The new regulations on the rights and responsibilities of representatives of state capital in enterprises

On 26/12/2024, the Government issued Decree No. 167/2024/ND-CP amending and supplementing a number of articles of Decree No. 91/2015/ND-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets in enterprises, which were amended and supplemented by Decree No. 32/2018/ND-CP dated March 8, 2018 of the Government and Decree No. 140/2020/ND-CP dated November 30, 2020 of the Government.

The Decree No. 167/2024/ND-CP amending and supplementing Clause 3, Article 37 of Decree No. 91/2015/ND-CP, which was amended and supplemented in Clause 14, Article 1 of Decree No. 32/2018/ND-CP, which was amended and supplemented in Clause 17, Article 2 of Decree No. 140/2020/ND-CP as follows:

The rights, responsibilities, salaries, remuneration, bonuses and other benefits of the representative of state capital shall comply with the provisions of Articles 48 and 50 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises and the following contents:

The representative of state capital at an enterprise with shares and capital contributions of the State must seek the opinion of the owner's representative agency on the annual after-tax profit distribution plan of the enterprise for which he/she is the capital representative in order to participate in giving opinions, voting and deciding at the General Meeting shareholders, the meetings of the Board of Members as prescribed. Before directing the representative to give opinions, vote and make decisions at the General Meeting of Shareholders, the meetings of the Board of Members, the representative body of the owner must send a written request for opinions to the financial agency at the same level (for enterprises with shares and capital contributions of the State holding 36% or more of the charter capital). Within 10 working days from the date of receipt of the document of the representative body of the owner (attached: the current charter of organization and operation of the enterprise, audited annual financial statements and the plan for annual dividend and after-tax profit distribution of the enterprise), the financial agency at the same level shall give opinions so that the representative body of the owner can direct the representative of the State capital portion at the enterprise to give opinions, vote and make decisions at the General Meeting of Shareholders, the meetings of the Board of Members. The plan for distributing annual after-tax profits at enterprises with shares and capital contributions of the State (except for credit institutions that are joint-stock commercial banks with State capital) must ensure implementation according to the following principles:

For enterprises with shares and capital contributions in which the State holds more than 50% of the charter capital or total number of voting shares, the plan for distributing dividends and annual after-tax profits shall be distributed in the following order:

Distributing profits to associated capital contributors according to the provisions of the signed economic contract (if any);

Compensating for losses of previous years that have expired the period for deduction from pre-tax profits according to regulations.

Deducting a maximum of 30% into the enterprise development investment fund (if the Charter of organization and operation of the enterprise stipulates the setting aside of this Fund).

Deducting the reward fund, welfare fund for employees in enterprises, and the reward fund for enterprise managers according to the Government's regulations on labor, salary, remuneration, and bonuses for companies with shares and capital contributions controlled by the State.

The remaining profits shall be distributed in cash or shares to shareholders and capital contributors. For dividends and profits distributed in cash for the State capital contribution in enterprises, they shall be paid into the State budget according to regulations.

Dividends in shares shall only be applied to joint stock companies within the scope of additional State capital investment to implement important national projects according to the classification criteria prescribed in the Law on Public Investment and approved by competent authorities for project policies. The owner's representative agency shall fully exercise the rights and responsibilities stipulated in Article 43 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, ensuring the effective use of capital from stock dividends, without creating loopholes for embezzlement or corruption. If there is a violation, it shall be handled according to the provisions of law.

For enterprises with shares and capital contributions in which the State holds from 36% to 50% of charter capital, after receiving opinions from the financial agency at the same level, the owner's representative agency shall be responsible for directing the representative of the State capital portion in the enterprise to participate in giving opinions, voting and deciding at the General Meeting of Shareholders and the meeting of the Board of Members on the annual after-tax profit distribution plan in the same order as enterprises with shares and capital contributions in which the State holds from 50% or more of charter capital as mentioned above.

For enterprises with shares and capital contributions in which the State holds less than 36% of charter capital, based on the annual production and business plan, the owner's representative agency is responsible for directing the representative of the State capital portion at the enterprise to participate in giving opinions, voting and deciding at the General Meeting of Shareholders and the meeting of the Board of Members on the plan for distributing annual after-tax profits appropriately, in which the remaining profits after setting aside funds according to the Charter and Financial Management Regulations are fully distributed as dividends and profits in cash to shareholders and capital contributors. For dividends and profits distributed in cash for the State capital portion contributed to this enterprise, they are paid into the State budget according to regulations.

For credit institutions that are joint stock commercial banks with state capital, the distribution of profits after corporate income tax shall be carried out in accordance with the provisions of Decree No. 93/2017/ND-CP dated August 7, 2017 of the Government on financial regime for credit institutions, foreign bank branches and financial supervision, evaluation of the efficiency of state capital investment in credit institutions with 100% state capital and credit institutions with state capital and amendments, supplements and replacements.

Periodically within a maximum period of 15 days from the end of each quarter and 30 days from the end of the year and sudden at the request of the owner's representative agency and the financial agency at the same level, the representative of state capital allocation shall report on the production, business situation, financial situation and propose solutions for the enterprise for which he/she is appointed to represent state capital. The report of the representative of the State capital portion shall be sent to the representative agency of the owner and the financial agency at the same level according to the form prescribed in Appendix III issued with this Decree.

This Decree takes effect from the date of signing.