Nghị định 45/2021/ND-CP

DECREE

ESTABLISHMENT, ORGANIZATION AND OPERATION OF COOPERATIVE DEVELOPMENT ASSISTANCE FUNDS

Pursuant to the Law on Government Organization dated June 19, 2015 and the Law on Amendments to the Law on Government Organization and the Law on Local Government Organization dated November 22, 2019;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on amendments to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on Public Investment dated June 13, 2019;

Pursuant to the Law on management and use of state capital invested in manufacturing and business operations of enterprises dated November 26, 2014;

Pursuant to the Law on cooperatives dated November 20, 2012;

At the request of the Minister of Finance;

The Government promulgates a Decree on establishment, organization and operation of cooperative development assistance fund.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. This Decree provides for:

a) The organization and operation of the cooperative development assistance fund that is established under the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006 and the Prime Minister’s Decision No. 23/2017/QD-TTg dated June 22, 2017 (hereinafter referred to as “central cooperative fund”);

b) The establishment, organization and operation of cooperative development assistance funds of provinces and central-affiliated cities (hereinafter referred to as “provincial cooperative funds”).

2. This Decree applies to:

a) The central cooperative fund and provincial cooperative funds;

b) Cooperatives and cooperative unions; members of artels and cooperatives getting loans from cooperative funds in accordance with regulations hereof;

c) Vietnam Cooperative Alliance and cooperative alliances at all levels; organizations and individuals involved in the implementation of this Decree.

Article 2. Definitions

For the purposes of this Decree, the terms below are construed as follows:

1. “cooperative fund” or “fund” means the central cooperative fund or a provincial cooperative fund.

2. “client” means a cooperative, cooperative union or member of an artel or cooperative that gets loans from a cooperative fund.

3. “existing charter capital” means the charter capital specified in accounting books plus or minus undistributed profits (or unrealized accumulated losses) which are recognized on accounting books at the same time.

4. “bad debt” means a debt classified in either group 3, 4 or 5 according to debt classification regulations adopted by the cooperative fund.

5. “related person” means an organization or individual prescribed in Clause 28 Article 4 of the 2010 Law on Credit Institutions and its amending documents (if any).

6. “fund’s manager” means a fund’s chairperson, chairperson or member of the fund's Board of Directors, General Director/Director, Deputy General Director/ Deputy Director, chief accountant or holder of another title prescribed in the charter on organization and operation of a cooperative fund.

7. “founding member” means a member of a cooperative or artel, cooperative or cooperative union that voluntarily makes a commitment to found or participate in the establishment of a provincial cooperative fund that operates adopting the cooperative business model.

8. “provincial People’s Committee” means the People's Committee of a province or central-affiliated city.

Article 3. Legal status and legal personality

1. A cooperative fund is an out-of-budget state financial fund that operates adopting the business model of a single-member limited liability company 100% of charter capital of which is held by the State or a financial organization that operates adopting the cooperative business model, capital preservation and growth principles, for not-for-profit purposes, and has autonomy in raising and using capital for granting loans to cooperatives, cooperative unions, and members of artels and cooperatives in accordance with regulations herein and relevant laws.

2. A cooperative fund shall have legal personality, charter capital and seal, and may open accounts at the State Treasury and commercial banks lawfully operating in Vietnam in accordance with regulations of law.

3. Establishment, organization, operation, bankruptcy and dissolution of cooperative funds shall comply with regulations herein and relevant laws corresponding to the fund's business model.

Article 4. Functions and duties of cooperative funds

1. Receive, manage and use capital from domestic and foreign sources, financial supports, aids, contributions and entrusted capital of domestic and foreign entities.

2. Raise capital from domestic entities in accordance with regulations herein.

3. Provide loans to clients in accordance with regulations herein.

4. Provide financial and investment consultancy; provide training for clients getting loans from the fund in accordance with regulations of law.

5. Offer and receive trusteeship in accordance with regulations herein and relevant laws.

Article 5. Operational principles of cooperative funds

1. The cooperative fund operates according to the financial autonomy and the principles of public disclosure, transparency, capital preservation and growth.

2. The cooperative fund provides loan to right entities that meet requirements specified in this Decree.

Article 6. Responsibilities and rights of cooperative funds

The cooperative fund shall have primary responsibilities and rights as follows:

1. Responsibilities of the cooperative fund:

a) Provide loans to right clients that meet requirements as prescribed;

b) Use capital for defined purposes as prescribed herein and relevant laws;

c) Implement policies on accounting, statistical reports and financial statements as prescribed in the laws on accounting and statistics;

d) Bear the inspection of competent authorities in accordance with regulations of law and the inspection of the cooperative alliance of the same level;

dd) Provide data and publicly disclose financial status and operational status as prescribed herein and in relevant laws;

e) Purchase property insurance and other insurance as prescribed by law to ensure safety for its operation;

g) Promulgate and revise procedures and internal regulations on organization, administration and operation of the cooperative fund under its jurisdiction prescribed in its charter on organization and operation.

2. Rights of the cooperative fund:

a) Ensure its organization and operation adhere to its defined objectives and scope of operation;

b) Select feasible and efficient investment projects and business plans that meet requirements and are suitable for the client assistance plan of the cooperative fund for giving loans according to regulations herein;

c) Recruit, arrange, use, train and develop its employees in accordance with regulations herein and relevant laws;

d) Refuse requests for provision of information and resources of the cooperative fund if such requests are contrary to regulations of law and the charter on organization and operation of the cooperative fund.

Chapter II

ESTABLISHMENT, BUSINESS MODEL AND ORGANIZATIONAL STRUCTURE OF COOPERATIVE FUNDS

Section 1. CENTRAL COOPERATIVE FUND

Article 7. Business model of cooperative fund

The central cooperative fund is an out-of-budget state financial fund that operates adopting the business model of a single-member limited liability company 100% of charter capital of which is held by the State as prescribed herein.

Article 8. Rights and responsibilities of Prime Minister, Vietnam Cooperative Alliance, and Chairperson of central cooperative fund over and towards the central cooperative fund

1. Rights and responsibilities of the Prime Minister:

a) Consider giving approval for strategies, 05-year development investment plans and operational plans at the request of Vietnam Cooperative Alliance;

b) Make decisions on restructuring (full or partial division, consolidation or merger), conversion of the fund's model, dissolution or bankruptcy of the central cooperative fund at the request of Vietnam Cooperative Alliance and on the basis of opinions given by the Ministry of Finance, Ministry of Justice, Ministry of Planning and Investment and State Bank of Vietnam;

c) Make decisions on the charter capital and changes in the charter capital of the central cooperative fund during its operation at the request of Vietnam Cooperative Alliance and according to opinions given by the Ministry of Finance and Ministry of Planning and Investment;

d) Assign Vietnam Cooperative Alliance to act as the owner’s representative agency of the central cooperative fund in accordance with regulations herein.

2. Rights and responsibilities of Vietnam Cooperative Alliance:

a) Submit strategies, 05-year development investment plans and operational plans to the Prime Minister for approval;

b) Consider giving approval for annual operational and financial plans of the central cooperative fund at the request of its Chairperson;

c) Make decisions to plan, appoint, re-appoint, dismiss, transfer, reward, discipline, and approve resignations or retirement of Chairperson, Controller and General Director of the fund;

d) Promulgate and revise the charter on organization and operation of the central cooperative fund in accordance with regulations herein;

dd) Approve financial statements, profit distribution, and establishment of annual funds of the central cooperative fund after obtaining assessment opinions from the Controller of the central cooperative fund;

e) Perform other rights and responsibilities of the owner’s representative agency as defined in the charter on organization and operation of the central cooperative fund.

3. Chairperson of the central cooperative fund shall perform the following rights and duties:

a) Develop and submit annual operational and financial plans of the central cooperative fund to Vietnam Cooperative Alliance for approval;

b) Request Vietnam Cooperative Alliance to make decisions to plan, appoint, re-appoint, dismiss, transfer, reward, discipline, and approve resignations or retirement of Chairperson, Controller and General Director of the central cooperative fund;

c) Make decisions to plan, appoint, assess, re-appoint, reward, discipline and approve resignations, dismissal and retirement of Deputy General Director(s) and Chief Accountant of the central cooperative fund after obtaining approval from Vietnam Cooperative Alliance;

d) Request Vietnam Cooperative Alliance to revise the charter on organization and operation of the central cooperative fund; request competent authorities to approve increase or decrease of charter capital, restructuring, conversion of business model, dissolution or bankruptcy of the central cooperative fund;

dd) Submit financial statements, and plans for distributing profits and setting up annual funds of the central cooperative fund to Vietnam Cooperative Alliance for approval after obtaining assessment opinions from the Controller of the central cooperative fund;

e) Make decisions to promulgate and revise procedures and internal regulations on organization, administration and operation of the cooperative fund after obtaining approval from Vietnam Cooperative Alliance;

g) Perform other rights and responsibilities defined in the charter on organization and operation of the central cooperative fund.

Article 9. Organizational structure of central cooperative fund

Organizational structure of the central cooperative fund consists of:

1. Fund’s Chairperson.

2. Controller.

3. Executive board includes General Director, Deputy General Director(s), Chief Accountant and assistant apparatus.

Article 10. Chairperson of central cooperative fund

1. Chairperson of the central cooperative fund is appointed by Vietnam Cooperative Alliance and bears responsibility for the fund’s operation before Chairperson of Vietnam Cooperative Alliance.

2. Chairperson of the central cooperative fund shall hold the term of office not exceeding 05 years, and may be re-appointed for up to 02 terms. Chairperson of the central cooperative fund may work under full-time or part-time working regime according to a decision issued by Vietnam Cooperative Alliance according to the fund’s operational scale.

3. Chairperson of the central cooperative fund must satisfy the following standards and requirements:

a) Be a Vietnamese citizen as prescribed by law;

b) Have full legal capacity and attain fitness to perform tasks;

c) Possess a bachelor’s degree or higher in economics, finance, banking, law, accounting or auditing;

d) Have at least 03 years’ managerial experience in economics, finance, banking, law, accounting or auditing;

dd) Be not a spouse, natural or adoptive parent, blood child, adopted child, natural sibling, brother-in-law, or sister-in-law of Chairperson or Deputy Chairperson of Vietnam Cooperative Alliance, Controller, General Director, Deputy General Director or Chief Accountant of the fund;

e) Meet other standards and requirements for holders of managerial positions set out by Vietnam Cooperative Alliance and specified in the charter on organization and operation of the central cooperative fund.

4. Chairperson of the central cooperative fund shall have rights and responsibilities specified in Clause 3 Article 8 hereof and in the charter on organization and operation of the central cooperative fund.

Article 11. Controller of central cooperative fund

1. Controller of the central cooperative fund shall be appointed by Vietnam Cooperative Alliance, and work under the full-time working regime to control the performance of management and administration duties of Chairperson or General Director of the fund as prescribed by law and the charter on organization and operation of the cooperative fund.

2. Controller of the central cooperative fund shall hold the term of office not exceeding 05 years, and may be re-appointed for up to 02 terms.

3. Controller of the central cooperative fund must satisfy the following standards and requirements:

a) Meet the standards and requirements in Points a, b, c, d and e Clause 3 Article 10 hereof;

b) Be not a spouse, natural or adoptive parent, blood child, adopted child, natural sibling, brother-in-law, or sister-in-law of Chairperson or Deputy Chairperson of Vietnam Cooperative Alliance, General Director, Deputy General Director or Chief Accountant of the fund.

4. Chairperson of Vietnam Cooperative Alliance shall issue practice rules of Controller of the central cooperative fund according to regulations on promulgation of practice rules of controllers of single-member limited liability companies 100% of charter capital of which is held by the State and in conformity with regulations herein.

Article 12. General Director of central cooperative fund

1. General Director of the central cooperative fund is appointed and dismissed by Vietnam Cooperative Alliance to manage daily operations of the fund.

2. General Director of the fund shall hold the term of office not exceeding 05 years and may be re-appointed or replaced.

3. General Director of the central cooperative fund must satisfy the following standards and requirements:

a) Meet the standards and requirements in Points a, b, c, d and e Clause 3 Article 10 hereof;

b) Be not a spouse, natural or adoptive parent, blood child, adopted child, natural sibling, brother-in-law, or sister-in-law of Chairperson or Deputy Chairperson of Vietnam Cooperative Alliance, Controller, Deputy General Director or Chief Accountant of the fund.

4. General Director of the central cooperative fund shall have rights and responsibilities prescribed in the charter on organization and operation of the central cooperative fund.

Article 13. Deputy General Director(s), Chief Accountant and assistant apparatus of central cooperative fund

1. Deputy General Director(s) of the central cooperative fund shall be appointed by the fund’s Chairperson at the request of General Director to assist General Director in managing the fund’s operation upon his/her assignment and authorization; bear responsibility before the fund’s General Director and before the law for his/her performance of assigned and authorized tasks; the number of Deputy General Directors shall be decided by Chairperson of Vietnam Cooperative Alliance and shall not exceed 03 persons.

2. Chief Accountant of the central cooperative fund shall be appointed by the fund’s Chairperson at the request of General Director to organize the fund's accounting and statistical works as assigned and authorized by the fund’s General Director and according to regulations of the Law on accounting and relevant laws; bear responsibility before General Director and Chairperson of the fund, and before the law for his/her performance of rights and tasks as assigned or authorized.

3. Assistant apparatus of the central cooperative fund:

a) The assistant apparatus consists of professional and specialized departments or divisions in charge of advising and assisting Chairperson and General Director of the fund in managing the fund. The fund’s General Director shall decide to appoint or dismiss holders of leadership positions of the assistant apparatus after obtaining approval from the fund’s Chairperson;

b) The fund's General Director shall decide organizational structure, functions, duties and rights of the assistant apparatus.

4. Standards and requirements for being appointed as Deputy General Director and Chief Accountant of the central cooperative fund are specified in its charter on organization and operation.

5. Rights and responsibilities of Deputy General Director(s), Chief Accountant and assistant apparatus of the central cooperative fund are specified in its charter on organization and operation.

Article 14. Charter on organization and operation of central cooperative fund

1. The charter on organization and operation of the central cooperative fund shall be issued by Vietnam Cooperative Alliance.

2. The charter on organization and operation of the central cooperative fund shall include the following primary contents:

a) Name and head office;

b) Legal status and business model, legal personality;

c) Contents and scope of operation;

d) Charter capital;

dd) Organizational structure and legal representative of the fund;

e) Functions and duties of the fund;

g) Functions and tasks of Chairperson, Controller and executive board of the fund;

h) Standards and eligibility requirements, rights and responsibilities of managers and holders of other leadership positions of the fund;

i) Recruitment, planning for and appointment of holders of leadership positions;

k) Financial management principles of the fund;

l) Procedures for revising the fund's charter on organization and operation;

m) Relationship between the fund and regulatory authorities and relevant parties as prescribed herein;

n) Relationship between the central cooperative fund and provincial cooperative funds as prescribed herein;

o) Dispute settlement, restructuring, bankruptcy and dissolution of the fund as prescribed herein and in relevant laws;

p) Other contents to serve management requirements.

Section 2. PROVINCIAL COOPERATIVE FUNDS

Article 15. Establishment of provincial cooperative funds

1. The establishment of provincial cooperative funds shall be considered on the basis of local collective economic development orientations in order to ensure that the establishment of provincial collective funds is necessary, feasible and meets the requirements in Clause 2 of this Article. If the establishment of provincial collective funds is considered necessary, only one provincial cooperative fund will be established in each province or central-affiliated city in accordance with regulations herein.

2. Requirements for establishment of a new provincial cooperative fund:

a) The scheme for establishment of provincial cooperative fund has been approved by a competent authority as prescribed herein. This scheme must include the primary contents specified in Clause 3 of this Article;

b) The charter capital available at the time of establishment of the cooperative fund is at least VND 20 billion;

c) The charter on organization and operation of the provincial cooperative fund has been approved by a competent authority prescribed herein in conformity with Article 19 hereof.

3. The scheme for establishment of provincial cooperative fund shall include the following primary contents:

a) The necessity of the establishment of provincial cooperative fund; impacts of the establishment of provincial cooperative fund on provincial economic and social development; the feasibility of the establishment and operation of the fund;

b) Name of the provincial cooperative fund, operation areas, head office’s address, charter capital at the establishment date, sources of charter capital, and scope of operation which must be conformable with regulations herein;

c) Business model of the provincial cooperative fund as prescribed in Article 16 hereof and description of the selected business model of the fund which must ensure efficiency and conformity with actual conditions of the province or central-affiliated city;

d) Description of the planned organizational structure and operational process of the provincial cooperative fund in accordance with regulations herein, including: Organizational structure; operations of the provincial cooperative fund; risk management procedures which must specify potential risks incurred during operation, methods and measures for preventing risks; control of these risks; information technology system developed for managing the fund’s operations;

dd) Financial and operational plans of the provincial cooperative fund for 05 years after establishment, including: The plan for operating capital of the fund, description of capital sources (including charter capital, sources of charter capital, mobilized capital and other capital; expected performance of the provincial cooperative fund to prove the feasibility of the fund establishment;

e) List of persons to be elected as managers of the provincial cooperative fund and documents proving their fulfillment of corresponding standards and requirements for managers specified herein;

g) In case a provincial cooperative fund operates adopting the cooperative business model, the followings must be provided:

- List of persons who will contribute capital to the fund which bears signatures of such capital contributors, and the following contents: Full name (of individual or family representative), name and head office (of juridical person), number of ID card or citizen’s identity card or passport number (of individual), number of family register (of household) and number of business registration certificate (of juridical person), contributed amounts and contribution percentage of each contributor;

- Certified true copies issued by Commune-level People’s Committee of the following documents: ID card or citizen’s identity card or unexpired Passport (of individual, juridical person’s representative or household’s representative), family register (of household), business registration certificate (of juridical person);

- The power of attorney issued by the juridical person to its representative to make capital contribution; the power of attorney issued by the household to its representative to make capital contribution.

4. Procedures for establishment of a new provincial cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State:

a) The provincial cooperative alliance shall formulate the scheme for establishment of provincial cooperative fund, and submit it to the provincial People’s Committee for consideration and assessment;

b) Within 30 business days from the receipt of the scheme for establishment of provincial cooperative fund as prescribed in Point a of this Clause, if the scheme is considered unfeasible and unsatisfactory, the provincial People’s Committee shall give a written notice, in which reasons for refusal to approve must be specified, to the provincial cooperative alliance;

c) If the scheme is feasible and satisfactory, the provincial People’s Committee shall submit a report to the provincial People’s Council for considering and approving the guidelines for fund establishment with the following contents: Charter capital and sources of charter capital, mobilized capital, business model and organizational structure of the provincial cooperative fund, and other contents to serve management requirements of the provincial People’s Council;

d) After obtaining approval for the establishment of fund, Chairperson of provincial People’s Committee shall issue a decision to establish the cooperative fund;

dd) Within 30 business days from the date of establishment of the cooperative fund, the provincial People’s Committee shall give notification, enclosed with the decision to establish the cooperative fund, to the Ministry of Finance, the State Bank of Vietnam, Ministry of Planning and Investment, Vietnam Cooperative Alliance; the provincial cooperative fund shall publicly disclose its establishment on mass media;

e) Within 180 days from the date of issue of the decision to establish the provincial cooperative fund, the provincial People’s Committee shall use funding derived from provincial government budget for allocating charter capital according to the issued decision.

5. Procedures for establishment of new provincial cooperative fund that operates under the cooperative business model:

a) Founding members and provincial cooperative alliance shall convene a meeting on establishment of the provincial cooperative fund for approving contents about establishment of the provincial cooperative fund, including: The scheme for establishment of the fund as prescribed in Clause 3 of this Article; the planned charter on organization and operation of the fund as prescribed in Article 19 hereof and other contents concerning the establishment, organization and operation of the fund. The resolution of the meeting on establishment of the provincial cooperative fund must be approved by voting under the majority rule;

b) After the resolution of the meeting on establishment of the provincial cooperative fund has been approved, the provincial cooperative alliance shall request the provincial People’s Committee to consider and appraise the scheme on establishment of provincial cooperative fund;

c) Within 30 business days from the receipt of the scheme for establishment of provincial cooperative fund as prescribed in Point b of this Clause, if the scheme is considered unfeasible and unsatisfactory, the provincial People’s Committee shall give a written notice, in which reasons for refusal to approve must be specified, to the provincial cooperative alliance;

d) If the scheme is feasible and satisfactory, the provincial People’s Committee shall request the provincial People’s Council to consider and approve the guidelines for fund establishment;

dd) After obtaining approval for the establishment of fund from the provincial People’s Council, the General Meeting of Members of the provincial cooperative fund shall convene meeting and issues a resolution to establish the provincial cooperative fund;

e) After the resolution to establish the provincial cooperative fund has been approved by the General Meeting of Members, the provincial cooperative fund shall request the provincial Department of Planning and Investment in writing to issue the certificate of registration of provincial cooperative fund in accordance with regulations of law;

g) Within 30 business days from the date of issue of the certificate of registration of provincial cooperative fund, the provincial People's Committee shall send notification, enclosed with the certificate of registration of provincial cooperative fund, to the Ministry of Finance, the State Bank of Vietnam, Ministry of Planning and Investment, and Vietnam Cooperative Alliance. The provincial cooperative fund shall publicly disclose its establishment on mass media;

h) Within 180 days from the date of issue of certificate of registration of provincial cooperative fund, capital contributors must make full contribution of capital as committed.

Article 16. Business model and administration of operations of provincial cooperative funds

1. Provincial cooperative funds shall operate under one of the following models;

a) The model of single-member limited liability companies 100% of charter capital of which is held by the State;

b) The model of cooperative.

2. Provincial cooperative funds are organized by adopting one of the following methods:

a) Establish an independent apparatus to organize and manage the provincial cooperative fund and perform operations as prescribed herein;

b) Authorize local financial organizations to manage the fund. A trust agreement must be signed by and between two parties and shall, inter alia, indicate the following contents: Entrustment or authorization scope, contents and process; responsibilities, duties and rights of contracting parties; potential risks and other relevant contents.

Article 17. Rights and responsibilities of provincial People's Committees and provincial cooperative alliances; organizational structure of provincial cooperative funds that operate under the business model of a single-member limited liability company 100% of charter capital of which is held by State

1. Rights and responsibilities of each provincial People’s Committee:

a) Consider giving approval for 05-year operational plans or strategies, financial plans and development investment plans at the request of provincial cooperative alliance;

b) Issue a decision on establishment, restructuring, transfer of ownership, bankruptcy or dissolution of the provincial cooperative fund at the request of the provincial cooperative alliance and on the basis of opinions given by the provincial Department of Finance, provincial Department of Planning and Investment, and provincial Department of Justice after obtaining approval from the provincial People’s Council;

c) Decide the charter capital and approve increase or decrease in the charter capital of the provincial cooperative fund during its operation at the request of the provincial cooperative alliance and according to opinions given by the provincial Department of Finance, and provincial Department of Planning and Investment after obtaining approval from the provincial People’s Council;

d) Promulgate and revise the charter on organization and operation of the provincial cooperative fund in accordance with regulations herein;

dd) Appoint or authorize the provincial cooperative alliance to appoint the fund's Chairperson, Controller and Director according to the charter on organization and operation of the provincial cooperative alliance;

e) Perform other rights and responsibilities as prescribed herein and in relevant laws.

2. Rights and responsibilities of each provincial cooperative alliance:

a) Approve annual operational and financial plans of the provincial cooperative fund after obtaining approval from the provincial People’s Committee;

b) Make decisions to plan, appoint, re-appoint, dismiss, transfer, reward, discipline, and approve resignations or retirement of title holders as prescribed in the charter on organization and operation of the cooperative fund;

c) Approve financial statements, profit distribution, and establishment of annual funds of the provincial cooperative fund after obtaining assessment opinions from the Controller of the provincial cooperative fund;

d) Perform other rights and responsibilities assigned by the provincial People’s Committee as prescribed in the charter on organization and operation of the provincial cooperative fund.

3. Organizational structure of the provincial cooperative fund consists of:

a) Fund’s Chairperson;

b) Controller;

c) Executive board, composed of: Director, Deputy Director(s), Chief Accountant and assistant apparatus.

4. Chairperson of the provincial cooperative fund:

a) Chairperson of the provincial cooperative fund is a representative in charge of performing rights and responsibilities of the state owner’s representative at the fund;

b) Chairperson of the provincial cooperative fund shall hold the term of office not exceeding 5 years, and may be re-appointed for up to 02 terms. Chairperson of the provincial cooperative fund shall be appointed and dismissed according to the charter on organization and operation of the provincial cooperative fund;

c) Chairperson of the provincial cooperative fund must satisfy the following standards and requirements: Meet the standards and requirements laid down in Points a, b, c and d Clause 3 Article 10 hereof; be not a spouse, natural or adoptive parent, blood child, adopted child, natural sibling, brother-in-law, or sister-in-law of Chairperson or Deputy Chairperson of the provincial cooperative alliance, Controller, Director, Deputy Director or Chief Accountant of the fund; and meet other standards and requirements to serve management requirements of the provincial cooperative alliance as prescribed in the charter on organization and operation of the provincial cooperative fund;

d) Chairperson of the provincial cooperative fund shall have the following rights and responsibilities: Formulate and submit 05-year operational plans or strategies, financial plans and development investment plans to the provincial cooperative alliance for submission to the provincial People's Committee; formulate and submit annual operational and financial plans of the provincial cooperative fund to the provincial cooperative alliance; Request the provincial cooperative alliance to decide the planning, appointment, re-appointment, dismissal, transfer, reward, discipline, and approval for resignations and retirement of title holders as prescribed in the charter on organization and operation of the provincial cooperative fund; Submit reports to the provincial cooperative alliance for requesting the provincial People’s Committee to approve revisions to the charter on organization and operation of the provincial cooperative fund; approve increase or decrease in the charter capital, restructuring, conversion of business model, dissolution or bankruptcy of the provincial cooperative fund; Request the provincial cooperative alliance to consider giving approval for financial statements, profit distribution, and establishment of annual funds of the provincial cooperative fund after obtaining assessment opinions from the Controller of the provincial cooperative fund; Make decisions to promulgate and revise procedures and internal regulations on organization, administration and operation of the provincial cooperative fund after obtaining approval from the provincial cooperative alliance; Perform other rights and responsibilities defined in the charter on organization and operation of the provincial cooperative fund.

5. Controller of the provincial cooperative fund:

a) Controller of the provincial cooperative fund shall assist the provincial cooperative alliance in controlling the performance of management and administration duties of Chairperson and Director of the provincial cooperative fund and other relevant contents;

b) Controller of the provincial cooperative fund shall hold the term of office not exceeding 05 years, and may be re-appointed for up to 02 terms; appointment and dismissal of Controller of the provincial cooperative fund shall be carried out according to the charter on organization and operation of the provincial cooperative fund;

c) Controller of the provincial cooperative fund must satisfy the following standards and requirements: Meet the standards and requirements laid down in Points a, b, c and d Clause 3 Article 10 hereof; be not a spouse, natural or adoptive parent, blood child, adopted child, natural sibling, brother-in-law, or sister-in-law of Chairperson or Deputy Chairperson of the provincial cooperative alliance, or Chairperson, Director, Deputy Director or Chief Accountant of the fund; and meet other standards and requirements to serve management requirements of the provincial cooperative alliance as prescribed in the charter on organization and operation of the provincial cooperative fund;

d) Chairperson of provincial cooperative alliance shall issue practice rules of Controller of the provincial cooperative fund according to regulations on promulgation of practice rules of controllers of single-member limited liability companies 100% of charter capital of which is held by the State and in conformity with regulations herein.

6. Director of the provincial cooperative fund:

a) Director of the provincial cooperative fund shall directly manage operations of the fund;

b) The fund’s Director shall hold the term of office not exceeding 05 years and may be re-appointed or replaced. Director of the provincial cooperative fund shall be appointed and dismissed according to the charter on organization and operation of the provincial cooperative fund;

c) Director of the provincial cooperative fund must satisfy the following standards and requirements: Meet the standards and requirements laid down in Points a, b, c and d Clause 3 Article 10 hereof; be not a spouse, natural or adoptive parent, blood child, adopted child, natural sibling, brother-in-law, or sister-in-law of Chairperson or Deputy Chairperson of the provincial cooperative alliance, or Chairperson, Controller, Deputy Director or Chief Accountant of the fund; and meet other standards and requirements to serve management requirements of the provincial cooperative alliance as prescribed in the charter on organization and operation of the provincial cooperative fund;

d) Director of the provincial cooperative fund shall have rights and responsibilities prescribed in the fund’s charter on organization and operation.

7. Deputy Director(s), Chief Accountant and assistant apparatus of the fund:

a) Deputy Director(s) of the provincial cooperative fund shall be appointed and dismissed by the fund’s Chairperson at the request of the fund’s Director. Deputy Director(s) of the provincial cooperative fund shall assist the fund’s Director in managing the fund’s operations as assigned and authorized by the fund’s Director; assume responsibility before the fund’s Director and before the law for their performance of assigned and authorized tasks;

b) Chief Accountant of the provincial cooperative fund shall be appointed and dismissed by the fund’s Chairperson at the request of the fund’s Director. Chief Accountant shall take charge of accounting, financial and statistical works of the provincial cooperative fund as assigned by the fund’s Director and in conformity with regulations of the Law on accounting and the fund’s charter on organization and operation;

c) The assistant apparatus of the provincial cooperative fund consists of professional and specialized departments or divisions in charge of advising and assisting the fund’s Chairperson and General Director in managing the fund. The fund’s Director shall decide to appoint or dismiss holders of leadership positions of the assistant apparatus after obtaining approval from the fund’s Chairperson. Organizational structure, functions, duties and powers of the assistant apparatus are specified in the fund’s charter on organization and operation;

d) Standards and requirements for being appointed as Deputy Director(s) and Chief Accountant of the provincial cooperative fund are prescribed in its charter on organization and operation;

dd) Rights and responsibilities of Deputy Director(s), Chief Accountant and assistant apparatus of the provincial cooperative fund are specified in its charter on organization and operation.

Article 18. Organizational structure of provincial cooperative funds that operate under cooperative business model

1. Organization structure of the fund consists of:

a) General meeting of members;

b) Board of Directors;

c) Controller;

d) Executive board, composed of: Director, Deputy Director(s), Chief Accountant and assistant apparatus.

2. General meeting of members:

a) General meeting of members shall have the ultimate decision-making power of the provincial cooperative fund that operates under the cooperative business model. There are annual general meeting of members and extraordinary general meeting of members. The general meeting of members may be held in the form of a plenary meeting of its members or a meeting of representatives of members in accordance with regulations of the Law on cooperatives;

b) Rights and duties of the general meeting of members shall comply with the Law on cooperatives.

3. Board of Directors:

a) The Board of Directors of the provincial cooperative fund shall be elected and dismissed by the general meeting of members in the form of a secret ballot. The Board of Directors is composed of at least 03 members, including: Chairperson and other members. Chairperson of the Board of Directors of the provincial cooperative fund may work under full-time or part-time working regime, has the term of office not exceeding 05 years, and may be re-appointed for up to 02 terms;

b) Chairperson of the Board of Directors of the provincial cooperative fund must satisfy the standards and requirements in Point c Cause 4 Article 17 hereof and the charter on organization and operation of the provincial cooperative fund;

c) Chairperson of the Board of Directors of the provincial cooperative fund shall have rights and responsibilities prescribed in the fund’s charter on organization and operation.

4. Controller of the provincial cooperative fund:

a) Controller of the provincial cooperative fund shall be elected and dismissed by the general meeting of members in the form of a secret ballot;

b) Controller of the provincial cooperative fund may work under full-time or part-time working regime, has the term of office not exceeding 05 years, and may be re-appointed for up to 02 terms to take charge of controlling the performance of management and administration tasks of the Board of Directors and Director of the fund, and other relevant contents;

c) Controller of the provincial cooperative fund must satisfy the standards and requirements in Cause 3 Article 11 hereof and the charter on organization and operation of the provincial cooperative fund;

d) The general meeting of members shall ratify the resolution on promulgation of practice rules of controller of the provincial cooperative fund which must be conformable with the Law on cooperatives and regulations herein.

5. Director of the provincial cooperative fund:

a) Director of the provincial cooperative fund shall be appointed and dismissed by the general meeting of members in the form of secret ballot; directly take charge of managing operations of the fund. Director of the fund shall hold the term of office not exceeding 05 years and may be re-appointed or replaced;

b) Director of the provincial cooperative fund must satisfy the standards and requirements in Point c Cause 6 Article 17 hereof and the charter on organization and operation of the provincial cooperative fund;

c) Director of the provincial cooperative fund shall have rights and responsibilities prescribed in the fund’s charter on organization and operation.

6. Deputy Director(s), Chief Accountant and assistant apparatus:

a) Deputy Director(s) of the provincial cooperative fund shall be appointed and dismissed by Chairperson of the Board of Directors of the fund at the request of the fund’s Director. Deputy Director(s) of the provincial cooperative fund shall assist the fund’s Director in managing the fund’s operations as assigned and authorized by the fund’s Director; assume responsibility before the fund’s Director and before the law for their performance of assigned and authorized tasks. Chairperson of the Board of Directors shall decide the structure and number of Deputy Directors according to the fund’s operational scale and conditions in each period;

b) Chief Accountant of the provincial cooperative fund shall be appointed and dismissed by Chairperson of the Board of Directors of the fund at the request of the fund’s Director. Chief Accountant shall take charge of accounting, financial and statistical works of the provincial cooperative fund as assigned by the fund’s Director and in conformity with regulations of the Law on accounting and relevant laws;

c) The assistant apparatus of the fund consists of professional and specialized departments or divisions in charge of advising and assisting Board of Directors and Director of the fund in managing the fund. The fund’s Director shall decide to appoint or dismiss holders of leadership positions of the assistant apparatus after obtaining approval from the fund’s Board of Directors. Organizational structure, functions, duties and powers of the assistant apparatus are specified in the fund’s charter on organization and operation;

d) Standards and requirements for being appointed as Deputy Director(s) and Chief Accountant of the provincial cooperative fund are prescribed in its charter on organization and operation;

dd) Rights and responsibilities of Deputy Director(s), Chief Accountant and assistant apparatus of the provincial cooperative fund are specified in its charter on organization and operation.

Article 19. Charter on organization and operation of provincial cooperative fund

1. Charter on organization and operation of a provincial cooperative fund must be conformable with its organizational and business model and include the primary contents specified in Article 14 hereof.

2. Provincial People's Committees shall promulgate charters on organization and operation of provincial cooperative funds that operate under the business model of a single-member limited liability company 100% of charter capital of which is held by State. General meetings of members of provincial cooperative funds that operate under the cooperative business model shall issue resolutions to approve their charters on organization and operation.

Chapter III

OPERATIONS OF COOPERATIVE FUNDS

Section 1. LENDING

Article 20. Eligible borrowers and lending scope

1. Eligible borrowers:

a) Cooperative funds shall provide loans for cooperatives, cooperative unions, members of artels and cooperatives (except members of cooperatives that are enterprises);

b) Vietnam Cooperative Alliance and provincial People's Committees shall stipulate borrowers that are given priority to get loans from cooperative funds according to development strategies of the funds.

2. Lending scope:

a) The central cooperative fund shall provide loans to the entities specified in Clause 1 of this Article nationwide;

b) Each provincial cooperative fund shall provide loans for the entities specified in Clause 1 of this Article within the province or central-affiliated city where the fund is established.

Article 21. Lending principles

1. Cooperative funds shall provide loans to their clients under agreements made between the funds and clients in conformity with regulations herein.

2. Clients getting loans from a cooperative fund must ensure the correct use of borrowed funds and repay principal and interests according to the schedule agreed upon with the fund.

Article 22. Eligibility requirements for a loan

A client may get a loan from the cooperative fund if all of the following eligibility requirements are met:
1. The client is an entity defined in Clause 1 Article 20 hereof.

2. The client is a juridical person established in accordance with regulations of law. If the client is an individual, he/she must be aged 18 or older and has full legal capacity as prescribed by law.

3. The client has an investment project or business plan appraised to be feasible by the cooperative fund and the client is capable of repaying debts.

4. The client complies with regulations on loan security laid down in Article 26 hereof.

5. The client’s equity used for implementing the investment project or business plan is accounted for at least 20% of total investment capital of that project or plan.

6. At the time of first disbursement made by the cooperative fund after the credit contract is signed, the client has not incurred any bad debts at credit institutions.

Article 23. Loan amount and loan limit

1. Loan amount: Based on the plan for use of borrowed money, financial capability, capacity to repay debts, and loan security of each client, and the loan limit prescribed herein, the cooperative fund shall consider and decide the specific loan amount given to that client in conformity with its available capital sources and financial capability.

2. Loan limit:

a) Total loan outstanding balance of a client shall not exceed 15% of the existing charter capital of the cooperative fund at the time it decides to grant loans;

b) Total loan outstanding balance of a client and related persons shall not exceed 25% of the existing charter capital of the cooperative fund at the time it decides to grant loans;

3. Cooperative funds provide syndicated loans according to specific agreements between such cooperative funds and clients, and in conformity with regulations herein and relevant laws.

Article 24. Loan term

1. The loan term shall be determined according to capital recovery capacity and in conformity with the client’s business cycle, investment plan and solvency.

2. The cooperative fund shall consider and decide specific term of loan given to each investment project or business plan of the client.

Article 25. Lending interest rate and currency units used for extending loans and repaying debts

1. Principles for determining interest rate and currency units used for extending loans and repaying debts

a) The lending interest rates adopted by cooperative funds must be conformable with incentive policies and plans for development of collaborative economy and cooperatives of the Government and of each provincial government, ensure funding for covering operating expenses of the cooperative fund, and adhere to relevant regulations on lending interest rates;

b) The interest rate charged on overdue debts in each specific case shall be determined by the relevant cooperative fund, and shall not exceed 150% of the interest rate charged on due repayment;

c) Currency unit used for extending loans and repaying debts is VND.

2. The power to decide lending interest rates, interest rates charged on overdue debts, reduction or exemption of interests shall comply with the charter on organization and operation of each cooperative fund and its internal regulations on lending and borrowed fund management.

Article 26. Loan security

1. The cooperative fund and its client shall agree on whether or not the loan must be secured by collateral in conformity with law regulations on loan security measures.

2. The cooperative fund is allowed to dispose of collateral provided by the client to recover debts in accordance with regulations of law on secured transactions.

Article 27. Debt rescheduling

The cooperative fund shall consider deciding whether the debt rescheduling (including adjustment to a repayment period and extension of a loan term) is necessary at the client’s request and depending on the financial capability of that cooperative fund and results of assessment of the client’s capability to repay debts. To be specific:

1. If the client is incapable of making due repayment of loan principal and/or interest, and is assessed by the cooperative fund as having capacity for fully repaying the loan principal and/or interest within the adjusted repayment period, the cooperative fund shall consider adjusting the period of repayment of that loan principal and/or interest as appropriate to the client’s source of financing for debt repayment without prejudice to the loan term.

2. If the client is incapable of paying off loan principal and/or interest in full within the agreed loan term, and is assessed by the cooperative fund as having capacity for fully repaying loan principal and/or interest within a specified period of time following the said loan term, the cooperative fund shall consider extending the period of debt repayment as appropriate to the client’s source of financing for such debt repayment.

3. The power to decide the debt rescheduling is specified in the charter on organization and operation of the cooperative fund and its internal regulations on lending and borrowed fund management.

Article 28. Debt classification, establishment and use of loan loss provisions

1. Cooperative funds shall classify debts, set aside loan loss provisions and use such provisions for settling losses incurred during the provision of loans in accordance with SBV’s regulations applicable to microfinance institutions.

2. The cooperative fund is not required to set aside loan loss provisions for the loans granted by the cooperative fund under authorization by a third party or granted by a third party under the cooperative fund’s authorization.

3. After 05 years from the day on which the provision is used for dealing with loan losses and after all necessary measures taken to collect debts are unsuccessful, at the request of the risk control council of the cooperative fund:

a) For the central cooperative fund: Chairperson of Vietnam Cooperative shall decide to remove the debts monitored in its off-balance sheet on the basis of the approval given by Vietnam Cooperative Alliance after reporting the Prime Minister;

b) For a provincial cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State: Chairperson of the provincial cooperative fund shall decide to remove the debts monitored in its off-balance sheet on the basis of the approval given by the provincial cooperative alliance after reporting the provincial People’s Committee.

4. For a provincial cooperative fund that operates under the cooperative business model: Chairperson of the Board of Directors of the provincial cooperative fund shall decide to remove the debts monitored in its off-balance sheet after obtaining the approval from the fund’s general meeting of members.

5. Pursuant to Clause 1, Clause 2 and Clause 3 of this Article, the cooperative fund shall promulgate internal regulations on debt classification, establishment and use of loan loss provisions in accordance with regulations herein.

Article 29. Risk control council

1. The cooperative fund shall establish a risk control council that is composed of a Chairperson who is the fund’s Chairperson or Chairperson of the fund’s Board of Directors and members who are Controller, the fund’s Director, Chief Accountant, head of lending department and other members decided by the fund’s Chairperson or Chairperson of the fund’s Board of Directors.

2. The risk control council shall perform the following tasks:

a) Quarterly assess reports on debt classification, establishment and use of loan loss provisions provided by the fund’s Director;

b) Make decisions to use loan loss provisions;

c) Decide the plan for collecting debts for which loan loss provisions have been used, in which the period and measures for collecting debts must be specified;

d) Monitor the collection of debts for which loan loss provisions have been used;

dd) Follow procedures and prepare documents for removing the debts monitored in the off-balance sheet for submitting to competent authorities for consideration as prescribed in Clause 3 Article 28 hereof;

e) Formulate internal regulations on operations of the risk control council for submission to the fund’s Chairperson or Chairperson of the fund’s Board of Directors for promulgation.

Article 30. Authorization to grant loans by the central cooperative fund

1. The central cooperative fund may authorize provincial cooperative funds and other financial organizations or credit institutions to use its capital to grant loans.

2. A trust agreement must be entered into between the central cooperative fund and the trustee as the basis for performing fiduciary activities. The trust agreement must, inter alia, include the followings: Entrustment scope and contents, entrusted capital, entrustment process, potential risks, responsibilities, duties and rights of contracting parties, and other relevant contents.

Article 31. Promulgation of internal regulations on lending and borrowed fund management

1. The cooperative fund shall promulgate its internal regulations on lending and borrowed fund management according to the power specified in its charter on organization and operation.

2. Internal regulations on lending and borrowed fund management of the cooperative fund must be conformable with regulations herein and suitable for the fund’s operations, and must, inter alia, include the following contents: Eligible borrowers, lending requirements, lending methods, loan term, lending interest rate, interest rate charged on overdue debts, application for loan, debt collection, process and procedures for debt rescheduling, delinquency procedures; procedures for appraising, approving and deciding to grant loan; procedures for inspection of borrowing, use of borrowed funds and debt repayment by clients; application of loan security measures, cases where the collateral is not required based on results of assessment of risk levels and capacity to repay debts by clients; power to decide to each loan security measure; risk control.

Section 2. CAPITAL MOBILIZATION AND OTHER ACTIVITIES

Article 32. Capital mobilization by cooperative funds

Each cooperative fund is allowed to mobilize capital in conformity with its business model. To be specific:

1. Central cooperative fund:

The central cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State may mobilize capital in accordance with the Law on enterprises, the Law on management and use of state capital invested in manufacturing and business operations of enterprises, and relevant guiding documents.

2. Provincial cooperative funds:

a) A provincial cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State may mobilize capital within the province/city in accordance with the Law on enterprises, the Law on management and use of state capital invested in manufacturing and business operations of enterprises, and relevant guiding documents;

b) A provincial cooperative fund that operates under the cooperative business model may mobilize capital within the province/city in accordance with the Law on Cooperatives and relevant guiding documents.

Article 33. Other activities of cooperative funds

Cooperative funds are allowed to provide investment and financial consulting services, and provide assistance and training for their clients in accordance with regulations of law in force.

Chapter IV

FINANCIAL POLICIES, ACCOUNTING, AUDITING, REPORTING AND ASSESSMENT OF PERFORMANCE OF COOPERATIVE FUNDS

Article 34. Financial, accounting and auditing policies

1. Cooperative funds shall comply with financial, accounting and reporting policies laid down herein and guidelines of the Ministry of Finance.

2. The financial year of the cooperative fund commences from January 01 to December 31 of every year.

3. Annual financial statements of the cooperative fund must be audited by an independent audit organization or the State Audit Office of Vietnam in accordance with regulations of law in force.

Article 35. Financial management principles

1. Cooperative funds shall exercise financial autonomy and be self-responsible for their performance of assigned tasks, obligations and commitments as prescribed by law.

2. Cooperative funds shall make financial disclosure in accordance with regulations of law in force. The fund’s Chairperson or Chairperson of the fund’s Board of Directors shall assume responsibility for the accuracy and truthfulness of the fund's financial statements, statistical reports and financial disclosure.

3. Cooperative funds shall fulfill tax obligations in accordance with regulations of the Law on taxation.

Article 36. Working capital of cooperative funds

The working capital of a cooperative fund is derived from the following sources:

1. Owner’s equity:

a) Charter capital;

b) Development investment fund and financial reserve funds;

c) Funds derived from non-refundable financing, aids and contributions of domestic and foreign entities;

d) Differences from revaluation of assets;

dd) Differences in undistributed expenses and revenues, and unrealized accumulated losses;

e) Other capital owned by the cooperative fund.

2. Capital raised from domestic entities in accordance with Article 32 hereof.

3. Any refundable aids given by the State to the cooperative fund that operates under the cooperative business model shall comply with regulations of the Law on Cooperatives.

4. Other lawful sources of capital as regulated by law (if any).

Article 37. Charter capital of cooperative funds

1. The charter capital of a cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State shall include funding from state budget and other lawful funding sources. To be specific:

a) The charter capital of the central cooperative fund is VND 1.000 (one thousand) billion which is derived from the central-government budget for development investment expenditures. The change in the charter capital of the central cooperative fund shall be decided by the Prime Minister at the request of Vietnam Cooperative Alliance after obtaining the consent from Ministry of Finance and Ministry of Planning and Investment;

b) The minimum charter capital of a provincial cooperative fund is VND 20 (twenty) billion which is derived from the provincial-government budget for development investment expenditures. The change in the charter capital of the provincial cooperative fund shall be decided by the Chairperson of the provincial People’s Committee after obtaining approval from the same-level People’s Council and at the request of the provincial cooperative alliance after obtaining the consent from provincial Department of Finance and provincial Department of Planning and Investment.

2. For a provincial cooperative fund that operates under the cooperative business model:

a) The minimum charter capital of the cooperative fund is VND 20 billion which is contributed by the fund's members;

b) The change in the charter capital of the cooperative fund shall be decided by the fund’s general meeting of members.

Article 38. Principles for management and use of capital and assets of cooperative funds

1. Cooperative funds must manage and use their capital in a safe, proper and effective manner so as to perform their tasks as prescribed herein.

2. Management and use of idle capital:

a) Cooperative funds may deposit money at commercial banks that are duly established and operating under the law of Vietnam according to the capital preservation and growth principle;

b) Provincial cooperative funds may deposit their idle capital at the central cooperative fund and vice versa under agreements between the parties;

c) Cooperative funds shall formulate their own internal regulations on management and use of idle capital, which shall, inter alia, include the following contents: Criteria for selection of commercial banks receiving deposits to ensure capital preservation and growth principle; power to decide the selection of banks.

3. Acquisition, management and use of assets of cooperative funds:

a) For a cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State: The cooperative fund is allowed to acquire and invest in fixed assets to directly serve its operations on the condition that the residual value of fixed assets does not exceed 10% of its existing charter capital at the time of issuance of investment or acquisition decision, and the cooperative fund must fully comply with law regulations on construction and investment management by single-member limited liability companies 100% of charter capital of which is held by the State;

b) For a cooperative fund that operates under the cooperative business model: The cooperative fund may acquire and invest in fixed assets to directly serve its operations in accordance with regulations of the Law on Cooperatives and the fund’s internal regulations which are promulgated by the fund’s Board of Directors after obtaining approval from its general meeting of members.

Article 39. Capital adequacy

Every cooperative fund is required to comply with the following regulations on capital adequacy:

1. Manage and use capital and assets, distribute financial outcomes, and implement financial management and accounting policies in accordance with regulations herein and relevant laws.

2. Comply with regulations on loan limits as prescribed herein.

3. Buy mandatory property insurance as prescribed by law.

4. Record loan loss provisions set aside as prescribed herein as operating expenses.

5. Adopt other measures for ensuring capital adequacy as prescribed by law.

Article 40. Salaries and allowances of cooperative funds

1. For a cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State: The cooperative fund shall manage its employees, salaries, remunerations and bonuses of its employees and managers in the same manner as a single-member limited liability company 100% of charter capital of which is held by the State, and as appropriate to the fund’s characteristics and business model as prescribed herein.

2. For a cooperative fund that operates under the cooperative business model: The cooperative fund shall manage its employees, salaries, remunerations and bonuses of its employees and managers in the same manner as a cooperative as prescribed in the Law on Cooperatives.

Article 41. Incomes of cooperative funds

1. Incomes of a cooperative fund are determined in conformity with accounting standards of Vietnam and relevant laws and supported by lawful invoices or receipts, and must be fully recorded as its revenues.

2. Incomes of a cooperative fund include:

a) Interest income and similar incomes;

b) Income earned from service provision;

c) Income from other activities;

d) Other incomes as prescribed by law.

3. The Ministry of Finance shall provide specific guidance on incomes of cooperative funds as prescribed in Clause 2 of this Article.

Article 42. Expenses of cooperative funds

1. Expenses of a cooperative fund are expenses actually incurred during the fund’s operation; comply with the matching principle between incomes and expenses; and must be proved by lawful invoices and receipts in accordance with regulations of law. The cooperative fund shall not record expenses which are covered by other funding sources as its expenses. Expenses shall be determined and recorded in accordance with Vietnam’s accounting standards and relevant laws. Deductible expenses upon determination of tax liabilities shall comply with regulations of the Law on taxation.

2. Expenses of a cooperative fund include:

a) Interest payments and other similar expenses;

b) Costs of service provision;

c) Costs of other activities;

d) Payments of taxes and other fees and charges;

dd) Payments made to employees of the cooperative fund;

e) Management and administration costs;

g) Asset-related costs;

h) Contributions to loan loss provisions;

i) Costs for participation in activities organized by cooperative alliances at all levels and related to operation of the cooperative fund;

k) Other expenses.

3. The Ministry of Finance shall provide specific guidance on expenses of cooperative funds as prescribed in Clause 2 of this Article.

Article 43. Financial outcomes and distribution of financial outcomes

1. Financial outcomes mean the difference between total incomes and total expenses incurred in a financial year:

a) The cooperative fund has surplus financial outcomes if the difference between total incomes and total expenses in the financial year is a positive number;

b) The cooperative fund has financial deficit if the difference between total incomes and total expenses in the financial year is a negative number.

2. After paying fines for violations against law and offsetting its deficits in previous years (if any), the financial surplus of a cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State shall be distributed as follows:

a) Contribute not more than 30% of the surplus to the development investment fund.

b) Contribute 10% of the surplus to the financial reserve fund.

c) Make contributions to reward and welfare funds for employees as follows:

A cooperative fund rated A may set aside an amount equivalent to 3 months’ earned income of employees for two reward and welfare funds;

A cooperative fund rated B may set aside an amount equivalent to 1,5 months’ earned income of employees for two reward and welfare funds;

A cooperative fund rated C may set aside an amount equivalent to 01 month’s earned income of employees for two reward and welfare funds.

d) Make contributions to the reward fund for managers and controllers:

A cooperative fund rated A may set aside an amount equivalent to 1,5 months’ earned income of managers and controllers for this fund;

A cooperative fund rated B may set aside an amount equivalent to 01 months’ earned income of managers and controllers for this fund;

A cooperative fund rated C is not allowed to set aside the reward fund for managers and controllers.

d) Id the difference between revenues and expenses that remains after setting aside the funds specified in Points a and b of this Clause is not enough for setting aside reward and welfare funds for employees, and the reward fund for managers and controllers as regulated, the cooperative fund may reduce the amount used to set aside the development investment fund but must ensure the minimum amount contributed to the development investment fund in the financial year as prescribed;

e) The remaining amount (if any) after setting aside the abovementioned funds shall be contributed to the development investment fund of the cooperative fund.

3. For a cooperative fund that operates under the cooperative business model:

a) The difference between incomes and expenses shall be distributed according to Clause 1, Clause 2 Article 46 of the Law on Cooperatives;

b) The remaining amount (if any) after setting aside the funds specified in Point a of this Clause shall be contributed to the development investment fund of the cooperative fund.

4. Purposes of funds:

a) The development investment fund is used for investing in expansion of the business scale and renovation of technologies, equipment and working conditions of the cooperative fund and for supplementation of the charter capital of the cooperative fund. The fund’s Chairperson shall decide investment form and method in conformity with regulations applicable to single-member limited liability companies 100% of charter capital of which is held by the State. Chairperson of the fund’s Board of Directors shall decide investment form and method in conformity with regulations of the Law on Cooperatives;

b) The financial reserve fund is used for covering the remaining losses, asset damage, and uncollectible debts during the fund’s operation after they are offset by compensation paid by the entities at fault, insurers and provisions recorded in the fund’s expenses;

c) The reward fund for managers and controllers shall be used for managers and controller(s) of the cooperative fund. The reward rates shall be determined by the Chairperson of the cooperative alliance of the same level (for a cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State) or general meeting of members (for a cooperative fund that operates under the cooperative business model), depending on the performance of assigned tasks and business results of the cooperative fund at the request of its Chairperson or Chairperson of the Board of Directors.

d) The reward fund is used for periodically or spontaneously rewarding individuals or teams of the cooperative fund, depending on their productivity or working achievements;

dd) The welfare fund is used for spending on sports, cultural activities and social welfare works for officials of the cooperative fund; spending on subsidies for regular or sudden hardships for officials of the cooperative fund; spending on other welfare activities of the cooperative fund.

Director of the cooperative fund shall cooperate with its trade union to manage and use this fund in a public and transparent manner.

5. In case of financial deficit, the cooperative fund may carry the negative difference between incomes and expenses forward to the following years. If this negative difference is still not yet fully carried forward within a maximum period of 05 years, the cooperative fund shall request the Prime Minister (if it is the central cooperative fund) or Chairperson of the provincial People’s Committee (if it is a provincial cooperative fund that operates under the business model of a limited liability company 100% of charter capital of which is held by the State) or general meeting of members (if it is a cooperative fund that operates under the cooperative business model) to consider deciding to reduce or supplement capital, re-structure, dissolve or declare the cooperative fund bankrupt.

Article 44. Reporting

1. The central cooperative fund shall:

a) Prepare and submit biannual and annual reports to Vietnam Cooperative Alliance, Ministry of Finance, State Bank of Vietnam and Ministry of Planning and Investment for monitoring and inspection;

b) Consolidate biannual and annual reports submitted by provincial cooperative funds. Consolidated reports shall be sent to Vietnam Cooperative Alliance, Ministry of Finance, State Bank of Vietnam and Ministry of Planning and Investment for monitoring and inspection.

2. Each provincial cooperative fund shall:

Prepare and submit biannual and annual reports to the provincial People’s Committee, provincial cooperative alliance, provincial Department of Finance, and branch of State Bank of Vietnam in the province where the cooperative fund is established, and sent to the central cooperative fund for consolidating as prescribed in Point b Clause 1 of this Article.

3. Biannual and annual reports specified in Clause 1 of this Article include:

a) Financial statements, including: balance sheet; income statement; cash flow statement; statement of changes in equity; financial statements as prescribed by law; statement of financial revenues and expenses; reports on distribution of difference between revenues and expenses, and use of funds according to guidelines given by the Ministry of Finance;

b) Consolidated reports on the fund's operations;

c) Reports on the fund’s lending activities;

d) Auditor’s report on annual financial statements.

4. Deadline for submission of reports:

a) Biannual report shall be submitted by July 31 every year;

b) Annual report shall be submitted within 90 days from the end of the financial year. The auditor’s report on annual financial statements of the cooperative fund prepared by an independent audit organization shall be submitted within 120 days from the end of the financial year.

5. Methods for submitting reports: The cooperative fund shall submit reports directly or by post.

6. Cooperative funds must also provide information and/or ad hoc reports to competent authorities at their request.

7. Cooperative alliances at all levels shall submit annual reports as prescribed in Article 12 of the Government’s Decree No. 163/2016/ND-CP dated December 21, 2016 and its amending documents (if any).

8. Cooperative funds shall implement reporting regime in accordance with law regulations on inspection and auditing.

Article 45. Evaluation of performance of cooperative funds

1. The annual performance of a cooperative fund shall be evaluated according to the following criteria:

a) Criterion 1: Growth of loan outstanding balance;

b) Criterion 2: Bad debt ratio (including group-3, group-4 and group-5 outstanding debts according to the fund’s debt classification results);

c) Criterion 3: Annual financial outcomes;

d) Criterion 4: Compliance with regulations on investment, management and use of capital of the fund, fulfillment of obligations to state budget, and compliance with regulations on financial statements.

2. When calculating the criteria for evaluation of performance of the cooperative fund specified in Clause 1 of this Article, the cooperative fund may exclude the objective reasons in terms of:

a) Disasters, fire, epidemics, wars and other force majeure events;

b) Changes in State’s policies that affect operations of the cooperative fund.

3. The Ministry of Finance shall provide guidance on methods of calculation of performance evaluation criteria and rating of cooperative funds in conformity with specific operations of cooperative funds.

4. The cooperative alliance of the same level shall set evaluation criteria and carry out evaluation of annual performance of the cooperative funds that operate under the business model of a single-member limited liability company 100% of charter capital of which is held by the State in accordance with regulations of this Article. General meeting of members shall set evaluation criteria and carry out evaluation of annual performance of the cooperative fund that operates under the cooperative business model.

Chapter V

DISSOLUTION, BANKRUPTCY AND CONVERSION OF BUSINESS MODEL OF COOPERATIVE FUNDS

Article 46. Dissolution cases

A cooperative fund shall be dissolved in the following cases:

1. A provincial cooperative fund fails to maintain adequate minimum charter capital as prescribed in Article 37 and Point c Clause 5 Article 58 hereof.

2. A cooperative fund is rated C by a competent authority as prescribed herein within 05 consecutive years in accordance with regulations herein and has maintained the ratio of loan outstanding balance (excluding loans granted under authorization of third parties) to equity less than 20% in 05 consecutive years.

3. The ratio of bad debts of the cooperative fund to its total loan outstanding balance is higher than 50% of its existing charter capital in 05 consecutive years.

4. The accumulated negative difference between revenues and expenses is higher than or equal to 75% of the existing charter capital of the cooperative fund in 05 consecutive years.

5. A cooperative fund is dissolved in other cases according to a decision issued by the Prime Minister (if it is the central cooperative fund), or the provincial People’s Committee (if it is a provincial cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State), or general meeting of members (if it is a provincial cooperative fund that operates under the cooperative business model).

Article 47. Power to decide dissolution of cooperative funds

1. For cooperative funds that operate under the business model of a single-member limited liability company 100% of charter capital of which is held by the State:

a) For the central cooperative fund: At the request of Vietnam Cooperative Alliance and after consulting the Ministry of Finance, Ministry of Planning and Investment, and State Bank of Vietnam, the Prime Minister shall consider deciding to dissolve the central cooperative fund in accordance with regulations herein and relevant laws;

b) For a provincial cooperative fund: At the request of the provincial cooperative alliance and after consulting the provincial Department of Finance, provincial Department of Planning and Investment, and provincial branch of the State Bank of Vietnam, the provincial People’s Committee shall send the dissolution policies to the provincial People’s Council for approval before issuing a decision to dissolve the provincial cooperative fund in accordance with regulations herein and relevant laws.

2. For provincial cooperatives fund that operate under the cooperative business model: A decision to dissolve the cooperative fund shall be issued in accordance with regulations of the Law on Cooperatives and relevant laws.

Article 48. Procedures of dissolution of cooperative funds

1. For a cooperative fund that operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State: Procedures for dissolution of the cooperative fund shall be same as those for dissolution of a single-member limited liability company 100% of charter capital of which is held by the State.

2. For a cooperative fund that operates under the cooperative business model: Procedures for dissolution of the cooperative fund shall be same as those for dissolution of a cooperative.

Article 49. Bankruptcy of cooperative funds

The bankruptcy of cooperative funds shall comply with regulations of the Law on bankruptcy and Article 55 of the Law on Cooperatives (for cooperative funds that operate under the cooperative business model).

Article 50. Business model conversion

1. If a cooperative fund wants to convert its business model from a single-member limited liability company 100% of charter capital of which is held by the State into a cooperative, or vice versa, it is required to develop a conversion plan in which obligations of the current cooperative fund, and operational plans adopted by the cooperative fund operating under the new business model (including financial plan, plans for management and administration, and loan outstanding balance) must be specified.

2. Power to make decision on conversion of business model:

a) The power to decide the conversion of business model of the central cooperative fund shall comply with Point b Clause 1 Article 8 hereof;

b) The conversion of business model of a provincial cooperative fund from a single-member limited liability company 100% of charter capital of which is held by the State into a cooperative shall be carried out according to a decision issued by the provincial People’s Committee at the request of the provincial cooperative alliance and after consulting the provincial Department of Finance, provincial Department of Justice, provincial Department of Planning and Investment, and provincial branch of the State Bank of Vietnam;

c) The conversion of business model of a provincial cooperative fund from a cooperative into a single-member limited liability company 100% of charter capital of which is held by the State shall be carried out according to a decision issued by the provincial People’s Committee at the request of its general meeting of members and after consulting the provincial cooperative alliance, provincial Department of Finance, provincial Department of Justice, provincial Department of Planning and Investment, and provincial branch of the State Bank of Vietnam, and obtaining approval from the provincial People’s Council.

Chapter VI

IMPLEMENTATION

Article 51. Responsibilities of Ministry of Finance

1. Provide guidance on mechanisms for financial management and evaluation of performance of cooperative funds; guidance for settling financial issues concerning restructuring or conversion of business model of cooperative funds; guidance on accounting policies for cooperative funds as prescribed herein.

2. Play the leading role and cooperate with relevant authorities, Vietnam Cooperative Alliance, provincial People’s Committees and relevant entities in reviewing and amending legislative documents prescribing organization and operation of cooperative funds, and submitting them to competent authorities for promulgation, or promulgate them within its competence.

Article 52. Responsibilities of State Bank of Vietnam

1. Cooperate with Vietnam Cooperative Alliance, provincial People's Committees, and provincial cooperative alliances in inspecting lending activities of cooperative funds as prescribed herein.

2. Cooperate with Ministry of Finance and relevant authorities in establishing and completing legal framework for organization and operation of cooperative funds, and organizing the implementation of this Decree in accordance with regulations of law.

Article 53. Responsibilities of Ministry of Planning and Investment

1. Balance and include funding from state budget used for supplementing the charter capital of the central cooperative fund in the medium-term public investment plan in accordance with regulations of the Law on Public Investment and legal documents elaborating the Law on Public Investment.

2. Monitor and inspect the use of funding derived from state budget allocated to the central cooperative fund in accordance with regulations of the Law on Public Investment and relevant laws.

3. Cooperate with Ministry of Finance and relevant authorities in establishing and completing legal framework for organization and operation of cooperative funds, and organizing the implementation of this Decree in accordance with regulations of law.

Article 54. Responsibilities of Ministry of Labor, War Invalids and Social Affairs

Play the leading role and cooperate with relevant authorities and provincial People's Committees in providing guidance on management of employees, salaries, remunerations and bonuses of employees and managers, and ranking of the cooperative funds that operate under the business model of a single-member limited liability company 100% of charter capital of which is held by the State.

Article 55. Responsibilities of provincial People’s Councils and provincial People’s Committees

1. Responsibilities of provincial People’s Councils:

a) Consider giving approval for schemes for establishment of provincial cooperative funds in accordance with regulations herein;

b) Supervise the organization and management of provincial cooperative funds in accordance with regulations of the Law on State Budget as prescribed herein and relevant laws.

2. Responsibilities of provincial People’s Committees:

a) Issue decisions on establishment, dissolution or bankruptcy of provincial cooperative funds in accordance with regulations herein and relevant laws;

b) Based on the state budget estimates approved by the People's Council of the same level, make decisions to allocate charter capital of provincial cooperative funds in accordance with regulations herein, and make decisions to adjust charter capital of provincial cooperative funds during their operation in accordance with regulations herein and relevant laws;

c) Carry out comprehensive inspections of provincial cooperative funds;

d) Submit annual reports and ad hoc reports on operation and performance of cooperative funds to the Ministry of Finance, Ministry of Planning and Investment and State Bank of Vietnam in accordance with regulations herein;

dd) Propose solutions for dealing with difficulties faced by cooperative funds during their operation; propose amendments to mechanisms and policies for operation of cooperative funds;

e) Submit annual reports on business performance of cooperative funds to provincial People’s Councils, and propose solutions for dealing with difficulties and improving business performance of cooperative funds within their competence;

g) Perform other responsibilities of provincial People's Committees as prescribed herein and relevant laws.

Article 56. Responsibilities of Vietnam Cooperative Alliance and provincial cooperative alliances

1. Cooperative alliances of same level shall manage and inspect operation of cooperative funds in accordance with regulations herein and relevant laws.

2. Cooperative alliances of same level shall annually carry out performance evaluation and ranking of cooperative funds in accordance with regulations herein and relevant laws.

3. Vietnam Cooperative Alliance shall cooperate with provincial People's Committees in monitoring and evaluating performance of cooperative funds for formulating and proposing orientations for development of cooperative funds to the Prime Minister in accordance with regulations herein and relevant laws.

4. Perform other powers and responsibilities to cooperative funds as assigned by competent authorities in accordance with regulations herein and relevant laws.

Article 57. Implementation clause

1. This Decree comes into force from May 15, 2021.

2. The following regulations shall be abrogated from the effective date of this Decree:

a) Article 2; Clause 1, Clause 3, Clause 4 Article 3; Clause 2 Article 5; Article 6; Article 7; Article 8; Article 9; Clause 1, Clause 2, Clause 3 Article 11 of Decision No. 246/2006/QD-TTg dated October 27, 2006 of the Prime Minister;

b) Clause 2, Clause 3, Clause 4, Clause 5 and Clause 6 Article 1, Article 2, Article 3 and Article 4 of Decision No. 23/2017/QD-TTg dated June 23, 2017 of the Prime Minister;

c) Point a and Point b Clause 4 Article 24 of the Government’s Decree No. 193/2013/ND-CP dated November 21, 2013.

Article 58. Transition

1. Credit contracts, guarantee letters and other agreements that have been signed between a cooperative fund and relevant parties before the effective date of this Decree shall continue to be performed. The modification of such agreements must comply with regulations herein.

2. At the effective time of this Decree, pursuant to Clause 1 Article 28 hereof, if the balance of loan loss provisions of a cooperative fund is higher than the required amount, the surplus shall be recorded as its income; if the balance of loan loss provisions of a cooperative fund is less than the required amount, the cooperative fund is required to make additional contributions to its loan loss provisions within 12 months as prescribed by law.

3. The balance of the additional reserve fund of charter capital of the cooperative development assistance fund as prescribed in the Circular No. 81/2007/TT-BTC dated July 11, 2007 of the Ministry of Finance may be used for increasing the fund’s charter capital provided that the fund’s charter capital shall not exceed the one prescribed in Point a Clause 1 Article 37 hereof.

4. Within 6 months from the effective date of this Decree, cooperative funds must request competent authorities to decide lending interest rates and interest rates charged on overdue debts to be applied by the funds as prescribed in Clause 2 Article 25 hereof.

Before these interest rates are set, cooperative funds may apply their own current interest rates.

5. With regard to cooperative funds established and operating before this Decree comes into force: Within 03 years from the effective date of this Decree, they must review and re-arrange:

a) Their business models;

b) Their organizational structure;

c) Ensure the minimum charter capital of a provincial cooperative fund as prescribed in Point b Clause 1 Article 37 and Point a Clause 2 Article 37 hereof;

d) Apply for certificate of registration of provincial cooperative fund at the provincial Department of Planning and Investment if the cooperative fund operates under the cooperative business model; request the provincial People's Committee to revise the establishment decision if the cooperative fund operates under the business model of a single-member limited liability company 100% of charter capital of which is held by the State.

6. Director and Deputy Director titles of the cooperative development assistance fund that are appointed under the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006 and the Prime Minister’s Decision No. 23/2017/QD-TTg dated June 22, 2017 are changed into General Director and Deputy Director titles as prescribed herein.

7. The cooperative development assistance fund that is established and operating under the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006 and the Prime Minister’s Decision No. 23/2017/QD-TTg dated June 22, 2017 is renamed as Vietnam Cooperative Development Assistance Fund. Vietnam Cooperative Development Assistance Fund shall inherit all rights, responsibilities and obligations of the cooperative development assistance fund.

Article 59. Organizing implementation of this Decree

Ministers, heads of ministerial agencies, heads of Governmental agencies, Chairperson of Vietnam Cooperative Alliance, Chairperson of provincial People’s Committees, Chairpersons of provincial cooperative alliances, Chairpersons and Directors of cooperative funds, and relevant organizations and individuals are responsible for the implementation of this Decree.