Decree No. 19/2019/ND-CP regulations on tontine

DECREE

On tontine^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the November 24, 2015 Civil Code;

At the proposal of the Minister of Justice,

The Government promulgates the Decree on tontine.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Government prescribes principles of organizing tontine; conditions for becoming tontine members or tontine holders; participation in and withdrawal from tontine; tontine agreements; annuity-receiving order and interest rates; and rights, obligations and legal liabilities of tontine members and tontine holders.

Article 2. Subjects of application

This Decree applies to:

1. Tontine participants, including tontine members and tontine holders;

2. Other related agencies, organizations and individuals.

Article 3. Principles of organizing tontine

1. The organization of tontine must strictly comply with the fundamental principles of civil law prescribed in Article 3 of the Civil Code.

2. Tontine may be organized only for the purpose of mutual assistance among tontine participants.

3. It is prohibited to organize tontine to practice usury, appropriate property by swindle or abuse of trust, illegally raise funds, or commit other violations of law.

Article 4. Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Tontine group means a tontine formed according to specific agreements between tontine participants on time, annuity share, annuity-contributing and -receiving procedures, and rights and obligations of the tontine holder (if any) and tontine members.

2. Tontine member means a person who participates in a tontine group, contributes annuity shares and receives annuities and interests (if any).

3. Tontine holder means a person who organizes and manages a tontine group, collects annuity shares and hands over those shares to the member entitled to receive them in each tontine opening time till the closing of the tontine group.  The tontine holder may also be a tontine member in the same tontine group.

4. Annuity share means a determined sum of money or another asset (below referred to as money) which, as agreed upon, a member must contribute at each tontine opening time.

5. Tontine opening time means the time when tontine members contribute annuity shares and a tontine member receives the annuities as agreed upon by all tontine members.

6. Interest-free tontine means a tontine whereby members receive annuities at the tontine opening time without having to pay interests to other members.

7. Interest-bearing tontine means a tontine whereby members receiving annuities at the tontine opening time shall pay interests to other members.

8. Commission tontine means an interest-bearing or interest-free tontine whereby the annuity-receiving member shall pay a commission to the tontine holder at a rate agreed upon among tontine members.

Article 5. Conditions for becoming tontine members

1. A member is a person who is aged full 18 years or older and does not fall into the case of losing civil act capacity, having limited civil act capacity or having difficulty in cognition or act control as prescribed in the Civil Code.

A person aged from full 15 years to under 18 years and having private property may become a tontine group’s member. If he/she uses his/her private property being immovable property or movable property subject to registration for participating in a tontine group, he/she shall obtain the consent of his/her at-law representative.

2. Other conditions as agreed upon among tontine participants.

Article 6. Conditions for acting as tontine holders

1. Tontine holder is a person who is aged full 18 years or older and does not fall into the case of losing civil act capacity, having limited civil act capacity or having difficulty in cognition or act control as prescribed in the Civil Code.

2. In case members self-organize a tontine group, the tontine holder is a person who is elected by more than a half of the total members, unless otherwise agreed upon by the members.

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