The Ministry of Finance is drafting a Decree amending and supplementing a number of articles of Decree No. 91/2015/ND-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets at enterprises, which has been amended and supplemented in Decree No. 32/2018/ND-CP dated March 8, 2018 of the Government and Decree No. 140/2020/ND-CP dated November 30, 2020 of the Government.

One of the points the Ministry of Finance wants to amend is related to the regulation on divestment from loss-making enterprises.

According to the Ministry of Finance, enterprises in which the State holds 50% or more of the charter capital cannot divest capital from enterprises that are suffering losses or accumulated losses, affecting the investment capital of the enterprise.

The Ministry of Finance cited the case of Vietnam Airlines divesting capital from Pacific Airlines Joint Stock Company as an example of the mechanism's problems.

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Pacific Airlines lost more than 2,000 billion. Photo: Hoang Ha

According to current regulations, to be eligible for divestment, Pacific Airlines' business operations must have been profitable for two consecutive years prior to the year of registration for offering, and must have no accumulated losses up to the year of registration for offering.

But since the early 2000s, Pacific Airlines' business results have been continuously losing money. In 2022, Pacific Airlines continued to record a pre-tax profit loss of VND2,096 billion.

After several unsuccessful restructuring attempts, the Australian national airline Qantas Group chose to withdraw and give away 30% of its shares in Pacific Airlines to Vietnam Airlines. To date, Vietnam Airlines holds 98% of Pacific Airlines shares.

From the above problems, the Ministry of Finance believes that it is necessary to amend Decree 91 to remove obstacles and build a legal basis for enterprises in which the State holds more than 50% of charter capital to divest capital from other enterprises that are losing money or have accumulated losses.

Accordingly, the draft adds a provision that in the case of divestment from a company in which the State holds more than 50% of the charter capital, and that joint stock company does not ensure that its business activities for 2 consecutive years immediately preceding the year of divestment must be profitable, and at the same time, there is no accumulated loss up to the year of divestment, the owner's representative agency shall direct the representative of the State capital to choose to transfer shares in that joint stock company according to the provisions of Clause 2, Article 127 of the 2020 Law on Enterprises.

In addition, the Ministry of Finance also mentioned the case of Airports Corporation of Vietnam (ACV). The Ministry said that the Capital Management Committee has proposed allowing ACV to pay dividends in shares to help ACV increase its own capital, carry out important national projects, large projects such as: Long Thanh International Airport project, T3 passenger terminal of Tan Son Nhat International Airport, expansion of T2 terminal of Noi Bai International Airport...

Because if following the old regulations, ACV will not be able to meet the current capital shortage to ensure the timely completion of investment and construction, especially the Long Thanh International Airport project phase 1 which must be completed and put into operation in 2025.

In this case, ACV will have to borrow from credit institutions, leading to increased risks in investment activities, reduced project efficiency and reduced ACV's operating efficiency.

To resolve the problem, the Ministry of Finance proposed to draft a Decree amending and supplementing a number of articles of Decree 91 focusing on the following direction: stipulating that for enterprises that are joint stock companies in which the State holds more than 50% of the charter capital or total number of voting shares, the remaining profits will be distributed as dividends to shareholders in cash or in shares.

"Dividends in shares are only applied to joint stock companies implementing important national projects approved by competent authorities and approved by the Prime Minister to pay dividends in shares," the Ministry of Finance stated.

In the draft submission, the Ministry of Finance said that through submissions and instructions, the Capital Management Committee has directed the representative of the state capital portion at Vietnam Airlines to amend and supplement the company charter to implement the process of divestment of investment capital at other enterprises according to regulations with 3 methods including: public auction; if the public auction is unsuccessful, then competitive offering; if the competitive offering is unsuccessful, then it will be implemented by agreement.

However, the implementation of the public auction method cannot be implemented due to the related regulations at Point b, Clause 1, Article 15 of the 2019 Securities Law: “... 1. Conditions for the initial public offering of shares of a joint stock company include: b) Business activities of 2 consecutive years immediately preceding the year of registration for the offering must be profitable, and there must be no accumulated losses up to the year of registration for the offering”.

Close-up of the construction of the Long Thanh airport connecting road near Tet. During the six months of construction of the Long Thanh airport connecting road, the joint venture contractor has always worked "3 shifts" to speed up the project's progress. Route T1 has completed the service road.