VCCI Proposes Amendments to Joint Venture Partner Selection Regulations

VCCI recently provided feedback on the draft circular amending and supplementing certain provisions of Circular 144/2017/TT-BTC dated December 29, 2017, issued by the Ministry of Finance, which guides certain contents of Decree 151/2017/ND-CP dated December 26, 2017, of the Government detailing certain provisions of the Law on Management and Use of Public Assets.

Accordingly, Clause 2, Article 6a of the Draft stipulates that units with joint venture assets must notify about the selection of joint venture partners according to the provisions of Clause 3, Article 47 of Decree 151/2017/ND-CP, Clause 42, Article 1 of Decree 114/2024/ND-CP, at least three working days before the decision date.

According to Decree 151/2017/ND-CP and Decree 114/2024/ND-CP, the process for selecting joint venture partners includes: (1) publicly announcing the selection of partners on electronic media; (2) establishing an evaluation team to score; (3) deciding on the selection of partners.

VCCI noted that the Draft's provision of a three-working-day notification period before the decision date means the entire selection process could be completed in just three working days. "In other words, the entire joint venture selection process is only three working days. This period is too short to carry out the partner selection process, which may cause difficulties for partners in preparing the necessary documents and materials for participation," VCCI assessed.

Therefore, VCCI proposed that the drafting committee separate the steps for selecting joint venture partners and establish mandatory deadlines to ensure transparency and effectiveness in the partner selection process.

Regarding the selection of partners in cases where only one organization or individual registers, Clause 3, Article 6a stipulates, "If only one organization or individual registers by the deadline for submitting registration documents for joint ventures, the unit with the assets shall consider and decide to select that organization or individual if they meet the criteria specified in Clause 3, Article 47 of Decree 151/2017/ND-CP, Clause 42, Article 1 of Decree 114/2024/ND-CP, this circular, and relevant laws."

VCCI said that this regulation needs clarification on the following points: (i) the minimum criteria to be met according to the scoring table in Appendix I of the Draft; (ii) whether the proposals of these organizations or individuals for business, joint venture, and partnership activities need to be compared with the previously approved business, joint venture, and partnership plans of public non-business units; and (iii) the need for criteria in the Appendix, without regard to the score.

Therefore, VCCI suggested that the drafting committee clearly define these issues to ensure transparency and ease of implementation.

Additionally, regarding the handling of assets after the expiration of joint ventures and partnerships as stipulated in Clause 6, Article 47 of Decree 151/2017/ND-CP, assets involved in joint ventures and partnerships of public non-business units, including land use rights, public works, and other assets attached to the land, will revert to the State after the expiration of the joint venture or partnership.

VCCI said that other assets after the expiration of the joint venture or partnership should be handled according to the following principles:

First, for joint ventures and partnerships that do not establish a new legal entity, the parties use their assets to carry out the joint venture or partnership, manage and use their assets independently, cover their operational costs, and share profits from the joint venture or partnership according to the contract. After the expiration of the joint venture or partnership, the unit continues to manage and use the assets or submits them to the competent authority for decision.

Second, for joint ventures and partnerships that do not establish a new legal entity, the parties contribute assets or capital to invest in the construction or purchase of assets for the joint venture or partnership. These assets are jointly controlled by the parties involved. After the expiration of the joint venture or partnership, the assets are divided among the parties based on their respective contributions. If the assets cannot be divided in kind, they are sold to the remaining parties in the joint venture at market value. If the parties do not purchase the assets, they are auctioned.

Third, for joint ventures and partnerships that establish a new legal entity, the parties contribute assets or capital to invest in the construction or purchase of assets for the joint venture or partnership. The new legal entity is responsible for managing and using the assets according to the law and the joint venture contract. After the expiration of the joint venture or partnership, the assets are divided among the parties based on their respective contributions. If the assets cannot be divided in kind, they are sold to the remaining parties in the joint venture at market value. If the parties do not purchase the assets, they are auctioned.

Fifth, if the parties in the joint venture or partnership voluntarily transfer their ownership rights to the State without compensation, the public non-business unit reports to the competent authority for the establishment of public ownership rights.

Thus, based on the above handling methods, the asset handling methods after the expiration of the joint venture or partnership will vary depending on the form of the joint venture or partnership. The Draft Appendix only identifies one criterion as "commitment to transfer assets formed through joint venture or partnership activities to public non-business units without compensation," with the maximum score for this item, which seems unreasonable as there may be other handling methods," VCCI assessed.

Therefore, VCCI recommended that the drafting committee base the asset handling methods after the expiration of the joint venture or partnership on Clause 6, Article 47 of Decree 151/2017/ND-CP. For example, in the case of forming a new legal entity, after the expiration of the joint venture, the commitment to repurchase the assets formed during the joint venture or partnership at market value would receive a lower score than the maximum score applied to the commitment to transfer assets formed through joint venture or partnership activities without compensation.

VCCI said that according to the law on the management and use of public assets, before implementing a joint venture or partnership, public non-business units must develop a proposal for approval by the competent state authority.

The proposal includes the financial plan for the business/rental/joint venture or partnership (estimated total revenue, total cost, revenue-cost difference); a preliminary assessment of the effectiveness of the business/rental/joint venture or partnership plan; and the asset handling plan after the joint venture or partnership period ends or the contract is terminated early.

Therefore, VCCI recommended that the drafting committee clarify whether the data and indicators in the financial plan for the joint venture or partnership in the proposal serve as a basis for scoring the selection of joint venture or partnership organizations or individuals.