PetroVietnam barred from investing in properties and banks
PetroVietnam barred from investing in properties and banks
Prime Minister Nguyen Tan Dung last week officially signed a decree forbidding the parent company Vietnam Oil and Gas Group (Petrovietnam) in using its capital to invest and acquire shares in real estate project, banks and insurance companies, according to Vneconomy newswire.
In particular, PetroVietnam may not invest nor contribute capital in real estate projects and acquire shares in banks, insurance companies, securities companies, risk investment funds, securities investment funds and securities investment companies, except in special circumstances as directed by the prime minister.
PetroVietnam’s capital includes the state capital invested in the organisation, capital raised by PetroVietnam itself and other sources of fund raised in accordance with legislation. PetroVietnam is responsible for accounting and following each source of funds under current regulations.
According to the new decree, PetroVietnam will not be able to reduce its chartered capital. However, during its business operations, depending on requirements for periodic development, the prime minister will decide to adjust the chartered capital upon requests made by the Ministry of Industry and Trade, opinions of the Ministry of Planning and Investment and evaluations of the Ministry of Finance.
PetroVietnam will be permitted to manage and flexibly use all of the state capital and other legitimate sources of funds in its production and business operations to make profits. In addition, Petrovietnam will be responsible to maintain and develop investors’ capital effectively and ensure the rights of all relevant parties of Petrovietnam such as creditors, customers and employees in accordance with signed agreements.
PetroVietnam will also directly manage and account for the entire state capital in the Vietsovpetro Joint Venture under an intergovernmental agreement signed on December 27, 2010 and the provision laws of Vietnam, ensuring effective usage and management of the capital allocated.
Besides, PetroVietnam is permitted to raise capital for investment and business operations via issuance of bonds, credit loans borrowed from credit institutions, other financial oraganisations, individuals and other enterprises other than the PetroVietnam parent company, loans from employees and other forms of funds raising in accordance with the regulations. Raising funds must comply with the principle of fund repaying, ensure efficient use of capital and must not change the ownership state of the parent company.
Additionally, PetroVietnam is entitled to use its funds and assets under its management to invest elsewhere rather than PetroVietnam.
With regard to funds that PetroVietnam already contributed and invested in areas which were not eligible for investment, PetroVietnam must restructure its plans and withdraw the funds contributed or invested accordingly.
PetroVietnam also will not be able to invest or acquire shares in companies in which their managers or owners are spouse, parents, siblings or family members of the board of directors, the board of management, supervisors or chief accountants of PetroVietnam.
PetroVietnam currently holds a large amount of shares in a number of fields including finance, banking and real estate. The group is said to be finding a solution to divest its investment in these fields however PetroVietnam stressed that it has not found suitable partners and transfer prices.
