On 5 November 2009, the Government issued Decree No. 101/2009/ND-CP on piloting the establishment, organisation, operation and management of State economic groups ("Decree 101").
These new regulations have been drafted to govern the establishment and operation of State economic groups and aim at providing strict measures on supervision to ensure these groups contribute fully to the entire economy.
Pursuant to Decree 101, a State economic group is comprised of a group of large-scale companies connected in the form of parent-subsidiary companies and other forms, constituting a group of enterprises attached to each other in terms of economic interests, technology, market and other services.
The establishment of a proposed State economic group must meet the following conditions:
- Being capable of developing its major business sector, which falls within the following list:
1. Post, telecommunication and information technology;
2. Shipbuilding, ship repair;
3. Production, transmission, distribution and trading of electricity;
4. Survey, exploration, exploitation, processing and distribution of oil and gas;
5. Survey, exploration, exploitation, processing of coal and minerals;
6. Textile and garment;
7. Planting, exploitation, processing of rubber;
8. Production, trading of fertiliser and chemicals;
9. Investment and trading in real estate;
10. Construction industry and machinery manufacturing;
11. Finance, banking and insurance;
12. Other sectors as decided by the Prime Minister.
- Focusing on making investments and conducting business in its core business sector and related sectors.
- Among other things, the parent company's charter capital must be not less than the minimum capital required for the relevant sector (as decided by the Prime Minister). The parent company must be equipped with sufficient and experienced staff, and have the financial capability to conduct the major business and other related business investments.
A State economic group is subject to conditions on restricted investment and cross-investment measures among related companies.
The State economic group may engage in business in unrelated sectors provided that such participation does not negatively affect its major sector business and helps develop its core business.
All investment operations are under the strict supervision of government officials who oversee the use of State capital in the State companies.
Decree 101 will take effect from 20 December 2009.
For inquiries related to this Client Alert, please contact:
Dao Nguyen (firstname.lastname@example.org)
Thinh Dan (email@example.com)