Decree No. 77/2019/ND-CP on cooperative groups

DECREE

On cooperative groups^[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 Planning and Investment;

The Government promulgates the Decree on cooperative groups.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Decree prescribes the formation, organization, operation, and termination of the operation of cooperative groups.

Article 2.Subjects of application

This Decree applies to:

1. Cooperative groups and members of cooperative groups;

2. Competent state agencies and related organizations and individuals.

Article 3.Interpretation of terms

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

1. Cooperative group means an organization without legal person status which is formed on the basis of a cooperation contract and composed of at least 2 individuals or legal persons that voluntarily form such group and contribute assets and physical efforts for performing certain jobs, while sharing benefits and taking joint responsibility.

2. Cooperation contract means a contract agreed upon by members of a cooperative group and made in writing with signatures of all members of the group. The contents of such contract must not go against relevant laws and include such details as the purpose and duration of cooperation; full name(s) and place(s) of residence of individual(s); name(s) and head office(s) of legal person(s); contributed assets (if any); contributions in labor (if any); method of sharing yields or profits; rights and obligations of the contracting members; rights and obligations of representatives (if any); conditions for members to participate in and withdraw from the contract (if any); and conditions for termination of the contract.

3. Contribution of a member of a cooperative group means the value of his/her/its contribution in assets or physical efforts (specific activities or jobs) to the group he/she/it has made or committed to make. The determination of the value of the contribution of a member of a cooperative group must comply with Article 24 of this Decree.

4. Cooperation duration means a period during which members of a cooperative group agree to cooperate with one another and which is stated in a cooperation contract. The cooperation duration shall be determined under Articles 144 thru 148 of the Civil Code. In case the cooperation duration cannot be agreed upon by the parties, it will end when the cooperation contract is terminated under Article 512 of the Civil Code.

Article 4.Principles of organization and operation of cooperative groups

1. A cooperative group operates on the basis of a cooperation contract.

2. Individuals and legal persons form, join or leave a cooperative group in a voluntary manner.

3. Members of a cooperative group have democratic and equal rights in deciding on the organization and operation of the group. They shall make decisions based on majority vote, unless otherwise prescribed by the cooperation contract, Civil Code and relevant laws.

4. Members enjoy mutual benefit and bear joint responsibility.

Article 5.Rights of a cooperative group

1. To have its own name.

2. To freely operate and do business in sectors and trades not banned by law; to engage in conditional business sectors and trades when fully satisfying the law-prescribed conditions.

3. To enter into business cooperation with organizations and individuals for expanding production and business activities in accordance with law.

4. To open and use payment accounts at payment service providers in accordance with relevant laws.

5. To establish and perform civil transactions in accordance with this Decree, Article 508 of the Civil Code and relevant laws.

6. To be entitled to the State’s preferential and support policies like cooperatives.

7. To have other rights in accordance with the cooperation contract, the Civil Code and relevant laws.

Article 6.Obligations of a cooperative group

1. To respect lawful and legitimate rights and interests of workers, other organizations and individuals, and its members.

2. To fully and promptly perform obligations toward the State, workers, other organizations and individuals, and its members.

3. To implement the provisions of the cooperation contract, Civil Code and relevant laws.

Chapter II

MEMBERS OF COOPERATIVE GROUPS

Article 7.Conditions on a member of a cooperative group

A member of a cooperative group must satisfy the following conditions:

1. For an individual, being a Vietnamese citizen and having civil act capacity prescribed in Articles 16 thru 24 of the Civil Code, Labor Code and relevant laws.

2. For an organization, being a Vietnamese legal person, being established and operating in accordance with Vietnam’s law, and having legal capacity relevant to the business sector of the cooperative group.

3. Voluntarily joining the cooperative group and consenting to contents of the cooperation contract.

4. Committing to contribute assets or physical efforts as stated in the cooperation contract.

5. Meeting other conditions stated in the cooperation contract.

Article 8.Rights of a member of a cooperative group

1. To enjoy yields and profits gained from activities of the cooperative group.

2. To take part in deciding on issues related to the performance of the cooperation contract and managing and supervising the operation of the cooperative group.

3. To leave the cooperative group when having a plausible reason and obtaining the consent of more than fifty percent (50%) of total members of the group or when satisfying the conditions agreed upon in the cooperation contract.

4. To have other rights stated in the cooperation contract and relevant laws.

Article 9.Obligations of a member of a cooperative group

1. To take part in deciding on issues related to the performance of the cooperation contract and supervising the operation of the cooperative group.

2. To pay compensations for damage caused by his/her/its fault.

3. To comply with the cooperation contract on the principles of equality, mutual benefit and joint benefit of the cooperative group.

4. To fully and promptly contribute assets or physical efforts as committed in the cooperation contract.

5. To perform other obligations stated in the cooperation contract and relevant laws.

Article 10.Procedures for admission of new members to a cooperative group

Members of a cooperative group shall themselves reach agreement on procedures and conditions for admission of new members to the group and record such in the cooperation contract. If the admission of new members to a cooperative group is not specified in the cooperation contract, it must comply with the following procedures:

1. An individual or a legal person that satisfies the conditions prescribed in Article 7 of this Decree and wishes to join a cooperative group shall make a written request or directly express his/her/its aspiration for joining the group to the head of a cooperative group (or a person authorized by the group’s members).

2. The head of a cooperative group (or a person authorized by the group’s members) shall directly or indirectly collect opinions of the group’s members regarding the admission of new members to the group.

3. An individual or a legal person will be recognized as a member of a cooperative group when more than fifty percent (50%) of total members of the group agree to admit him/her/it to the group and record his/her/its name in the cooperation contract.

Article 11.Termination of cooperative group membership status

1. The membership status of a member of a cooperative group will be terminated in one of the following cases:

a/ The cooperative group terminates its operation under Article 14 of this Decree;

b/ The member being an individual is dead or is declared dead by the court, except the case specified at Point a, Clause 1, Article 27 of this Decree;

c/ The member being a legal person terminates its existence, except the case specified in Clause 4, Article 27 of this Decree;

d/ The member voluntarily leaves the cooperative group under Clause 3, Article 8 of this Decree;

dd/ The member seriously violates the cooperation contract and relevant regulations.

2. Members of a cooperative group shall themselves reach agreement on the competence to decide on, and procedures for, termination of the cooperative group membership status and record such in the cooperation contract. For the cases specified at Points d and dd, Clause 1 of this Article, if the termination of the cooperative group membership status is not specified in the cooperation contract, it must comply with the following procedures:

a/ The head of a cooperative group (or a person authorized by the group’s members) shall summarize and propose the list of the group’s members whose membership status is terminated at the nearest meeting of the group’s members for the members to make consideration and decision;

b/ The cooperative group membership status will terminate if more than fifty percent (50%) of the group’s total members agree to such termination; the termination shall be recorded in the meeting’s minutes stating the percentage (%) of members agreeing to the termination;

c/ The head of a cooperative group (or a person authorized by the group’s members) shall, on behalf of the group, notify all members of the group of the termination of membership status, cross out names of members with membership status terminated within 5 working days from the date of the meeting of the group’s members.

3. The rights and obligations of members of a cooperative group with their membership status terminated shall be agreed upon by these members themselves and stated in the cooperation contract. If these rights and obligations are not specified in the cooperation contract, Article 26 of this Decree shall be complied with.

4. A member of a cooperative group with his/her/its membership status terminated under Point dd, Clause 1 of this Article shall be regarded as having breached the contract and shall fulfill the civil liability in accordance with the Civil Code and relevant laws.

5. The termination of membership status of a member of a cooperative group will not result in the termination of the rights and obligations of this member which are established and performed before the date he/she/it withdraws from the cooperation contract.

Chapter III

FORMATION AND TERMINATION OF OPERATION OF COOPERATIVE GROUPS

Article 12.Formation of cooperative groups

1. Individuals and legal persons that wish to form a cooperative group shall mobilize the formation of such group and organize the group’s operation.

2. The group’s members shall discuss and reach agreement on contents concerning the group’s formation, organization and operation and record them in the cooperation contract.

3. Within 5 working days after the group’s members sign the cooperation contract, the group’s head shall send a notice of the group formation (made according to Form No. I.01 provided in the Appendix to this Decree) together with the cooperation contract (made according to Form No. I.02 provided in the Appendix to this Decree) to the commune-level People’s Committee of the locality where the group is expected to be formed and operate.

4. In case a group changes one or several of contents including name, address, production and business line, total value of contributions, representative, and number of the group’s members, it shall, within 5 working days after the change is made, send a notice of the change (made according to Form No. I.01 provided in the Appendix to this Decree) to the commune-level People’s Committee of the locality where the group is formed and operates.

5. A commune-level People’s Committee shall make a book for monitoring the formation and operation of cooperative groups in the locality (made according to Form No. II.01 provided in the Appendix to this Decree), and update the changes of these cooperative groups in accordance with law.

Article 13.Names and logos of cooperative groups

1. A cooperative group may choose its name and logo in accordance with Clause 2 of this Article which must not be identical to the name and logo of another cooperative group in the same commune-level locality.

2. The name of a cooperative group must only contain the following two elements:

a/ Type, which is “cooperative group”;

b/ Proper name of the cooperative group. The proper name shall be written in the Vietnamese alphabet letters plus F, J, Z and W, which may be accompanied with numerals and symbols. No words, phrases and symbols in violation of historical, cultural and moral traditions and fine habits and customs of the nation may be used in the proper name of a cooperative group. No phrases that are likely to cause confusion with other types of organizations as prescribed by Vietnam’s law may be used in the name to a cooperative group.

Article 14.Termination of operation of cooperative groups

1. A cooperative group will terminate its operation in the following cases:

a/ Its operation duration stated in the cooperation contract has expired;

b/ Its cooperation purpose has been achieved;

c/ It fails to maintain the minimum number of members prescribed in Clause 1, Article 3 of this Decree;

d/ The termination of its operation is decided by a competent state agency;

dd/ The termination of its operation is stated in the cooperation contract and prescribed by relevant laws;

e/ The termination of its operation is agreed upon by the group’s members.

2. The termination of operation of a cooperative group under Point e, Clause 1 of this Article shall be approved by all members of the group and stated in the minutes of the meeting of the group’s members bearing signatures of the group’s head (or a person authorized by the group’s members) and members, unless otherwise prescribed by the cooperation contract.

3. Within 5 working days from the date of termination of the operation of a cooperative group, the group’s head (or a person authorized by the group’s members) shall send a notice of termination (made according to Form No. I.03 provided in the Appendix to this Decree) together with the minutes of the meeting of the group’s members to the commune-level People’s Committee of the locality where the group operates.

Article 15.Handling of common assets of members of cooperative groups, finance of cooperative groups after operation termination

1. In any of the cases of operation termination specified in Clause 1, Article 14 of this Decree, a cooperative group shall use common assets of its members to perform the financial obligations or other property obligations arising in the course of its operation.

2. In case the value of common assets of the group’s members is not enough for fulfilling financial obligations or other property obligations, the group’s members shall fulfill such obligations with their private assets in proportion to their contributions, unless otherwise prescribed in the cooperation contract or relevant laws.

3. For assets formed from the State’s support or incentives or donated by other individuals or organizations of which, as requested by the State or donors, the cooperative group has no right to disposition, the cooperative group shall, upon the termination of its operation, transfer them to the commune-level People’s Committee of the locality where it operates or to a competent state agency in accordance with law, and such shall be stated in the cooperation contract, unless otherwise agreed upon by the parties.

4. After having fulfilled financial obligations or other property obligations, if common assets of the cooperative group’s members have not yet been used up, the rest shall be divided to the members in proportion to their contributions as stated in the cooperation contract, unless otherwise prescribed by relevant laws or agreed upon by the parties.

Chapter IV

ORGANIZATION AND ADMINISTRATION OF COOPERATIVE GROUPS

Article 16.Representatives in the establishment and performance of transactions

1. A representative of a cooperative group in the establishment and performance of civil transactions is an individual or a legal person authorized by the group’s members.

2. Contents, duration and scope of representation of the representative authorized by the group’s members shall be agreed upon by the members themselves and recorded in writing, unless otherwise prescribed by relevant laws, with signatures of the authorized representative and all members of the group.

3. When necessary, the group shall notify related parties of the authorized representative of the group’s members as well as contents, duration and scope of representation.

4. The representative and members of the group shall comply with the provisions on representation of Articles 138 thru 143 of the Civil Code and relevant laws.

Article 17.Mechanism for administration of operation of cooperative groups

1. When necessary, a cooperative group may elect its head and executive board and hold members’ meetings to administer its activities.

2. Powers and responsibilities of the head and executive board (if any) of a cooperative group shall be stated in the cooperation contract, otherwise, they must comply with Articles 18 and 19 of this Decree.

Article 18.Heads of cooperative groups

1. The head of a cooperative group shall be elected among the group’s members at a meeting of the group’s members when more than fifty percent (50%) of total members of the group so agree, unless otherwise prescribed in the cooperation contract.

2. The cooperative group’s head shall organize and administer operation of the group according to the scope and tasks prescribed in the cooperation contract.

3. The cooperative group’s head must satisfy the conditions stated in the cooperation contract which are not contrary to law.

4. The cooperative group’s head shall, when authorized by the group’s members, act as the group’s representative in the establishment and performance of transactions in accordance with Article 16 of this Decree.

Article 19.Executive boards of cooperative groups

1. Members of the executive board of a cooperative group shall be elected among the group’s members at a meeting of the group’s members when more than fifty percent (50%) of total members of the group so agree. The number of members of the executive board must be odd and prescribed by the group itself.

2. The executive board shall perform a number of tasks concerning the management and administration of the cooperative group as assigned by the group’s head and agreed by the group’s members.

Article 20.Members’ meetings of cooperative groups

1. A cooperative group shall itself decide on the number of meetings of the group’s members which must be at least once a year.

A meeting of the cooperative group’s members may decide on:

a/ Approval of operation results of the group;

b/ A plan to share yields and profits, offset losses, and settle financial matters of the group;

c/ An operation plan for the upcoming period;

d/ Handling of common assets of the group’s members;

dd/ Election, removal from office or relief from duty of the group’s head and executive board, when deeming it necessary;

e/ Termination of membership status under Points d and dd, Clause 1, Article 11 of this Decree;

g/ Modification of the cooperation contract;

h/ Remuneration and bonus levels for the group’s head and members of the executive board (if any);

i/ Other issues as requested by the group’s head, executive board or more than thirty-three percent (33%) of total members of the group;

k/ Other cases as stated in the cooperation contract.

2. Procedures for convening a meeting of a cooperative group’s members

Unless it is specified in the cooperation contract, procedures for convening a meeting of a cooperative group’s members are prescribed below:

a/ The group’s head (or a person authorized by the group’s members) shall, on behalf of the group, convene a meeting of the group’s members. When necessary, representatives of more than thirty-three percent (33%) of total members of the group may request the group’s head (or a person authorized by the group’s members) to convene such a meeting, unless otherwise prescribed by the cooperation contract and relevant laws;

b/ A meeting of the group’s members shall be held when more than seventy-five percent (75%) of total members of the group are present, otherwise, such meeting shall be postponed and another meeting shall be convened within 15 working days after the projected date of the first meeting. The second meeting shall be attended by more than fifty percent (50%) of total members of the group;

c/ The minutes of a meeting of the group’s members shall be made in writing and signed by representatives of the members attending the meeting and must state the percentage (%) of the members agreeing to the minutes;

d/ Within 5 days after the meeting is held, the group’s head (or a person authorized by the group’s members) shall notify the meeting’s contents to all members of the group, unless otherwise prescribed by the cooperation contract and relevant laws.

Article 21.Voting in cooperative groups

1. The modification of a cooperation contract shall be agreed by all members of a cooperative group and recorded in writing, unless otherwise prescribed by the cooperation contract.

2. The disposition of common assets of members of a cooperative group which are the rights to use land, houses, workshops, other main means of production, and assets with a value exceeding fifty percent (50%) of the total value of common assets of the group’s members shall be agreed by all members of the group and recorded in writing, unless otherwise prescribed by the cooperation contract.

3. Other matters not mentioned in Clauses 1 and 2 of this Article shall be approved when more than fifty percent (50%) of total members of the group so agree, unless otherwise prescribed by the cooperation contract.

Article 22.Common assets of members of cooperative groups, finance of cooperative groups

1. Common assets of members of a cooperative group may be formed:

a/ From contributions of the group’s members, including objects, money, valuable papers and property rights;

b/ From after-tax deductions from yields and profits;

c/ By the group’s members;

d/ From the State’s support or incentives or donations of other individuals and organizations;

dd/ From other sources as prescribed by law.

2. The disposition of assets and finance of a cooperative group shall be decided by the group’s members under Article 21 of this Decree, except the case specified in Clause 3 of this Article.

3. In case a cooperative group is vested by the State or an individual or organization with the usufruct over assets, it may exercise this usufruct under Articles 257 thru 266 of the Civil Code.

4. Cooperative groups shall comply with the regulations on finance and accounting.

Article 23.Sharing of yields and benefits, handling of losses

1. Based on the agreement in a cooperation contract, the head of a cooperative group (or a person authorized by the group’s members) shall formulate a plan on sharing of yields and profits and handling of losses of the group and report such to the group’s members at the plenary meeting of the group’s members.

2. The sharing of yields and profits and other financial plans of a cooperative group shall be effected after the group fulfills its financial obligations (if any) toward the State and obligations (if any) toward employees.

3. The cooperation contract must specify the handling of cases in which the cooperative group suffers losses or other risks.

Article 24.Contributions of members of cooperative groups

1. Members of a cooperative group may contribute their assets or physical efforts to the group as agreed upon in the cooperation contract. The value of the contributed assets or physical efforts shall be determined as agreed upon by the group’s members themselves or determined by a third party as authorized by all the group’s members.

2. In case a member of a cooperative group has committed to make contributions but fails to make contributions fully and on time, he/she/it shall be handled under Articles 351 thru 364 of the Civil Code.

Article 25.Verification of contributions

1. A cooperative group shall compile a book for clearly and transparently recording contributions of its members, including the following details:

a/ Names, personal identification numbers (or people’s identity card or citizen identity card numbers) of contributors being individuals, or names, identification numbers and head office addresses of contributors being legal persons and names and personal identification numbers (or people’s identity card or citizen identity card numbers) of at-law representatives of such legal persons;

b/ Value of contributions and type of assets used as contributions of the group’s members;

c/ Time of making contributions;

d/ Signatures of contributors being individuals or at-law representatives of contributors being legal persons;

dd/ Signatures of the group’s head (or person authorized by the group’s members) and members assigned to receive the contributions.

2. The head of a cooperative group (or person authorized by the group’s members) shall keep and preserve the book for recording contributions of the group’s members, and take responsibility before the group and law for the loss of the book or erasure or falsification of information in the book.

3.  Members of a cooperative group shall be granted a certificate of contributions, when necessary, with all information as recorded in the group’s book at the time of making contributions.

Article 26.Return of contributions

1. A cooperative group shall return assets to its members in proportion to their contributions in the following cases:

a/ In case the group terminates its operation after fulfilling its financial obligations or other property obligations, if the common assets of its members have not yet been used up, the rest shall be divided to its members in proportion to their contributions, unless otherwise prescribed in the cooperation contract.

b/ In case a member has his/her/its membership status terminated under Point d, Clause 1, Article 11 of this Decree and is not regarded as having breached the contract, and requests the return of his/her/its contributions, the cooperative group shall return such contributions only when this member has fulfilled the obligations toward the group which are established and performed before the time of termination of the membership status, unless otherwise agreed upon by all members of the group, and such shall be stated in the cooperation contract.

c/ Other cases as prescribed in the cooperation contract and relevant laws.

2. The return of contributions to members of a cooperative group under Points b and c, Clause 1 of this Article must neither change the group’s rights and obligations toward related parties nor terminate the rights and obligations of the group’s members which are established and performed before the time of termination of the membership status.

3. In case the return of contributions being assets of members of a cooperative group affects the operation of the group, such contributions will be monetized before being returned to these members under Clause 1, Article 24 of this Decree.

Article 27.Inheritance, takeover and management of contributions

1. In case an individual member of a cooperative group is dead or is declared dead by the court, the inheritance of his/her contributions must comply with the Civil Code’s provisions on inheritance and is specified as follows:

a/ If his/her heirs wish to join the group and their wish is accepted by the majority of the group’s members under Article 10 of this Decree, they may continue to exercise the rights and perform the obligations prescribed in the cooperation contract and relevant laws;

b/ If his/her heirs do not wish to join the group or are ineligible to join the group, they may request the return of the contributions and receive the divided assets under Article 26 of this Decree, the Civil Code and relevant laws;

c/ If his/her heirs voluntarily leave the contributions being assets to the group, such contributions shall be included in common assets of the group’s members;

d/ Other cases shall be settled as agreed upon by the parties.

2. In case an individual member of a cooperative group is absent from his/her place of residence or is declared missing by the court, the management of his/her contributions must comply with Articles 65 thru 70 of the Civil Code.

3. In case an individual member of a cooperative group has limited civil act capacity or lost his/her civil act capacity or has difficulty in cognizing and controlling his/her acts, the return or management of his/her contributions shall be carried out by his/her at-law representative under Article 26 of this Decree and relevant laws or court rulings.

4. In case a member being a legal person of a cooperative group is separated, split, consolidated, merged or transformed, the takeover of its contributions must comply with the Law on Enterprises, Law on Cooperatives and other relevant laws.

Article 28.Settlement of disputes

1. A dispute among members of a cooperative group arising under the cooperation contract shall be first settled within the group. In case the negotiation among the members of the group is unsuccessful, the dispute shall be settled through conciliation or under procedural law at a court or an arbitration.

2. Disputes between cooperative groups and other organizations or individuals shall be settled in accordance with law.

Chapter V

ORGANIZATION OF IMPLEMENTATION

Article 29.Periodical reporting on and state management of cooperative groups

The operation and state management of cooperative groups shall be reported as follows:

1. Before December 16 every year, cooperative groups shall send truthful, adequate and accurate reports on their operation, made according to Form No. I.04 provided in the Appendix to this Decree, to commune-level People’s Committees of localities where they operate. The report data shall be taken from December 15 of the year preceding the reporting period to December 14 of the reporting period.

2. No later than December 30 every year, commune-level People’s Committees shall summarize information and send reports, made according to Form No. II.02 provided in the Appendix to this Decree, on operation of cooperative groups of the preceding year in their localities, which shall be consolidated with reports on operation of cooperatives (if any), to district-level People’s Committees.

3. No later than January 15 every year, district-level People’s Committees shall summarize information and send reports, made according to Form No. II.02 provided in the Appendix to this Decree, on operation of cooperative groups of the preceding year in their localities, which shall be consolidated with reports on operation of cooperatives (if any), to provincial-level People’s Committees.

4. No later than January 30 every year, provincial-level People’s Committees shall summarize information and send reports, made according to Form No. II.02 provided in the Appendix to this Decree, on operation of cooperative groups of the preceding year in their localities, which shall be consolidated with reports on operation of cooperatives (if any), to the Ministry of Planning and Investment.

5. Annually, the Ministry of Planning and Investment shall send to the Prime Minister reports on operation of cooperative groups nationwide, which shall be consolidated with reports on operation of cooperatives (if any), and the implementation of the regime of reporting on the operation of cooperative groups by agencies, organizations and individuals in accordance with this Decree.

6. The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with related agencies in, studying and submitting to the Government or Prime Minister for promulgation policies to promote the development of cooperative groups, which shall be included in policies to support the development of collective economy and cooperatives in accordance with law.

Article 30.Transitional provision

Cooperative groups and cooperative teams of other forms formed and operating before the effective date of this Decree shall supplement contents and forms of transactions prescribed in Article 16 of this Decree and may continue to operate under this Decree.

Article 31.Effect

This Decree takes effect on November 25, 2019, and replaces the Government’s Decree No. 151/2007/ND-CP of October 10, 2007, on the organization and operation of cooperative groups.

Article 12.Implementation responsibility

1. The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with related ministries and sectors in, organizing the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and related organizations and individuals shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC

* The Appendix to this Decree is not translated.