Author:

• Ha Minh Khang – Lawyer

• Le Hong Dang – Paralegal

Pursuant to Law No. 68/2025/QH15 and Decree No. 366/2025/ND-CP, the management by State-Owned Enterprises (“SOEs”) of their affiliated entities is conducted through capital representatives, under a tiered mechanism based on ownership ratios.

• For subsidiaries wholly owned (100% charter capital): SOEs exercise direct and comprehensive management in their capacity as owners. All financial regulations and investment plans, as well as transactions involving investment projects or capital transfers exceeding 50% of the owner’s equity, are subject to mandatory approval by the SOE. Guarantee and lending activities must strictly comply with the capital preservation principles prescribed in Article 19 of the 2025 Law on Management and Investment of State Capital.
• For capital contributions in joint-stock companies and limited liability companies: SOEs exercise indirect management through their capital representatives. Rights are exercised based on the ownership ratio to decide matters related to dividend distribution, profit allocation, and capital restructuring. Capital representatives are required to make periodic reports and are subject to close inspection and supervision by the SOE to prevent governance deficiencies.
• Capital restructuring: The Members’ Council or the Chairperson of the SOE proactively approves and promulgates capital restructuring plans (including divestment, merger, consolidation, division, or equitization). Any conversion of corporate form or transfer of capital to the State Capital Investment Corporation (SCIC) must comply with the latest procedures prescribed under Decree No. 366/2025/ND-CP in order to optimize the investment portfolio.

Note: The interaction between the 2020 Law on Enterprises and the 2025 Law on Management and Investment of State Capital requires SOEs to ensure the legal independence of their subsidiaries, while fully discharging accountability for the efficiency of state capital utilization in such enterprises.

1. Overview of SOEs’ management mechanisms over subsidiaries and capital contributions in other enterprises

First, SOEs manage the above entities through their capital representatives, pursuant to Article 23 of the 2025 Law on Management and Investment of State Capital in Enterprises (“Law on Management”).

Second, depending on the legal form of the enterprise, SOEs exercise management in accordance with the applicable regulations under enterprise law:

Pursuant to Clause 1, Article 196 of the 2020 Law on Enterprises, “depending on the legal form of the subsidiary, the parent company shall exercise its rights and obligations in its capacity as a member, owner, or shareholder in relation to the subsidiary in accordance with the relevant provisions of the Law on Enterprises and other applicable laws.” Accordingly:

• For subsidiaries in which the SOE holds 100% of the charter capital, the SOE exercises the rights of the owner and directly and comprehensively manages the capital, including deciding matters falling within the owner’s authority as prescribed by the Law on Enterprises and relevant laws.
• For subsidiaries established as multi-member limited liability companies or joint-stock companies, the SOE manages its capital contribution through its capital representative by exercising the rights and obligations of a member or shareholder in proportion to the capital contribution or shareholding held.

Management in each of the above cases aims to ensure the lawful rights and interests of the SOE, while remaining consistent with corporate governance mechanisms and the legal independence of each enterprise in accordance with law.

Third, based on the level of capital ownership, SOEs manage capital under the following forms:

For enterprises wholly owned by the SOE:

• Providing opinions on the issuance of the company’s financial regulations;
• Approving plans for investment activities, purchase, lease-purchase, sale of fixed assets, transfer of investment projects, or transfer of investment capital exceeding 50% of the owner’s equity, or exceeding 50% of the owner’s invested capital in cases where equity is lower than invested capital, or other lower thresholds as stipulated in the company’s charter. Owner’s equity and invested capital are determined based on the company’s most recent quarterly or annual financial statements at the time of approval;
• Guarantee and lending activities must comply with the principles set out in Article 19 of the Law on Management;
• Transfer of investment projects or investment capital must comply with Clauses 1, 3, 4, and 5 of Article 21 of the Law on Management.

For SOEs’ capital contributions in joint-stock companies and multi-member limited liability companies:

• Deciding or submitting to competent authorities decisions on increases, decreases, or transfers of state capital invested in such companies in accordance with law and the company’s charter;
• Prescribing standards for appointment, dismissal, removal, commendation, and disciplinary measures applicable to capital representatives in accordance with Articles 37 and 38 of the Law on Management, and issuing internal regulations on capital representatives;
• Requiring capital representatives to provide opinions on profit and dividend distribution of joint-stock companies and multi-member limited liability companies;
• Requiring capital representatives to submit periodic or ad hoc reports on the financial status and production and business activities of the invested enterprises in accordance with law and the company’s charter;
• Inspecting and supervising capital representatives’ performance in order to promptly prevent and address shortcomings or deficiencies.

2. Capital restructuring of SOEs’ investments in joint-stock companies and limited liability companies

Based on the capital management mechanisms of SOEs, capital restructuring is identified as one of the key components of state capital management in enterprises. This activity not only serves to adjust ownership structures but also functions as a tool for SOEs to implement strategic orientations, enhance capital utilization efficiency, and strengthen the accountability of state capital representatives. The Members’ Council or the Chairperson of the company approves and promulgates capital restructuring plans as a basis for implementation.

Accordingly, Article 30 of Decree No. 366/2025/ND-CP provides as follows:

• Conversion of enterprise form from a single-member limited liability company into a joint stock company shall comply with the Government’s regulations on restructuring of state capital invested in enterprises;
• Conversion of enterprise form from a single-member limited liability company into a multi-member limited liability company shall comply with the regulations on converting enterprises wholly owned by the State into multi-member limited liability companies as prescribed in the Government’s regulations on restructuring of state capital invested in enterprises;
• Consolidation, merger, division, separation, and dissolution of enterprises shall be carried out in accordance with enterprise law, securities law, and other relevant laws;
• Transfer of capital and assets invested by enterprises wholly owned by the State into joint-stock companies or limited liability companies to the agency representing the owner shall comply with the Government’s regulations on restructuring of state capital invested in enterprises.

From the above provisions, it can be seen that the management by SOEs of their subsidiaries and capital contributions in other enterprises is designed on the basis of an integrated approach between enterprise law and specialized legislation on the management and use of state capital. Depending on the type of enterprise and the level of capital ownership, SOEs exercise the rights of owners or of members/shareholders through appropriate management, supervision, and capital restructuring mechanisms. This approach ensures both the preservation and development of state capital and respect for the legal independence and governance mechanisms of invested enterprises, thereby contributing to enhanced effectiveness of state capital management in practice. A comprehensive understanding of these management contents and forms serves as a basis for assessing the effectiveness of state capital management and provides a foundation for further refinement of the legal framework in subsequent stages.

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Time of writing: 10/02/2026

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

You can refer for more information:

• Salary, remuneration and bonus regime in state-owned enterprises (2026)
• Regulations on investment activities of State-Owned Enterprises (SOEs) in 2026
• Disclosure Obligations of State-Owned Enterprises (SOEs) in 2026
• Transfer of Investment Projects and Capital of State-Owned Enterprises (SOEs) under the 2025 Law