On June 19, 2025, the National Assembly passed the Law on Management and Investment of State Capital in Enterprises (“Law No. 68/2025”), which will officially take effect from August 1, 2025. The overarching principle of Law 68/2025 is to grant more autonomy to state-owned enterprises to encourage their investment activities. Key highlights of Law 68/2025 compared to the 2014 Law on the Management and Use of State Capital Invested in Production and Business Activities at Enterprises (“Law No. 69/2014”) include:
1. The Law emphasizes the principle of non-intervention by the State in enterprise operations:
Law 68/2025 clearly states that state ownership representatives and regulatory agencies shall not directly interfere in the production, business, or investment activities of enterprises. The management of state capital in enterprises must be carried out through ownership representatives or capital representatives. In other words, the State manages only the capital it invests in the enterprise, not the enterprise itself, as previously prescribed. This creates a mechanism that allows state-owned enterprises to independently consider, decide, and take responsibility for their business activities.
Additionally, Law 68/2025 narrows the scope of State capital management in enterprises where the State does not hold 100% ownership. In enterprises where the State holds from 50% to less than 100% of charter capital, capital representatives only need to report and seek opinions from the ownership representative body on key matters. For enterprises where the State holds less than 50% of charter capital, capital representatives must comply with the Enterprise Law, company charter, and representative regulations issued by the investing unit/enterprise.
2. Investment and capital transfer rights of 100% state-owned enterprises
2.1. Investment activities:
Law 69/2014 allowed 100% state-owned enterprises to invest but restricted them to specific areas and decision-making authority. Law 68/2025 adopts a more liberal approach, confirming that state-owned enterprises may invest or purchase securities as permitted by relevant laws.
2.2. Transfer of investment capital or investment projects:
Law 68/2025 affirms the right of 100% state-owned enterprises to transfer investment capital or projects. This regulation aims to ensure fairness, market orientation, and encourage participation from other economic sectors.
Accordingly, enterprises may transfer investment capital or projects to other organizations or individuals based on the following principles:
- Compliance with legal provisions;
- Full reflection of the actual value of the investment/project, including land use rights in accordance with land and other relevant laws;
- Ensuring market-based, transparent, and public principles;
- Not restricted by public offering conditions as stipulated by securities laws.
3. 100% state-owned enterprises may raise capital when total liabilities exceed three times the owner's equity
3.1. Regarding capital raising, Law 68/2025 allows enterprises to decide on capital mobilization on the principle of self-borrowing and self-repayment. They are only required to report to the ownership representative after approving the capital raising plan if total liabilities (including guarantees) exceed three times the owner’s equity stated in the quarterly or annual financial statements. This is a significant improvement over Law 69/2014, allowing more flexibility in capital management and use.
3.2. On lending and guaranteeing: Law 68/2025 provides that:
- Lending/guaranteeing is allowed only for companies in which the enterprise holds more than 50% of charter capital;
- The total guarantee or loan amount for each company must not exceed the enterprise’s actual capital contribution at the time of the loan/guarantee.
4. Adjusting the principle of post-tax profit distribution for 100% state-owned enterprises
While granting autonomy, to ensure state capital safety, Law 68/2025 stipulates the following order for profit distribution after tax:
- Profit sharing with capital contributors as per business cooperation contracts;
- Offsetting accumulated losses of previous years that are beyond the allowable time frame;
- Settling expenses allowed to be covered from post-tax profits under relevant laws;
- Covering exploration costs for mineral projects that cannot be implemented or for failed investments in risky or unique ventures;
- Expenses for political tasks assigned by competent authorities;
- Fund allocations, including:
- Up to 50% into the Development Investment Fund for production expansion or equity increase;
- Up to 3 months of implemented salary to establish the Bonus and Welfare Fund based on enterprise assessment and ranking;
- Other funds as regulated by related laws;
- The remaining profit shall be remitted to the state budget, except when used to increase charter capital or invest in projects as stipulated by the Government.
5. State investment focuses on science, technology, innovation, and digital transformation
Law 68/2025 maintains the principle that the State invests (holding 100% charter capital) in enterprises operating in essential sectors that require state participation, such as providing essential public products/services, national defense and security, and natural monopolies.
In addition to these traditional areas, the Law emphasizes state capital investment in the establishment or co-establishment of enterprises in science, technology, innovation, and digital transformation. This aligns with the Party and State’s development policies in the new era.
The new Law on Management and Investment of State Capital in Enterprises will take effect from August 1, 2025.
Before December 31, 2026, enterprises where the State holds over 50% of charter capital must review and issue new charters in compliance with this Law. Until new charters are issued, existing regulations may continue to apply if they are not contrary to or more favorable than the new Law.
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