New Bill Proposes Enhanced Corporate Authority for State-Owned Enterprises Regarding Capital Management and Investment Decisions
Hey there! Let's dive into the latest updates on the revised draft Law on the Management and Investment of State Capital in Enterprises in Vietnam. This law, presented at the 9th session, is all about giving enterprises more autonomy and refining the management of state capital. Here's what's new:
Empowering Enterprises through Decentralization
The revised draft law seeks to streamline administrative procedures by:
- Cutting Red Tape: About 30% of current administrative procedures are set to be axed, and 50% of procedures previously submitted to the Prime Minister will be reduced or consolidated to the owner's representative agency[2]. This move is designed to empower enterprises by reducing bureaucratic red tape and increasing autonomy.
Broadening the Scope of State Capital Management
The draft law now includes provisions for managing enterprises where the State directly invests under 50% of charter capital[2], ensuring comprehensive management and investment of State capital across different ownership structures.
Clarifying State Capital vs. Enterprise Operations
In terms of legal clarification, the revised draft law differentiates between state capital and enterprise assets. Once capital is contributed, it becomes the property of the enterprise, and the state owns shares, not the assets. This distinction aims to ensure fair competition, strengthen enterprise autonomy, and align more closely with market principles[4].
Performance Evaluation and Decision-Making
Enterprise performance evaluations will serve as a basis for decisions related to appointing, reappointing, or terminating the contracts of individuals representing state capital, as well as determining employee bonuses and benefits[4].
These changes, by and large, are geared towards ensuring state-owned enterprises (SOEs) operate more effectively under market mechanisms while maintaining appropriate oversight and management of state capital.
[1] - http://vietnamnews.vn/economy/613518/revised-draft-law-on-state-capital-submitted-to-national-assembly.html[2] - https://www.vietnamplus.vn/ngan-ha-xu-thac-thoi-trang-cu-luat-quan-ly-va-may-tinh-capital-structure-422719222[3] - https://en.vietnam.gov.vn/about-vietnam/economy-sectors/state-owned-enterprises/12767-explaining-state-capital-in-enterprises.html[4] - https://vietnamnet.vn/vn/economy/cham-soc-tieu-huong-loi-nhu-ma-luat-quan-ly-hat-capital-613748.html
National Assembly (NA) deputies on Tuesday heard a report on revision of the draft Law on the Management and Investment of State Capital in Enterprises. VNA/VNS Photo
- The revised draft Law on the Management and Investment of State Capital in Enterprises aims to enhance the autonomy of enterprises by cutting red tape, with approximately 30% of administrative procedures being eliminated, and 50% of procedures formerly submitted to the Prime Minister being reduced or consolidated to the owner's representative agency.
- The draft law expansion now encompasses the management of enterprises where the State invests less than 50% of charter capital, ensuring comprehensive management and investment of State capital across varied ownership structures.
- In the revised draft law, state capital is differentiated from enterprise assets, with the goal of strengthening enterprise autonomy and ensuring fair competition, aligning more closely with market principles.
- Enterprise performance evaluations will now be a key factor in decision-making regarding the appointment, reappointment, or termination of individuals representing state capital, as well as determining employee bonuses and benefits.
- Governments, businesses, and the AI sector must adapt to these changes to ensure state-owned enterprises operate more effectively under market mechanisms while maintaining appropriate oversight and management of state capital.
- The opinion of the industry, finance, science, technology, and government sectors will play a crucial role in weighing the potential benefits and drawbacks of these changes and their impact on the economy and business in general.
