This Circular provides guidelines on inventorying capital, assets, financial disposition before and at the time of business valuation of equitized enterprise; business valuation according to the asset-based method and public disclosure of information about the equitization process.
Accordingly, with regard to the loss already handled by the reduction in the state capital at the time of equitization in proportion to the loss incurred, the joint-stock company shall not be allowed to carry forward this loss during the process of determination of taxable income of the following years.
The equitized enterprise shall manage and use reward and welfare fund arising from the time of business valuation to the time when the equitized enterprise is granted the certificate of initial registration of the joint-stock company in accordance with regulations. The newly-established joint stock company can inherit and continue to use the residual balance (if any).
At the time of officially being transformed into a joint stock company, the equitized enterprise shall use risk provisions to deal with the loss of intercorporate financial investments qualified for such provisions (if any) and keep a reverse record of the residual provisions in the equitized enterprise’s business results. The joint stock company may make new risk provisions after being officially put into operation.
|Published||Vietlaw's Newsletter No. 522|