Law No. 18/2003/QH11 on Cooperatives

Article 1.- Cooperatives ORDER No. 28/2003/L-CTN OF DECEMBER 10; 2003 ON THE PROMULGATION OF LAW A cooperative is a collective economic organization established under the provisions of this Law by individuals, households or legal persons (hereinafter THE STATE PRESIDENT OF THE SOCIALIST referred collectively to as cooperative members) who REPUBLIC OF VIETNAM share common demands and interests, and volunteer to contribute capital and labor in order to bring into play Pursuant to Article 103 and Article 106 of the 1992 the collective strength of each cooperative member, to Constitution of the Socialist Republic of Vietnam, which help one another efficiently conduct production/business was amended and supplemented under Resolution activities and improve the material and spiritual life, thus No. 51/2001/OH1 O of December 25, 2001 of the )(lh contributing to the national socio-economic National Assembly, the 1oth session; development. Pursuant to Article 91 of the Law on Organization A cooperative operates as a type of enterprise, having of the National Assembly; the legal person status, enjoying autonomy and taking self-responsibility for financial obligations within the Pursuant to Article 50 of the Law on Promulgation scope of its charter capital, accumulated capital and other of Legal Documents, capital sources according to law provisions. HEREBY PROMULGATES: Article 2.- Scope of regulation The Law on Cooperatives, This Law prescribes the setting up, organization and operation of cooperatives in all branches and domains which was passed on November 26, 2003 by the of the national economy. x1 th National Assembly of the Socialist Republic of Vietnam at its 4th session. Article3.-The State's policies towards cooperatives 1. The State shall implement the following policies State President of the Socialist towards cooperatives: Republic of Vietnam TRAN PUC LUONG a/ To promulgate and implement policies and programs to support the development of cooperatives in terms of personnel training; human resource develop- ment; land; finance; credit; establishment of funds in support of development of cooperatives; scientific and technological application; marketing and market expansion; infrastructure development investment; and to create conditions for cooperatives to participate in the State's socio-economic development programs; LAW ON COOPERATIVES b/To encourage and create favorable conditions for cooperatives to develop; (No. 18/2003/QH11 of November 26, 2003) cl To ensure that cooperatives' legal position and Pursuant to the 1992 Constitution of the Socialist production/business conditions are equal to those of Republic of Vietnam, which was amended and enterprises of other types; supplemented under Resolution No. 51/2001/OH10 of d/ To protect cooperatives' legitimate rights and December 25, 2001 of the )(fh National Assembly, the interests according to law provisions; 1oth session; e/To respect cooperatives' rights to autonomy, self- This Law prescribes the cooperatives. determination and self-responsibility in production and business activities; by this Law and agree to the cooperative's charter, ti Not to interfere in cooperatives' lawful may join the cooperative; cooperative members may management and operation. leave the cooperative in accordance with the provisions of the cooperative's charter; 2. For agricultural cooperatives, the Government shall specify preferential policies suitable to their 2. Democracy, equality and publicity: Cooperative specific characteristics and development degrees in members may participate in managing, examining and each period. supervising the cooperative and have equal voting right; make public production/business plans, finance,

Article 4.· Interpretation of terms distribution and other issues prescribed in the In this Law, the words and phrases below shall be cooperative's charter; construed as follows: 3. Autonomy, self-responsibility and mutual 1. Minimum contributed capital means a sum of benefits: The cooperative shall enjoy autonomy and money or value of assets, including land-use right take self-responsibility for the results of its production/ value, property right to inventions, technical know-hows business activities; and decide by itself on income and other valuable papers, which are monetized, to distribution. be compulsorily contributed by cooperative members After fulfilling the cooperative's tax payment when they join the cooperatives. obligations and offsetting its losses, a part of profits 2. Labor contribution means the cooperative shall be channeled to the cooperative's funds, another members' participation in the building of cooperatives part shall be distributed according to capital and labor in forms of direct management, productive labor, contributions of the cooperative members, and the rest business, consultancy and other forms of participation. shall be distributed to the cooperative members according to the extent of using the cooperative's 3. The cooperative's charter capita/means the total services; capital contributed by the cooperative members and inscribed in the cooperative's charter. 4. Cooperation and community development: Cooperative members must have the sense of bringing 4. The cooperative's logo means the exclusive into play the spirit of collective building and cooperation symbol of each cooperative representing particular with one another in the cooperative and soc[al characteristics of such cooperative and distinguishing community; cooperation with domestic and foreign it from other cooperatives and enterprises. cooperatives in accordance with law provisions. 5. Cooperative's services provided to its members mean the provision of goods or supplies by the Article 6.- Rights of cooperatives cooperative to its members in material or non-material Cooperatives shall have the following rights: form, for which the members have the demand and 1. To select production/business llnes not banned must pay to the cooperative. bylaw; 6. The extent of use of the cooperative's services 2. To decide on the form and structure of their means the ratio between the value of services provided production/business organization; by the cooperative to each member and the total value of services provided by the cooperative to all of its 3. To conduct direct import/export or enter into joint- members. venture or association with domestic and foreign organizations and individuals for production/business 7. Economic commitment between the cooperative and its members means economic ties between the expansion in accordance with law provisions; cooperative and its members. 4. To hire labor if cooperative members fail to meet the cooperatives' production/business requirements

Article 5.-Principles for organization and operation according to law provlsions; of cooperatives 5. To decide on the admission of new members, Cooperatives shall be organized and operate on permit members to leave the cooperatives, and expel the following principles: members according to the provisions of the 1. Voluntariness: All individuals, households and cooperatives' charters; ,· legal persons, that fully meet the conditions prescribed 6. To decide on the distribution of incomes, and handle the cooperatives' losses; provisions of the cooperatives' charters and law 7. To decide on the commendation and/or reward provisions on insurance; to organize the participation of members who record numerous achievements in in paying voluntary social insurance premiums by the cooperative building and development; to discipline members other than the above•said subjects. The members who violate the cooperatives' charters; and Government shall specify the payment of social to decide on the compensation paid by members for insurance premiums by cooperative members; damage caused to the cooperatives; 1O, To attend to education, training, fostering in 8. To borrow capital from credit institutions and order to raise their members' knowledge, and provide mobilize other capital sources; to organize internal information to all cooperative members so that they credit according to law provisions; can actively participate in the cooperative building; 9. To have industrial property right protected 11. To fulfill other obligations according to law according to law provisions; provisions. 10. To refuse organizations' or individuals' requests Article 8.- Names and logos of cooperatives contrary to law; A cooperative may select its own name and logo 11. To lodge complaints about acts of infringing by itself in accordance with law provisions. upon the cooperatives' legitimate rights and interests; The seal, signboard, advertisement forms and 12. To exercise other rights under law provisions. transaction papers of the cooperative must carry the

Article 7.-0bligations of cooperatives sign "HTX" (Cooperative). The name and logo {if any) of the cooperative must Cooperatives shall have the following obligations: be registered at the competent State body and 1. To conduct production/business strictly according protected according to law provisions. to the registered production/business lines or commodity items; Article 9.-Political organizations and socio-political organizations in cooperatives 2. To strictly observe law provisions on accounting, statistics and audit; Political organizations and socio-political 3. To pay taxes and fulfill other financial obligations organizations in cooperatives shall operate within the according to law provisions; framework of the Constitution, law and their respective charters in accordance with law provisions. 4. To preserve and develop their working capital; to manage and use the State-assigned land according to law provisions; Chapter II 5. To bear responsibility for financial obligations ESTABLISHMENT AND BUSINESS within their charter capital, accumulated capital and REGISTRATION OF COOPERATIVES other capital sources according to law provisions; 6. To protect the environment, ecological environ- Article 10.- Founding members ment, scenic places, historical-cultural relics as well 1. The founding members are individuals, as defense and security works according to law households or legal persons who initiate the setting- provisions; up of the cooperative and participate in it. 7. To ensure its members' rights and fulfill economic 2. The founding members shall make written commitments to their members; reports to the commune, ward or township People's 8. To fulfill obligations towards their members who Committee (hereinafter referred collectively to as the directly work for the cooperatives and laborers hired commune-level People's Committee) of the locality by the cooperatives according to the law provisions where the cooperative is planned to be headquartered on labor; to encourage and create conditions for on the setting-up, headquarter location, production/ laborers to become cooperative members; business orientations and operation plans of the 9. To pay compulsory social insurance premiums cooperative. for their members being individuals and laborers who 3. The founding members shall propagate and regularly work for the cooperatives according to the mobilize individuals, households and other legal persons, that wish to join the cooperative; elaborate production/ contents: business orientations; draft the charter of the cooperative a/ The name and logo (if any) of the cooperative; and perform other necessary jobs in order to organize b/The address of the cooperative's headquarter; the conference to set up the cooperative. c/ Production and/or business lines;

Article 11.- Conference to set up a cooperative d/ Regulations on subjects, conditions and 1. The conference to set up a cooperative shall be procedures for joining the cooperative and for organized by the founding members. The conference cooperative members to leave the cooperative; participants include the founding members as well as el Regulations on interests, responsibilities and individuals, households and other legal persons that wish obligations of cooperative members; to become the cooperative members. fl Principles for, and subjects of, payment of 2. The conference shall discuss and reach compulsory social insurance premiums; agreement on the cooperative's production/business g/ The cooperative's charter capital; orientations and operation plans; the draft charter of the h/ Minimum contributed capital: The levels, forms cooperative; the name and logo (if any) of the and terms of contribution, and conditions for return of cooperative; and draw up the list of cooperative contributed capital of cooperative members; members. ii Competence and modes for capital mobilization; 3. The conference shall discuss and vote by majority on the following issues: j/ Principles for paying remunerations and handling losses; distribution of profits according to capital and a/ Adoption of the list of cooperative members; the labor contributed by cooperative members and according number of cooperative members shall be 7 or more; to the extent of using services of the cooperative; b/ Adoption of the charter and internal regulations of deduction for setting up, management and use of the the cooperative; cooperative's funds; cl Decision on the separate or non-separate j/ Modalities for management, use, preservation and establishment of the managerial apparatus and handling of the cooperative's common property and executive apparatus of the cooperative. accumulated capital when the cooperative is operating For the cooperative which sets up a managerial-cum- or when it is dissolved; exec ut ive apparatus, the conference shall elect k/ Organizational and managerial structure of the Managing Board and the manager; the cooperative cooperative; functions, powers, tasks and responsibilities manager shall be concurrently the head of the Managing of the Managing Board and its head, the cooperative Board; and the conference shall decide the number of manager, the Control Board and its head, and the the cooperative's deputy managers. sections assisting the cooperative; For the cooperative which sets up the managerial I/The cooperative's representative at law; apparatus and the executive apparatus separately, the ml Modalities for holding the congress and adopting conference shall elect the Managing Board and its head decisions of the congress of cooperative members; among the Managing Board's members; it shall decide to elect or hire the cooperative manager; and decide n/ Regime on handling violations of the cooperative the number of the cooperative's deputy managers; charter and principles for settling internal disputes; d/ The election of the Control Board and its head ol Modalities for amending the cooperative charter; among the Control Board's members; pl Other regulations decided by the congress of e/ Adoption of minutes of the cooperative-founding cooperative members itself, which, however, must not conference. be contrary to law. 3. When amending its charter, the cooperative must

Article 12.- The cooperative charter send its amended charter enclosed with minutes of the 1. Each cooperative shall have its own charter. The congress of cooperative members to the agency which cooperative charter must conform to the provisions of has granted the business registration certificate to the this Law and other law provisions. cooperative. 2. A cooperative charter shall cover the following 4. The Government shall promulgate forms guiding the elaboration of charters of agricultural cooperatives, consider the dossiers and grant the business registration people's credit funds and non-agricultural certiHcate to the cooperatives; in case of refusal, they cooperatives. must reply in writing thereto; b/The cooperatives shall have the legal person status

Article 13.- Business registration dossiers and may commence their operation as from the date A business registration dossier shall comprise: they are granted the business registration certificates; 1. An application for business registration; for conditional production and/or business lines 2. The cooperative charter; registered by the cooperatives, they may conduct such production and/or business lines as from the date they 3. The number of cooperative members, lists of are granted the business registration certificates by the members of the cooperative's Managing Board and competent State bodies or when they fully meet the Control Board; business conditions according to law provisions. 4. The minutes adopted at the cooperative-founding 3. In case of disagreement with the business conference. registration offices' decisions to refuse the granting of

Article 14.- Business registration places the business registration certificates as prescribed in Clause 2 of this Article, the representatives at law of the 1. A cooperative shall make business registration at to be-set up cooperatives may lodge their complaints to the provincial- or district-level business registration office the competent State bodies or initiate lawsuits at courts in the locality where the cooperative is planned to be according to law provisions. headquartered, depending on its specific conditions. 2. The representative at law of the to be-set up Article 16.- Branches, representative offices and cooperative shall submit business registration dossiers dependent enterprises of cooperatives at the selected business registration office and bear 1. Cooperatives may open their branches or responsibility for the accuracy and truthfulness of the representative offices at home and abroad. The order business registration dossiers. and procedures for opening branches and representative offices shall comply with the Government's regulations

Article 15.- Granting of business registration applicable to enterprises of all types. certificates 2. Cooperatives may set up their dependent 1. Cooperatives shall be granted the business enterprises in accordance with law provisions. registration certificates when they fully meet the following conditions: Chapter II/ a/ Having valid business registration dossiers as prescribed in Article 13 of this Law; COOPERATIVE MEMBERS b/ Being engaged in production and/or business lines Article 17.- Conditions for becoming cooperative not banned by law; members c/ Having their names and logos (if any) prescribed 1. Every Vietnamese citizen, who is aged full 18 years in Article 8 of this Law; or older, has full civil act capacity, contributes capital or di Having charter capital. For cooperatives engaged labor, agrees to the cooperative charter, and volunteers in production and/or business lines which require legal to join the cooperative, can become a member of the capital as stipulated by the Government, the charter cooperative. capital must not be lower than the legal capital; Officials and public servants may participate in e/ Having fully paid business registration fees as cooperatives in the capacity as cooperative members prescribed. according to the provisions of the cooperatives' charters 2. The granting of, or refusal to grant, business but must not directly manage or administer the registration certificates, and time for cooperatives to cooperatives. commence their operation, are as follows: 2. Households and legal persons may become a/ Within fifteen days after receiving the complete cooperative members according to the provisions of the and valid dossiers, the business registration otlices must cooperatives' charters. When participating in cooperatives, households and legal persons must cooperatives' charters and relevant law provisions in the appoint their representatives fully meeting the conditions following cases where: set for participating individuals. a/They leave the cooperative; 3. An individual, household or legal person may b/ The cooperative members being individuals die, become a member of many cooperatives if such is are reported missing, lose their civil act capacity or have not prohibited by the cooperative charter. their civil act capacity restricted;

Article 18.- Rights of cooperative members c/The cooperative members being households have no representatives fully meeting the conditions as Cooperative members shall have the following prescribed in the cooperatives' charter; rights: d/ The cooperative members being legal persons 1. To be given priority to work for their cooperatives dissolve or go bankrupt, or have no representatives fully and enjoy remuneration according to the provisions meeting the conditions as prescribed in the cooperatives' of their cooperatives' charters; charters. 2. To enjoy profits distributed according to their For cases prescribed at Points b, c and d, Clause 11 contributed capital or labor, and the extent of using of this Article, the cooperative members' contributed the cooperatives' services; capital and other interests shall be returned to those 3. To be provided with necessary econo-technical persons who fully meet the conditions for inheritance or information by the cooperatives; to be provided with the guardians of such cooperative members according training, fostering and improvement of their to law provisions. professional qualifications by the cooperatives; 4. To benefit from their cooperatives' welfare and Article 19.- Obligations of cooperative members the fulfillment of economic commitments by the Cooperative members shall have the following cooperatives; obligations: 5. To be commended and/or rewarded when they 1. To abide by their cooperatives' charters and internal make numerous contributions to the cooperative regulations as well as resolutions of the cooperative bullding and development; members' congresses; 6. To attend the congress of cooperative members 2. To make capital contribution according to the or elect delegates to attend the congress of cooperative provisions of their cooperatives' charters; the contributed members, attend conferences of cooperative members capital shall not exceed thirty percent of their to discuss and vote on the cooperatives' affairs; cooperatives' charter capital; 7. To stand for or be elected as members of the 3. To unite and cooperate with one another, to study Managing Board, the cooperative manager, members of the Control Board or other elected Htles of the to raise their professional qualifications, thus contributing cooperatives; to boosting the development of cooperatives; 8. To make proposals to the Managing Board, the 4. To fulfill economic commitments with their cooperative manager and the Control Board, and request cooperatives; the reply; to requestthe Managing Board, the cooperative 5. Within the limits of their contributed capital, to bear manager or the Contra I Board to convene an extraordinary joint responsibility for debts, risks, damage or losses of congress of cooperative members according to the their cooperatives; provisions of Clause 4, Article 21 of this Law; 6. To pay compensation for damage they have 9. To transfer their contributed capital as well as caused to the cooperatives according to the provisions interests and obligations to other persons according to of their cooperatives' charters. the provisions of the cooperative charter;

Article 20.~ Termination of cooperative membership 10. To apply for leaving their cooperatives in accordance with the provisions of the cooperatives' 1. The cooperative membership shall be terminated charters; in the following cases where: 11. To have thelr contributed capital returned and a/ Cooperative members being individuals die, are enjoy other interests according to the provisions of the reported missing, lose their civil act capacity or have their civil act capacity restricted; cooperative members In cases where at least one•th ird of the total number being households have no representatives fully meet1ng of cooperative members file their written requests the conditions as prescribed in the cooperative charter; altogether to the Managing Board or the Control Board or cooperative members being legal persons dissolve for the convention of the congress of cooperative or go bankrupt or have no representatives fully meeting members, within fifteen days after fully receiving the the conditions as prescribed in their cooperatives' requests, the Managing Board must convene the charters; extraordinary congress of cooperative members; it past bl Cooperative members are permitted to leave this time limit, the Managing Board fails to convene their cooperatfves under the provisions of their the congress, the Control Board must convene the cooperatives' charters; extraordinary congress of cooperative members to settle matters raised in the written requests. cl Cooperative members have transferred their whole contributed capital as well as interests and Article 22.-Contents of the congress of cooperative obligations to other persons under the provisions of members their cooperatives' charters; The congress of cooperative members shall d/ Cooperative members are expelled by the discuss and decide on the following issues: congress of cooperative members; 1. Criteria set for cooperative members when el Other cases prescribed by the cooperatives' joining the cooperative; charters. 2. Annual report on the cooperative's production/ 2. The settlement of the cooperative members' business situation, report on activities of the Managing interests and obligations in cases prescribed in Clause Board and the Control Board; 1 of this Artrcle shall be prescribed by the cooperatives' 3. Report on financial publicity, planned distribution charters. of incomes, and handltng of losses and debts; Chapter JV 4. Production/business orientations and plans; 5. Minimum capital; charter capital increase or ORGANIZATION AND MANAGEMENT OF reduction; competence and modes for capital COOPERATIVES mobilization;

Article 21.~ Congress of cooperative members 6. Determination of value of the cooperative's common assets under the provisions of Clause 3, 1. The congress of cooperative members shall be Article 35 of this Law; the highest decision-making body of a cooperative. 7. Distribution of profits according to the contributed 2. A cooperative with many members may organize capital and labor as well as the extent of using services a congress of delegates of cooperative members; the by cooperative members; the cooperative's funds; election of delegates to the congress shall be 8. Separate or non-separate establishment of the prescribed by the cooperative's charter. The congress cooperative's managerial apparatus and executfve of delegates of cooperative members and the congress apparatus under the provisions at Point c, Clause 3, of all cooperative members (hereinafter referred

Article 11 of this Law; collectively to as the congress of cooperative members) are equal in rights and tasks. 9. Election or dismissal of the Managing Board, the Managing Board's head, the Control Board, and 3. The regular congress of cooperative members the Control Board's head; shall be convened once a year by the Managing Board within three months after the annual settlement books 10. Adoption of the admlssion of new cooperative are closed. members and permission of cooperative members to leave the cooperative; decis1on on expulsion of 4. The extraordinary congress of cooperative cooperative members; members shall be convened by the cooperative's Managing Board or Control Board to decide on 11. Reorganization or dissolution of the cooperative; necessary issues which fall beyond the powers of the 12. Amendment of the cooperative's charter or Managing Board or the Control Board. internal regulations; 13. Levels of remunerations, salaries and bonuses managing body, elected directly by the congress of for the head and other members of the Managing cooperative members, consisting of the head and other Board, the manager and deputy managers of the members. The number of the Managing Board's cooperative, the head and other members of the members shall be prescribed by the cooperative's Control Board, and other titles of the cooperative; charter. 14. Subjects for whom the cooperative pays social 2. The term of the cooperative's Managing Board insurance premiums under the State's policy on shall be prescribed by the cooperative's charter, which compulsory social insurance; shall be at least two years and not exceed five years. 15. Other issues which are proposed by the 3. The cooperative's Managing Board shall hold a Managing Board, the Control Board or at least one- meeting at least once a month, which is convened and third of the total number of cooperative members. presided over by the Managing Board's head or an authorized member. The cooperative's Managing Board

Article 23.-Stipulations on the number of delegates shall hold an extraordinary meeting at the request of and the voting at the congress of cooperative members one-third of the Managing Board's members, the 1. The congress of cooperative members must be Managing Board's head, the Control Board's head, or attended by at least two-thirds of the total number of the cooperative manager. A meeting of the cooperative's cooperative members or defegates of cooperative Managing Board shall be regarded as valid when it is members; in cases where the number of cooperative attended by at least two-thirds of the number of the members is insufficient, the congress must be Managing Board's members. The cooperative's postponed; the Managing Board or the Control Board Managing Board shall operate on the principles of must reconvene the congress of cooperative members. collectivism and make decisions by majority. In cases where the number of votes for equals the number of 2. The decision on amendment of the charter, votes against, the number of votes on the side of the reorganization or dissolution of the cooperative shall person who presides over the meeting shall be declsive. be adopted when it is voted for by at least three-fourths of the total number of cooperative members or Article 26.- Criteria and conditions of members of delegates of cooperative members present at the the cooperative's Managing Board congress. Decisions on other issues shall be adopted A member of the Managing Board must be a when they are voted for by more than half of the total cooperative member, possessing good moral qualities number of delegates present at the congress. and having qualifications and capability to manage the 3. The voting at the congress of cooperative cooperatlve. members and conferences of cooperative members The Managing Board's members must not be shall not depend on the contributed capital or positions concurrently members of the Control Board, the of the members in the cooperative. Each cooperative cooperative's chief accountants or cashiers, or the member or delegate of cooperative member has only parents, spouses, children or siblings thereof; other one vote. criteria and conditions (if any) shall be prescribed by the

Article 24.- Notification on convening the congress cooperative's charter. of cooperative members

Article 27.-Setting-up of managerial-cum-executive At least ten days before the opening of the congress apparatus by cooperatives of cooperative members, the convening body must notify 1. The Managing Board shall have the following rights each cooperative member or delegate of cooperative and tasks: member of the time, venue and agenda of the congress. The congress of cooperative members shall discuss and al To appoint or dismiss the cooperative's deputy decide on the issues already put on the congress's managers at the proposal of the cooperative's manager; agenda and arising issues proposed by at least one- bl To appoint, dismiss, hire or terminate the contract third of the total number of cooperative members. on hiring, chief accountant (if this title exists in the cooperative};

Article 25.-A cooperative's Managing Board cl To decide on the organizational structures of 1. A cooperative's Managing Board is the cooperative- professional sections of the cooperative; d/ To organize the implementation of the resolution g/ To propose to the Managing Board the plan on of the congress of cooperative members; organizational structure of the cooperative; el To prepare the reports on the cooperative's h/ To recruit labor, except for cases falling under the production and/or business plans, capital mobilization competence of the cooperative's Managing Board; and profit distribution, and report on the Managing i/ To exercise other rights prescribed in the Board's operation for submission to the congress of cooperative's charter and resolution of the congress of cooperative members; cooperative members; fl To prepare the agenda of the congress of j/ To bear responsibility before the congress of cooperative members and convene the congress of cooperative members and the Managing Board for his/ cooperative members; her assigned tasks; g/ To evaluate the cooperative's production and/or When being absent, the cooperative manager shall business results; to approve the financial settlement authorize a deputy manager or a member of the report for submission to the congress of cooperative Managing Board to administer the cooperative's members; activities. h/To organize the performance of the cooperative's

Article 28.- Separate establishment of managerial rights and obligations defined in Articles 6 and 7 of this apparatus and executive apparatus by the cooperative Law; i/ To consider the admission of new cooperative 1. The Managing Board shall have the following rights members and permit cooperative members to leave the and tasks: cooperative (except for cases where cooperative a/To appoint, dismiss, hire, or terminate the contract members are expelled) and report such to the congress on hiring, the cooperative manager according to the of cooperative members for adoption; resolution of the congress of cooperative members; j/To represent the owner of assets of the cooperative b/ To appoint and dismiss deputy managers of the and its dependent enterprises if the cooperative has its cooperative at the proposal of the cooperative manager. dependent enterprises; Apart from the above-said rights and tasks, the k/To examine and evaluate the work of the manager cooperative's Managing Board shall also have the rights and deputy managers of the cooperative under the and tasks prescribed at Points b, c, d, e, f, g, h, i, j, k, I Managing Board's decisions; and m, Clause 1, Article 27 of this Law. I/ To bear responsibility for its own decisions before 2. The head of the cooperative's Managing Board the congress of cooperative members and law; shall have the following rights and tasks: ml To perform other rights and tasks prescribed by a/To represent the cooperative according to law; the cooperative's charter. b/To elaborate programs and plans on operation of 2. The cooperative manager shall have the following the Managing Board; rights and tasks: cl To convene and preside over meetings of the a/ To represent the cooperative according to law; Managing Board and the congress of cooperative bl To realize production and/or business plans and members; run daily activities of the cooperative; d/ To bear responsibility before the congress of c/ To organize the implementation of decisions of cooperative members and the Managing Board for his/ the cooperative's Managing Board; her assigned tasks; d/ To appoint, dismiss, and assign tasks to, titles in el To sign decisions of the congress of cooperative the cooperative's Managing Board, exceptfortitles falling members and the Managing Board; under the competence of the congress of cooperative fl To exercise other rights and perform other tasks members and the cooperative's Managing Board; prescribed by the cooperative's charter. el To sign contracts in the name of the cooperative; 3. The cooperative manager shall have the following fl To submit the annual financial settlement report to rights and tasks: the cooperative's Managing Board; al To realize production and/or business plans and run daily activities of the cooperative; the same as those of a member of the Managing Board. b/ To organize the implementation of decisions of The Control Board members must not be concurrently the cooperative's Managing Board; members of the Managing Board, chief accountants or cashiers of the cooperative, or must not be the parents, c/ To sign contracts in the name of the cooperative spouses, children or siblings thereof. under the authorization of the cooperative's Managing Board; 4. The term of office of the Control Board corresponds with that of the Managing Board. d/To submit the annual financial settlement report to the cooperative's Managing Board; Article 30.- Rights and tasks of the Control Board el To propose to the Managing Board the plan on The Control Board shall have the following rights and organizational structure of the cooperative; tasks: fl To recruit labor under the authorization of the 1. To examine the observance of the cooperative's cooperative's Managing Board; charter and internal regulations as well as the resolution g/ To exercise other rights prescribed in the of the congress of cooperative members; cooperative's charter, the resolution of the congress of 2. To supervise activities of the Managing Board, the cooperative members or contracts signed with the cooperative manager and cooperative members strictly cooperative's Managing Board. according to law as well as the cooperative's charter When being absent, the cooperative manager shall and internal regulations; authorize a deputy manager to administer the 3. To examine finance, book-keeping, income cooperative's activities. distribution, handling of losses, use of cooperative's In cases where the cooperative manager is a funds, use of assets, loan capital and supports of the cooperative member or a member of the cooperative's State; Managing Board, apart from fully exercising the rights 4. To receive complaints and denunciations related and performing the tasks of a cooperative manager as to the cooperative's activities; settle, or propose prescribed by this Article, he/she shall also have to exercise the rights and fulfill the obligations of a competent bodies to settle, such complaints and cooperative member or member of the cooperative's denunciations according to the provisions of the Managing Board. cooperative's charter; In cases where the cooperative manager is hired, 5. To attend the Managing Board's meetings; he/she shall have to fully exercise the rights and perform 6. To notify the cooperative's Managing Board of the tasks of a cooperative manager prescribed in this examination results and report them before the congress Article and the contract on hlring the cooperative of cooperative members; to propose the Managing manager. The cooperative manager shall be entitled to Board and the cooperative manager to redress participate in the Managlng Board's meetings and weaknesses in the cooperative's production and/or congress of cooperative members but not entitled to business activlties and handle violations of the vote or enjoy other rights of a cooperative member or cooperative's charter and internal regulations; member of the cooperative's Managing Board. 7. To request relevant persons in the cooperative to provide documents, books, vouchers and necessary

Article 29.- The Control Board information in service of the examination work but not 1. The Control Board is the body which supervises to use such documents or information for other and examines all activities of the cooperative strictly purposes; according to law and the cooperative's charter. 8. To prepare the agenda of, and convene, the 2. The Control Board shall be elected directly by the extraordinary congress of cooperative members in one congress of cooperative members. The number of the of the following cases where: Control Board's members shall be prescribed by the a/ The Managing Board fails to take or inefficiently cooperative's charter; a cooperative with few members takes measures to preclude acts of violating law, the may elect only one controller. cooperative's charter or internal regulations, or the 3. The criteria of a member of the Control Board are resolution of the congress of cooperative members as requested by the Control Board; The working capital of cooperatives shall be formed b/ The Managing Board fails to convene the from cooperative members' contributed capital, the extraordinary congress of cooperative members at the cooperative-owned accumulated capital and other lawful requests of the cooperative members prescribed in capital sources. Clause 4, Article 21 of this Law. The workrng capital of cooperatives shall be managed and used according to the provisions of this ChapterV Law, other law provisions and the cooperatives' charters. ASSETS AND FINANCE OF COOPERATIVES Article 34.-Cooperatives' funds 1. Cooperatives must set up the production

Article 31.- Capital contributed by cooperative development fund and the reserve fund under the members Government's guidance; other funds shall be prescribed 1. When joining cooperatives, the cooperative by the cooperatives' charters and congress of members must contribute capital according to the cooperative members, which are suitable to specific provisions of Clause 2, Article 19 of this Law. conditions of each cooperative. The specific percentage Cooperative members may contribute capital in lump of deduction for setting up the funds shall be decided by sum right from the beginning or in installments; the levels, the congress of cooperative members. forms and time limits for capital contribution shall be 2. The purposes and modes of management and prescribed by the cooperatives' charters. use of the cooperatives' funds shall be prescribed by The minimum contributed capital level shall be the cooperatives' charters. adjusted under the decision of the congress of

Article 35.- Cooperative's assets cooperative members. 2. Cooperative members shall have their contributed 1. Assets under cooperatives' ownership shall be capital returned in the cases prescribed at Points a, b, d formed from the cooperatives' working capital. and e, Clause 1, Article 20 of this Law. 2. The management and use of cooperatives' assets The return of contributed capital of cooperative shall comply with the provisions of the cooperatives' members shall be based on the cooperative's financial charters and relevant law provisions. actual situation at the time of returning the capital after 3. Cooperatives shall have common assets, including the cooperative has made the annual settlement and works in service of production, socio-cultural welfare settled economic interests and obligations of cooperative works, infrastructures in service of the population members towards the cooperative. The forms and time community, which are formed from the cooperatives' limits for return of contributed capital to cooperative production development funds and welfare funds, capital members shall be stipulated by the cooperatives' sources subsidized by the State, as well as donations charters. and gifts of domestic and foreign organizations and individuals.

Article 32.- Capital mobilization

Article 36.- Handling of cooperatives' assets and 1. Cooperatives may borrow capital from banks and capital upon their dissolution mobilize capital in other forms according to law provisions. 1. Upon its dissolution, a cooperative shall not 2. Cooperatives may additionally mobilize contributed distribute to its members the capital and common assets capital of cooperative members under decisions of the subsidized by the State but transfer them to the local congress of cooperative members. administration for management. 3. Cooperatives may receive and use capital and For the cooperative's capital and common assets subsidies from the State as well as domestic and foreign formed from capital sources and labor contributed by organizations and individuals as agreed upon by the the cooperative members or donations and gifts of parties and in accordance with law provisions. domestic and foreign organizations and individuals, the congress of cooperative members shall make decision

Article 33.- Working capital of cooperatives thereon. 2. Capital contributed by cooperative members in cooperatives land-use right value and land assigned by the State to i. The Managing Board of the to be-divided/ the cooperative for use shall be handled according to separated cooperative must: the law provisions on land. a/ Set up a Council to settle the division or separation 3. After having paid all debts and expenses for the of the cooperative. The Council for division/separation cooperative dissolution, the handling of other remaining shall be composed of the Managing Board of the to be- assets, capital or funds of the cooperative shall comply divided/separated cooperative and representatives of the with the provlsions of this Article, other relevant law new cooperatives to be formed from the divided/ provisions, and the cooperative's charter. separated cooperative. The Council shall have the tasks

Article 37.- Distribution of profits to discuss and negotiate to reach agreement on settling matters related to the division or separation of the , . After fulfilling the tax payment obligations, a cooperative; compile dossiers of application for division cooperative's profits shall be distributed as follows: or separation of the cooperative; and form the managerial and executive apparatuses of the new cooperatives; a/ Off-setting the previous year's losses (if any) according to law provisions on tax; b/ Elaborate plans on handling of assets, capital, funds, organizational structure, personnel, cooperative b/ Deduction for setting up the production develop- members and labor (including those of branches, ment fund, the reserve fund and other funds of the representatives offices and dependent enterprises of the cooperative; distribution of profits to cooperative cooperative) upon the division or separation; draw up members according to their contributed capital and labor, production/business orientations; the charters of new the rest shall be distributed to cooperative members cooperatives; rights, interests, responslbilities and according to the extent of using services of the obligations of the cooperatives after the division or cooperative. separation; 2. Basing itself on the production/business results c/ Convene the congress of cooperative members and accumulation demands for the development of the to decide on the matters prescribed at Point b of this cooperative, the congress of cooperative members shall Clause; perform the tasks prescribed in Clauses 2 and decide on the specific ratios of distribution of annual 3, Article 11 of this Law; profits into the funds prescribed at Point b, Clause i of d/ Inform in writing creditors as well as organizations this Article. and individuals having economic relations with the

Article 38.- Handling of losses cooperative of the decision on the division/separation, and settle economic issues related to them; A cooperative's losses arising in the year shall be e/ Send the business registration dossier of the deducted into the proceeds from compensations by divided/separated cooperative made according to the relevant organizations and/or individuals; the deficit provisions of this Law to the agency which has granted amounts (if any) shall be offset by the reserve fund; if the business registration certificate, enclosed with the such amounts are still insufficient, the remaining loss resolution of the congress of cooperative members on amounts shall be transferred to the subsequent year the division or separation of the cooperative; plans for according to law provisions on tax. settlement of issues related to the division or separation already discussed with creditors as well as organizations Chapter VI and individuals having economic relations with the REORGANIZATION, DISSOLUTION OR cooperative. BANKRUPTCY OF COOPERATIVES 2. Within fifteen days after receiving the division/ separation dossiers, the business registration agency

Article 39.- Division and separation of cooperatives which has granted the business registration certificate The congress of cooperative members shall decide shall announce in writing the approval or disapproval on the division or separation of a cooperative into two or of the divis[on or separation of the cooperative. If the more cooperatives. cooperative disagrees with the decision on the disapproval of the division or separation, it may lodge

Article 40.- Procedures for dividing or separating its complaints to the competent State body or initiate a lawsuit at court according to law provisions. and modes of settlement of economic relations related The business registration agency which has to them; granted the business registration certificate to the to e/Within fifteen days after receiving the consolidation be-divided cooperative must withdraw the business dossiers, the business registration agency must registration certificate from such cooperative after the announce in writing the approval or disapproval of the division; The divided cooperative must submit consolidation and grant the business registration immediately its seal to the competent State body. certificate to the consolidating cooperative. lf the 3. The cooperatives having branches, represen- cooperative disagrees with the business registration tative offices or dependent enterprises must, upon thelr agency's decision, it may lodge its complaints to the division/separation, notify the business registration competent State body or initiate a lawsuit at court agencies of the continuity or termination of operation according to law provisions; of their branches, representative offices or dependent fl After business registration, the consolidating enterprises. cooperative shall have the rights and legitimate interests, bear responsibility for the unsettled debts, labor contracts

Article 41.~ Consolidation and merger ot and other property obligations of the consolidated cooperatives cooperatives. 1. Two or more cooperatives may be consolidated 3. The procedures for the merger of cooperatives into one new cooperative by transferring all assets, rights, shall comply with the followlng regulations: obligations and legltimate interests to the consolidating a/The Managing Boards ofthe merging and merged cooperative, and at the same time terminating the cooperatives must together set up the Merger Council existence of the consolidated cooperatives. to project the merger procedures and conditions; plans One or several cooperatives may be merged into on handling of assets, capital, debts, cooperative another cooperative by transferring all assets, rights, members, labor and unsettled issues of the merged obligations and legitimate interests to the merging cooperative; draft production/business plans and charter cooperative, and at the same time terminating the of the merging cooperative; existence of the merged cooperative(s). b/To convene the congress of cooperative members 2. Procedures for consolidation of cooperatives with the participation of members of the merging and shall comply with the following regulations: merged cooperatives to decide on the issues prescribed a/ The Managing Boards of the consolidated at Point a of this Clause; cooperatives must together set up the Consolidation c/To notify in writing creditors as well as organizations Council to project the name and head-office of the and individuals having economic relations with the consolidating cooperative; the consolidation procedures cooperative of the decision on merger and modes of and conditions; plans on handling of assets, capital, settlement of economic relations related to them; debts, cooperative members, labor and unsettled issues di To send the merger applications and records as transferred by the consolidated cooperatives to the well as the cooperative's charter to the business consolidating cooperative; draft production/business registration agency for supplementation of dossiers of plans and charter of the consolidating cooperative; the merging cooperative. Within fifteen days after b/To convene the congress of cooperative members receiving the merger dossiers, the business registration of the consolidating ·cooperative to decide on the agency must announce in writing the approval or consolidation and adopt issues prescribed at Point a of disapproval of the merger. If the cooperative disagrees this Clause; with the business registration agency's decision, it may cl To compile business registration dossiers of the lodge its complaints to the competent State body or consolidating cooperative according to the provisions initiate a lawsuit at court according to law provisions; of Article i 3 of this Law and send them to the business el After supplementing the business registration registration agency; dossiers, the merging cooperative shall have the rights d/ To inform in writing creditors as well as and legitimate interests, bear responsibility for unsettled organizations and individuals having economic relations debts, labor contracts and other property obligations of with the cooperative of the decision on consolidation the merged cooperatives.

Article 42.- Dissolution of cooperatives on a newspaper of the locality where the cooperative conducts its operation for three consecutive issues; The dissolution of cooperatives is prescribed as announce the order, procedures and time limits for follows: settlement of debts and Hquidation of contracts, and 1. Voluntary dissolution: handle capital and assets according to the provisions of In case of voluntary dissolution under the resolution Article 36 of this Law, return contributed capital and settle of the congress of cooperative members, a cooperative cooperative members' other relevant interests according must send the application for dissolution and the to the provisions of the cooperative's charter. resolution of the congress of cooperative members to The time limit for settlement of debts and liquidation the business registration agency which has granted the of contracts shall be one hundred and eighty days at business registration certificate to the cooperative, and most after the first publication on newspapers. at the same time publish the dissolution application and 4. After the cooperative receives the dissolution time limits for settlement of debts and liquidation of notice, the business registration agency which has contracts on the newspaper of the locality where it granted the business registration certificate must conducts operation for three consecutive issues. withdraw the business registration certificate and delete Within thirty days after the expiry of the time limit for the name of the cooperative from the business settlement of debts and liquidation of contracts, the registration book; the cooperative must immediately application-receiving business registration agency must submit its seal to the competent State body; announce the approval or disapproval of the 5. If the cooperative disagrees with the People's cooperative's application for dissolution. Committee's decision on the dissolution of the Within thirty days after receiving the announcement cooperative, it may lodge its complaints to the competent on the approval of the dissolution from the business State body or initiate a lawsuit at court according to law registration agency, the cooperative must handle capital provisions. and assets according to the provlslons of Article 36 of this Law, pay expenses for the dissolution, return Article 43.- Settlement of the cooperative's request contributed capital, and settle interests of cooperative to declare bankruptcy members according to the provisions of the cooperative's The settlement of the cooperative's request to declare charter; bankruptcy shall comply witl1 the law provisions on 2. Compulsory dissolution: bankruptcy. The People's Committee of the locality where the business registration certificate is granted may decide Chapter VII on the compulsory dissolution of a cooperative in one of the following cases where: UNIONS OF COOPERATIVES, FEDERATIONS OF a/ Within twelve months after being granted the COOPERATIVES business registration certificate, the cooperative fails to

Article 44.- Unions of cooperatives conduct its operation; b/ The cooperative have ceased lts operation for 1. Those cooperatives, which wish and volunteer twelve consecutive months; to establish a union of cooperatives, may jointly do so. cl The cooperative fails to convene a regular A union of cooperatives is an economic organization congress of cooperative members without plausible operating on the principles on organization and reasons for eighteen consecutive months; operation of cooperatives prescribed in Article 5 of this di Other cases as prescribed by law; Law, aiming to raise the production/business efficiency 3. The People's Committee which issues the decision of member cooperatives, support one another in their on dissolution shall set up the Dissolution Council and activities and satisfy other demands of the participating designate the Council chairman to organize the members. dissolution of the cooperative. The union of cooperatives shall set up the The Council for dissolution of the cooperative must Management Board and the Directorate. publish the decision on the dissolution of the cooperative The head of the Management Board is the chairman; the head of the Directorate is the director cooperatives; the presidents of the provincial/municipal or general director. People's Committees shall issue decisions to recognize The union of cooperatives shall make business the charters of provincial/municipal federations of registration at the provincial-level business registration cooperatives. agency. 5. The State shall create conditions for the central 2. The union of cooperatives may select its own and local federations of cooperatives to operate name and logo by itself in accordance with law according to Jaw provisions. provisions. The seal, signboard and transaction papers 6. The Government shall specify the working relations of the union of cooperatives must bear the sign between federations of cooperatives and the "LHHTX" (Union of cooperatives). administrations of all levels. 3. The objectives, functions, tasks and organi- zational structures of unions of cooperatives shall be Chapter VIII prescribed in the charters of the unions of STATE MANAGEMENT OVER COOPERATIVES cooperatives, adopted by the congress of their members.

Article 46.- State management over cooperatives

Article 45.- Federations of cooperatives 1. Contents of State management over cooperatives 1 . A federation of cooperatives is a socio-economic cover: organization which is voluntarily and jointly established al To issue, disseminate, and organize the by cooperatfves or unions of cooperatives. The implementation of, legal documents on cooperatives; federations of cooperatives shall be organized according bl To elaborate and implement strategies and plans to branches and economic sectors. The federations of on development of cooperatives; cooperatives shall be set up at the central and provincial/ cl To organize and guide business registration for municipal levels. cooperatives and unions of cooperatives; 2. Federations of cooperatives shall have the di To organize professional training and fostering following functions: for raising the qualifications of managerial officials as aJ To represent and protect legitimate interests of well as necessary knowledge of cooperative members; member cooperatives and unions of cooperatives; el To inspect and examine the observance of law b/To propagate and mobilize for the development of by cooperatives according to law provisions; cooperatives; fl To direct the implementation of international c/To provide support and necessary services for the cooperation on cooperatives. formation and development of cooperatives and unions 2. Responsibilities of agencies performing the State of cooperatives; to carry out programs in support of management over cooperatives: development of cooperatives, which are assigned by a/The Government shall perform the uniform State the Government; to train and foster officials of management over cooperatives; ,cooperatives according to the Government's regulations; b/The ministries and ministerial-level agencies shall, ct/To participate in formulating policies and legislation within the ambit of their respective tasks and powers, on cooperatives; perform the State management over cooperatives; el To represent cooperatives and unions of c/The People's Committees of all levels shall have cooperatives in relations of the members' coordination to perform the State management over cooperatives with domestic and foreign organizations according to in their respective localities according to law provisions; law provisions. d/ The Government shall specify the assignment 3. The rights, tasks, organizational structures, names and decentralization of State management over and finance of federations of cooperatives shall be cooperatives among the ministries, ministerial-level prescribed by the charters of federations of cooperatives. agencies and localities. 4. The Prime Minister shall issue a decision to recognize the charter of central federation of Article 47.- Tasks and powers of the People's Committees of various levels towards cooperatives operate efficiently and make numerous contributions to local socio-economic development; 1. The People's Committees of various levels shall, within the ambit of their respective tasks and powers: 2. Organizations and individuals, that record splendid a/ Propagate, mobilize, create favorable conditions achievements in labor, production and/or business activities and development of cooperatives. and provide support for, the formation and develop- ment of cooperatives in their respective localities; Article 50.~ Handling of violations b/ Guide and encourage cooperatives to coordinate 1. Those who violate the provisions of this Law and their activities for the interests of people in tt1eir other relevant law provisions shall, depending on the respective localities; nature and seriousness of their violations, be cl Examine and inspect the enforcement of the Law reprimanded, cautioned, dismissed, expelled from on Cooperatives and relevant legal documents; cooperatives, administratively sanctioned or examined d/To settle according to their respective competence for penal liability; if causing damage, they must pay complaints, denunciations and disputes, and handle acts compensation therefor according to law provisions. of violating the legislation on cooperatives; 2. Organizations or individuals, that commitfraudulent e/To materialize other contents of the State manage- acts in business registration or abuse the names of ment over cooperatives according to law provisions. cooperatives to operate; cooperatives which operate 2. The professional agencies of the People's without business registration certificates or contrarily to Committees of various levels shall, within the ambit of the registered production/business lines, shall be their respective functions, tasks and powers, assist the suspended from operation and handled according to law People's Committees in performing the State manage- provisions. ment over cooperatives in their assigned domains. 3. Those who abuse their positions or powers to grant business registration certificates in contravention of law

Article 48.- Relations between State agencies and or deliberately refuse to grant business registration Vietnam Fatherland Front and its member organizations, certificates even when organizations fully meet the and roles of these organizations towards cooperatives conditions for setting up cooperatives shall, depending 1. The State agencies shall have to coordinate with on the nature and seriousness of their violations, be Vietnam Fatherland Front and its member organizations disciplined, administratively sanctioned or examined for in organizing the implementation of the legislation on penal liability according to law provisions. cooperatives. ChapterX 2. Vletnam Fatherland Front and its member organizations shall propagate and mobilize people to IMPLEMENTATION PROVISIONS participate in building and developing cooperatives; consult with State agencies in elaborating policies and Article 51.~ Implementation effect supervising the implementation of the legislation on This Law takes implementation effect as from July cooperatives. 1, 2004. Chapter IX This Law replaces the 1996 Law on Cooperatives. COMMENDATION AND HANDLING OF Article 52.- lmplementation guidance VIOLATIONS The Government shall detail and guide the implementation of this Law.

Article 49.- Commendation This Law was passed on November 26, 2003 by The following organizations and individuals shall be the Xl th National Assembly of the Socialist Republic commended and/or rewarded according to law of Vietnam at its 4th session. provisions: 1. Cooperative members, cooperatives, unions of National Assembly Chairman cooperatives and federations of cooperatives, that NGUYEN VAN AN