Legal updates: Rules on public companies, capital reserve funds and corporate income tax break
The Ministry of Finance issued Circular No 121/2012/TT-BTC on July 27, regulating management of public companies.
Under the circular, at least one-third of the management board of a large-scale public company or listed company must be non-executive members. A non-executive member must meet certain conditions as regulated by law.
The circular also supplements regulations on the audit board, the head of which must be "good at accounting" and at least one member of which must be an accountant or auditor.
The circular also emphasizes the importance of honesty and the prevention of conflicts of interests between members of the board of management and audit board and the managing officers of the company.
The circular takes effect September 17 and replaces Decision No 12/2007/QD-BTC and Decision No 15/2007/QD-BTC of March 2007.
New rules on capital reserve funds
The Government issued Decree 57/2012/ND-CP on July 20, regarding the financial schemes of credit institutions, including branches of foreign banks. The decree strengthens the requirement in Decree No 146/2005/ND-CP that credit institutions must publicize their participation in a deposit insurance organization at their headquarters and branches.
It also requires that credit institutions maintain actual value of their charter capital. When seeking to increase or decrease charter capital, a credit institutions must make a public announcement.
Decree No 57 also provides that State-owned banks and banks organized as single-member limited liability companies must place 5 per cent and 10 per cent of the revenues, respectively, into a capital reserve fund. However, the accumulated amount of such fund must not exceed the charter capital of the credit institution.
The decree takes effect on September 15, replacing Decree No 146/2005/ND of November 2005 and Decree No 22/2006/ND-CP of February 2006.
Exceptions to temporary corporate tax break
The Government has issued Decree No 60/2012/ND-CP to enforce National Assembly Resolution No 29/2012/QH13 on a 30-per-cent of corporate income tax rates in 2012.
The tax break is applicable to small- and medium-sized enterprises and co-operatives, except businesses operating in lottery, real estate, securities, finance, banking, insurance, or manufacturing of goods and service subject to excise taxes, as well as labor-intensive enterprises in manufacture and processing of agricultural products, textiles and garments, leather and footwear, electronics (as specified in Decision No 10/2007/QÐ-TTg), and labor-intensive enterprises engaged in infrastructure development (as listed in Article 2.2 of Decree No 60/2012/NÐ-CP). Decree No 60 takes effect on September 20.
