Law 18/2003/Qh11 26/11/2003

No: 18/2003/QH11

Ha Noi, day 26 month 11 year 2003                          

LAW

ON COOPERATIVES

(No. 18/2003/QH11 of November 26, 2003)

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented under Resolution No. 51/2001/QH10 of December 25, 2001 of the Xth National Assembly, the 10th session;

This Law prescribes the cooperatives.

Chapter I

GENERAL PROVISIONS

Article 1. Cooperatives

A cooperative is a collective economic organization established under the provisions of this Law by individuals, households or legal persons (hereinafter referred collectively to as cooperative members) who share common demands and interests, and volunteer to contribute capital and labor in order to bring into play the collective strength of each cooperative member, to help one another efficiently conduct production/business activities and improve the material and spiritual life, thus contributing to the national socio-economic development.

A cooperative operates as a type of enterprise, having the legal person status, enjoying autonomy and taking self-responsibility for financial obligations within the scope of its charter capital, accumulated capital and other capital sources according to law provisions.

Article 2. Scope of regulation

This Law prescribes the setting up, organization and operation of cooperatives in all branches and domains of the national economy.

Article 3. The State's policies towards cooperatives

1. The State shall implement the following policies towards cooperatives:

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;

b/ To encourage and create favorable conditions for cooperatives to develop;

c/ To ensure that cooperatives' legal position and production/business conditions are equal to those of enterprises of other types;

d/ To protect cooperatives' legitimate rights and interests according to law provisions;

e/ To respect cooperatives' rights to autonomy, self-determination and self-responsibility in production and business activities;

f/ Not to interfere in cooperatives' lawful management and operation.

2. For agricultural cooperatives, the Government shall specify preferential policies suitable to their specific characteristics and development degrees in each period.

Article 4. Interpretation of terms

In this Law, the words and phrases below shall be construed as follows:

1. Minimum contributed capital means a sum of money or value of assets, including land-use right value, property right to inventions, technical know-hows and other valuable papers, which are monetized, to be compulsorily contributed by cooperative members when they join the cooperatives.

2. Labor contribution means the cooperative members' participation in the building of cooperatives in forms of direct management, productive labor, business, consultancy and other forms of participation.

3. The cooperative's charter capital means the total capital contributed by the cooperative members and inscribed in the cooperative's charter.

4. The cooperative's logo means the exclusive symbol of each cooperative representing particular characteristics of such cooperative and distinguishing it from other cooperatives and enterprises.

5. Cooperative's services provided to its members mean the provision of goods or supplies by the cooperative to its members in material or non-material form, for which the members have the demand and must pay to the cooperative.

6. The extent of use of the cooperative's services means the ratio between the value of services provided by the cooperative to each member and the total value of services provided by the cooperative to all of its members.

7. Economic commitment between the cooperative and its members means economic ties between the cooperative and its members.

Article 5. Principles for organization and operation of cooperatives

Cooperatives shall be organized and operate on the following principles:

1. Voluntariness: All individuals, households and legal persons, that fully meet the conditions prescribed by this Law and agree to the cooperative's charter, may join the cooperative; cooperative members may leave the cooperative in accordance with the provisions of the cooperative's charter;

2. Democracy, equality and publicity: Cooperative members may participate in managing, examining and supervising the cooperative and have equal voting right; make public production/business plans, finance, distribution and other issues prescribed in the cooperative's charter;

3. Autonomy, self-responsibility and mutual benefits: The cooperative shall enjoy autonomy and take self-responsibility for the results of its production/business activities; and decide by itself on income distribution.

After fulfilling the cooperative's tax payment obligations and offsetting its losses, a part of profits shall be channeled to the cooperative's funds, another part shall be distributed according to capital and labor contributions of the cooperative members, and the rest shall be distributed to the cooperative members according to the extent of using the cooperative's services;

4. Cooperation and community development: Cooperative members must have the sense of bringing into play the spirit of collective building and cooperation with one another in the cooperative and social community; cooperation with domestic and foreign cooperatives in accordance with law provisions.

Article 6. Rights of cooperatives

Cooperatives shall have the following rights:

1. To select production/business lines not banned by law;

2. To decide on the form and structure of their production/business organization;

3. To conduct direct import/export or enter into joint-venture or association with domestic and foreign organizations and individuals for production/business expansion in accordance with law provisions;

4. To hire labor if cooperative members fail to meet the cooperatives' production/business requirements according to law provisions;

5. To decide on the admission of new members, permit members to leave the cooperatives, and expel members according to the provisions of the cooperatives' charters;

6. To decide on the distribution of incomes, and handle the cooperatives' losses;

7. To decide on the commendation and/or reward of members who record numerous achievements in the cooperative building and development; to discipline members who violate the cooperatives' charters; and to decide on the compensation paid by members for damage caused to the cooperatives;

8. To borrow capital from credit institutions and mobilize other capital sources; to organize internal credit according to law provisions;

9. To have industrial property right protected according to law provisions;

10. To refuse organizations' or individuals' requests contrary to law;

11. To lodge complaints about acts of infringing upon the cooperatives' legitimate rights and interests;

12. To exercise other rights under law provisions.

Article 7. Obligations of cooperatives

Cooperatives shall have the following obligations:

1. To conduct production/business strictly according to the registered production/business lines or commodity items;

2. To strictly observe law provisions on accounting, statistics and audit;

3. To pay taxes and fulfill other financial obligations according to law provisions;

4. To preserve and develop their working capital; to manage and use the State-assigned land according to law provisions;

5. To bear responsibility for financial obligations within their charter capital, accumulated capital and other capital sources according to law provisions;

6. To protect the environment, ecological environ-ment, scenic places, historical-cultural relics as well as defense and security works according to law provisions;

7. To ensure its members' rights and fulfill economic commitments to their members;

8. To fulfill obligations towards their members who directly work for the cooperatives and laborers hired by the cooperatives according to the law provisions on labor; to encourage and create conditions for laborers to become cooperative members;

9. To pay compulsory social insurance premiums for their members being individuals and laborers who regularly work for the cooperatives according to the provisions of the cooperatives' charters and law provisions on insurance; to organize the participation in paying voluntary social insurance premiums by members other than the above-said subjects. The Government shall specify the payment of social insurance premiums by cooperative members;

10. To attend to education, training, fostering in order to raise their members' knowledge, and provide information to all cooperative members so that they can actively participate in the cooperative building;

11. To fulfill other obligations according to law provisions.

Article 8. Names and logos of cooperatives

A cooperative may select its own name and logo by itself in accordance with law provisions.

The seal, signboard, advertisement forms and transaction papers of the cooperative must carry the sign "HTX" (Cooperative).

The name and logo (if any) of the cooperative must be registered at the competent State body and protected according to law provisions.

Article 9.- Political organizations and socio-political organizations in cooperatives

Political organizations and socio-political organizations in cooperatives shall operate within the framework of the Constitution, law and their respective charters in accordance with law provisions.

Chapter II

ESTABLISHMENT AND BUSINESS REGISTRATION OF COOPERATIVES

Article 10. Founding members

1. The founding members are individuals, households or legal persons who initiate the setting-up of the cooperative and participate in it.

2. The founding members shall make written reports to the commune, ward or township People's Committee (hereinafter referred collectively to as the commune-level People's Committee) of the locality where the cooperative is planned to be headquartered on the setting-up, headquarter location, production/business orientations and operation plans of the cooperative.

3. The founding members shall propagate and mobilize individuals, households and other legal persons, that wish to join the cooperative; elaborate production/business orientations; draft the charter of the cooperative and perform other necessary jobs in order to organize the conference to set up the cooperative.

Article 11. Conference to set up a cooperative

1. The conference to set up a cooperative shall be organized by the founding members. The conference participants include the founding members as well as individuals, households and other legal persons that wish to become the cooperative members.

2. The conference shall discuss and reach agreement on the cooperative's production/business orientations and operation plans; the draft charter of the cooperative; the name and logo (if any) of the cooperative; and draw up the list of cooperative members.

3. The conference shall discuss and vote by majority on the following issues:

a/ Adoption of the list of cooperative members; the number of cooperative members shall be 7 or more;

b/ Adoption of the charter and internal regulations of the cooperative;

c/ Decision on the separate or non-separate establishment of the managerial apparatus and executive apparatus of the cooperative.

For the cooperative which sets up a managerial-cum-executive apparatus, the conference shall elect Managing Board and the manager; the cooperative manager shall be concurrently the head of the Managing Board; and the conference shall decide the number of the cooperative's deputy managers.

For the cooperative which sets up the managerial apparatus and the executive apparatus separately, the conference shall elect the Managing Board and its head among the Managing Board's members; it shall decide to elect or hire the cooperative manager; and decide the number of the cooperative's deputy managers;

d/ The election of the Control Board and its head among the Control Board's members;

e/ Adoption of minutes of the cooperative-founding conference.

Article 12. The cooperative charter

1. Each cooperative shall have its own charter. The cooperative charter must conform to the provisions of this Law and other law provisions.

2. A cooperative charter shall cover the following contents:

a/ The name and logo (if any) of the cooperative;

b/ The address of the cooperative's headquarter;

c/ Production and/or business lines;

d/ Regulations on subjects, conditions and procedures for joining the cooperative and for cooperative members to leave the cooperative;

e/ Regulations on interests, responsibilities and obligations of cooperative members;

f/ Principles for, and subjects of, payment of compulsory social insurance premiums;

g/ The cooperative's charter capital;

h/ Minimum contributed capital: The levels, forms and terms of contribution, and conditions for return of contributed capital of cooperative members;

i/ Competence and modes for capital mobilization;

j/ Principles for paying remunerations and handling losses; distribution of profits according to capital and labor contributed by cooperative members and according to the extent of using services of the cooperative; deduction for setting up, management and use of the cooperative's funds;

j/ Modalities for management, use, preservation and handling of the cooperative's common property and accumulated capital when the cooperative is operating or when it is dissolved;

k/ Organizational and managerial structure of the cooperative; functions, powers, tasks and responsibilities of the Managing Board and its head, the cooperative manager, the Control Board and its head, and the sections assisting the cooperative;

l/ The cooperative's representative at law;

m/ Modalities for holding the congress and adopting decisions of the congress of cooperative members;

n/ Regime on handling violations of the cooperative charter and principles for settling internal disputes;

o/ Modalities for amending the cooperative charter;

p/ Other regulations decided by the congress of cooperative members itself, which, however, must not be contrary to law.

3. When amending its charter, the cooperative must send its amended charter enclosed with minutes of the congress of cooperative members to the agency which has granted the business registration certificate to the cooperative.

4. The Government shall promulgate forms guiding the elaboration of charters of agricultural cooperatives, people's credit funds and non-agricultural cooperatives.

Article 13. Business registration dossiers

A business registration dossier shall comprise:

1. An application for business registration;

2. The cooperative charter;

3. The number of cooperative members, lists of members of the cooperative's Managing Board and Control Board;

4. The minutes adopted at the cooperative-founding conference.

Article 14. Business registration places

1. A cooperative shall make business registration at the provincial- or district-level business registration office in the locality where the cooperative is planned to be headquartered, depending on its specific conditions.

2. The representative at law of the to be-set up cooperative shall submit business registration dossiers at the selected business registration office and bear responsibility for the accuracy and truthfulness of the business registration dossiers.

Article 15. Granting of business registration certificates

1. Cooperatives shall be granted the business registration certificates when they fully meet the following conditions:

a/ Having valid business registration dossiers as prescribed in Article 13 of this Law;

b/ Being engaged in production and/or business lines not banned by law;

c/ Having their names and logos (if any) prescribed in Article 8 of this Law;

d/ Having charter capital. For cooperatives engaged in production and/or business lines which require legal capital as stipulated by the Government, the charter capital must not be lower than the legal capital;

e/ Having fully paid business registration fees as prescribed.

2. The granting of, or refusal to grant, business registration certificates, and time for cooperatives to commence their operation, are as follows:

a/ Within fifteen days after receiving the complete and valid dossiers, the business registration offices must consider the dossiers and grant the business registration certificate to the cooperatives; in case of refusal, they must reply in writing thereto;

b/ The cooperatives shall have the legal person status and may commence their operation as from the date they are granted the business registration certificates; for conditional production and/or business lines registered by the cooperatives, they may conduct such production and/or business lines as from the date they are granted the business registration certificates by the competent State bodies or when they fully meet the business conditions according to law provisions.

3. In case of disagreement with the business registration offices' decisions to refuse the granting of the business registration certificates as prescribed in Clause 2 of this Article, the representatives at law of the to be-set up cooperatives may lodge their complaints to the competent State bodies or initiate lawsuits at courts according to law provisions.

Article 16. Branches, representative offices and dependent enterprises of cooperatives

1. Cooperatives may open their branches or representative offices at home and abroad. The order and procedures for opening branches and representative offices shall comply with the Government's regulations applicable to enterprises of all types.

2. Cooperatives may set up their dependent enterprises in accordance with law provisions.

Chapter III

COOPERATIVE MEMBERS

Article 17. Conditions for becoming cooperative members

1. Every Vietnamese citizen, who is aged full 18 years or older, has full civil act capacity, contributes capital or labor, agrees to the cooperative charter, and volunteers to join the cooperative, can become a member of the cooperative.

Officials and public servants may participate in cooperatives in the capacity as cooperative members according to the provisions of the cooperatives' charters but must not directly manage or administer the cooperatives.

2. Households and legal persons may become cooperative members according to the provisions of the cooperatives' charters. When participating in cooperatives, households and legal persons must appoint their representatives fully meeting the conditions set for participating individuals.

3. An individual, household or legal person may become a member of many cooperatives if such is not prohibited by the cooperative charter.

Article 18. Rights of cooperative members

Cooperative members shall have the following rights:

1. To be given priority to work for their cooperatives and enjoy remuneration according to the provisions of their cooperatives' charters;

2. To enjoy profits distributed according to their contributed capital or labor, and the extent of using the cooperatives' services;

3. To be provided with necessary econo-technical information by the cooperatives; to be provided with training, fostering and improvement of their professional qualifications by the cooperatives;

4. To benefit from their cooperatives' welfare and the fulfillment of economic commitments by the cooperatives;

5. To be commended and/or rewarded when they make numerous contributions to the cooperative building and development;

6. To attend the congress of cooperative members or elect delegates to attend the congress of cooperative members, attend conferences of cooperative members to discuss and vote on the cooperatives' affairs;

7. To stand for or be elected as members of the Managing Board, the cooperative manager, members of the Control Board or other elected titles of the cooperatives;

8. To make proposals to the Managing Board, the cooperative manager and the Control Board, and request the reply; to request the Managing Board, the cooperative manager or the Control Board to convene an extraordinary congress of cooperative members according to the provisions of Clause 4, Article 21 of this Law;

9. To transfer their contributed capital as well as interests and obligations to other persons according to the provisions of the cooperative charter;

10. To apply for leaving their cooperatives in accordance with the provisions of the cooperatives' charters;

11. To have their contributed capital returned and enjoy other interests according to the provisions of the cooperatives' charters and relevant law provisions in the following cases where:

a/ They leave the cooperative;

b/ The cooperative members being individuals die, are reported missing, lose their civil act capacity or have their civil act capacity restricted;

c/ The cooperative members being households have no representatives fully meeting the conditions as prescribed in the cooperatives' charter;

d/ The cooperative members being legal persons dissolve or go bankrupt, or have no representatives fully meeting the conditions as prescribed in the cooperatives' charters.

For cases prescribed at Points b, c and d, Clause 11 of this Article, the cooperative members' contributed capital and other interests shall be returned to those persons who fully meet the conditions for inheritance or the guardians of such cooperative members according to law provisions.

Article 19. Obligations of cooperative members

Cooperative members shall have the following obligations:

1. To abide by their cooperatives' charters and internal regulations as well as resolutions of the cooperative members' congresses;

2. To make capital contribution according to the provisions of their cooperatives' charters; the contributed capital shall not exceed thirty percent of their cooperatives' charter capital;

3. To unite and cooperate with one another, to study to raise their professional qualifications, thus contributing to boosting the development of cooperatives;

4. To fulfill economic commitments with their cooperatives;

5. Within the limits of their contributed capital, to bear joint responsibility for debts, risks, damage or losses of their cooperatives;

6. To pay compensation for damage they have caused to the cooperatives according to the provisions of their cooperatives' charters.

Article 20. Termination of cooperative membership

1. The cooperative membership shall be terminated in the following cases where:

a/ Cooperative members being individuals die, are reported missing, lose their civil act capacity or have their civil act capacity restricted; cooperative members being households have no representatives fully meeting the conditions as prescribed in the cooperative charter; or cooperative members being legal persons dissolve or go bankrupt or have no representatives fully meeting the conditions as prescribed in their cooperatives' charters;

b/ Cooperative members are permitted to leave their cooperatives under the provisions of their cooperatives' charters;

c/ Cooperative members have transferred their whole contributed capital as well as interests and obligations to other persons under the provisions of their cooperatives' charters;

d/ Cooperative members are expelled by the congress of cooperative members;

e/ Other cases prescribed by the cooperatives' charters.

2. The settlement of the cooperative members' interests and obligations in cases prescribed in Clause 1 of this Article shall be prescribed by the cooperatives' charters.

Chapter IV

ORGANIZATION AND MANAGEMENT OF COOPERATIVES

Article 21. Congress of cooperative members

1. The congress of cooperative members shall be the highest decision-making body of a cooperative.

2. A cooperative with many members may organize a congress of delegates of cooperative members; the election of delegates to the congress shall be prescribed by the cooperative's charter. The congress of delegates of cooperative members and the congress of all cooperative members (hereinafter referred collectively to as the congress of cooperative members) are equal in rights and tasks.

3. The regular congress of cooperative members shall be convened once a year by the Managing Board within three months after the annual settlement books are closed.

4. The extraordinary congress of cooperative members shall be convened by the cooperative's Managing Board or Control Board to decide on necessary issues which fall beyond the powers of the Managing Board or the Control Board.

In cases where at least one-third of the total number of cooperative members file their written requests altogether to the Managing Board or the Control Board for the convention of the congress of cooperative members, within fifteen days after fully receiving the requests, the Managing Board must convene the extraordinary congress of cooperative members; if past this time limit, the Managing Board fails to convene the congress, the Control Board must convene the extraordinary congress of cooperative members to settle matters raised in the written requests.

Article 22. Contents of the congress of cooperative members

The congress of cooperative members shall discuss and decide on the following issues:

1. Criteria set for cooperative members when joining the cooperative;

2. Annual report on the cooperative's production/business situation, report on activities of the Managing Board and the Control Board;

3. Report on financial publicity, planned distribution of incomes, and handling of losses and debts;

4. Production/business orientations and plans;

5. Minimum capital; charter capital increase or reduction; competence and modes for capital mobilization;

6. Determination of value of the cooperative's common assets under the provisions of Clause 3, Article 35 of this Law;

7. Distribution of profits according to the contributed capital and labor as well as the extent of using services by cooperative members; the cooperative's funds;

8. Separate or non-separate establishment of the cooperative's managerial apparatus and executive apparatus under the provisions at Point c, Clause 3, Article 11 of this Law;

9. Election or dismissal of the Managing Board, the Managing Board's head, the Control Board, and the Control Board's head;

10. Adoption of the admission of new cooperative members and permission of cooperative members to leave the cooperative; decision on expulsion of cooperative members;

11. Reorganization or dissolution of the cooperative;

12. Amendment of the cooperative's charter or internal regulations;

13. Levels of remunerations, salaries and bonuses for the head and other members of the Managing Board, the manager and deputy managers of the cooperative, the head and other members of the Control Board, and other titles of the cooperative;

14. Subjects for whom the cooperative pays social insurance premiums under the State's policy on compulsory social insurance;

15. Other issues which are proposed by the Managing Board, the Control Board or at least one-third of the total number of cooperative members.

Article 23. Stipulations on the number of delegates and the voting at the congress of cooperative members

1. The congress of cooperative members must be attended by at least two-thirds of the total number of cooperative members or delegates of cooperative members; in cases where the number of cooperative members is insufficient, the congress must be postponed; the Managing Board or the Control Board must reconvene the congress of cooperative members.

2. The decision on amendment of the charter, reorganization or dissolution of the cooperative shall be adopted when it is voted for by at least three-fourths of the total number of cooperative members or delegates of cooperative members present at the congress. Decisions on other issues shall be adopted when they are voted for by more than half of the total number of delegates present at the congress.

3. The voting at the congress of cooperative members and conferences of cooperative members shall not depend on the contributed capital or positions of the members in the cooperative. Each cooperative member or delegate of cooperative member has only one vote.

Article 24. Notification on convening the congress of cooperative members

At least ten days before the opening of the congress of cooperative members, the convening body must notify each cooperative member or delegate of cooperative member of the time, venue and agenda of the congress. The congress of cooperative members shall discuss and decide on the issues already put on the congress's agenda and arising issues proposed by at least one-third of the total number of cooperative members.

Article 25. A cooperative's Managing Board

1. A cooperative's Managing Board is the cooperative-managing body, elected directly by the congress of cooperative members, consisting of the head and other members. The number of the Managing Board's members shall be prescribed by the cooperative's charter.

2. The term of the cooperative's Managing Board shall be prescribed by the cooperative's charter, which shall be at least two years and not exceed five years.

3. The cooperative's Managing Board shall hold a meeting at least once a month, which is convened and presided over by the Managing Board's head or an authorized member. The cooperative's Managing Board shall hold an extraordinary meeting at the request of one-third of the Managing Board's members, the Managing Board's head, the Control Board's head, or the cooperative manager. A meeting of the cooperative's Managing Board shall be regarded as valid when it is attended by at least two-thirds of the number of the Managing Board's members. The cooperative's Managing Board shall operate on the principles of collectivism and make decisions by majority. In cases where the number of votes for equals the number of votes against, the number of votes on the side of the person who presides over the meeting shall be decisive.

Article 26. Criteria and conditions of members of the cooperative's Managing Board

A member of the Managing Board must be a cooperative member, possessing good moral qualities and having qualifications and capability to manage the cooperative.

The Managing Board's members must not be concurrently members of the Control Board, the cooperative's chief accountants or cashiers, or the parents, spouses, children or siblings thereof; other criteria and conditions (if any) shall be prescribed by the cooperative's charter.

Article 27. Setting-up of managerial-cum-executive apparatus by cooperatives

1. The Managing Board shall have the following rights and tasks:

a/ To appoint or dismiss the cooperative's deputy managers at the proposal of the cooperative's manager;

b/ To appoint, dismiss, hire or terminate the contract on hiring, chief accountant (if this title exists in the cooperative);

c/ To decide on the organizational structures of professional sections of the cooperative;

d/ To organize the implementation of the resolution of the congress of cooperative members;

e/ To prepare the reports on the cooperative's production and/or business plans, capital mobilization and profit distribution, and report on the Managing Board's operation for submission to the congress of cooperative members;

f/ To prepare the agenda of the congress of cooperative members and convene the congress of cooperative members;

g/ To evaluate the cooperative's production and/or business results; to approve the financial settlement report for submission to the congress of cooperative members;

h/ To organize the performance of the cooperative's rights and obligations defined in Articles 6 and 7 of this Law;

i/ To consider the admission of new cooperative members and permit cooperative members to leave the cooperative (except for cases where cooperative members are expelled) and report such to the congress of cooperative members for adoption;

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