Investment of state capital in an enterprise refers to the use of such capital assets allocated from the State budget or those derived from funds managed by the State for the purpose of investing in financing for such enterprise.

Mr. Tran Thanh Bang (in Ho Chi Minh City) would like to request the authority to respond to this following issue:

As specified in Clause 44, Article 4 of Law on Bidding No. 43/2013/QH13: “44. Financed by the State means the use of State Budget funds; national bonds, Governmental bonds, bonds of local authorities; official development assistance capital, concessional loans from donors; fund for development of non-business activities; credit facilities for investment and development of the State; credit facilities guaranteed by the Government, loans guaranteed by assets of state; investment and development funds of State-owned enterprises, and value of land-use right.”

Company A, a state-owned corporation (100% charter capital), owns 90% of company B’s shares (B is a joint stock company). Company B owns 51% of company C’s shares. When company C carries out the investment activities financed by its own development investment capital, not from commercial loans, this source is not included in the State capital.

Mr. Bang would like to ask, Is my interpretation correct?

Regarding this issue the Ministry of Finance gives the following opinion:

Pursuant to clause 3, article 3 of Law No.69/2014/QH13 dated November 26, 2014 of the National Assembly on management and utilization of state capital invested in the enterprise’s manufacturing and business activities:

 “3. Investment of state capital in an enterprise refers to the use of such capital assets allocated from the State budget or those derived from funds managed by the State for the purpose of investing in financing for such enterprise”.

Pursuant to clause 1, clause 5, Article 4 of Decree No. 91/2015/NĐ-CP dated October 13th 2015 of the Government on state capital investment in enterprises, use and management of capital and assets in enterprises:

 “1. Representative agency of state capital owner refers to Ministries, Ministry-level agencies and Government agencies (hereinafter referred to as managing Ministry); People’s Committees of centrally-affiliated cities and provinces (hereinafter referred to as provincial People’s Committee), or organizations established under legal regulations.

 … 5. Other state capital invested in an enterprise refers to the capital invested in a joint stock company or multiple-member limited liability company to which the portion of capital contributed is owned by the representative agency”.

Based on the above provisions and according to the content of Mr. Bang's question above, Company B is a joint stock company. When company B contributes 51% of the shares in company C, this capital contribution is considered as the capital investment of company B in company C (not the State capital invested in company C).