Legal Analysis

DECREE NO.10/2019/ND-CP ON IMPLEMENTING RIGHTS AND RESPONSIBILITIES OF STATE OWNER’S REPRESENTATIVES

The Government has just issued Decree No.10/2019/ND-CP regulating the exercise of rights and responsibilities of representatives of state owners. The Decree takes effect from March 15, 2019. Accordingly, the Decree provides for regulations on identifying a subject as a state owner’s representative to enterprises. Although Law No. 69/2014 /QH13 on Management and Use of State Capital Invested in Business Activities of Enterprises dated November 26, 2014, Decree 91/2015/ND-CP and Decree 32/2018/ND-CP detail the competence, orders and procedures for state capital investment to establish enterprises, these documents have not provided adequate and clear guidance on the issuance of decisions on establishment of 100% state-owned enterprises and preparations for registration of such enterprises. Therefore, Decree No.10 was issued to provide a guidance on unclear issues or no specific guidelines for the issuance of decisions on establishment of 100% state-owned enterprises. In addition, the Decree sets forth a uniform guidance on the implementation of rights and responsibilities of the state owner’s representative agency in approvals of production and business strategies; the re-organization, dissolution, transformation of enterprises with 100% capital owned by the State into limited liability companies with two or more members.

A few key provisions of the new regulations are highlighted below:

Under the Decree No.10, the Prime Minister shall carry out rights and responsibilities of the state owner’s representative under the provisions of the Law on management and use of state capital invested in business activities of enterprises and other relevant laws.

The owner’s representative agency shall implement rights and responsibilities as a state owner’s representative to enterprises that the representative decides to establish or is authorized to manage, and shall implement rights and responsibilities as a state owner’s representative for state capital contribution portions at joint-stock companies and multiple-member limited liability companies in accordance with the Law on management and use of state capital invested in business activities of enterprises and other relevant laws.

The owner’s representative shall directly carry out rights and responsibilities of the state owner’s representative at enterprises under the provisions of the Law on management and use of state capital invested in business activities of enterprises and other relevant laws.

The Decree also provides for the organization of the exercise of the rights and responsibilities of representatives of state owners; in which, specifying the rights and responsibilities of the representative agency on establishment, reorganization, ownership transformation, dissolution, bankruptcy and transfer of enterprises with 100% capital owned by the State regulations; rights and responsibilities of the agency representing the owner of the charter, strategy and plan of an enterprise with 100% charter capital owned by the State.