State investment in enterprises under stricter surveillance
The Government on October 6 issued Decree No. 87/2015/ND-CP on supervision of state capital investment in enterprises; financial supervision, assessment of operation efficiency and disclosure of financial information of state-owned and state-invested enterprises.
Under the new regulation, the Ministry of Finance (MOF) will be responsible for coordinating with other related ministries and sectors in performing the supervision of state capital investment in enterprises.
The activities involved in the supervision are specified in Clauses 2 thru 6, Article 51 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.
The new regulation also lays out five criteria for assessing efficiency of enterprises’ operation, including turnover; after-tax profits and return-on-equity ratio; overdue debts and capacity to pay due debts; observance of the law on investment, management and use of state capital, laws on taxes and other budget remittances, and regulations on financial statements and reports for financial supervision; and provision of public-utility products and services.
These criteria are identified based on data in audited annual financial statements and regular statistical reports of independent single-member limited liability companies and parent companies.
The Decree also requires financial information to be made public on a regular basis based on biannual and annual financial statements.
In the last quarter of a year, the MOF is tasked to prepare a plan on supervision of state capital investment in enterprises for publicization before January 31 of the following year. The ministry will also have to receive and make public enterprises’ financial information on its website starting from the 2016 fiscal year.
The new regulation will take effect on December 1, 2015, and replace Decree No. 61/2013/ND-CP of June 25, 2013.