies themselves

1. The corporations
with investment and establishment decided by the State, which satisfy the
conditions prescribed in Article 54 of this Law, may be transformed to be
organized and operate according to the provisions of Articles 55, 56, 57, 58
and 59 of this Law.

2. The Government shall
prescribe the principles, conditions and time limits for transformation of
corporations with investment and establishment decided by the State to operate
after the model of corporations invested in and set up by companies themselves.
Within the transformation period, the corporations set up under the provisions
of the 1995 Law on State Enterprises can operate under the provisions in
Section 1, Chapter V of this Law.

Section
2. CORPORATIONS INVESTED IN AND SET UP BY COMPANIES THEMSELVES

Article
54.- Cases of application of the
provisions on corporations invested in and set up by companies themselves

1. The corporations
defined in Section 1, Chapter V of this Law, which are reorganized or invest by
themselves in other enterprises, meet the requirements on membership structures
prescribed in Article 55 of this Law.

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Article
55.- Structure of corporations invested in
and set up by companies themselves

A corporation invested
in and set up by companies themselves is structured to comprise:

1. The State company
which holds the powers to dominate other enterprises (hereinafter called the
parent company);

2. Member companies
(hereinafter called the affiliate companies):

a) State-run one-member
limited liability companies whose charter capital is fully held by the State
companies;

b) Companies with
dominant contributed capital of State companies, including limited liability
companies with two or more members, joint-stock companies, companies of joint
venture with foreign countries, overseas-based companies; companies with
dominant contributed capital of State companies operating according to law
corresponding to such types of companies;

3. Companies with
portions of non-dominant contributed capital of State companies (hereinafter
called associated companies), which are organized in form of limited liability
companies with two or more members, joint-stock companies, companies of
joint-venture with foreign countries.

Article
56.- State companies holding dominant
powers over other enterprises

1. State companies
holding dominant powers over other enterprises shall have the rights and
obligations of the State companies, prescribed in Chapter III of this Law.

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Article
57.- The State companies’ relationships
with companies where they invest and hold the entire charter capital

The one-member limited
liability companies with their entire charter capital invested by State
companies shall operate under the provisions of the Enterprise Law. The State
companies shall be the owners of such one-member limited liability companies,
exercising the rights and performing the obligations of the owners over the
one-member limited liability companies according to the provisions of the
Enterprise Law.

Article
58.- The dominant State companies’
relationships with companies where the State companies hold dominant capital

The State companies
holding dominant powers over other enterprises shall manage their dominant
shares or contributed capital as follows:

1. Exercising the
rights and performing the obligations of shareholders, dominant
capital-contributing members through their representatives at enterprises under
the provisions of the Enterprise Law, the Law on Foreign Investment in Vietnam,
the laws of the countries where the companies invest their capital and the
provisions of the charters of the dominated companies;

2. Designating,
dismissing, commending, disciplining, deciding on allowances and interests for,
their representatives at the dominated enterprises (hereinafter called
representatives of the dominant contributed capital portions);

3. Requesting the
representatives of the dominant contributed capital portions to report
regularly or irregularly on the financial situations, business results and
contents of the enterprises where exists dominant contributed capital of the
State companies;

4. Assigning tasks to,
and requesting the representatives of the dominant contributed capital portions
to ask for opinions on important matters of the dominated enterprises before
voting thereon; to report on the use of dominant shares or contributed capital
in service of the development orientations and objectives of the dominant State
companies;

5. Collecting yields
and bearing risks from their contributed capital at dominated enterprises;

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7. Bearing
self-responsibility for the efficiency of the use, preservation and development
of their capital portions contributed to dominated enterprises.

Article
59.- Relationships between the State
companies and enterprises where exist contributed capital portions of the State
companies

1. The enterprises
where exist contributed capital portions of State companies shall effect their
business autonomy under the provisions of law. The relationships between the
State companies and the enterprises where exist contributed capital portions of
the State companies shall comply with the provisions of law.

2. The State companies
shall exercise the rights and perform the obligations of the capital
contributors through their representatives at enterprises to which they have
contributed capital, in accordance with law and the charters of the enterprises
where exist contributed capital portions of the State companies.

Section
3. CORPORATIONS MAKING INVESTMENT WITH, AND DEALING IN,
STATE CAPITAL

Article
60.- Corporations making investment with,
and dealing in, State capital

1. Corporations making
investment with, and dealing in, State capital are special economic
organizations having the following functions:

a) To exercise the
rights and perform the obligations of owners being the State over State-run
one-member limited liability companies transformed from independent State
companies; the State’s contributed capital portions at joint-stock companies or
limited liability companies with two or more members, which are transformed
from independent State companies or newly set up;

b) To perform the
functions of making investment with, and dealing in, the State capital at
enterprises, which have already undergone the conversion of ownership or legal
forms prescribed at Point a, Clause 1 of this Article.

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Article
61.- Managerial organization, operation
scope, rights and obligations of corporations making investment with, and
dealing in, State capital

1. The managerial
organization of corporations making investment with, and dealing in, State
capital shall comply with the provisions in Section 2, Chapter IV of this Law.

2. The structure,
operation scope, rights and obligations of corporations making investment with,
and dealing in, State capital shall comply with the Government’s regulations.

Chapter
VI

RIGHTS AND
OBLIGATIONS OF OWNERS BEING THE STATE OVER STATE COMPANIES AND STATE CAPITAL IN
OTHER ENTERPRISES

Section
1. OWNERS AND REPRESENTATIVES OF OWNERS OF STATE COMPANIES AND STATE CAPITAL IN
OTHER ENTERPRISES

Article
62.- Owners of State companies

The State serves as
owners of the State companies. The Government shall uniformly organize the
exercise of rights and the performance of obligations of owners over the State
companies according to the provisions of this Law and other provisions of
relevant legislation.

Article
63.- Representatives of owners of the
State companies and State capital in other enterprises

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a) The Government
shall directly perform the rights and obligations of owners over the State
companies as provided for in Clause 1, Article 65 of this Law; the Prime
Minister shall directly perform or authorize the concerned ministries to
perform a number of rights and obligations of owners over particularly
important State companies set up under the Prime Minister’s decisions;

b) The branch-managing
ministries and the provincial-level People’s Committees shall act as
representatives of owners of the State companies having no Managing Board under
the provisions of Article 66 of this Law;

c) The Finance
Ministry shall perform a number of rights and obligations of the
representatives of owners of the State companies under the provisions of
Article 67 of this Law;

d) The Managing Boards
are the owners’ direct representatives at the State companies having the
Managing Boards and representatives of owners of the companies where they
totally invest the charter capital as provided for in Articles 29, 30 and 33 of
this Law.

2. The corporations
making investment with, and dealing in, State capital shall be the
representatives of owners of the companies where they totally invest the charter
capital and the representatives of the capital portions they have invested in
other enterprises as provided for in Articles 60 and 61 of this Law.

3. The State companies
shall be the representatives of owners of the capital portions invested by the
companies in other enterprises.

4. The assignment and
decentralization of the performance of the rights and obligations of
representatives of owners of the State companies shall comply with the
provisions in Section 2, Chapter VI of this Law.

Section
2. RIGHTS AND OBLIGATIONS OF OWNERS BEING THE STATE OVER THE STATE COMPANIES

Article
64.- Rights and obligations of owners
being the State over the State companies

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a) To decide on the
establishment, reorgani-zation, dissolution, ownership conversion of the
companies; to decide on the managerial structures of the companies; to select,
appoint, dismiss, stipulate the wage and bonus regimes for, the Managing Board
chairmen and members, the general directors or directors of the companies; to
approve the contents, amendment and supplementation of the companies’ charters;

b) To decide on the
objectives, strategies and plan orientations for development of the companies;
to decide on investment projects valued at over 30% of the total remaining
asset values on the accounting books of the State companies having no Managing
Board or smaller percentages prescribed in the companies’ charters; to decide
on investment projects valued at over 50% of the total remaining asset values
on the accounting books of the companies with the Managing Boards or smaller
percentages prescribed in the companies’ charters; decide on borrowing,
lending, renting, leasing or other economic contracts in excess of the companies’
charter capital levels; to prescribe the regime of plan assignment, goods order
placement or bidding, sale prices, difference subsidies for public-utility
product- and/or service- providing companies;

c) To decide on the initial
investment capital level, the charter capital level and adjust the charter
capital of the companies; to decide on borrowing or lending projects valued at
over the level decentralized for the Managing Boards or the directors of the
companies having no Managing Board; prescribe the financial regimes of the
companies;

d) To inspect,
supervise, assess the results of business activities of the companies.

2. The State- owners
shall have the following obligations towards the State companies:

a) To invest adequate
charter capital for the companies;

b) To abide by the
companies’ charters.

c) To bear
responsibility for debts and other property obligations of the companies within
the limits of the companies’ charter capital;

d) To abide by law
provisions on purchase, sale, borrowing, lending, renting and leasing contracts
between the companies and owners;

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f) To perform other
obligations as provided for by law.

Article
65.- Owners’ rights and obligations
performed by the Government over the State companies

1. The Government
shall directly exercise the rights and perform obligations of owners over the
State companies as follows:

a) To approve schemes
on establishment, reorganization and restructuring of State companies within
the scope of entire national economy, within branches, provinces or
centrally-run cities;

b) To decide on or
decentralize the decision on investment projects of the State companies; to
decide on or decentralize the decision on allocation of initial investment
capital, supplementary investment, increase or decrease of charter capital of
the State companies; to submit to the National Assembly for ratification the
investment projects of the State companies, which fall under the jurisdiction
of the National Assembly;

c) To uniformly
organize the performance of tasks and powers of owners over the capital
portions invested by the State in other companies. To decide on or decentralize
the decision on projects for contribution of capital or assets of the State or
State companies to joint ventures with foreign investors, the State companies’
projects on investment overseas;

d) To prescribe the
financial regimes of the State companies;

e) To inspect and
supervise the use of capital at the State companies;

f) To prescribe the
regimes of wages, bonuses, subsidies and other interests for the Managing Board
chairmen and members, the general directors or directors of the State companies;

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h) To prescribe the
regime of inspection and supervision of the State companies in the performance
of State-assigned objectives and tasks; to evaluate the results of business
activities of the companies, managerial activities of the Managing Boards and
the administration of the general directors or directors.

2. The Government
shall assign and decentralize the performance of owners’ rights and obligations
to the following owner- representing agencies and organizations:

a) The ministries and
provincial-level People’s Committees as provided for in Article 66 of this Law;

b) The Managing Boards
of the State companies as provided for in Article 30 of this Law;

c) The corporations
making investment with, and dealing in, State capital as prescribed in Articles
60 and 61 of this Law.

Article
66.- Owners’ rights and obligations
performed by the branch-managing ministries, provincial-level People’s
Committees over the State companies

The branch-managing
ministries and the provincial-level People’s Committees shall be the
representatives of owners over the State companies set up under decisions of,
or authorization to, the ministries or provincial-level People’s Committees,
performing the owners’ rights and obligations and representing the owners as
follows:

1. To elaborate
schemes on reorganization of independent State companies set up under their own
decisions for submission to the Prime Minister for approval; to effect the
reorganization of State companies according to the schemes already approved by
the Prime Minister;

2. To decide on the
establishment, reorganization, dissolution, ownership conversion of the State
companies; to approve contents, amendment and supplementation of the charters
of the State companies. To reach agreement with the Finance Ministry on
determination of the initial charter capital level, increase of charter capital
of the State companies;

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4. To decide according
to competence on investment projects valued at over 50% of the total remaining
asset values on the accounting books of the State companies having the Managing
Boards or smaller percentages prescribed in the companies’ charters; to decide
according to their competence the investment projects valued at over 30% of the
total remaining asset value on the accounting books of the State companies
having no Managing Board or smaller percentages prescribed in the companies’
charters; to propose the Government to approve the investment projects of the
companies, which fall beyond the levels decentralized to the branch-managing
ministries or provincial-level People’s Committees;

5. To decide on
approval of the plans on use of capital and assets of the State companies to
contribute capital to joint ventures with foreign investors; the State
companies’ projects on investment overseas; the schemes on the use of capital
and assets of the companies to contribute capital to, or buy shares of,
domestic companies above the levels decentralized to the Managing Boards or
directors of the companies having no Managing Board prescribed in the
companies’ charters; approve plans on purchase of companies of other economic
sectors;

6. To decide on
undertakings to sell assets valued at over 50% of the total remaining asset
value on the accounting books of the State companies with Managing Boards or
smaller percentages prescribed in the companies’ charters; on the sale of
assets valued at over 30% of the total remaining asset value on the accounting
books of the State companies having no Managing Board or smaller percentages
prescribed in the companies’ charters; the borrowing, lending, renting, leasing
of capital or assets with value higher than the charter capital of the State
companies having no Managing Board;

7. To decide on
selection, appointment, dismissal, regimes of wage, allowance and other
interests of the Managing Board chairmen and members; to select, sign contracts
or decide on appointment, removal from duty, dismissal, wage level and other
interests of directors of independent State companies having no Managing Board;
to organize the evaluation of results of operation and management of the
companies by the Managing Boards and directors according to the Government’s
regulations;

8. To participate in
inspection and supervision of the management and use of capital, the distribution
of income, the deduction for establishment and use of funds of the State
companies;

9. To perform other
rights and obligations as assigned or decentralized by the Government.

Article
67.- Owners’ rights and obligations
performed by the Finance Ministry over the State companies

The Finance Ministry
shall perform a number of rights and obligations of owners and owners’
representatives over the State companies as follows:

1. To submit to the
Government for promulga-tion, and organize the implementation of, the regimes
of financial management, business accounting, the regimes of reporting and
financial publicity of the State companies, the consolidated financial
statements of the corporations;

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a) Investment in the
establishment of new State companies after the establishment schemes are
approved by the Prime Minister;

b) Additional
investment to increase the charter capital of the State companies at the proposals
of the persons who decide on the establishment of the State companies.

3. To participate in
assessment of the results of operation and management of the companies by the
Managing Boards and the directors of the State companies according to the Government’s
regulations.

4. To organize the
inspection and supervision of the management and use of capital, the
distribution of income, the deduction for establishment and use of funds of the
State companies;

5. To perform other
rights and obligations as decentralized by the Government.

Article
68.- Responsibilities of the ministers,
heads of ministerial-level agencies, heads of Government-attached agencies,
presidents of provincial-level People’s Committees

1. To fulfill all
rights and obligations of the State-owners, which have been assigned or
decentralized thereto.

2. To ensure the
business autonomy, self-responsibility of the companies; not to interfere in
affairs under the jurisdiction of the Managing Boards, the general directors,
directors and managerial apparatuses of the companies.

3. To bear
administrative and material liabilities for their own decisions in the
performance of delegated powers and assigned tasks; to be responsible for full
investment of charter capital in the companies.

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a) When the companies
fail to strictly realize the development objectives, tasks, strategies and/or
long-term plans as provided for;

b) Letting corruption,
red tape, loss of State property happen in State-invested companies under their
management;

c) The State
companies’ managerial officials they have appointed cause great damage to the
State companies, untruthfully report on the financial situation of the
companies;

d) Re-appointing or
deciding to transfer to equivalent or higher positions the Managing Board
chairmen or members, the general directors, directors of State companies and/or
other managerial officials they have appointed, who have violated the
provisions at Points a, b, c and d, Clause 3, Article 25, Point e of Clause 5,
Clauses 8 and 9 of Article 27, Points b, c and d, Clause 3, Article 32 of this
Law.

5. To organize the
structuring, transformation of State enterprises according to the overall
schemes and plans approved by the Government.

6. To transfer the
ownership rights to corporations making investment with, and dealing in, State
capital according to the Government’s regulations.

Section
3. RIGHTS AND OBLIGATIONS OF OWNERS’ REPRESENTATIVES OVER THE STATE CAPITAL
INVESTED IN OTHER ENTERPRISES

Article
69.- State capital invested in other
enterprises

State capital invested
in other enterprises means the following assorted capital invested in companies
other than the subjects defined at Point a, Clause 2, Article 2 of this Law:

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2. State budget capital
invested in, or contributed to, other companies, assigned to State companies
for management;

3. Value of the shares
or capital contributed by the State to equitized State companies, one-member
limited liability companies or limited liability companies with two or more
members;

4. Capital borrowed by
State companies for investment;

5. Dividends from
capital invested in, or contributed to other companies by the State or State
companies, which are used for re-investment in such companies;

6. Capital of other
kinds.

Article
70.- Rights and obligations in the
management of State capital invested in the entire charter capital of other
enterprises

1. The ministries, the
provincial-level People’s Committees, the Managing Boards of State corporations
or State companies shall perform the functions, powers, obligations and
responsibilities of owners over State-run one-member limited liability
companies where they invest the entire charter capital according to the
provisions of the Enterprise Law.

2. The owners’ functions,
powers, obligations and responsibilities towards State-run limited liability
companies with two or more members and State-run joint-stock companies where
agencies, organizations or State companies directly invest or contribute
capital shall comply with the provisions of the Enterprise Law.

3. The owners’
representatives nominated to join the Managing Boards, the Members’ Councils,
to be general directors or directors of State-run one-member limited liability
companies, State-run limited liability companies with two or more members and
State-run joint-stock companies must satisfy the corresponding criteria and
conditions prescribed in Articles 24, 31, 36 and 39 of this Law.

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The State corporations
and independent State companies shall have the following rights and obligations
over their capital portions invested in other enterprises:

1. To decide on
investment, capital contribution; to increase, reduce their investment capital,
contributed capital according to the provisions of this Law and the charters of
the companies where exists the contributed capital of State companies;

2. To designate,
replace, dismiss representa-tives of the companies’ contributed capital
portions according to the provisions of the charters of the companies where
exists the contributed capital and the Enterprise Law; to appoint people to
join the Managing Boards of joint-venture companies operating under the Law on
Foreign Investment in Vietnam (hereinafter called the representatives of
companies’ contributed capital portions); to decide on commendation,
discipline, allowances and other relevant interests of the representatives of
the companies’ contributed capital portions. The expenses for responsibility
allowances, rewards and other relevant interests for representatives of the
companies’ contributed capital portions shall be accounted into the business
expenses or covered by the State companies’ funds. The State companies’
representatives nominated to join the Managing Boards, the Members’ Councils or
to be directors of joint-stock companies where the State companies hold the
dominant stock capital or contributed capital must satisfy the corresponding criteria
and conditions prescribed in Articles 24, 31 and 36 of this Law;

3. To request the
representatives of the companies’ contributed capital portions to regularly or
irregularly report on the financial situation, the business results and other
contents on the companies where exist the contributed capital of the State
companies;

4. To assign tasks to
and request the represen-tatives of the companies’ contributed capital portions
to ask for opinions on important matters of the companies where exists contributed
capital of the State companies before voting thereon; to report on the use of
dominant shares or contributed capital in service of the State’s development
orientations and objectives;

5. To get yields and
bear risks from the contributed capital portions at companies. The recovered
capital portions, including divided interests thereon, shall be used under
decisions of the companies or organizations making investment with and dealing
in, capital in service of the business objectives of the companies or organizations.
Where the companies are reorganized, the management of their contributed
capital portions shall comply with the Government’s regulations;

6. To supervise and
inspect the use of contributed capital portions of the companies;

7. To bear responsibility
for the efficiency of the use, preservation and development of the contributed
capital portions of the companies.

Article
72.- Rights and obligations of the
representatives of the State companies’ contributed capital portions in other
enterprises

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1. To perform the
tasks and rights of share-holders, capital-contributing members, joint-venture
parties in the companies where exists the contributed capital of the State or
State companies. Where State companies hold dominant shares of other companies,
the representatives of contributed capital portions shall exercise the rights
of dominant shares or dominant contributed capital to direct the companies
where exist the dominant shares or dominant contributed capital of the State
companies to achieve the objectives set by the State-owners and assigned by the
State companies;

2. To stand as, or
nominate candidates, to be the State companies’ representatives in the
managerial or executive apparatuses of the contributed capital-receiving
companies according to the charters of such companies;

3. To monitor and
supervise the situation on business activities of the companies where exists
the contributed capital of the State companies;

4. To observe the
regime of reporting to the Managing Boards, the general directors and the
directors of the State companies on the efficiency of the use of the State’s
contributed capital at the companies;

In cases where they
fail to observe the prescribed reporting regime, abuse the rights to be
representatives of the contributed capital portions, show irresponsibility,
thus causing damage to the companies and the State, they must bear responsibility
therefor and pay compensations for the damage according to law provisions;

5. To ask for the
opinions of the Managing Boards, the general directors or directors before
joining in the voting at the shareholders’ congresses, at the meetings of the
Managing Boards or the Members’ Councils of the companies where exists
contributed capital portions of the State companies on the business
orientations, strategies and plans, the amendments and supplements to the
charters, the increase and reduction of charter capital, profit division, sale
of assets of big value, which require voting by shareholders or
capital-contributing members. Where many representatives of the State companies
join the Managing Boards of the contributed capital-receiving companies, they must
discuss together, reach unanimous opinions and ask for opinions on important
issues of the companies where exists the contributed capital of the State
companies before voting;

6. To bear responsibility
before the Managing Boards, for companies having the Managing Boards, or the
company directors, for companies having no Managing Boards, for the efficiency
of the use of the State’s contributed capital at the companies.

Chapter
VII

REORGANIZATION,
DISSOLUTION, BANKRUPTCY OF STATE COMPANIES

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Forms of
reorganization of State companies which do not alter the companies’ ownership
shall include:

1. Merger into other
State companies;

2. Consolidation of
State companies;

3. Division of State
companies;

4. Separation of State
companies;

5. Transformation of
State companies into State-run one-member limited liability companies or
State-run limited liability companies with two or more members;

6. Transformation of
State corporations with investment and establishment decided by the State into
corporations invested and set up by companies themselves;

7. Contracting or
lease of State companies;

8. Other forms as
provided for by law.

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1. Independent State
companies conducting business activities and being on the list of those which
the State shall consolidate, develop or maintain 100% ownership may be
transformed into State-run one-member limited liability companies or State-run
limited liability companies with two or more members.

2. The conditions for
reorganization of State companies in forms of merger, consolidation, division,
separation shall be prescribed by the Government.

3. The State
corporations set up under the 1995 Law on State Enterprises and meeting the
following conditions may be transformed, reorganized into the State
corporations invested and set up by companies themselves under the provisions
in Articles 54, 55, 56, 57, 58 and 59 of this Law:

a) Being on the list
of those which the State shall consolidate, develop and continue to maintain
100% State ownership in companies where the State holds dominant powers;

b) Having dominant
contributed capital in many other companies or having plans on equitization or
sale of member companies of the corporations, sections of the State companies,
where, however, the State holds dominant shares or dominant contributed capital;

c) Being engaged in
various business lines, of which one is the principal business line; having
many dependent units inside and outside the country;

d) Having large
capital for investment of capital in other companies;

e) Having the
development capability.

The principles and
schedules for transformation of State companies shall be prescribed by the
Government.

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1. The competence to
decide on reorganization of State companies is prescribed as follows:

a) The persons who
decide on the establishment of State companies shall organize the elaboration
of plans for, and decide on, the reorganization of companies. In case of merger
or consolidation of State companies of various ministries, of various provinces
or centrally-run cities, or between State companies set up by ministries and
State companies set up by provinces or centrally-run cities, the agencies
agreed upon shall perform the rights and obligations of owners of the
consolidating companies or the merging companies to issue decisions on merger
or consolidation of the companies; in case of failure to reach agreement, the
agencies having companies to be merged or consolidated may be the co-owners of
State-run limited liability companies with two or more members;

b) For cases of
reorganization or transformation of corporations, after the Appraisal Councils
make proposals and the Prime Minister approves the plans for reorganization of
the corporations, the persons who have decided the establishment of the
corporations shall decide on the reorganization of the corporations;

c) The Prime Minister
shall decide to reorganize important State companies in direct service of
defense and/or security.

2. The decisions on
reorganization of companies must be sent to creditors and notified to laborers
within thirty days as from the date of issuing the reorganization decisions.

3. Where the
reorganization of companies leads to the change in legal forms or business
objectives and lines, in charter capital, the companies must carry out
procedures for re-registration or additional registration with the business
registries.

Article
76.- Responsibilities of the reorganized
State companies

1. For cases of
division of companies, the divided companies shall terminate their existence and
the new companies shall jointly bear responsibility for the debts not yet
repaid, the labor contracts and other property obligations of the divided
companies.

2. For cases of
separation of companies, the separated companies and the separating companies
shall jointly bear responsibility for the debts not yet repaid, the labor
contracts and other property obligations of the separated companies.

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4. For cases of merger
of companies, the merging companies shall enjoy the lawful interests and bear
responsibility for the debts not yet repaid, the labor contracts and other
property obligations of the merged companies.

Article
77.- Dissolution of State companies

1. The State companies
shall be considered for dissolution in the following cases:

a) Upon the expiry of
the operation duration inscribed in the establishment decisions and the
companies do not apply for the extension;

b) The companies
suffer prolonged business losses but have not yet fallen into the state of
bankruptcy;

c) The companies fail
to fulfill the tasks assigned by the State after they have applied the
necessary measures;

d) The maintenance of
the companies is unnecessary.

2. The corporations
organized and set up by the State and failing to achieve the objectives
prescribed in Clause 5, Article 48 of this Law shall have their managerial
apparatuses dissolved and be transformed into independent State companies.

Article
78.- Decisions on dissolution of State
companies

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2. The persons who
decide to dissolve companies must set up the Dissolution Councils which
function to advise the company dissolution deciders on deciding to dissolve the
companies and organize the execution of the decisions on company dissolution.
The order and procedures for execution of the company dissolution decisions
shall be prescribed by the Government.

3. The complaints
about dissolution of State companies and the settlement thereof shall comply
with the provisions of legislation on complaints and denunciations.

Article
79.- Bankruptcy of State companies

The settlement of
bankruptcy of State companies shall comply with the provisions of legislation
on bankruptcy.

Chapter
VIII

CONVERSION
OF OWNERSHIP OF STATE COMPANIES

Article
80.- Forms of ownership conversion

The State companies
shall have their ownership conversed in the following forms:

1. Equitization of
State companies;

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3. Partial sale of
State companies to set up limited liability companies with two or more members,
including one member being the representative of the owner of the State capital
portion;

4. Assignment of State
companies to the labor collectives for transformation into joint-stock
companies or cooperatives.

Article
81.- Types of State companies subject to
ownership conversion

1. State companies
operating in branches and domains where the State needs not to hold 100%
charter capital shall be subject to the ownership conversion forms prescribed
in Article 80 of this Law.

2. The Government
shall prescribe the criteria for identification of branches and domains where
the State needs not to hold 100% charter capital in enterprises; holds dominant
shares or contributed capital; partially holds the capital; does not hold the
State capital; types of State companies to be assigned or sold to labor
collectives of the companies.

3. The Prime Minister shall
decide on the list, classification, plans for, and forms of ownership
conversion, of State companies.

Article
82.- Objectives of ownership conversion of
State companies

The ownership
conversion of State companies aims:

1. To restructure the
ownership of State companies where the State needs not to continue holding 100%
of their charter capital so as to use more efficiently the assets invested by
the State in the companies;

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3. To create
conditions for laborers to contribute capital and become the real masters of
the companies and have jobs.

Article
83.- Competence to select companies, to
approve ownership conversion plans, approve companies’ values and to decide the
ownership conversion

1. Basing themselves
on the provisions of Article 81 of this Law, the ministers, the heads of
ministerial-level agencies, the heads of Government-attached agencies and the
presidents of provincial-level People’s Committees shall select and decide
forms of ownership conversion of State companies.

2. The ministers, the
heads of ministerial-level agencies, the heads of Government-attached agencies
and the presidents of provincial-level People’s Committees shall organize the
valuation of the companies; decide on the values of the companies and approve
plans for ownership conversion of companies under their respective management.
The adjustment of companies’ values to be lower than the values inscribed in
the accounting books shall be guided by the Government.

3. The order and
procedures for ownership conversion of State companies shall be stipulated by
the Government.

Article
84.- Rights of ownership-converted
companies

1. To enjoy
preferences prescribed for newly set up companies under the provisions of
legislation on investment encouragement.

2. To be exempt from
registration tax on conversion of ownership over the assets of the State
companies into the ownership of share purchasers, company purchasers.

3. To be entitled to
continue with the land rent contracts of the former companies under the
provisions of land legislation.

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5. Purchasers of State
companies which have suffered prolonged losses are entitled to price discount
if they continue to maintain the companies for production and business,
re-employ the entire laborers of the companies and ensure jobs for them within
the time limits prescribed by the Government, except for cases where laborers
voluntarily terminate their labor contracts. The price discount levels shall be
prescribed by the Government.

6. Other interests and
preferences as prescribed by law.

Article
85.- Rights of laborers in
ownership-converted State companies

The laborers in the
ownership-converted State companies shall have the following rights:

1. To maintain and
develop welfare funds in kind under the ownership of the labor collectives,
which are managed by trade union organizations of the companies;

2. To be entitled to
use the welfare funds and reward funds in money (if any) divided to laborers
for purchase of shares;

3. To be given
priority in purchase of the companies, purchase of shares under the
Government’s regulations;

4. Other interests as
prescribed by law.

Article
86.- The State’s guarantee for share
purchasers, State-company purchasers or assignees

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Chapter
IX

STATE
MANAGEMENT OVER STATE ENTERPRISES

Article
87.- Contents of the State management over
State companies

1. To promulgate, and
organize the implementation of, legal documents on the State enterprises and
other relevant legal documents.

2. To elaborate
plannings and strategies for development of State companies according to the
orientations and objectives of the strategies, plannings and plans for
socio-economic development, branch development and territorial development.

3. To organize
business registration for the State companies; to build up and store basic
information on the State companies; to monitor and supervise business operation
of the State companies after registration; to ensure that the State companies
operate strictly under the conditions prescribed in the establishment decisions
and business registrations according to law provisions.

4. To draw up
plannings and organize the training, professional fostering, raising of
business ethical qualities for managers of the State companies, the political
and moral qualities as well as professional qualifications for officials
performing the State management over the State companies; to train and build up
the contingents of skilled workers.

5. To promulgate lists
of products, financial management modes and preferential policies for
public-utility products and services in each period.

6. To inspect and
examine the implementation of law, policies and regimes of the State in the
State companies; to settle complaints and denunciations and handle violations
according to law provisions.

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1. The Government
shall exercise the uniform State management over State companies; prescribe the
responsibility assignment and coordination among ministries, ministerial-level
agencies, Government-attached agencies as well as the decentralization and
coordination among the People’s Committees at all levels in performing the
tasks of State management over the companies.

2. The ministries and
ministerial-level agencies shall perform the State management over State
companies according to their respective functions and domains put under their
respective charge.

3. The
provincial/municipal People’s Committees have the responsibilities:

a) To perform the
State management over State companies within their respective localities
according to law provisions;

b) To organize
business registration; to inspect, examine and supervise activities of the
State companies within their respective localities;

c) To guide and direct
the People’s Committees of rural districts, urban districts, provincial
capitals or towns in the coordinated performance of the State management over
State companies.

Article
89.- Auditing and inspection of business
activities of State companies

1. The annual financial
statements of the State companies must be audited; the auditing regime shall
comply with the law provisions on audit.

2. The inspecting
agencies shall inspect business activities of the State companies strictly
according to their functions and competence and comply with the law provisions
on inspection.

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The irregular
inspection shall be conducted only when there are grounds on law violations by
companies.

When conducting
inspection, there must be decisions of the competent persons; upon the
termination of inspection, there must be records and conclusions on the
inspection; heads of the inspection teams are responsible for the contents of
the inspection records and conclusions.

The persons who issue
inspection decisions in contravention of law or abuse the inspection to seek
personal benefits, harassing for bribes and/or causing troubles for operations
of the companies shall, depending on the nature and seriousness of their
violations, be disciplined or examined for penal liability; if causing damage,
they must pay compensations therefor according to law provisions.

Article
90.- State management over other State
enterprises

1. The State
management over State-run one-member limited liability companies, State-run
limited liability companies with two or more members and State-run joint-stock
companies shall comply with the provisions of the Enterprise Law and the
Government’s regulations.

2. The State
management over the joint-stock companies and the limited liability companies
with the State’s dominant shares or contributed capital shall comply with the
provisions of the Enterprise Law.

Chapter
X

COMMENDATION
AND HANDLING OF VIOLATIONS

Article
91.- Commendation

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Article
92.- Handling violations committed by
State companies or economic organizations

1. Those State
companies which commit the following acts of violation shall, depending on the
nature and seriousness of their violations, be suspended from operation or administratively
sanctioned according to law provisions:

a) Setting up State
companies not according to the provisions of this Law;

b) Failing to make
business registration, doing business not in accordance with the registered
lines or without permission of competent State bodies;

c) Failing to
implement the tasks and objectives prescribed by the State;

d) Seriously violating
other provisions of this Law.

2. Economic
organizations operating in the name of State company without establishment
decisions shall be suspended from operation and have their property confiscated
and remitted into the State budget.

Article
93.- Handling of violations committed by
individuals

Individuals who commit
the following acts of violation shall, depending on the nature and seriousness
of their violations, be disciplined, administratively sanctioned or examined
for penal liability; if causing damage, they must pay compensations therefor
according to law provisions:

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2. Deciding to set up
State companies not in accordance with the prescribed procedures and order or
ultra vires, showing irresponsibility in appraising the establishment thereof,
thus leading to inefficient operations of the companies;

3. Failing to properly
implement the policies towards laborers in the State companies;

4. Interfering in
affairs which fall under the jurisdiction of the companies; harassing companies,
requesting companies to provide resources not prescribed by law;

5. Violating other
provisions of this Law.

Chapter
XI

IMPLEMENTATION
PROVISIONS

Article
94.- Implementation effect

1. This Law takes
implementation effect as from July 1, 2004.

2. This Law replaces
the 1995 Law on State Enterprises.

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State corporations and
independent State enterprises, which have been set up before the effective date
of this Law and fail to satisfy the conditions prescribed by this Law for State
corporations or independent State companies, must be reorganized, dissolved or
have their ownership converted according to the Government’s regulations.

Article
95.- Implementation guidance

The Government shall
detail and guide the implementation of this Law.

The Government shall
assign the competent agencies to coordinate with Vietnam Labor Confederation in
guiding the organization and operation of the Congresses of public servants in
the State companies and the laborers’ participation in the management of
companies according to the provisions of this Law.

This Law was passed on
November 26, 2003 by the XIth National Assembly of the Socialist Republic of
Vietnam, the 4th session.

National
Assembly Chairman