On December 31, 2013, the Ministry of Finance issued the Circular No. 220/2013/TT-BTC guiding the implementation of the Decree No. 71/2013/ND-CP of July 11, 2013, on investment of state capital in enterprises and financial management of enterprises of which 100% charter capital is held by the State.
Within that, the most important regulations is the adjustment in increasing the charter capital level of enterprises. Accordingly, determination of demand and adjustment of charter capital of enterprises which are operating must base on objectives, tasks, strategies of development and expansion of scale, trades in production and business of enterprises under plans, planning already been approved by competent authorities. The adjustment to increase charter capital of enterprise must base on capital demand to perform investment, asset procurement projects in serve of the main production and business activities of enterprise; capital demand for production of products, trading in goods, services; capital demand for investment outside enterprise under plan already been approved by competent authorities.
Also in accordance with this Circular, the increased charter capital shall be applied minimally in 03 years since the owner approves and must ensure the association with plan on capital sources to add sufficient charter capital from the fund for investment and development which are deducted from the annual after- tax profit or other lawful sources under regulations. If passing 03 years, enterprise still has not enough sources to add sufficient charter capital as approved, the owner shall base on situation of enterprise to re-adjust objectives, tasks and strategies of development under the plan assigned to enterprise or in necessary case, to perform task of production and business already been approved, the owner shall allocate additionally lack of charter capital to enterprise if necessary.
This Circular takes effect on February 15, 2014 and is applied to the financial year of 2013 and upwards.
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