How should enterprises with remaining state capital account for excess and missing assets after equitization?
According to Clause 1, Article 5 of Circular No. 108/2026/TT-BTC, for enterprises that retain state capital after equitization, the accounting and treatment of excess and missing assets compared with the value of the equitized enterprise depend on the status of the finalization process and the resolution of the General Meeting of Shareholders, as follows:
1. Treatment of excess assets
Case 1: The enterprise has not completed finalization as of the official date of conversion into a joint-stock company
If the joint-stock company needs to use the excess assets and the use is approved by the General Meeting of Shareholders, the value of such excess assets shall be recognized as an increase in state capital in the joint-stock company.
Accounting entry:
- Debit Accounts 152, 153, 155, 156, 211, 241, etc.
- Credit Account 411 – Owner’s Equity.
Case 2: The company does not need the assets or the finalization has been completed
If the joint-stock company does not need to use the excess assets, even though finalization has not yet been completed; or if the enterprise has completed finalization as of the official date of conversion into a joint-stock company, the excess assets shall be handed over to the Vietnam Debt and Asset Trading Corporation (DATC) in accordance with regulations on enterprise equitization.
2. Treatment of missing assets
Case 1: The enterprise has not completed finalization as of the official date of conversion into a joint-stock company
The value of missing assets shall be determined after taking into account any compensation payable by relevant organizations or individuals (if any). The remaining amount shall be recognized as production and business expenses for the period from the date of determination of the enterprise value to the official date of conversion into a joint-stock company.
Accounting entry:
- Debit Accounts 111, 112, 1388, etc.: Compensation receivable from organizations or individuals for missing assets (if any).
- Debit Accounts 632, 811, etc.: Portion of the missing asset value recognized as expenses after deducting compensation from organizations or individuals (if any).
- Debit Account 214 – Accumulated Depreciation of Fixed Assets: Accumulated depreciation of missing fixed assets.
- Credit Accounts 152, 153, 155, 156, 211, etc.
Case 2: Finalization has been completed and the General Meeting of Shareholders approves the treatment
If the enterprise has completed finalization as of the official date of conversion into a joint-stock company and the General Meeting of Shareholders approves the treatment, the value of missing assets, after deducting compensation payable by organizations or individuals (if any), shall be recognized as a reduction in state capital in the joint-stock company.
Accounting entry:
- Debit Account 411 – Owner’s Equity.
- Debit Account 214 – Accumulated Depreciation of Fixed Assets: Accumulated depreciation of missing fixed assets.
- Credit Accounts 152, 153, 155, 156, 211, etc.
Case 3: Finalization has been completed but the General Meeting of Shareholders does not approve the treatment
If the enterprise has completed finalization as of the official date of conversion into a joint-stock company but the General Meeting of Shareholders does not approve the treatment, the value of missing assets, after deducting compensation payable by organizations or individuals (if any), shall be recognized as production and business expenses of the joint-stock company.
Accounting entry:
- Debit Accounts 111, 112, 1388, etc.: Compensation receivable from organizations or individuals for missing assets (if any).
- Debit Accounts 632, 811, etc.: Portion of the missing asset value recognized as expenses after deducting compensation from organizations or individuals (if any).
- Debit Account 214 – Accumulated Depreciation of Fixed Assets: Accumulated depreciation of missing fixed assets.
- Credit Accounts 152, 153, 155, 156, 211, etc.
What are the conditions for enterprise equitization?
According to Article 6 of Decree No. 57/2026/ND-CP, enterprises subject to equitization must satisfy the prescribed conditions. Specifically:
1. Conditions for enterprise equitization
Enterprises falling within the scope specified in Article 5 of Decree No. 57/2026/ND-CP may undergo equitization if they simultaneously satisfy the following conditions:
- The enterprise is not subject to the requirement for the State to hold 100% of its charter capital;
- After completing financial settlement and enterprise valuation in accordance with Sections 2 and 3 of Chapter II of Decree No. 57/2026/ND-CP, the actual value of the enterprise is equal to or greater than its total liabilities.
2. Where the enterprise value is lower than its liabilities
If, after financial settlement and revaluation in accordance with the regulations, the actual value of the enterprise is lower than its total liabilities, the owner’s representative agency shall direct the enterprise to continue working with the Vietnam Debt and Asset Trading Corporation (DATC) and the enterprise’s creditors to develop a plan for:
- Debt purchase and debt settlement; and
- Enterprise restructuring;
with the aim of enabling the enterprise to meet the conditions for equitization.
If the plan for debt purchase, debt settlement and restructuring is not feasible, the enterprise shall be subject to another form of transformation in accordance with applicable laws.
What are the forms of enterprise equitization?
According to Article 7 of Decree No. 57/2026/ND-CP, enterprise equitization may be carried out in one of the following forms:
1. Retaining existing state capital and issuing additional shares
The State retains its existing capital contribution in the enterprise, while the enterprise issues additional shares to increase its charter capital.
2. Selling part of the existing state capital
The enterprise may sell part of the State’s existing capital contribution, or combine:
- The sale of part of the State’s existing capital; and
- The issuance of additional shares to increase charter capital.
3. Selling all existing state capital
The enterprise may sell all of the State’s existing capital contribution, or combine:
- The sale of all of the State’s existing capital; and
- The issuance of additional shares to increase charter capital.
