Arrangement, handling of real estate to be separated from equitization process

	Control capital mobilization of real estate enterprises in stock market
	Real estate businesses manage with sustainable capital flow
	Change to adapt to the actual situation

SOEs must prepare land use plans to report to the owner's representative agency for constancy from the People's Committees of provinces and centrally run cities before approving the land use plan upon equitization Photo: ST

A series of decrees to be revised

The legal framework on equitization and divestment has been amended and supplemented. But the progress of equitization and divestment has shown signs of slowing down, failing to meet the plan set out by the Prime Minister. This is because of many reasons, including the system of legal documents, said the Ministry of Finance

Implementing the direction of the National Assembly, Government and Prime Minister on removing problems and difficulties for SOEs in equitization and divestment, the Ministry of finance is reviewing to report to the competent authority on amendments to related legal documents such as Decree 91/2015 ND-CP, Decree 126/2017/ND-CP, Decree 32/2018/ND-CP and Decree 140/2020/ND-CP, in 2022.

Accordingly, the amendments and supplements to policies on equitization and divestment shall be focused such as separating the arrangement and handling of real estate from the equitization process, including the value of land use rights into the enterprise’s value upon equitization, providing for the method of calculating the enterprise’s value upon equitization; completing provisions on profit sharing of enterprise associated with adding charter capital from dividends and after-tax profits; improving provisions on adjusting charter capital at the enterprise of which 100% charter capital is owned by the State; and amending provisions on determining the value of culture and history in the starting price to transfer capital and defining the responsibilities of the Steering Committee for Equitization.

For the separation of arrangement and handling of real estate from the equitization process, under Decree 126/2017/ND-CP, Decree 140/2020/ND-CP and the plan of arrangement and handling of real estate described in law on management and use of public assets and the plan on land use for agriculture and forestry enterprises, SOEs must make a plan to use land and report it to the owner's representative agency for constancy from the People's Committees of provinces and centrally run cities before approval.

However, the approval of the housing arrangement and handling plan has been very slow. The reason is that the origin and use of houses and land by SOEs are complicated and the management of houses and land is not strict.

In addition, the main reason is that some agencies, units, localities and businesses are not fully aware that the work of rearranging and handling houses and land is regular work but only takes place upon equitization and only serves the transformation of enterprise type.

Therefore, the Ministry of Finance is studying to amend this regulation in the direction of separating the arrangement and handling of real estate from the equitization process, removing the regulation on the condition that equitization enterprises must prepare a plan to arrange and handle houses and land.

Joint-stock company must commit to managing and using the land for the right purposes

Regarding the inclusion of the value of land use rights into the enterprise’s value upon equitization, the Ministry of Finance said that it is studying to amend this regulation in the direction of only determining the value of land use rights into the enterprise for land allotted or won at auction to conduct real estate business by SOEs whose main business line is real estate business and in some special cases under the Prime Minister's decision.

The land price used to determine the value of land use rights into the equitized enterprise value is the specific land price at the location where the enterprise has the land area allotted by the People's Committee of the province or city according to the provisions of Clause 3 and Point d, Clause 4, Article 114 of the Land Law. For the remaining SOEs, upon equitization, these enterprises will lease the land and pay annual rental but include the value of land use rights in the enterprise’s value.

According to the Ministry of Finance, the joint-stock company must commit to managing and using land for the right purposes and the use plan of the entire land area approved by the competent authority. If the company wants to change the land use purpose, it must return the land to participate in the auction of change the land use purpose according to the provisions of the land law.

If the land use planning, construction planning or land use plan is changed and the land must be recovered, the State shall compensate the company according to the provisions of the land law. The company shall prepare land use plans according to the current status and submit them to the owner's representative agency for approval, fully publicizing information about the land and the above-mentioned contents upon initial public offering (IPO).

In addition, the responsibilities of competent state management agencies in inspecting and supervising land use purposes after equitization shall be added in accordance with Resolution 18-NQ/TW dated June 16, 2022 and Resolution 62/2022/QH15 dated June 16, 2022 of the National Assembly.

Regarding the regulations on calculation methods of enterprise’s value upon equitization, the Ministry of Finance is reviewing and revising the calculation methods in the direction that consulting organizations may select calculation methods of enterprise’s value, including the asset method and at least another method as prescribed by the law on price and appraisal for submission to the owner's representative agency.

Ministry of Finance requests expediting equitization, divestment and restructuring of SOEs

The enterprise’s value and the value of state capital at the enterprise determined and announced must not be lower than the value of the enterprise and the value of state capital at the enterprise is determined by the asset method and the consulting organization is responsible for the price appraisal.