The Ministry of Finance suggested establishing a mechanism to facilitate the divestment of state capital in cases where a subsidiary experiences financial losses


The Ministry of Finance suggested establishing a mechanism to facilitate the divestment of state capital in cases where a subsidiary experiences financial losses

The Ministry of Finance is putting forth a proposal to revise multiple regulations, aiming to address issues encountered by enterprises where the State maintains ownership of over 50% of the charter capital. Under the proposed changes, the distribution of remaining profits to shareholders, in either cash or shares, will be implemented through two methods. Additionally, state-owned enterprises will be granted the authority to divest capital from entities experiencing financial losses.

State-owned enterprises have difficulty divesting capital from businesses that are suffering losses or accumulated losses.

Presently, the Ministry of Finance is in the process of crafting a draft Decree that proposes amendments and additions to various provisions of Decree 91/2015/ND-CP, issued on October 13, 2015, regarding state capital investment in enterprises and the management and utilization of capital and assets within these enterprises. The draft also considers modifications introduced by Decree No. 32/2018/ND-CP, dated March 8, 2018, and Decree No. 140/2020/ND-CP, dated November 30, 2020, both issued by the Government. The Ministry is actively seeking feedback from relevant stakeholders.

In comparison to the existing regulations, the draft introduces changes to guidelines concerning the distribution of after-tax profits and the divestment of capital in situations where it may jeopardize business operations. It is anticipated that the proposed decree will have implications for state-owned enterprises.


According to the draft report submitted to the Government regarding the proposed decree, the Ministry of Finance suggests that enterprises with 50% or more charter capital held by the State should not be allowed to divest from companies experiencing losses or accumulated losses, as it may impact the investment capital of those enterprises.

Citing issues within the mechanism, the Ministry of Finance refers to the case of Vietnam Airlines Corporation – Joint Stock Company (Vietnam Airlines) in the context of the overall project to address challenges faced by Vietnam Airlines due to the Covid-19 pandemic. The proposal involves finding a solution to divest capital from Pacific Airlines Joint Stock Company (PA).

Moreover, the draft report emphasizes that enterprises with 50% or more of charter capital held by the State should refrain from divesting capital from companies facing losses or accumulated losses, which could adversely affect the investment capital of the concerned enterprises.

The Ministry of Finance reveals that, based on reports and instructions, the Capital Management Committee directed the state capital representative at Vietnam Airlines to amend the company’s charter for the divestment process in other enterprises. The proposed methods include public auction, competitive offers, and agreements if the first two methods are unsuccessful.

However, the public auction method faced implementation challenges due to issues with relevant regulations in the Securities Law 2019. Specifically, the law requires joint stock companies to have profitable business activities for two consecutive years immediately preceding the year of registration for offering, without any accumulated losses.

Pacific Airlines has been experiencing continuous losses since the early 2000s, recording a pre-tax profit loss of VND 2,096 billion in 2022. Following unsuccessful restructurings, the Australian national airline Qantas Group chose to withdraw and donate 30% of its shares in Pacific Airlines to Vietnam Airlines, resulting in Vietnam Airlines holding 98% of Pacific Airlines shares.

To address these challenges, the Ministry of Finance proposes amending Decree 91 to resolve issues and establish a legal foundation for enterprises with more than 50% of charter capital held by the State to divest capital from other businesses facing losses or accumulated losses.

The proposed amendments include regulations specifying that, for divestment from a joint stock company with more than 50% of the charter capital held by the State in an enterprise where the State holds more than 50% of the charter capital, the joint stock company must ensure the business operations of the enterprise for two consecutive years preceding the divestment year, showing a profit and no accumulated losses up to the year of divestment. The owner’s representative agency will direct the representative of the selected state capital portion in accordance with Clause 2, Article 127 of the Law on Enterprises 2020, adhering to the lawful order, procedures, and authority for capital divestment in line with the management and utilization of state capital invested in production and business at enterprises.


In addition to the aforementioned details, the Ministry of Finance highlighted in its report that both the Committee for Management of State Capital at Enterprises and the Airports Corporation – Joint Stock Company (ACV) have issued official dispatches outlining the distribution of after-tax profits in accordance with regulations.

Specifically, the Capital Management Committee proposed permitting ACV to distribute dividends in the form of shares, aiming to bolster ACV’s capital and facilitate the execution of vital national projects and extensive initiatives such as the Long Thanh International Airport, Port project, passenger terminal T3 of Tan Son Nhat International Airport, and the expansion of terminal T2 of Noi Bai International Airport.

The rationale behind this proposal stems from the concern that adhering to existing regulations may impede ACV’s ability to meet capital requirements for timely completion of investments and constructions. This is especially crucial for the phase 1 completion and operation of the Long Thanh International Airport project by 2025.

Under the current regulations, it is explicitly stated that for enterprises in which the State holds more than 50% of charter capital or total voting shares, the distribution of after-tax profits and dividends follows a specific order. The Ministry of Finance’s proposal aims to address this issue by amending Decree 91, focusing on regulations pertaining to joint stock companies held by the State with more than 50% of charter capital or total voting shares. The proposed amendment suggests that the remaining profits be distributed as dividends to shareholders in either cash or shares.

The Ministry of Finance clarified that the distribution of dividends in shares should be applicable solely to joint stock companies involved in significant national projects, subject to approval by competent authorities and the Prime Minister.

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