DECREE No.44-CP OF APRIL 29, 1997 PROMULGATING THE MODEL STATUTE OF INDUSTRIAL AND CONSTRUCTION COOPERATIVES

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Law on Cooperatives of March 20, 1996;

At the proposal of the Minister of Industry,

DECREES:

Article 1.- To promulgate together with this Decree the Model Statute of industrial and construction cooperatives.

Article 2.- The Minister of Industry shall have to provide guidance for the implementation of this Statute.

Article 3.- The Minister of Industry, the Heads of the ministerial-level agencies, the agencies attached to the Government, the Presidents of the People�s Committee of the provinces and cities directly under the Central Government and the President of the Vietnam Federation of Cooperatives shall, within the ambit of their powers and responsibilities, organize the implementation of this Decree.

Article 4.- This Decree takes effect 15 after its signing. The earlier provisions which are contrary to this Decree are now annulled.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister

PHAN VAN KHAI

MODEL STATUTE OF INDUSTRIAL AND CONSTRUCTION COOPERATIVES

Chapter I

GENERAL PROVISIONS

Article 1.- Definition of an industrial or small-industrial or handicraft cooperative:

Industrial, small-industrial and handicraft cooperatives, construction cooperatives (industrial cooperatives for short) are self-governing economic organizations established in accordance with the provisions of law by laborers who share common needs and interests, and volunteer to contribute capital and labor to carry out production and business in the fields of industry, small industry, handicrafts, construction and industrial and construction services.

Article 2.- Legal person status, name, address and statutory capital of the industrial cooperative.

An industrial cooperative is an organization having the legal person status constituted by at least 9 members. It has a Vietnamese name and optionally an emblem; the address of its head office; its own seal; is entitled to open accounts at Vietnamese banks. It has its clearly stated statutory capital; a cooperative possessing capital and assets shall assume its liabilities for all the debts and other obligations with all the capital and assets under its ownership.

Article 3.- Types and principles of organization of an industrial cooperative:

1. Depending on the scale and characters of its production, business and service activities, a cooperative may be organized in one of the following forms:

- Cooperative of concentrated production;

- Cooperative of scattered production by family households;

- Cooperative of both concentrated and scattered production.

2. Principles of organization and operation; the rights and obligations of the cooperative shall comply with Articles 7, 8 and 9 of the Law on Cooperatives.

Article 4.- Party and mass organizations in an industrial cooperative:

The Communist Party of Vietnam organization in the cooperative shall operate in accordance with the Constitution and laws of the State and the regulations of the Communist Party of Vietnam; the Trade Union, the other socio-political organizations and the militia and self-defense organizations in the cooperative shall operate in accordance with the Constitution, law and their respective statutes.

Chapter II

COOPERATIVE MEMBERS

Article 5.- Criteria for cooperative membership:

A Vietnamese citizen aged from eighteen years upward who has working capability and the capacity for civil acts, who approve the Statute of Industrial Cooperatives and voluntarily applies for joining the cooperative and is accepted by the Congress of cooperative members shall become a member of the cooperative.

An industrial cooperative, when established, must have at least 9 members, two thirds of whom must have professional skills suited to the business lines and trades of the cooperative.

A family household which wants and volunteers to join a cooperative must nominate a representative of the family who meets the criteria for cooperative membership shall apply for joining the cooperative and have the rights and obligations as a member of the cooperative.

Article 6.- Rights of a cooperative member:

1. To enjoy priority to work for the cooperative and get salary from the cooperative for his/her labor in accordance with the provisions of the cooperative�s Statute.

2. To receive dividends according to his/her capital and labor contributions and the extent he/she uses the services of the cooperative.

3. To stand for, nominate and select members of the Managing Board, the Control Board and other elected posts of the cooperative.

4. To attend the Congress or to elect delegates to attend the Congress and meetings of cooperative members to discuss and vote on the work of the cooperative.

5. To make proposals or suggestions to the Managing Board, the Control Board and request for reply; request the Managing Board or the Control Board to convene an extraordinary Congress of cooperative members.

6.To be provided with necessary economic, technical information from the cooperative; and to receive professional training, skill fostering and upgrading from the cooperative.

7. To benefit from common social welfare of the cooperative, the economic commitments made by the cooperative and buy social insurance in accordance with the provisions of law.

8. To assign his/her contributed capital, rights and obligations to another person, provided that such person meets the prescribed conditions and voluntarily applies for joining the cooperative, and is accepted by the Congress of cooperative members.

9. To join other cooperatives of different branches and trades, provided that he/she fulfils all obligations prescribed in the Statute of the cooperative which he/she has joined.

10. To leave the cooperative of his/her own free will. For this, the cooperative member must make an application and send it to the Managing Board 30 days in advance. In cases where the application is approved, he/she shall be repaid his/her contributed capital and other interests in accordance with the provisions of the cooperative�s Statute.

11. To inherit properties, interests and obligations as prescribed by law and the Statute of the cooperative.

12. If the cooperative member joins the army and his/her contributed capital is still kept by the cooperative, he/she shall continue to receive his/her dividends according to his/her capital contribution; after fulfiling the military service, he/she shall be reassigned work as a cooperative member.

Article 7.- Obligations of the cooperative member:

1. To contribute capital in accordance with the provisions of the Statute of the cooperative;

2. To abide by the Statute, the Rules of the cooperative and the resolutions of the Congress of cooperative members, as well as the assignment of the Managing Board.

3. To fulfil economic commitments to the cooperative; to bear, within the scope of his/her contributed capital, responsibility for the debts, risks, damage and losses of the cooperative and to compensate for damage caused by him/her in accordance with provisions of the Statute of the cooperative.

4. To pay social insurance premiums as prescribed by law.

Article 8.- Cooperative membership shall be terminated in one of the following cases:

a/ The cooperative member dies;

b/ The cooperative member asks for leaving the cooperative in accordance with provisions of the cooperative�s Statute;

c/ The cooperative member has assigned all his/her capital, interests and obligations to another person and has completed the assignment procedures;

d/ The cooperative member is expelled by the Congress of cooperative members;

e/ The cooperative member does not go to work or ceases to have any economic relations with the cooperative or has not enough capital to contribute as precsribed in the cooperative�s Statute;

f/ The cooperative member has lost his/her capacity for civil acts.

Chapter III

ORGANIZATION AND MANAGEMENT OF COOPERATIVE

Article 9.- The Congress of cooperative members:

1. The Congress of cooperative members has the highest decision-making power in the cooperative.

2. A cooperative with 150 members or more may hold a Congress of delegates of cooperative members (referred to commonly as Congress of cooperative members), the Congress of delegates of cooperative members has the same duties and powers as the Congress of cooperative members.

3. The regular Congress of cooperative members shall be convened once a year by the Managing Board within three months from the closing of the annual financial accounts.

4. The extraordinary Congress of cooperative members shall be convened by the Managing Board or the Control Board of the cooperative to make decisions on necessary issues that are beyond the powers of the Managing Board and the Control Board.

If at least 1/3 (one third) of the total number of cooperative members request the convening of a Congress of cooperative members to the Managing Board or the Control Board, within 15 (fifteen) days after receiving the request, the Managing Board shall have to convene the Congress of cooperative members. Past that time limit, if the Managing Board does not convene the Congress, the Control Board shall have to convene an extraordinary Congress of cooperative members to solve the issues mentioned in the cooperative members� request.

Article 10.- The Congress of cooperative members shall discuss and decide on the following issues:

1. The annual reports on the results of production, business and service activities of the cooperative, the reports on the activities of the Managing Board and the Control Board.

2. The public financial and account statements, the draft plan on the income distribution and the settlement of losses.

3. The adoption of the orientations of production, business and services, the plan on operations and capital mobilization for the next year of the cooperative.

4. The increase or decrease of the statutory capital, deductions for various funds of the cooperative.

5. The election or dismissal of the Manager of the cooperative, the additional election or dismissal of other members of the Managing Board and the Control Board.

6. The admission of new cooperative members as well as the quitting and expulsion of cooperative members.

7. The merger, splitting or dissolution of the cooperative.

8. The amendment to the Statute, the Rules of the cooperative, the cooperative�s adhesion to the Union and Federation of Cooperatives.

9. The levels of wage or remuneration for the Manager, the members of the Managing Board, the Control Board and other posts in the cooperative.

10. Other issues proposed by the Managing Board, the Control Board or at least one third (1/3) of the total number of cooperative members.

Article 11.- Provisions 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 2/3 (two thirds) of the total number of cooperative members or delegates of cooperative members. If the number of participants falls short of this level, the Congress shall be postponed; the Managing Board or the Control Commission shall have to reconvene the Congress.

2. The decision on the amendment to the Statute, the merger, splitting or dissolution of the cooperative shall be adopted only when at least 3/4 (three fourths) of the total number of cooperative members or delegates of cooperative members present at the Congress vote for. The decisions on other issues shall be adopted when they are voted for by more than half (1/2) of the total number of the delegates present at the Congress.

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

Article 12.- The Managing Board of the cooperative:

1. The Managing Board is the body that manages and runs every activity of the cooperative. It is directly elected by the Congress of cooperative members and composed of the Manager and other members . The Managing Board is composed of from 3 to 9 members as decided by the Congress of cooperative members. A cooperative with less than 15 (fifteen) members may elect only the Manager of the cooperative.

2. The term of office of the Managing Board shall be at least 2 years and shall not exceed 5 years, as decided by the Congress of cooperative members.

3. The Managing Board of the cooperative meets at least once a month, and the meeting shall be convened and presided over by the Manager or a member of the Managing Board authorized by the Manager. The meetings of the Managing Board shall be considered valid only when they are attended by at least 2/3 (two thirds) of the number of members of the Managing Board. The Managing Board operates on the principle of collective work and makes decisions by majority votes. When the number of votes for and the number of votes against are equal, the voting side with the vote of the chairman of the meeting shall prevail.

Article 13.- Tasks and powers of the Managing Board:

1. To select and appoint the chief accountant, to decide the organizational structure of the professional and specialized sections of the cooperative;

2. To organize the implementation of the resolutions of the Congress of cooperative members.

3. To prepare reports on production, business and service plans and the plan for capital mobilization of the cooperative, reports on the activities of the Managing Board to be submitted to the Congress of cooperative members. To prepare the agenda of the Congress of cooperative members and convene the Congress of cooperative members.

4. To evaluate the results of production, business and service activities of the cooperative, and ratify the financial account statement to be submitted to the Congress of cooperative members.

5. To consider the admission of new cooperative members and the requests of cooperative members to leave the cooperative so as to report it to the Congress of cooperative members for approval.

6. To consider the cooperative�s joining or leaving the Union and Federation of Cooperatives so as to report it to the Congress of cooperative members for decision.

7. The Managing Board shall take responsibility for its decisions before the Congress of cooperative members and before law.

8. A member of the Managing Board must be a cooperative member, and has good moral qualities, qualifications and skills for the management of the cooperative; A member of the Managing Board must not concurrently be a member of the Control Board, the chief accountant or the cashier of the cooperative; nor a parent, spouse, offspring or sibling of such persons; other criteria shall be defined in the Statute of the cooperative.

Article 14.- Duties and powers of the Manager of the cooperative:

1.To represent the cooperative before law.

2. To organize the execution of the plans and run all production and business activities of the cooperative.

3. To convene and preside over the meetings of the Managing Board, to organize the implementation of the resolutions of the Congress of cooperative members and decisions of the Managing Board.

4. To be accountable before the Congress of cooperative members and the Managing Board for his/her assigned tasks.

5. In his/her absence, the Manager of the cooperative shall authorize the Deputy Manager or a member of the Managing Board to handle the work of the cooperative.

6. The position of the Deputy Manager of the cooperative shall be prescribed in the Statute of the cooperative.

Article 15.- The Control Board:

1. The Control Board is the body that supervises and inspects all activities of the cooperative to ensure that they comply with the law and the Statute of the cooperative. The Control Board is directly elected by the Congress of cooperative members. The Control Board is composed of from 3 to 5 members, as decided by the Congress of cooperative members. The Control Board shall elect a Chairman to run its activities. A cooperative with less than fifteen members may elect a controller.

2. The criteria for the Control Board membership shall be the same as those for the members of the Managing Board. A member of the Control Board shall not be at the same time a member of the Managing Board, chief accountant, cashier of the cooperative, and nor a parent, spouse, offspring or sibling of such persons.

3. The term of office of the Control Board shall correspond with that of the Managing Board.

Article 16.- Duties and powers of the Control Board:

1. To inspect the observance of the Statute and Rules of the cooperative and the resolutions of the Congress of cooperative members.

2. To supervise all activities of the Managing Board, the Manager and members of the cooperative to ensure that they comply with law and the Statute and Rules of the cooperative.

3. To inspect the financial and accounting situation, the income distribution, the settlement of losses, the use of funds of the cooperative, as well as the use of properties, borrowed capital and subsidies from the State.

4. To receive and handle complaints and denunciations against persons relating to the cooperative�s work.

5. To report the results of inspection to the Managing Board of the cooperative and the Congress of cooperative members; to propose to the Managing Board and the Manager of the cooperative measures to overcome weaknesses in the production, business and services of the cooperative and to handle the violations of the Statute and Rules of the cooperative.

6. To request the concerned persons in the cooperative to provide data, vouchers, documents and other necessary information for the inspection and must not use such data and information for other purposes.

7. To use professional staff of the cooperative to perform its inspection duties.

8. To convene an extraordinary Congress of cooperative members in one of the following cases:

a/ The Managing Board has not taken effective measures at the request of the Control Board to prevent acts of violation of law, the Statute and Rules of the cooperative and the Resolutions of the Congress of cooperative members .

b/ The Managing Board has not convened an extraordinary Congress of cooperative members at the request of cooperative members as prescribed in Item 4, Article 26 of the Law on Cooperatives.

9. To attend the meetings of the Managing Board.

Chapter IV

CAPITAL, FUNDS, ASSETS, PROFIT DISTRIBUTION AND SETTLEMENT OF LOSSES

Article 17.- Contributed capital of cooperative members:

1. A person who wishes to join the cooperative has to contribute capital. The capital contribution may be made in one or several instalments; the amount of capital, the form and time limit for capital contribution shall be stipulated in the Statute of the cooperative. At any time, the contributed capital of a cooperative member shall not exceed 30% of the total statutory capital of the cooperative.

2. For a cooperative involved in branches or trades that require prescribed capital according to the provisions of the Government, the total contributed capital of cooperative members must not be lower than the level of the prescribed capital set for the respective branches or trades with business registration as prescribed by law.

Article 18.- Capital mobilization:

1. The cooperative is entitled to borrow capital from banks in accordance with the provisions of law, and to mobilize capital from cooperative members in accordance with the decision of the Congress of cooperative members.

2. The cooperative is entitled to receive and use the subsidies from the State, domestic and foreign organizations and individuals under the conditions agreed upon by the parties and not in contradiction of law.

Article 19.- Operating capital of the cooperative:

The operating capital of the cooperative is formed on the basis of the sources of capital contributed by the cooperative members, the accumulative capital under the ownership of the cooperative, public donations, aids and borrowed capital.

The cooperative is entitled to manage and use sources of operating capital in accordance with the provisions of law and its Statute.

Article 20.- Assets of the cooperative:

The cooperative�s assets are the assets under its ownership, derived from its operating capital.

The management and use of the cooperative�s assets shall comply with the Statute of the cooperative, the resolution of the Congress of cooperative members and the provisions of law. In any case, the cooperative must not distribute to its members the subsidies of the State, the public utilities and infrastructure facilities in service of the population community.

Article 21.- Settlement of assets and capital of the dissolved cooperative:

When it is dissolved, the cooperative shall have to transfer its indivisible assets to the local administration for management, including subsidies from the State, public works and infrastructure facilities for common use by the population community. The land use right of the cooperative shall be handled in accordance with the provisions of the land legislation.

After settling all debts and paying the dissolution costs, the cooperative is entitled to distribute to its members the remainder of its assets, capital and funds.

Article 22.- Profit distribution:

1. After the fulfilment of all tax obligations, the cooperative�s profits shall be distributed as follows:

a/ To make up for the losses of the previous year (if any).

b/ To make deductions for various funds of the cooperative and distribute dividends according to the members� capital and labor contributions; the rest shall be divided to cooperative members according to the extent of their use of the cooperative�s services.

2. The rates of deductions for various funds and of the profit distribution for cooperative members shall be decided by the Congress of cooperative members.

3. The cooperative shall set up the following funds:

- The production development fund

- The reserve fund

- The training fund

- The welfare fund.

Article 23.- Settlement of losses:

- A cooperative member who causes damage to the cooperative shall have to pay compensation to the cooperative in accordance with the decision of the Congress of cooperative members.

- If losses of the cooperative are incurred due to objective causes, they shall be made up for by the reserve funds or by the profits of the following year or deducted from the cooperative�s fund. If the funds are not enough, the losses shall be made up for by deductions from the capital contributed by cooperative members as decided by the Congress of cooperative members.

Chapter V

MERGER, SPLITTING, DISSOLUTION AND BANKRUPTCY OF COOPERATIVE

Article 24.- Merger, splitting of the cooperative:

The merger, splitting of the cooperative shall be decided by the Congress of cooperative members in accordance with the provisions in Item 2, Article 11 of this Statute and Article 45 of the Law on Cooperatives.

Article 25.- Dissolution of the cooperative:

1. Voluntary dissolution.

The cooperative may be voluntarily dissolved according to the resolution of the Congress of cooperative members.

2. Compulsory dissolution.

The cooperative shall be compulsorily dissolved in one of the following cases:

a/ 12 months after receiving the business registration certificate the cooperative does not begin its operation.

b/ The cooperative has ceased its operation for 12 consecutive months.

c/ The number of cooperative�s members fails to reach 9 as prescribed by the Model Statute of Industrial Cooperatives after 6 consecutive months.

d/ The cooperative fails to organize the regular Congress of cooperative members for 18 consecutive months without plausible reasons.

e/ Other cases shall be prescribed by law (the order of dissolution shall comply with Article 46 of the Law on Cooperatives).

Article 26.- Bankruptcy of the cooperative:

The procedures for bankruptcy of the cooperative shall comply with the provisions of the Law on Bankruptcy of Enterprises.

Chapter VI

REWARD AND HANDLING OF VIOLATIONS

Article 27.- Reward:

A cooperative member with meritorious records in production, business or services or with outstanding contributions to the protection, construction and development of the cooperative shall be rewarded by the cooperative or the higher-level agency at the proposal of the cooperative; the form and level of reward are stipulated in the Statute of the cooperative.

Article 28.- Handling of violations:

A cooperative member who fails to observe the Statute and the Rules of the cooperative and the resolutions of the Congress of cooperative members, who causes damage to the interests of the cooperative shall, depending on the seriousness of his/her violation, be disciplined, administratively sanctioned or examined for penal liability in accordance with the provisions of law. For any damage, compensation must be made.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 29.- Specific Statute of each cooperative:

On the basis of this Model Statute, the industrial and construction cooperatives shall elaborate their own statutes, which must be adopted by the Congresses of cooperative members and accepted by the business certificate granting agency.

Article 30.- Amendment and supplement to the Statute of the cooperative.

Any amendment and supplement to the Statute of the cooperative must be decided by the Congress of cooperative members and approved by the business registration certificate granting agency. The Statute of the cooperative shall take effect from the date it is granted the business registration certificate.

On behalf of the GovernmentFor the Prime Minister

Deputy Prime Minister

PHAN VAN KHAI