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Question :: I am a member of the Supervisory Commission (the Commission) of a public company which is unlisted and termed from 2007 to 2010. Until now, my term is still valid. In 2009, I was [not] invited to attend any meeting of the company’s Commission. Recently, I also did not attend the Commission’s meeting to produce the Commission’s Report for submission to the General Shareholder’s Meeting (the Meeting) year 2010 on April 9. I was informed that this Commission’s Report was built by the Commissions’ Director (the another member of the Commission also did not attend). I would like to ask you whether the operation of the Commission like that is legal or not? Is the Report mentioned above legal? What should I do to comply with the rights, duties and obligations of a Commission’s member?
Question :: I am a president of the Management Board (“the Board”) of a public company. As per regulations, the term of the Board, Supervisory Commission (“the Commission”) is five (5) years. Therefore, the first term of the Board, Commission is due on November 2010. However, in order to facilitate the voting of the Board, the Commission in the second term, the Board would like to submit the General Shareholder’s Meeting (“the Meeting”) with the latest on April 19, 2010 for renewal of the first term of the Board, the Commission until April 2011. So, the question is that is the renewal true or not? If the shareholders are not taken opinions directly at the Meeting, can the Board collect opinions indirectly from shareholders in writing? If the Meeting does not pass the renewal, how can the voting of the Board, the Commission be taken in compliance with laws?
Question :: Our company registers shares at the Securities Depository Central (SDC), but cannot deposit, of which my 10.000 shares. So, can I transfer directly 2.000 shares to my brother and compliment 2.000 shares to my wife?

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LEGAL NEWS

Regulation on Financial Management of State-Owned Companies and Management of State Capital Invested in Other Enterprises

In order to provide guidance for implementing the Regulation on financial management of state-owned companies and management of state capital invested in other enterprises promulgated together with the Government’s Decree 09/2009/NĐ-CP dated 5 Feb 2009, the Finance Ministry issued Circular 242/2009/TT-BTC on 30 Dec 2009. This Circular takes effect from 14 Feb 2010 and is applied for handling the matters arising since the fiscal year 2009.

Accordingly, the subjects which need to be adjusted are the financial management activities of state-owned companies and the management of state capital invested in other enterprises duly incorporated and operating under the Enterprise Law & the Co-operative Law, including wholly state-owned parent companies in the economic groups and state-owned corporations.

The Circular also specifies a number of provisions on investment restriction and capital contribution, such as subsidiary companies not entitled to invest and contribute capital to the parent company; subsidiary companies and enterprises under the parent company not entitled to contribute capital for purchase of shares when an equitized enterprise is under the same group or corporation or under a parent-subsidiary complex. According to many experts, this Circular may limit cross investment by the companies in the same group, even a subsidiary investing in a parent company.

In addition, state-owned corporations and groups are not permitted to raise capital by itself which causes the debt ratio to exceed their charter capital by three-fold (for a company having a management board), or to surpass their charter capital (for a company without a management board), but they must report to the owner’s representative for consideration and approval in this case.

The Circular also stipulates if a company is not permitted to mobilise capital exceeding the above level, but its debt ratio exceeds the charter capital by three-fold for two consecutive years, it must conduct the financial investment assignment, diversify the ownership of member units, withdraw its investment capital in other sectors besides its main business line, etc.

To ensure the business efficiency and the accountability of the representative for the contributed capital in enterprises, the Circular specifies the reporting regime for the representative of state capital in enterprises, as well as clarify the accountability of the concerned person(s) in order to report to the owner’s representative for resolution in accordance with the legal regulations.