The effectiveness of the equitization method in reforming state-owned enterprises in Vietnam

1.5. Improve the quality of investment decisions

Organize a team of professional project appraisers and investment decision makers with high capacity, experience and expertise in the investment field to ensure the accuracy and effectiveness of investment decisions.

In evaluating an investment project or investment portfolio, it is necessary to calculate factors such as: opportunity cost of capital invested, tax benefits of debt capital and expected rate of return of the investor. From there, choose the discount rate (for new investment projects) or the required rate of return (for investment portfolio) to calculate the level of risk and profitability of the project.

Applying modern, scientific project appraisal methods in combination with the specific economic and political environment in Vietnam to propose the most appropriate method.

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1.6. Perfecting the information provision structure and business support services, facilitating businesses in business.

Regulations on the responsibilities of state management agencies in continuing to provide information and disseminate policies and regimes to enterprises after conversion. Completing the system of business registration agencies and business information under planning and investment agencies to combine business registration for equitized enterprises and providing information to enterprises after equitization.

- Clearly assign responsibilities to State management agencies related to the equitization process to answer enterprises' questions during and after equitization.

- Develop a number of specialized organizations to perform consulting and equity investment tasks, including: consulting on equitization plan development, new stock issuance services, share transfer, stock listing on the stock market, drafting joint stock company charters, and brokerage of equity investment loans.

consulting on enterprise management after equitization, services related to shareholders such as organizing shareholders' meetings, consulting on the establishment and operation of functional departments of joint stock companies, dividend distribution, share transfer, etc.

2. Perfecting the state management mechanism, combining the application of modern management methods in internal enterprise management

2.1. Perfecting the state management mechanism

2.1.1. Reducing the amount of state controlling shares in enterprises According to the report of the Steering Committee for Enterprise Innovation and Development, to

As of June 2006, about 30% of equitized enterprises had a state capital ratio.

The ratio is greater than 50%. This ratio is hindering the development of many state-owned enterprises after equitization.

State ownership of less than 51% does not mean that the state loses control of the enterprise, because if it still holds the role of controlling shareholder, it can still control. Therefore, the question is whether it is really necessary for an enterprise to have more than 51% of its capital owned by the state. And even in cases where it is necessary to hold that majority, there is still a need for a clear roadmap on the state capital structure in equitized enterprises. It is necessary to clearly recognize that, with the state still holding 51% or more in enterprises after equitization, the application of modern technology and management skills, especially risk management, to these enterprises will likely encounter more difficulties while the process of international economic integration is taking place more and more rapidly in most sectors of the national economy.

On the other hand, investors always want to hold more in well-performing enterprises, which is a legitimate desire. Thus, the situation of high state ownership ratio cannot last forever. Moreover, this legitimate desire of investors also creates the premise for promoting

Strengthening socialization of investment and mobilizing all resources to develop the country's capital market.

In addition, due to the limited capital management capacity of state agencies, which cannot cover the large amount of state capital in enterprises, the phenomenon of capital loss and improper use of capital after equitization even causes the state to suffer greater economic losses.

Therefore, reducing the state's holding ratio in enterprises after equitization is an urgent measure not only to improve the state's management capacity but also to enhance the business development ability of enterprises.

2.1.2. Perfecting the state capital management mechanism

Perfect the mechanism for managing state capital and assets at enterprises in the direction that the Government unifies the management of capital and assets at enterprises through economic groups and state-owned corporations that will represent the capital owners at equitized member enterprises and manage capital and assets at these enterprises.

Continue to promote equitization associated with the elimination of the management mechanism through resolutely separating state management from business management functions, transferring the right to represent capital ownership to SCIC and creating conditions for SCIC to participate in the enterprise equitization process.

Continue to research, develop and innovate the management and supervision mechanism of state capital invested in enterprises after conversion. In the coming time, SCIC needs to classify, develop a roadmap and plan to sell state capital in enterprises that have been received, focusing investment capital on key national projects and works.

Concentrating revenue from equitization of enterprises to the Government's Arrangement Fund at the State Capital Investment Corporation to support the settlement of surplus labor, handling financial issues for enterprises carrying out arrangements (not only equitization but also transferring, selling, dissolving, and converting state-owned farms and forestry farms) and investing in large, key infrastructure projects of the Government (taking into account the recovery of investment capital) to implement the policy of reallocating and developing the economy of regions, ensuring balanced development and maintaining a stable and sustainable growth rate of the entire economy is one of the important tasks of state economic management.

The study allows the establishment of a specialized organization with sufficient authority to assist the Government in the process of implementing the equitization of enterprises in the coming period and in the long term will be the state management agency for all activities of economic groups and state-owned corporations (including SCIC).

Strengthen inspection and supervision of state-owned enterprises to protect the legitimate rights and interests of the state, employees and investors. Strictly handle cases of intentional violations of policies and regulations on enterprise ownership conversion, delay or obstruction of conversion, and intentional violations of relevant regulations in the process of managing and performing the function of representing state capital ownership in enterprises.

2.2. Applying modern management methods within the enterprise

2.2.1. Raising awareness of corporate governance, especially financial governance in enterprises

Corporate governance is the mechanisms and rules through which a company is directed and controlled. The corporate governance structure determines the rights and

The scope and responsibilities of different members of the company, including the shareholders, the board of directors, the executive board, the board of supervisors and other stakeholders of the company. At the same time, corporate governance also establishes principles and processes, decision-making procedures within the company, thereby preventing the abuse of power and position, minimizing unnecessary risks for the company. These are risks related to or originating from transactions with related parties, potential conflicts of interest and from the absence of clear standards or non-compliance with regulations on information disclosure and non-transparency. Along with the rapid development of the business sector in both quantity and scale, especially the formation of large companies, Corporate Governance, a tool to separate ownership and management, will be something that businesses need to pay attention to.

In Vietnam, the concept of “corporate governance” is still very new. According to a survey of 85 large enterprises in Vietnam conducted by the International Finance Corporation (IFC), only 23% of respondents said that businessmen in Vietnam understood the basic concepts and principles of corporate governance. Many directors interviewed still confused corporate governance with operational management such as: production management, marketing management, human resource management, etc.

From the above reality, it can be seen that it is urgent to raise the awareness of the management team about the important role of corporate governance, and at the same time create opportunities for them to approach modern corporate governance. To do this, in addition to the State regularly opening advanced training courses on corporate governance, business leaders themselves also need to change their thinking, proactively learn, and continuously learn, to improve their leadership ability, worthy of being the leader leading the activities of the entire business.

2.2.2. Innovation of administrative apparatus

To successfully carry out administrative reform, it is necessary to carry out the following synchronous measures:

- Developing quality management human resources for equitized companies.

- Enhance the management role of the Board of Directors, it is necessary to create a balance between the authority and responsibility of the members of the Board of Directors, this is a particularly important issue, especially for equitized enterprises with a high proportion of state shares. It should be noted that in corporate governance practices around the world, the issue of standards for members of the Board of Directors is always a matter of primary concern, especially for joint stock companies formed from state-owned enterprises.

- Supplement regulations on independent members in the Board of Directors of equitized enterprises, especially in the context that many equitized enterprises in particular and joint stock companies in general are organized according to the model of concurrent holding of the Chairman of the Board of Directors and the Company Director.

- Specific regulations on the convening of meetings of the Board of Directors, including expanding the scope of rights (in addition to the Chairman of the Board of Directors) because in reality, in joint stock companies with many "chaos" in recent times, the common phenomenon is that the Chairman has delayed or refused to convene the Board of Directors even when requested by other members. The potential consequence of this is that members who do not share the same views with the Chairman of the Board of Directors cannot fulfill their obligations and responsibilities according to the law, negatively affecting corporate governance. If the Chairman of the Board of Directors also acts as the legal representative (Director), the functions of the Board of Directors are not guaranteed, etc.

- Specific regulations on the issue of owner authorization. For large joint stock companies or joint stock companies with state capital (formed from the equitization of state-owned enterprises), the common situation is that the person directly exercising the shareholder rights

The shareholder is not a real shareholder, but only a representative. The representative may be closely directed and supervised by the real shareholder, but may not be, leading to the situation where the authorized person abuses the power of attorney for personal gain. Therefore, legal documents need to provide for these situations.

- There are specific regulations to limit instability and difficulties caused by the intervention of external state administrative agencies in joint stock companies with state-controlled capital.

- In order for post-equitization joint stock companies to innovate and continue to develop, innovation is needed from the leadership team. To do so, it is necessary to build and apply necessary standards for each management position.

- Boldly apply the mechanism of hiring executive directors.

- It is necessary to develop regulations on appointment and dismissal of staff in accordance with the Charter of the Joint Stock Company.

2.2.3. Perfecting regulations on shareholders' rights, increasing the effectiveness of the shareholders' council's activities

Strengthen training and education for employees and managers of equitized enterprises on the rights of shareholders and management agencies in the company; procedures for passing important decisions of the company to make shareholders, especially shareholders who are employees, understand legal regulations to avoid conflicts within the enterprise or "formal" control or "wrong position" of employees and minority shareholders in the enterprise after conversion due to lack of understanding of the law to ensure the effective operation of the enterprise after equitization.

Conduct amendments and supplements to legal regulations related to improving the effectiveness of the enforcement mechanism to ensure the rights of shareholders in equitized enterprises, especially shareholders who are employees and minority shareholders, such as:

+ Ensure maximum information access rights of shareholders, supplement specific regulations to ensure shareholders have access to all information, records, and documents of the company; ensure the right to review accounting books, minutes of the General Meeting of Shareholders, Board of Directors.

+ Specify regulations on the rights of minority shareholders in nominating people to the Board of Directors, the Board of Supervisors and the right to convene the General Meeting of Shareholders, especially regulations on the principles of determining the number of people they can nominate, as well as the form and content of the request to convene the General Meeting of Shareholders to ensure that these rights can be effectively implemented in practice.

+ Supplementing the voting authorization mechanism to facilitate the concentration of a certain number of votes for decisions at the General Meeting of Shareholders under pressure from majority shareholders (for example, state shareholders in equitized enterprises with state-controlled capital).

+ Increase the rate of passing decisions at the General Meeting of Shareholders to reduce the possibility of manipulation by major shareholders.

+ Further specify the regulations on voting in writing to minimize the situation of arbitrarily collecting opinions in some enterprises with a large proportion of state shares (even much below the controlling level), making enterprises and third parties feel that external administrative agencies are rudely interfering in the decisions of the General Meeting of Shareholders, etc.

2.2.4. Changing perspectives on employment and labor structure

There are many ways to solve the problem of changing the labor structure to suit the tasks of the JSC, but the following issues must be ensured in principle:

- Employees participating in production and business activities at a joint stock company after equitization are always employees in the production line. At that time, they must comply with the Labor Law. If they are shareholders, they only have the right to exercise their shareholder rights according to the Enterprise Law.

The effectiveness of the equitization method in reforming state-owned enterprises in Vietnam - 10

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