Decree No. 366/2025/ND-CP, officially effective from January 1, 2026, was issued to concretize the strategy for reforming the governance of state-owned enterprises. This document is not only a control tool but also a legal framework to optimize the efficient use of national assets, shifting from administrative management to governance based on performance indicators and risk control.
Financial risk control barriers
To prevent scattered investments and asset losses, the Decree establishes strict limits that business managers are absolutely prohibited from violating:
Regionalization of capital investment scope
The government will narrow the scope for establishing new businesses. According to Article 6, budget funds can only be channeled to strategic locations:
- Social security: Providing essential public goods and services.
- National defense and security: Specific activities serving national defense and the protection of sovereignty.
- Growth drivers: High technology, science and technology, or natural monopolies that the private sector cannot/is not allowed to engage in.
- Strategic infrastructure: National key projects with significant economic spillover effects.
Tighten debt discipline.
To prevent businesses from borrowing beyond their ability to repay, Article 21 stipulates a safe threshold:
- Debt-to-Equity Ratio: Must not exceed 3 times.
- Reporting Obligation: As soon as total debt (including guarantees for subsidiaries) reaches this threshold, the enterprise must urgently report to the owner's representative agency to develop a plan for handling the situation and avoid the risk of insolvency.
Decentralization of investment and procurement authority
The decree clearly stipulates the asset approval limits in Articles 24 and 25:
- Board of Members or Company Chairman: Only authorized to decide on projects with a value under 50% of equity capital.
Absolute limit:
- For businesses in the large category (Appendix I): Maximum 15,000 billion VND.
- For other businesses: A maximum of 5,000 billion VND.
Note: Any transactions exceeding these thresholds require written approval from the owner's representative body.
Mandatory procedures and accountability
Compliance with the following regulations is essential to ensure transparency and avoid legal liability for the head of the organization.
Principle of compensation and capital preservation
Based on the spirit of the Law on Management and Use of State Capital, Decree 366/2025/ND-CP emphasizes the responsibility to preserve capital in Article 23:
- Businesses must periodically assess their capital preservation levels annually.
- If a decrease in equity occurs without objective reasons (such as natural disasters or changes in government policy), the Board of Members and the Executive Board shall be held personally responsible.
Procedure for increasing charter capital
Capital injection is no longer a "request-and-grant" mechanism. Additional capital will only be provided when the enterprise meets the requirements of Article 9:
- Must be rated Class B or higher according to the State-owned Enterprise Performance Evaluation System.
- Prioritize defense tasks and agriculture and forestry in remote areas.
- Other cases must undergo rigorous assessment of their urgency and economic efficiency, which will be reviewed by the Prime Minister.
Mechanism for distributing after-tax profits
The order of priority for using profits after fulfilling tax obligations is stipulated in Article 29:
- Reinvestment: Allocation from the Development Investment Fund.
- Rewards and Benefits: Linked to performance rating (Rate A: up to 3 months' salary; Rate B: 2 months; Rate C: 1 month). If no rating is given, the company is not allowed to allocate funds.
- Budget payment: The remaining amount must be paid to the State Budget.
Capital management in enterprises with between 50% and less than 100% of state capital.
In this group of enterprises, the State exercises ownership rights through its Capital Representative:
- Representatives are not allowed to vote independently at the General Meeting of Shareholders on material matters (ROE, revenue, profit, dividend distribution) but must obtain written approval from the owner's representative body before making any decisions.
- This management mechanism shifts from direct to indirect supervision through core financial indicators.
Conclude
Decree 366/2025/ND-CP is a step forward in the "marketization" of state capital management. Understanding the limits and mandatory regulations not only ensures legal safety for businesses but also creates momentum for enhancing competitiveness in the new economic era.
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Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
MAN Editorial Board – Master Accountant Network
