Decree 45/2021/ND-CP establishment, organization and operation of Cooperative Development Support Funds

DECREE

Providing regulations on the establishment, organization and operation of Cooperative Development Support Funds

Pursuant to the Law on Organization of the Government dated June 19, 2015 and the Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;

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

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing a Number of Articles of 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 Production and Business at Enterprises dated November 26, 2014;

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

At the proposal of the Minister of Finance;

The Government hereby promulgates the Decree providing regulations on the establishment, organization and operation of Cooperative Development Support Funds.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Decree regulates:

a) The organization and operation of the Cooperative Development Support Fund that is established under the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006, on establishment of Cooperative Development Support Funds and the Prime Minister’s Decision No. 23/2017/QD-TTg dated June 22, 2017, amending and supplementing a number of articles of the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006, on establishment of the Cooperative Development Support Fund and promulgation of the Regulation on credit guarantee activities and post-investment interest rate support investment from the Cooperative Development Support Fund (hereinafter referred to as the Central Cooperative Fund);

b) The establishment, organization and operation of Cooperative Development Support Funds of provinces and central-run cities (hereinafter referred to as “local cooperative funds”).

2. This Decree applies to:

a) The central cooperative fund and local cooperative funds;

b) Cooperatives and cooperative unions; members of cooperative groups and cooperatives getting loans from cooperative funds in accordance with this Decree;

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

Article 2. Interpretation of terms

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

1. “Cooperative fund” or “fund” refers to the central cooperative fund or a local cooperative fund.

2. “Customers” include cooperatives, cooperative unions or members of cooperative groups or cooperatives getting loans from cooperative funds.

3. “Actual charter capital” is determined by the charter capital recorded in the accounting books plus or minus the accumulated undistributed profits (unprocessed accumulated losses) reflected in the accounting books at the same time.

4. “Non-performing debt” means a debt classified in either group 3, 4 or 5 according to debt classification regulations of the cooperative fund.

5. “Affiliated persons” include organizations and individuals prescribed in Clause 28 Article 4 of the 2010 Law on Credit Institutions and its amending and supplementing documents (if any).

6. “Fund 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 as specified in the cooperative fund’s charter on organization and operation.

7. “Founding member” means a member of a cooperative or cooperative group, cooperative or cooperative union voluntarily committing to found or participate in the establishment of a local cooperative fund operating under the cooperative model.

8. “Provincial-level People’s Committee” means the People's Committee of a province or central-run city.

Article 3. Legal status and legal person status

1. A cooperative fund is an state financial fund outside the state budget that operates according to the model of a single-member limited liability company of which 100% of charter capital is held by the State or a financial institution that operates according to the cooperative model, not for the profit-making purpose, preserving and developing its capital by itself, and enjoying financial autonomy and accountability for capital mobilization and use to serve the performance of the function of providing loans to cooperatives, cooperative unions, and members of cooperative groups and cooperatives in accordance with this Decree and relevant laws.

2. A cooperative fund has legal person status, charter capital and seal, and is entitled to open accounts at the State Treasury and commercial banks lawfully operating in Vietnam as prescribed by law.

3. Establishment, organization, operation, bankruptcy and dissolution of cooperative funds shall be established, organized, and operate, go bankruptcy and dissolve in accordance with this Decree and relevant laws corresponding to the operation model that are not provided for in this Decree.

Article 4. Functions and tasks of cooperative funds

1. Receiving, managing and using domestic and foreign capital sources, financial aid and assistance, contributions and entrusted funds of domestic and foreign individuals and organizations.

2. Mobilizing capital from domestic organizations and individuals in accordance with this Decree.

3. Providing loans to customers in accordance with this Decree.

4. Providing financial and investment consultancy; providing training courses for customers getting loans from the fund as prescribed by law.

5. Entrusting loan provision or providing loans under entrustment in accordance with this Decree and relevant laws.

Article 5. Principles of operation cooperative funds

1. The cooperative fund operates on the principles of financial autonomy and publicity, transparency, capital preservation and development.

2. The cooperative fund provides loan to proper subjects that meet requirements specified in this Decree.

Article 6. Responsibilities and rights of cooperative funds

The cooperative fund has the following basis responsibilities and rights:

1. Responsibilities of the cooperative fund:

a) Providing loans to right customers that meet requirements as prescribed;

b) Using capital properly according to this Decree and relevant laws;

c) Implementing policies on accounting, statistical reports and financial statements in accordance with the on accounting and statistics;

d) Being subject to the inspection of competent state management agencies as prescribed by law and the inspection of the cooperative alliance of the same level;

dd) Providing data and publicly disclosing financial status and operational status in accordance with this Decree and in relevant laws;

e) Purchasing property insurance and other insurance as prescribed by law to ensure safety for the fund’s operation;

g) Promulgating, amending and supplementing procedures and internal regulations on organization, administration and operation of the cooperative fund within the competence prescribed in the fund’s charter on organization and operation.

2. Rights of the cooperative fund:

a) Organizing and operating according to the fund’s objectives and scope of operation;

b) Selecting feasible and efficient investment projects, production and business plans that meet requirements suitable for the customer support plan of the cooperative fund in order to provide loans in accordance with this Decree;

c) Being entitled to recruit, arrange, use, train and employ workers in accordance with this Decree and relevant laws;

d) Refusing organizations or individuals’ requests for provision of information and resources of the cooperative fund if such requests are in contravention of laws and the charter on organization and operation of the cooperative fund.

Chapter II

ESTABLISHMENT, OPERATION MODEL AND ORGANIZATIONAL STRUCTURE OF COOPERATIVE FUNDS

Section 1. CENTRAL COOPERATIVE FUND

Article 7. Operation model of cooperative fund

The central cooperative fund is a state financial fund outside the state budget that operates according to the model of a single-member limited liability company of which 100% of charter capital is held by the State in accordance with this Decree.

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

1. Rights and responsibilities of the Prime Minister:

a) To approve strategies, 05-year development investment plans and operation plans as requested by The Vietnam Cooperative Alliance;

b) To decide on restructuring or reorganizing (division, consolidation or merger), transformation of the fund's model, dissolution or bankruptcy of the central cooperative fund as requested by the Vietnam Cooperative Alliance and on the basis of opinions given by the Ministry of Finance, the Ministry of Justice, the Ministry of Planning and Investment and the State Bank of Vietnam;

c) To decide on the charter capital and changes in the charter capital of the central cooperative fund in the course of operation as requested by the Vietnam Cooperative Alliance and according to opinions given by the Ministry of Finance and the Ministry of Planning and Investment;

d) To assign the Vietnam Cooperative Alliance perform the function the owner’s representative agency of the central cooperative fund in accordance with this Decree.

2. Rights and responsibilities of the Vietnam Cooperative Alliance:

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

b) To consider giving approval for annual operational and financial plans of the central cooperative fund as requested by the central cooperative fund’s Chairperson;

c) To decide on planning, appointing, re-appointing, dismissing, transferring, rewarding, disciplining, and approving resignations or retirement of Chairperson, Controller and General Director of the fund;

d) To issue and revise the charter on organization and operation of the central cooperative fund in accordance with this Decree;

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

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

3. Chairperson of the central cooperative fund shall:

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

b) Request the Vietnam Cooperative Alliance 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) Decide on planning, appointing, assessing, re-appointing, rewarding, disciplining and approving resignations, dismissal and retirement of Deputy General Director(s) and Chief Accountant of the central cooperative fund after obtaining approval from the Vietnam Cooperative Alliance;

d) Request the Vietnam Cooperative Alliance to revise the charter on organization and operation of the central cooperative fund; submit the competent authority to increase or decrease the charter capital, restructure, reorganize or transform operation model, dissolve or go bankruptcy of the central cooperative fund;

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

e) Decide on promulgating, amending and supplementing procedures and internal regulations on organization, administration and operation of the cooperative fund after obtaining approval from the Vietnam Cooperative Alliance;

g) Perform other rights and responsibilities specified 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 includes:

1. Fund’s Chairperson.

2. Controller.

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

Article 10. Chairperson of central cooperative fund

1. The Chairperson of the central cooperative fund shall be appointed by the Vietnam Cooperative Alliance and take responsibility for the fund’s operation before Chairperson of the Vietnam Cooperative Alliance.

2. The Chairperson of the central cooperative fund shall hold the term of office of 05 years maximum, and may be re-appointed but not more than 02 terms. The Chairperson of the central cooperative fund may work under full-time or part-time working regime as decided by the Vietnam Cooperative Alliance on the basis of the fund’s operational scale.

3. Standards and conditions for appointment of the Chairperson of the central cooperative fund:

a) Being a Vietnamese citizen as prescribed by law;

b) Having full legal capacity and attaining fitness to perform tasks;

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

d) Having at least 03 years of experience as a manager or executive in one of the fields of economics, finance, banking, law, accounting, auditing;

dd) Not being the spouse, biological father, adoptive father, biological mother, adoptive mother, biological child, adopted child, biological brother, biological sister, brother-in-law, sister-in-law of the President, Vice President Chairman of the Vietnam Cooperative Alliance; Controller, General Director, Deputy General Director and Chief Accountant of the fund;

e) Other standards and requirements according to the management requirements of the Vietnam Cooperative Alliance as specified in the charter on organization and operation of the central cooperative fund.

4. Rights and obligations of the Chairperson of the central cooperative fund shall comply with Clause 3 Article 8 of this Decree and in the charter on organization and operation of the central cooperative fund.

Article 11. Controller of central cooperative fund

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

2. The controller of the central cooperative fund shall hold the term of office of 05 years maximum, and may be re-appointed for not more than 02 terms.

3.Standards and requirements of the controller of the central cooperative fund:

a) Meeting the standards and requirements specified at Points a, b, c, d and e Clause 3 Article 10 of this Decree;

b) Not being the spouse, biological father, adoptive father, biological mother, adoptive mother, biological child, adopted child, biological brother, biological sister, brother-in-law, sister-in-law of the President, Vice President Chairman of the Vietnam Cooperative Alliance; Controller, General Director, Deputy General Director and Chief Accountant of the fund.

4. Chairperson of the Vietnam Cooperative Alliance shall issue operation regulation of Controller of the central cooperative fund according to regulations on promulgation of operation regulations of controllers of single-member limited liability companies of which 100% of charter capital is held by the State in accordance with this Decree.

Article 12. General Director of central cooperative fund

1. General Director of the central cooperative fund shall be appointed and dismissed by the Vietnam Cooperative Alliance to directly administer daily the fund’s operations.

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

3. Standards and requirements of the General Director of the central cooperative fund:

a) Meeting the standards and requirements specified at Points a, b, c, d and e Clause 3 Article 10 of this Decree;

b) Not being 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 Vietnam Cooperative Alliance, Controller, Deputy General Director or Chief Accountant of the fund.

4. Rights and obligations of the General Director of the central cooperative fund shall comply with the charter on organization and operation of the central cooperative fund.

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

1. The Deputy General Director of the central cooperative fund shall be appointed by the fund’s Chairperson on the basis of the General Director’s proposal to assist the General Director in administration of the fund’s operation according to the General Director’s assignment and authorization; take responsibility before the fund’s General Director and the law for the assigned and authorized tasks; the number of Deputy General Directors shall be decided by Chairperson of the Vietnam Cooperative Alliance but must not exceed 03 persons.

2. The Chief Accountant of the central cooperative fund shall be appointed by the fund’s Chairperson on the basis of the General Director’s proposal to organize the fund's accounting and statistical works as assigned and authorized by the fund’s General Director in accordance with the Law on accounting and relevant laws; take responsibility before General Director and Chairperson of the fund, and before the law for the assigned or authorized rights and tasks.

3. Assistant apparatus of the central cooperative fund:

a) The assistant apparatus includes professional and specialized departments or divisions with the functions of advising and assisting the Chairperson and General Director of the fund in managing and administering the fund. The fund’s General Director shall decide to appoint or dismiss holders of leadership positions of the assistant apparatus after having the policies approved by the fund’s Chairperson;

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

4. Standards and requirements of the Deputy General Director and Chief Accountant of the central cooperative fund shall comply with the fund’s charter on organization and operation.

5. Rights and responsibilities of Deputy General Director, Chief Accountant and assistant apparatus of the central cooperative fund shall comply with the fund’s charter on organization and operation.

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

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

2. Bellows are basis contents of the charter on organization and operation of the central cooperative fund:

a) Name and headquarter;

b) Legal status and operation model, legal person status;

c) Contents and scope of operation;

d) Charter capital;

dd) Organizational structure and at-law representative of the fund;

e) Functions and tasks of the fund;

g) Functions and tasks of the fund’s Chairperson, Controller and executive committee;

h) Standards and conditions for appoitment, 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 state management agencies and related parties in accordance with this Decree;

n) Relationship between the central cooperative fund and local cooperative funds in accordance with this Decree;

o) Dispute settlement, restructuring, bankruptcy and dissolution of the fund in accordance with this Decree and relevant laws;

p) Other contents according to the management requirements.

Section 2. LOCAL COOPERATIVE FUNDS

Article 15. Establishment of local cooperative funds

1. Provinces and centrally-run cities shall consider establishing local cooperative funds on the basis of local collective economic development orientations, ensuring that such establishment is necessary, feasible and meets the conditions specified in Clause 2 of this Article. If the establishment is necessary, each province or centrally-run city may only establish one local cooperative fund in accordance with this Decree.

2. Conditions for establishment of a local cooperative fund:

a) Having the scheme for establishment of local cooperative fund approved by competent agencies in accordance with this Decree. This scheme must include the basis contents specified in Clause 3 of this Article;

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

c) Having the charter on organization and operation of the local cooperative fund, approved by competent agencies specified in this Decree in accordance with Article 19 of this Decree.

3. Basis contents of the scheme for establishment of local cooperative fund:

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

b) Name of the local cooperative fund, operation areas, headquarter address, charter capital at the date of establishment, sources of charter capital, and scope of operation which must be in conformity with this Decree;

c) Having operation model of the local cooperative fund as specified in Article 16 of this Decree and explanation of the selection of the fund’s operation model which must ensure efficiency and conformity with actual conditions of the locality;

d) Explanation of the expected organizational structure and operational process of the local cooperative fund in accordance with this Decree, including: Organizational structure; operation process of the local cooperative fund; regulations on risk management procedures, specifying potential risks incurred during operation, methods and measures for preventing risks; control of these risks; information technology system for managing the fund’s operations;

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

e) List of persons to be elected as managers of the local cooperative fund and documents proving their capacity which meets the standards and requirements for managers specified in this Decree;

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

- List of persons expected to contribute capital to the fund, with signatures of such capital contributors, and the contents as follows: Full name (for members being individuals or representatives of households), name and headquarter address (for members being legal entities), number of identity card or citizen’s identity card or passport number (for members being individuals), number of household registration book (for members being households) and number of business registration certificate (for members being legal entities), contributed amounts and contribution percentage of each contributor;

- Certified true copies of the commune-level People’s Committee of the following documents: identity card or citizen’s identity card or Passport (for members being individuals, legal entity’s representatives or household’s representatives) which remains valid, household registration book (of household), business registration certificate (for members being legal entities);

- The power of attorney of by the legal entity issued to its representative to contribute capital; the power of attorney of the household issued to its representative to contribute capital.

4. Procedures for establishment of a local cooperative fund operating in the form of a single-member limited liability company of which 100% of charter capital is held by the State:

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

b) Within 30 business days from the receipt of the scheme for establishment of local cooperative fund as specified at Point a of this Clause, if the scheme is considered unfeasible and unsatisfactory, the provincial-level People’s Committee shall notify in writing to the provincial-level cooperative alliance, specifying the reasons for refusal;

c) In case the scheme is feasible and satisfactory, the provincial-level People’s Committee shall report to the provincial-level People’s Council for considering and approving the policies for fund establishment with the following contents: Charter capital and sources of charter capital, mobilized capital, operation model and organizational structure of the local cooperative fund, and other contents according to the management requirements of the provincial-level People’s Council;

d) After the provincial-level People’s Council approves the policies, the Chairperson of provincial-level People’s Committee shall issue a decision on establishment of the cooperative fund;

dd) Within 30 business days from the date on which the cooperative fund is established, the provincial-level People’s Committee shall send a report to the Ministry of Finance, the State Bank of Vietnam, Ministry of Planning and Investment, the Vietnam Cooperative Alliance, enclosed with the decision on establishment of the local cooperative fund, the local cooperative fund shall publicize its establishment on mass media;

e) Within 180 days from the date on which the decision on establishment of the local cooperative fund is issued, the provincial-level People’s Committee shall allocate the provincial government budget for providing sufficient charter capital according to the issued decision.

5. Procedures for establishment of a local cooperative fund operating under the cooperative model:

a) Founding members and provincial-level cooperative alliance shall convene a meeting on establishment of the local cooperative fund for approving contents about establishment of the local cooperative fund, including: The scheme for establishment of the fund as specified in Clause 3 of this Article; the expected charter on organization and operation of the fund as specified in Article 19 of this Decree and other contents relating to the establishment, organization and operation of the fund. The resolution of the meeting on establishment of the local cooperative fund must be approved by voting under the majority principle;

b) After the resolution of the meeting on establishment of the local cooperative fund has been approved, the provincial-level cooperative alliance shall report the provincial-level People’s Committee for consideration and appraisal of the scheme on establishment of local cooperative fund;

c) Within 30 business days from date of receiving the scheme for establishment of local cooperative fund as specified at Point b of this Clause, if the establishment is unfeasible and unsatisfactory, the provincial-level People’s Committee shall notify in writing to the provincial-level cooperative alliance, specifying the reasons for refusal;

d) If the establishment is feasible and satisfactory, the provincial-level People’s Committee shall submit to the provincial-level People’s Council for consideration and approval of the policies for fund establishment;

dd) After the provincial-level People’s Council approves the policies, the General Meeting of Members of the local cooperative fund shall convene meeting and issue a resolution on establishment of the local cooperative fund;

e) After the resolution on establishment of the cooperative fund has been approved by the General Meeting of Members, the local cooperative fund shall request the provincial-level Department of Planning and Investment in writing to issue the certificate of registration of local cooperative fund as prescribed by law;

g) Within 30 business days from the date of issuing the certificate of registration of local cooperative fund, the provincial-level People’s Committee shall send notice to the Ministry of Finance, the State Bank of Vietnam, Ministry of Planning and Investment, and the Vietnam Cooperative Alliance, enclosed with the certificate of registration of local cooperative fund. The local cooperative fund shall publicize its establishment on mass media;

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

Article 16. Operation model and administration of operations of local cooperative funds

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

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

b) The model of cooperative.

2. Local cooperative funds are organized according to one of the following methods:

a) Establishing an independent apparatus to organize and manage the local cooperative fund and perform operations in accordance with this Decree;

b) Authorizing local financial institutions to manage the fund. A trust agreement must be signed between two parties with following basis contents: Entrustment or authorization scope, contents and process; responsibilities, tasks and rights between the trustor and the trustee; potential risks and other relevant contents.

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

1. Rights and responsibilities of the provincial-level People’s Committee:

a) To approve 05-year operational plans or strategies, financial plans and development investment plans as requested by provincial-level cooperative alliance;

b) To decide on establishment, restructuring, transfer of ownership, bankruptcy or dissolution of the local cooperative fund as requested by the provincial-level cooperative alliance and on the basis of opinions given by the provincial-level Department of Finance, provincial-level Department of Planning and Investment, and provincial-level Department of Justice after obtaining approval from the provincial-level People’s Council;

c) To decide the charter capital and approve increase or decrease in the charter capital of the local cooperative fund during its operation as requested by the provincial-level cooperative alliance and according to opinions of the provincial-level Department of Finance, and provincial-level Department of Planning and Investment after obtaining approval from the provincial-level People’s Council;

d) To issue and revise the charter on organization and operation of the local cooperative fund in accordance with this Decree;

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

e) Other rights and responsibilities in accordance with this Decree and relevant laws.

2. Rights and responsibilities of each provincial-level cooperative alliance:

a) To approve annual operational and financial plans of the local cooperative fund after obtaining approval from the provincial-level People’s Committee;

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

c) To approve financial statements, profit distribution, and establishment of annual funds of the local cooperative fund after obtaining appraisal opinions from the Controller of the local cooperative fund;

d) To effectively exercise other rights and responsibilities assigned by the provincial-level People’s Committee as specified in the charter on organization and operation of the local cooperative fund.

3. Organizational structure of the local cooperative fund:

a) Fund’s Chairperson;

b) Controller;

c) Executive committee, including Director, Deputy Director, Chief Accountant and assistant apparatus.

4. Chairperson of the local cooperative fund:

a) Chairperson of the local cooperative fund is an owner representative to perform rights and responsibilities of the state owner’s representative at the fund;

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

c) Standards and requirements of the Chairperson of the local cooperative fund: Meeting the standards and requirements specified at Points a, b, c and d Clause 3 Article 10 of this Decree; not being 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-level cooperative alliance, Controller, Director, Deputy Director or Chief Accountant of the fund; and meeting other standards and requirements for management requirements of the provincial-level cooperative alliance as specified in the charter on organization and operation of the local cooperative fund;

d) Responsibilities and rights of the Chairperson of the local cooperative fund: Developing and submit 05-year operational plans or strategies, financial plans and development investment plans to the provincial-level cooperative alliance for submission to the provincial-level People’s Committee; developing and submitting annual operational and financial plans of the local cooperative fund to the provincial-level cooperative alliance. Requesting the provincial-level cooperative alliance to decide the planning, appointment, re-appointment, dismissal, transfer, reward, discipline, and approval for resignations and retirement of title holders as specified in the charter on organization and operation of the local cooperative fund. Reporting the provincial-level cooperative alliance to request the provincial-level People’s Committee to revise the charter on organization and operation of the local cooperative fund; increase or decrease the charter capital, restructuring, transformation of operation model, dissolution or bankruptcy of the local cooperative fund. Submitting the provincial-level cooperative alliance to approve the financial statements, profit distribution, and establishment of annual funds of the local cooperative fund after obtaining appraisal opinions from the Controller of the local cooperative fund. Deciding to promulgate and revise procedures and internal regulations on organization, administration and operation of the local cooperative fund after obtaining approval from the provincial-level cooperative alliance. Exercising other rights and responsibilities specified in the charter on organization and operation of the local cooperative fund.

5. Controllers of the local cooperative fund:

a) Controllers of the local cooperative fund shall assist the provincial-level cooperative alliance in controlling the organization and implementation of management and administration tasks of Chairperson and Director of the local cooperative fund and other relevant contents;

b) A controller of the local cooperative fund shall hold the term of office not exceeding 05 years, and may be re-appointed no more than 02 terms; appointment and dismissal of Controller of the local cooperative fund shall comply with the charter on organization and operation of the local cooperative fund;

c) Standards and conditions of the controller of the local cooperative fund: Meeting the standards and requirements specified at Points a, b, c and d Clause 3 Article 10 of this Decree; not being 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-level cooperative alliance, or Chairperson, Director, Deputy Director or Chief Accountant of the fund; and meeting other standards and conditions for the management requirements of the provincial-level cooperative alliance as specified in the charter on organization and operation of the local cooperative fund;

d) Chairperson of provincial-level cooperative alliance shall issue operation regulations of Controller of the local cooperative fund according to regulations on promulgation of operation regulations of controllers of single-member limited liability companies of which 100% of charter capital is held by the State and in accordance with this Decree.

6. Director of the local cooperative fund:

a) The Director of the local cooperative fund shall directly administer the fund’s operations;

b) The fund’s Director shall hold the term of office not more than 05 years and may be re-appointed or replaced. The appointment and dismissal of the Director of the local cooperative fund shall comply with the charter on organization and operation of the local cooperative fund;

c) Standards and conditions of the Director of the local cooperative fund: Meeting the standards and requirements specified at Points a, b, c and d Clause 3 Article 10 of this Decree; not being 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-level cooperative alliance, or Chairperson, Controller, Deputy Director or Chief Accountant of the fund; and meeting other standards and conditions for management requirements of the provincial-level cooperative alliance as specified in the charter on organization and operation of the local cooperative fund;

d) Rights and responsibilities of the Director of the local cooperative fund shall comply with the fund’s charter on organization and operation.

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

a) Deputy Director of the local cooperative fund shall be appointed and dismissed by the fund’s Chairperson as requested by the fund’s Director. Deputy Director of the local cooperative fund shall assist the fund’s Director in managing the fund’s operations as assigned and authorized by the fund’s Director; take responsibility before the fund’s Director and the law for the assigned and authorized tasks;

b) Chief Accountant of the local cooperative fund shall be appointed and dismissed by the fund’s Chairperson as requested by the fund’s Director. Chief Accountant shall take charge of accounting, financial and statistical works of the local 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 local 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, tasks and powers of the assistant apparatus are specified in the fund’s charter on organization and operation;

d) Standards and conditions of the Deputy Director and Chief Accountant of the local cooperative fund shall comply with the charter on organization and operation;

dd) Rights and responsibilities of Deputy Director, Chief Accountant and assistant apparatus of the local cooperative fund shall comply with the charter on organization and operation.

Article 18. Organizational structure and apparatus of local cooperative funds operating under cooperative model

1. Organization structure of the fund:

a) General meeting of members;

b) Board of Directors;

c) Controller;

d) Executive committee, including the Director, Deputy Director, Chief Accountant and assistant apparatus.

2. General meeting of members:

a) General meeting of members shall have the ultimate decision-making power of the local cooperative fund operating under the cooperative model. There are annual general meeting of members and extraordinary general meeting of members. The member congress shall be held in the form of a general meeting or a member congress in accordance with the Law on Cooperatives;

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

3. Board of Directors:

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

b) Standards and conditions for the Chairperson of the Board of Directors of the local cooperative fund shall comply with Point c Cause 4 Article 17 of this Decree and the charter on organization and operation of the local cooperative fund;

c) Rights and responsibilities of the Chairperson of the Board of Directors of the local cooperative fund shall comply with the fund’s charter on organization and operation.

4. Controller of the local cooperative fund:

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

b) Controller of the local cooperative fund shall work under full-time or part-time working regime, with the term of office not exceeding 05 years, and may be re-appointed not more than 02 terms in order to assist in controlling the organization and implementation of management and administration tasks of the Board of Directors and Director of the fund, and other relevant contents;

c) Standards and conditions of the controller of the local cooperative fund shall comply with Cause 3 Article 11 of this Decree and the charter on organization and operation of the local cooperative fund;

d) The general meeting of members shall ratify the resolution on promulgation of operation regulations of controller of the local cooperative fund in accordance with the Law on Cooperatives and this Decree.

5. Director of the local cooperative fund:

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

b) Standards and conditions of the Director of the local cooperative fund shall comply with Point c Cause 6 Article 17 of this Decree and the charter on organization and operation of the local cooperative fund;

c) Rights and responsibilities of the Director of the local cooperative fund shall comply with the fund’s charter on organization and operation.

6. Deputy Director, Chief Accountant and assistant apparatus:

a) Deputy Director of the local cooperative fund shall be appointed and dismissed by Chairperson of the Board of Directors of the fund as requested by the fund’s Director. Deputy Director of the local 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 the 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 local cooperative fund shall be appointed and dismissed by Chairperson of the Board of Directors of the fund as requested by the fund’s Director. Chief Accountant shall be in charge of accounting, financial and statistical works of the local 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 the fund’s Board of Directors approves the policies. Organizational structure, functions, tasks and powers of the assistant apparatus are specified in the fund’s charter on organization and operation;

d) Standards and conditions of the Deputy Director and Chief Accountant of the local cooperative fund shall comply with the fund’s charter on organization and operation;

dd) Rights and responsibilities of Deputy Director, Chief Accountant and assistant apparatus of the local cooperative fund shall comply with the fund’s charter on organization and operation.

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

1. Charter on organization and operation of a local cooperative fund must be conformable with its organizational and operation model and include the basis contents specified in Article 14 of this Decree.

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

Chapter III

OPERATIONS OF COOPERATIVE FUNDS

Section 1. LENDING ACTIVITIES

Article 20. Borrowers and lending scope

1. Borrowers:

a) Borrowers of cooperative funds include cooperatives, cooperative unions, members of cooperative groups and cooperatives (except for members of cooperatives that are enterprises);

b) The Vietnam Cooperative Alliance and provincial-level People’s Committees shall stipulate borrowers that are given priority to receive loans from cooperative funds according to the funds’ development strategies.

2. Lending scope:

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

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

Article 21. Lending principles

1. Lending activities between cooperative funds and their customers shall be made according to the agreements between the funds and customers in accordance with this Decree.

2. Borrowers of a cooperative fund must commit to use loans properly and repay principal and interests according to the time limit as agreed upon with the cooperative fund.

Article 22. Loan conditions

1. The customer is an entity specified in Clause 1 Article 20 of this Decree.

2. The customer is a legal entity established in accordance with law. Individual customer must be aged 18 or older and has full legal capacity as prescribed by law.

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

4. The customer complies with regulations on loan security specified in Article 26 of this Decree.

5. The customer’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 of the cooperative fund after signing the credit contract, the customer has not incurred any non-performing debts at credit institutions.

Article 23. Loan amount and limits

1. Loan amount: Based on the plan for use of loans, financial capability, capacity to repay debts, and loan security of the customer, and the loan limit specified in this Decree, the cooperative fund shall consider and decide the specific loan amount provided to the customer in conformity with the fund’s available capital sources and financial capability.

2. Loan limit:

a) Total loan outstanding balance of a customer shall not exceed 15% of the actual charter capital of the cooperative fund at the time of deciding on providing loans;

b) Total loan outstanding balance of a customer and affiliated persons shall not exceed 25% of the actual charter capital of the cooperative fund at the time of deciding on providing loans;

3. Cooperative funds shall provide syndicated loans according to specific contracts between such cooperative funds and customers, in accordance with this Decree and relevant laws.

Article 24. Loan term

1. The loan term shall be determined on the basis of the capital recovery capacity, in conformity with the customer’s production and business cycle, investment plan and solvency.

2. The specific loan term for each investment project or business plan of the customer shall be considered and decided by the cooperative fund.

Article 25. Loan interest rate and currency for lending and debt collection

1. Principles for determining interest rate and the currency for lending and debt collection

a) The Cooperative Fund's loan interest rate must be consistent with preferential policies and cooperative economic development plans of the Government and each locality, and at the same time, ensure the principle of fully covering costs for operations of the Cooperative Fund in accordance with the law on loan interest rates;

b) The overdue interest rate for each specific case shall be decided by the Cooperative Fund, with a maximum of 150% of the loan interest rate within the term;

c) The currency for lending and debt collection is Vietnamese Dong.

2. The competence to decide loan interest rates, overdue interest rates, 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 managing loans.

Article 26. Loan security

1. The application of loan security measures or no asset security shall be agreed upon by the Cooperative Fund and the customer, in accordance with the law on security measures.

2. The cooperative fund is entitled to handle customers' secured assets to recover debts according to the law on secured transactions.

Article 27. Debt rescheduling

The Cooperative Fund shall consider and decide to restructure the debt repayment term (including measures to adjust the debt term and extend the debt) based on the customer's request, the Cooperative Fund's financial capacity and the results of assessing the customer's capacity to repay debt as follows:

1. If the customer is unable to repay the loan principal and/or interest on time and is assessed by the Cooperative Fund as having the ability to fully repay the loan principal and/or interest according to the adjusted repayment period, the Cooperative Fund will consider adjusting the loan principal and/or interest repayment term in accordance with the customer's debt repayment source; without changes to the loan term.

2. If the customer is unable to fully pay the loan principal and/or interest on the agreed loan term and is assessed by the Cooperative Fund as having the ability to fully repay the loan principal and/or interest within a certain period of time after the loan term, the Cooperative Fund will consider extending the debt with a term suitable to the customer's debt repayment source.

3. The competence to decide the debt rescheduling shall comply with the charter on organization and operation of the cooperative fund and its internal regulations on lending and managing loans.

Article 28. Debt classification, setting aside and use of loan risk provisions

1. Cooperative funds shall classify debts, set aside provisions for loans subject to risk and use provisions to handle loan risks according to regulations of the State Bank of Vietnam for microfinance institutions.

2. For entrusted loans or loans received under entrustment where the Cooperative Fund does not bear risks, no risk provision is made.

3. After 05 years from the date of using provisions to handle loan risks and having used all measures but unable to recover debt, based on the request of the Risk Handling Council of the Cooperative Fund:

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

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

4. For a local cooperative fund operating under the cooperative model: The Chairperson of the Board of Directors of the local 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. Based on Clause 1, Clause 2 and Clause 3 of this Article, the cooperative fund shall promulgate internal regulations on debt classification, setting aside and use of loan risk provisions in accordance with this Decree.

Article 29. Risk Handling Council

1. The cooperative fund must establish a Risk Handling Council, in which the Chairperson is the fund’s Chairperson or Chairperson of the fund’s Board of Directors and members are Controller, the fund’s Director, Chief Accountant, head of lending department and other members as decided by the fund’s Chairperson or Chairperson of the fund’s Board of Directors.

2. Tasks of the Risk Handling Council:

a) Assessing reports on debt classification, setting aside and use of loan risk provisions submitted by the fund’s Director on a quarter basis;

b) Deciding to use loan risk provisions;

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

d) Monitoring the collection of debts for which loan risk provisions have been used;

dd) Preparing procedures, order and dossiers for removing the debts monitored in the off-balance sheet for submitting to competent state management agencies for consideration as specified in Clause 3 Article 28 of this Decree;

e) Formulating internal regulations on operation of the Risk Handling Council for submission to the fund’s Chairperson or Chairperson of the fund’s Board of Directors for promulgation.

Article 30. Loan entrustment activities of the central cooperative fund

1. The central cooperative fund may authorize capital to the local cooperative fund and other financial and credit institutions to carry out lending activities.

2. The central cooperative fund and the entrusted organization must sign a entrust contract as a basis for implementation. The entrust contract must clearly stipulate the contents, including: Content and scope of entrust, entrust amount, entrust process, arising risks, responsibilities, obligations, and powers of the parties and other related contents.

Article 31. Promulgation of internal regulations on lending and managing loans

1. The cooperative fund shall promulgate its internal regulations on lending and managing loans according to the competence specified in its charter on organization and operation.

2. Internal regulations on lending and loan management must be consistent with this Decree and the Fund's operating characteristics and ensure the following minimum contents: borrowers, lending conditions, Loan method, loan term, loan interest rate, overdue interest rate, loan dossiers, debt collection, processes and procedures for restructuring debt repayment term, transferring overdue debt; appraisal, approval and loan decision process; process of checking and monitoring the loan process, loan use and debt repayment by customers; Application of loan security measures, cases where collateral is exempted based on the results of assessing the customer's risk level and repayment ability; competence to decide on each security measure; risk handling.

Section 2. CAPITAL MOBILIZATION AND OTHER ACTIVITIES

Article 32. Capital mobilization by cooperative funds

Cooperative fund is allowed to mobilize capital in conformity with its operation model. To be specific:

1. Central cooperative fund:

The central cooperative fund operating under the model of a single-member limited liability company of which 100% of charter capital 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 Production and Business at Enterprises, and relevant guiding documents.

2. Local cooperative funds:

a) A local cooperative fund operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State may mobilize capital within the locality in accordance with the Law on Enterprises, the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, and relevant guiding documents;

b) A local cooperative fund operating under the cooperative model may mobilize capital within the locality in accordance with the Law on Cooperatives and relevant guiding documents.

Article 33. Other activities of cooperative funds

The Cooperative Fund may carry out investment and financial consulting services and support and training services for the Fund's borrowers in accordance with current laws.

Chapter IV

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

Article 34. Financial, accounting and auditing regimes

1. Cooperative funds shall follow the financial, accounting and reporting regimes specified in this Decree and the Ministry of Finance’s instructions.

2. The financial year of the cooperative fund starts 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 as prescribed by applicable laws.

Article 35. Financial management principles

1. Cooperative funds shall implement the financial autonomy and be self-responsible for the implementation of assigned tasks, obligations and commitments as prescribed by law.

2. Cooperative funds shall make financial disclosure as prescribed by applicable laws. The fund’s Chairperson or Chairperson of the fund’s Board of Directors shall take 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 the tax law.

Article 36. Funding for operations of cooperative funds

Funding for operations of a cooperative fund is derived from the following sources:

1. Owner’s equity:

a) Charter capital;

b) Funds: Development investment fund and financial provision funds;

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

d) Differences from rassessment of assets;

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

e) Other capital under the ownership of the cooperative fund.

2. Capital raised from domestic organizations and individuals in accordance with Article 32 of this Decree.

3. Refundable aids given by the State to the cooperative fund operating under the cooperative model shall comply with the Law on Cooperatives.

4. Other lawful sources of capital in accordance with the law (if any).

Article 37. Charter capital of cooperative funds

1. For a cooperative fund operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State, its charter capital shall be allocated by 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 from the development investment expenditure of the central budget. The change in the charter capital of the central cooperative fund shall be decided by the Prime Minister as requested by the Vietnam Cooperative Alliance after obtaining the consent from the Ministry of Finance and the Ministry of Planning and Investment;

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

2. For a local cooperative fund operating under the cooperative 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 cooperative funds’ capital and assets

1. The cooperative fund’s capital must be managed and used in a safe, proper and effective manner in order to implement the cooperative fund’s tasks in accordance with this Decree.

2. Management and use of idle capital:

a) Cooperative funds may deposit money at commercial banks that are lawfully established and operating in Vietnam according to the capital preservation and development principle;

b) Local cooperative funds may deposit their idle capital at the central cooperative fund and vice versa as agreed upon between the parties;

c) The cooperative fund shall develop internal regulations on the management and use of temporarily idle capital, which must at least contain the following contents: Criteria for selecting commercial banks to deposit money to ensure capital security and development principles; competence to decide on bank selection.

3. Procurement, management and use of assets of the Cooperative Fund:

a) For Cooperative Funds operating under the model of a one-member limited liability company of which 100% charter capital is held by the State: The Cooperative Fund is allowed to purchase and invest in fixed assets to serve directly for operations according to the principle that the remaining value of fixed assets does not exceed 10% of the actual charter capital at the time of investment and procurement decisions; fully comply with the law on investment and construction management for single-member limited liability companies of which 100% charter capital is held by the State;

b) b) For Cooperative Funds operating under the cooperative model: Investment and purchase of fixed assets that directly serve the operations of the Cooperative Fund shall be carried out in accordance with the Law on Cooperatives and the Fund's internal regulations shall be issued by the Board of Directors after obtaining the approval of the Cooperative Fund's general meeting of members.

Article 39. Capital adequacy

The cooperative fund shall be responsible for implementing regulations on capital adequacy as follows:

1. Managing and using capital and assets, distributing financial outcomes, and implementing financial management and accounting regimes in accordance with this Decree and relevant laws.

2. Following regulations on loan limits in accordance with this Decree.

3. Buying property insurance for assets as required by law.

4. Account into operating expenses the loan risk in accordance with this Decree.

5. Other measures for ensuring capital adequacy as prescribed by law.

Article 40. Salaries and allowances of cooperative funds

1. For a cooperative fund operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State: The cooperative fund shall manage its employees, salaries, remunerations and bonuses of its employees and managers according to the regulations applicable to a single-member limited liability company of which 100% of charter capital is held by the State, according to the fund’s characteristics and operation model as prescribed by this Decree.

2. For a cooperative fund operating under the cooperative model: The cooperative fund shall manage its employees, salaries, remunerations and bonuses of its employees and managers according to the regulations applicable to a cooperative as specified in the Law on Cooperatives.

Article 41. Incomes of cooperative funds

1. Incomes of a cooperative fund shall be determined in conformity with Vietnamese accounting standards and relevant laws, with 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 from service provision;

c) Income from other activities;

d) Other incomes as prescribed by law.

3. The Ministry of Finance shall provide specific instructions on incomes of cooperative funds in accordance with Clause 2 of this Article.

Article 42. Expenses of cooperative funds

1. Expenses of a cooperative fund means expenses actually incurred during the fund’s operation; comply with the matching principle between incomes and expenses; with by lawful invoices and receipts as prescribed by law. The cooperative fund is not allowed to account for expenses covered by other funding sources. Cost determination and accounting shall be carried out in accordance with Vietnamese accounting standards and relevant laws. Expenses shall be deductible when determining tax liability in accordance with the provisions of tax law.

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, fees and charges;

dd) Payments for employees of the cooperative fund;

e) Expenses for management and administration;

g) Asset-related costs;

h) Expenses for setting aside loan risk provisions;

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

k) Other expenses.

3. The Ministry of Finance shall specifically guide expenses of cooperative funds as specified 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) Financial results of the Cooperative Fund in the year of surplus when the difference between income and expenses arising in the Cooperative Fund's fiscal year is positive;

b) The Cooperative Fund's financial results in the year are in deficit when the difference between income and expenses incurred in the Cooperative Fund's fiscal year is negative.

2. For Cooperative Funds operating under the model of a one-member limited liability company of which 100% charter capital is held by the State, when the financial results for the year reach a surplus, after paying fines due to violate the provisions of law and make up for the deficit from previous years (if any), distributed as follows:

a) Deducting a maximum of 30% into the development investment fund.

b) Deducting 10% into the financial provision fund.

c) Deducting to the reward and welfare fund for employees of the Cooperative Fund:

Cooperative funds rated A are entitled to deduct 3 months' salary for two bonus and welfare funds;

Cooperative funds rated B are entitled to deduct 1.5 months of actual salary for two bonus and welfare funds;

Cooperative funds rated C are entitled to deduct 1 month's salary for two bonus and welfare funds.

d) Deducting to reward fund for managers and controllers:

Cooperative funds rated A are entitled to deduct 1.5 months of actual salary of managers and controllers;

Cooperative funds rated B are entitled to deduct 01 month's actual salary of managers and controllers;

Cooperative funds rated C are not allowed to set aside bonus funds for managers and controllers.

dd) In case where the difference between revenues and expenses that remains after setting aside the funds specified at 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 prescribed, 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 aforesaid funds shall be contributed to the development investment fund of the cooperative fund.

3. For a cooperative fund operating under the cooperative model:

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

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

4. Use purposes of funds:

a) The development investment fund shall be 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 according to the regulations applicable to single-member limited liability companies of which 100% of charter capital is held by the State. Chairperson of the fund’s Board of Directors shall decide investment form and method under the Law on Cooperatives;

b) The financial provision fund shall be 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 organizations and individuals that cause damages, insurers and use of deducted provisions in the fund’s expenses;

c) The reward fund for managers and controllers shall be used for managers and controllers of the cooperative fund. The bonus level is granted by the Chairman of the Cooperative Alliance of the same level (for Cooperative Funds operating under the model of a single-member limited liability company of which 100% charter capital is held by the State) or the general meeting of members ( for Cooperative Funds operating under the Cooperative model) decided according to the level of completion of assigned tasks and operational efficiency of the Cooperative Fund based on the proposal of the Chairman/Chairman of the Board of Directors. value of the Fund;

d) The reward fund shall be used to periodically or irregularly reward individuals and groups of the Cooperative Fund on the basis of labor productivity or work achievements;

d) The welfare fund shall be used to pay for sports, cultural activities, and public welfare works of the collective staff of the Cooperative Fund; regular and unexpected hardship allowances for Cooperative Fund officials; Expenses for other welfare activities of the Cooperative Fund.

The Director of the Cooperative Fund shall coordinate with the Cooperative Fund's Trade Union to manage and use this fund openly and transparently.

5. When the financial results of the year are in deficit, the Cooperative Fund is allowed to transfer the difference in income that is smaller than the expenses to the next year, the transfer time must not exceed 05 years if the Cooperative Fund does not transfer all the difference in income that is smaller than the cost, the Cooperative Fund shall report to the Prime Minister (for the Central Cooperative Fund), the Chairman of the Provincial People's Committee (for local Cooperative Funds operating under the model of a single-member limited liability company of which 100% charter capital is held by the State) and the general meeting of members (for Cooperative Funds operating under the cooperative model) shall consider and decide on capital reduction or capital supplementation, restructuring, reorganization or dissolution, bankruptcy of the Cooperative Fund.

Article 44. Reporting regimes

1. The central cooperative fund shall:

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

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

2. Local cooperative funds shall:

Prepare and send biannual and annual reports to the provincial-level People’s Committees, provincial-level cooperative alliances, provincial-level Departments of Finance, and State Bank branches in provinces where the cooperative funds are established, and sent to the central cooperative fund for consolidating under 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 the Ministry of Finance’s instructions;

b) Consolidated reports on the fund's operations;

c) Reports on the fund’s lending activities;

d) Audit report of annual financial statements.

4. Deadline for submission of reports:

a) Biannual report shall be sent by July 31 every year at the latest;

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

5. Methods for submitting reports: The cooperative fund shall send reports directly or by postal office.

6. In unexpected cases, the Cooperative Fund has the responsibility and obligation to provide information and report to the competent authority upon request.

7. On an annual basis, Cooperative alliances at all levels shall make reports under Article 12 of the Government’s Decree No. 163/2016/ND-CP dated December 21, 2016, detailing a number of articles of the Law on the State Budget and amending and supplementing documents (if any).

8. Cooperative funds shall make reports in accordance with the law on inspection, examination and auditing.

Article 45. Assessment of performance of cooperative funds

1. Criteria for assessing the annual performance of a cooperative include:

a) Criterion 1: Growth of loan outstanding balance;

b) Criterion 2: Non-performing 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 the law 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 assessment 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 assessment criteria and rating of cooperative funds in conformity with specific operations of cooperative funds.

4. The cooperative alliance of the same level shall provide assessment criteria and carry out assessment of annual performance of the cooperative funds operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State according to this Article. General meeting of members shall provide assessment criteria and conduct assessment of annual performance of the cooperative fund operating under the cooperative model.

Chapter V

DISSOLUTION, BANKRUPTCY AND TRANSFORMATION OF MODEL OF COOPERATIVE FUNDS

Article 46. Cases of dissolution of cooperative funds

A cooperative fund shall be dissolved in the following cases:

1. A local cooperative fund fails to have adequate minimum charter capital as specified in Article 37 and Point c Clause 5 Article 58 of this Decree.

2. A cooperative fund is rated C by a competent agency as prescribed in this Decree within 05 consecutive years in accordance with this Decree and has the ratio of loan outstanding balance (excluding loans granted under entrustment) to equity less than 20% in 05 consecutive years.

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

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

5. Other cases of dissolution shall be decided by the Prime Minister (for central cooperative funds), or the provincial-level People’s Committee (for local cooperative funds operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State), or general meeting of members (for local cooperative funds operating under the cooperative model).

Article 47. Competence to decide dissolution of cooperative funds

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

a) For the central cooperative fund: Based on the proposals of the Vietnam Cooperative Alliance, opinions of the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam, the Prime Minister shall consider and decide on dissolving the central cooperative fund in accordance with this Decree and relevant laws;

b) For a local cooperative fund: Based on the proposals of the provincial-level cooperative alliance and opinions of the provincial-level Department of Finance, provincial-level Department of Planning and Investment, and the State Bank branch in the locality, the provincial-level People’s Committee shall consider and submit the provincial-level People’s Council for approval of the dissolution policies before issuing a decision to dissolve the local cooperative fund in accordance with this Decree and relevant laws.

2. For local cooperatives fund operating under the cooperative model: The decision on dissolving the cooperative fund shall comply with the Law on Cooperatives and relevant laws.

Article 48. Dossiers, order and procedures for dissolution of cooperative funds

1. For a cooperative fund operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State: Dossiers, order and procedures for dissolution of the cooperative fund shall be same as those applicable to the cases of dissolution of a single-member limited liability company of which 100% of charter capital is held by the State.

2. For a cooperative fund operating under the cooperative model: Dossiers, order and 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 the Law on Bankruptcy and Article 55 of the Law on Cooperatives (for cooperative funds operating under the cooperative model).

Article 50. Transformation of operation model

1. If a cooperative fund wants to transform its operation model from a single-member limited liability company of which 100% of charter capital is held by the State into a cooperative, or vice versa, it must develop a transformation plan, specifying the handling obligations of the current cooperative fund, and plans for transforming into a cooperative fund operating under the new operation model (including financial plan, plans for management and administration, and loan outstanding balance).

2. Competence to decide on transformation of operation model:

a) For the central cooperative fund: comply with Point b Clause 1 Article 8 of this Decree;

b) For the local cooperative fund transformed from a single-member limited liability company of which 100% of charter capital is held by the State into a cooperative: the provincial-level People’s Committee shall decide based on the proposal of the provincial-level cooperative alliance and opinions of the provincial-level Department of Finance, provincial-level Department of Justice, provincial-level Department of Planning and Investment, and the State Bank branch;

c) For a local cooperative fund transformed from a cooperative into a single-member limited liability company of which 100% of charter capital is held by the State: the provincial-level People’s Committee shall decide on the transformation based on the proposal of the general meeting of members and opinions of the provincial-level cooperative alliance, the provincial-level Department of Finance, the provincial-level Department of Justice, the provincial-level Department of Planning and Investment, and the State Bank branch, and approval from the provincial-level People’s Council.

Chapter VI

IMPLEMENTATION ORGANIZATION

Article 51. Responsibilities of the Ministry of Finance

1. To provide guidance on mechanisms for financial management and assessment of performance of cooperative funds; guidance for handling financial issues concerning restructuring or transformation of operation model of cooperative funds; guidance on accounting regimes for cooperative funds in accordance with this Decree.

2. To assume the prime responsibility for, and coordinate with relevant authorities, the Vietnam Cooperative Alliance, provincial-level People’s Committees and relevant units in, completing, amending and supplementing legal documents on organization and operation of cooperative funds, and submitting them to agencies competent to promulgate, or to promulgate within the competence.

Article 52. Responsibilities of the State Bank of Vietnam

1. To coordinate with the Vietnam Cooperative Alliance, provincial-level People’s Committees, and provincial-level cooperative alliances in inspecting and supervising lending activities of cooperative funds in accordance with this Decree.

2. To coordinate with the Ministry of Finance and relevant ministries and sectors in establishing and completing legal framework for organization and operation of cooperative funds, and organizing the implementation of this Decree as prescribed by law.

Article 53. Responsibilities of the Ministry of Planning and Investment

1. To 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 the Law on Public Investment and legal documents guiding the Law on Public Investment.

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

3. To coordinate with the Ministry of Finance and relevant ministries and sectors in establishing and completing legal framework for organization and operation of cooperative funds, and organizing the implementation of this Decree as prescribed by law.

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

To assume the prime responsibility for, and coordinate with relevant ministries, sectors and provincial-level People’s Committees in, providing guidance on management of employees, managers, salaries, remunerations and bonuses of employees and managers, and ranking of the cooperative funds operating under the model of a single-member limited liability company of which 100% of charter capital is held by the State.

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

1. Responsibilities of provincial-level People’s Councils:

a) To approve the schemes for establishment of local cooperative funds in accordance with this Decree;

b) To supervise the organization and management of local cooperative funds in accordance with the Law on State Budget in accordance with this Decree and relevant laws.

2. Responsibilities of provincial-level People’s Committees:

a) To decide on establishment, dissolution or bankruptcy of local cooperative funds in accordance with this Decree and relevant laws;

b) Based on the state budget estimates approved by the People's Council of the same level, to decide to allocate charter capital of local cooperative funds in accordance with this Decree, and decide to adjust charter capital of local cooperative funds during their operation in accordance with this Decree and relevant laws;

c) To conduct comprehensive inspection, examination and supervision of local cooperative funds;

d) To make annual reports and irregular 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 this Decree;

dd) To make proposals on solutions for removing difficulties in the cooperative funds’ operation; proposals on amendments to mechanisms and policies for operation of cooperative funds;

e) To make annual reports on performance of cooperative funds to the provincial-level People’s Councils, and make proposals on solutions for removing difficulties and improving business performance of cooperative funds within their competence;

g) Other responsibilities of the provincial-level People’s Committees in accordance with this Decree and relevant laws.

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

1. Cooperative alliances of same level shall manage, supervise and inspect operation of cooperative funds in accordance with this Decree and relevant laws.

2. Cooperative alliances of same level shall annually carry out performance assessment and ranking of cooperative funds in accordance with this Decree and relevant laws.

3. The Vietnam Cooperative Alliance shall coordinate with the provincial-level People’s Committees in monitoring and assessing performance of cooperative funds for formulating and proposing orientations for development of cooperative funds to the Prime Minister in accordance with this Decree and relevant laws.

4. To perform other powers and responsibilities to cooperative funds as assigned by competent agencies in accordance with this Decree and relevant laws.

Article 57. Effect

1. This Decree takes effect from May 15, 2021.

2. The following regulations are repealed 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, on establishment of the cooperative development support funds;

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, amending and supplementing a number of articles of Decision No. 246/2006/QD-TTg dated October 27, 2006 of the Prime Minister, on establishment of the cooperative development support funds;

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

Article 58. Transitional provisions

1. For the implementation of credit contracts, guarantee deeds and agreements signed between the Cooperative Fund and related parties before this Decree takes effect, continue to comply with the signed agreements in credit contracts, guarantee contracts, guarantee deeds and other agreements. In case of amendments and supplements to agreements signed between the Cooperative Fund and related parties, the provisions of this Decree shall be applied.

2. At the time this Decree takes effect, based on the provisions of Clause 1, Article 28 of this Decree, in case the risk provision balance of the Cooperative Fund is excess compared to the amount to be deducted, the excess difference will be recorded as income. In case the Cooperative Fund's risk provision balance is insufficient compared to the amount to be deducted, within 12 months, the Cooperative Fund will supplement risk provisions according to regulations.

3. For the balance of the provision fund to supplement charter capital of the Cooperative Development Support Fund under Circular No. 81/2007/TT-BTC dated July 11, 2007 of the Ministry of Finance, guiding the financial management regime of the Cooperative Development Support Fund, the charter capital of the Cooperative Development Support Fund may be supplemented, but not exceeding the capital amount specified at Point a, Clause 1, Article 37 of this Decree.

4. Within 6 months from the effective date of this Decree, the Cooperative Fund must submit to the competent authority to stipulate loan interest rates and overdue interest rates of the Fund in accordance with Clause 2, Article 25 of this Decree.

While the interest rate has not yet been issued, the Cooperative Fund can apply the current interest rate to make loans.

5. For Cooperative Funds established and operating before the effective date of this Decree: Within 03 years from the effective date of this Decree, Cooperative Funds must review and reorganize:

a) Their operation models;

b) Their organizational structure and apparatus;

c) Supplement charter capital of local cooperative funds as specified at Point b Clause 1 Article 37 and Point a Clause 2 Article 37 of this Decree;

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

6. The Director and Deputy Director titles of the Cooperative Development Support Fund that are appointed under the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006, on establishment of the cooperative development support funds, and the Prime Minister’s Decision No. 23/2017/QD-TTg dated June 22, 2017, amending and supplementing a number of articles of the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006, on establishment of the cooperative development support funds, and promulgation of regulations on credit guarantee activities and post-investment interest rate support of the Cooperative Development Support Fund, may be appointed General Director and Deputy Director titles in accordance with this Decree.

7. To rename the Cooperative Development Support Fund that is established and operating under the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006, on establishment of the cooperative development support funds, and the Prime Minister’s Decision No. 23/2017/QD-TTg dated June 22, 2017, amending and supplementing a number of articles of the Prime Minister’s Decision No. 246/2006/QD-TTg dated October 27, 2006, on establishment of the cooperative development support funds, and promulgation of regulations on credit guarantee activities and post-investment interest rate support of the Cooperative Development Support Fund, to the Vietnam Cooperative Development Support Fund. Vietnam Cooperative Development Support Fund shall inherit all rights, responsibilities and obligations of the Cooperative Development Support Fund.

Article 59. Implementation organization

Ministers, heads of ministerial-level agencies, heads of Government-attached agencies, Chairperson of the Vietnam Cooperative Alliance, Chairpersons of provincial-level People’s Committees, Chairpersons of the provincial-level People’s Councils, Chairpersons of provincial-level cooperative alliances, Chairpersons and Directors of cooperative funds, and relevant organizations and individuals shall implement this Decree.