Circular No. 01/TT-NC guiding the Government's Decree No. 46/CP dated April 29, 1997 on the issuance of a model cooperative charter for fisheries cooperatives.

CIRCULAR

Guidelines for implementing Decree No. 46/CP dated April 29, 1997 of the Government on promulgating the model regulations of Fisheries Cooperatives

Model Regulations of Fisheries Cooperatives

Pursuant to the Law on Cooperatives adopted by the National Assembly on March 20, 1996 and Decree No. 46/CP dated April 29, 1997 of the Government on issuing the model regulations of Fisheries Cooperatives.
Pursuant to Decree No. 16/CP dated February 21, 1997 of the Government on conversion, registration of cooperatives and organization of activities of Cooperative Federations.
The Ministry of Fisheries hereby provides guidelines as follows:

I. OBJECTIVES AND SCOPE OF APPLICATION:

1. Fisheries cooperatives are autonomous economic organizations of fishermen and workers with common interests who voluntarily contribute capital and labor according to the law to combine the strength of the collective with that of each member to help each other more effectively in production, business, and service activities and improve their living standards. The Party and State policy is to develop a multi-sector market economy where state-owned economy is dominant and cooperative economy is an important component gradually becoming the foundation of the national economy and the political-social foundation of the country, aiming at the goal of enriching the people and strengthening the nation, achieving social equity and civilization.

2. Along with the Law on Cooperatives, the model regulations of Fisheries Cooperatives issued by the Government serve as the legal basis for reforming and developing Fisheries Cooperatives in accordance with the Party and State's viewpoint and policy on cooperative economy during the period of industrialization and modernization of the country. 3. These model regulations apply to Fisheries Cooperatives engaged in fishing, aquaculture, and services supporting fishing and aquaculture, registered under the Law on Cooperatives and relevant laws of the State. Fisheries Cooperatives may also engage in other production and business activities.

II. SOME SPECIFIC ISSUES:

The model regulations consist of seven chapters and thirty-six articles. The content of each article is clearly stated. This circular provides additional guidance on some specific issues.

1. Regarding the form of property ownership:

Depending on specific conditions and the voluntary agreement of members, the cooperative may apply appropriate forms of ownership such as:

a. Fishing cooperatives:

- Assets and capital belong to the collective ownership of each individual fishing unit or other production and business units; share capital belongs to the members. Cultural and social facilities and public welfare assets belong to the collective ownership of the cooperative.

- Assets and capital of each individual fishing unit, other production and business units, cultural and social facilities and public welfare assets belong to the collective ownership of the cooperative, share capital belongs to the members.

- Assets and capital contributed by members or private individuals for production and business purposes belong to the contributing members or private individuals.

b. Aquaculture cooperatives.

Assets and capital belong to household members used for production, business, and aquaculture. Land or land with water bodies assigned for use by households. Assets and capital serving the production and business needs and interests of household members, and cultural and social facilities and public welfare assets belong to the collective ownership of the cooperative. Share capital belongs to the members.

c. Cooperatives providing services for fishing and aquaculture:

- Assets and capital, cultural and social facilities and public welfare assets belong to the collective ownership of the cooperative; share capital belongs to the members.

- Or diverse forms of ownership within the cooperative such as: Part of assets and capital belong to the collective ownership of the cooperative, part belong to the collective ownership of each production and business unit, part belong to private ownership; cultural and social facilities and public welfare assets belong to the collective ownership of the cooperative.

2. Regarding scale and organizational structure:

To exploit the potential resources, labor force, and capital efficiently to achieve high economic efficiency in production and business, and improve the material and spiritual life of members, it is necessary to choose suitable forms based on specific conditions of each region, management level of cadres, and the wishes of members.

a. Fishing cooperatives.

Depending on the type of marine fishing, a fishing unit can use one or two, three boats.

- A single fishing unit must be a cooperative with at least ten members, having full legal personality from the date of issuance of the business registration certificate and enjoying production encouragement policies of the State for cooperatives.

- Multiple fishing units forming a cooperative must have at least two fishing units, the number of fishing units depends on the management level and the wishes of members but each fishing unit is an independent economic entity responsible for production and business accounting, profit distribution, debt repayment, and tax payment to the State.

The management board of the cooperative should be streamlined to provide production services, communication, product sales, and public welfare and cultural management.

b. Aquaculture cooperatives and cooperatives providing services for fishing and aquaculture.

Depending on the aquaculture area or production and business service sector, the cooperative organizes production and business activities that are more effective when carried out collectively, based on voluntariness and mutual benefit. The scale of the cooperative depends on the management level of cadres and the wishes of members, but it must have at least ten members.

c. Cooperative Federation: In areas where there are at least three member cooperatives participating in capital contribution and related to technology, production and business sectors, and services, if they voluntarily agree, they can organize a Cooperative Federation according to Article 22 of Decree No. 16/CP dated February 21, 1997 of the Government. Member cooperatives are production and business entities with legal personality, the Cooperative Federation provides production services, product sales, and public welfare management. The Cooperative Federation is a registered economic organization operating under the Law on Cooperatives.

3. Regarding members and shares: 

- Each person applying to join the cooperative must comply with the provisions of the cooperative regulations and be present at the general meeting for admission.

- A household wishing to join a Cooperative shall nominate a representative who meets the criteria for a member to submit an application to join the Cooperative. The representative of the household has the rights and obligations of other members.

- All individuals joining a Cooperative must contribute shares, with the minimum share capital of a member based on the investment capital required for production and business activities and the member's ability to contribute. Each member contributes one share at the minimum capital contribution level. In cases where a member faces genuine difficulties, they may contribute in multiple installments as stipulated in the Cooperative's charter. Members may contribute multiple shares but at any point, the capital contribution of each member shall not exceed 30% of the total registered capital of the Cooperative. If a member needs to borrow funds from the State, organizations, or individuals, that borrowed amount must also be converted into their share, for which the member is responsible for repayment.

To ensure the value of the shares and the fairness and reasonableness of share contributions and returns to members, it is necessary to set a minimum capital contribution level equivalent to the market price (gold, foreign currency, rice, etc.). At each time period, based on production and business requirements, the members' capacity, and the development fund of the Cooperative, the Cooperative may adjust the minimum capital contribution level, with specific adjustments decided by the members' congress.

Members who undertake Party, government, or mass organization work at the commune or ward level, or who serve military service, if they do not withdraw their shares, shall still be entitled to dividends according to the shares they have contributed and upon returning to the Cooperative, they need not rejoin.

4. On profit distribution.

Depending on the characteristics and nature of each industry, the wishes of the members, and the management capabilities of the staff, each Cooperative may apply and select appropriate forms of contracting and profit distribution to enhance economic efficiency and create motivation to promote production development.

a. For Cooperatives engaged in exploitation:

- For Cooperatives operating with a single fishing unit:

Profit distribution is determined by the collective of members on the fishing unit over a certain period or per voyage, based on the principle of covering all costs, production, taxes, and dividends for contributed capital, as stipulated in the Cooperative's charter.

- For Cooperatives operating with multiple fishing units:

Each fishing unit operates as an independent economic entity with separate accounting, thus profit distribution is negotiated and agreed upon by each unit similar to the case of a single-unit Cooperative, and must remit to the Cooperative management fees, welfare funds, insurance premiums, etc., as specified by the Cooperative, while the development fund is managed and utilized by the unit itself.

b. For aquaculture Cooperatives, a comprehensive contracting or bidding system can be implemented for each tool, water area, and long-term stable contracting period to encourage contractors to invest deeply in production development.

c. For Cooperatives providing services for exploitation and aquaculture, a comprehensive contracting or separate accounting system can be applied to each department or task. Each department must remit to the Cooperative management fees, welfare funds, insurance premiums, etc., as specified by the Cooperative.

d. Dividend distribution for shares: For members with different share contributions, if production and business operations are profitable, a portion of the profits will be distributed according to the shares contributed by the members; if there is a loss, losses will be shared or deducted from the members' shares. The dividend distribution, loss sharing, or share deduction is decided by the Cooperative's charter or the members' congress.

For private property units, members may apply the profit distribution method mentioned above or, after deducting expenses and paying taxes, distribute the remainder between labor and assets in a ratio of 4/6 or 5/5, depending on the type of industry and season, as agreed upon by the members and the asset owners.

e. Establishment of various types of funds: These must be based on the effectiveness of production and business operations in each industry, the quality of assets in each unit, and decided by the members' congress.

Development Fund: To build material and technical infrastructure, modernize equipment, apply scientific and technological advancements, train staff, etc., to expand and improve the efficiency of production and service activities.

- Reserve Fund: To mitigate the consequences of natural disasters and other impacts on the Cooperative.

- Welfare and Reward Fund: To finance cultural and social activities, collective welfare, and rewards for members and workers who have made significant contributions to the Cooperative.

- Social Insurance Fund: To provide assistance to members in case of workplace accidents, illness, childbirth, or retirement.

The proportion of establishment and utilization of various funds is regulated by the Cooperative's charter.

When there is a poor harvest, natural disaster, or sudden damage to boats or fishing gear leading to extremely low income for the unit, the contribution to the fund may be reduced or even waived to ensure continued production and stabilize living conditions. The reduction or exemption level is decided by the members' congress.

5. On the establishment, merger, division, dissolution of Cooperatives, and participation in Cooperative alliances.

The establishment, merger, division, dissolution of Cooperatives, and participation in Cooperative alliances must be carried out in accordance with the principles and procedures prescribed by the Law on Cooperatives and the Model Charter of Aquatic Product Cooperatives.

a. Establishment of a Cooperative:

- To establish a Cooperative, the founders must report in writing to the People's Committee of the commune, ward, or town where the main office of the Cooperative is planned to be located regarding the intention to establish, direction, and program of activities of the Cooperative. After obtaining approval from the local People's Committee, the founders proceed to promote and mobilize those interested in joining the Cooperative; develop production and business directions, draft a specific Cooperative charter, and advance other necessary tasks to organize the founding meeting of the Cooperative.

- Organizing the founding meeting of the Cooperative: The founding meeting of the Cooperative is organized by the founders, consisting of the founders and those who wish to become members of the Cooperative.

The meeting discusses and votes to approve the production and business direction, service plan, and operational plan of the Cooperative; the specific Charter of the Cooperative; the name and emblem (if any) of the Cooperative; establish a list of official members who elect the head and other members of the Management Board and Supervisory Board, and record the minutes of the Cooperative establishment meeting.

- The head of the Cooperative must submit the business registration dossier to the People's Committee of the district, town, city under provincial jurisdiction where the main office of the Cooperative is located. The business registration dossier includes:

+ The business registration form attached with the minutes of the Cooperative establishment meeting.

+ The specific Charter of the Cooperative.

+ A list of the Management Board including the head and other members, and the Supervisory Board.

+ A list of members, addresses, occupations, and contributed capital.

+ Business and service plans. + Fishing license on the sea. The Cooperative acquires legal personality from the date it receives the business registration certificate.

b. Merger and division of the Cooperative.

The Management Board of the Cooperative planning to merge or the Cooperative planning to divide must:

- Establish a Council to handle the merger or division of the Cooperative. The Council for merger consists of the heads of the Cooperatives planning to merge, while the division Council comprises the head of the Cooperative planning to divide and representatives of the Cooperatives that will be formed from the division. The Council is responsible for negotiating and agreeing on issues related to the merger or division of the Cooperative such as inventory, revaluation of all fixed assets (based on records and actual inventory and valuation), funds, material reserves, products, and preparing the application for merger or division of the Cooperative.

- Develop a plan for handling assets, funds, reserves, organization, and personnel during the merger or division; develop a business and service direction; draft the specific Charter of the new Cooperative for the member assembly to decide.

- Convene a member assembly to decide on the plan for handling assets, funds, reserves, organization, and personnel during the merger or division. Subsequently, proceed with discussions and voting to approve the business direction, service plan, operational plan, specific Charter of the new Cooperative, name, emblem of the Cooperative, member list, election of the head and other members of the Management Board and Supervisory Board, and the minutes of the Cooperative establishment meeting.

- Notify in writing creditors, organizations, and individuals economically related to the Cooperative about the decision to merge or divide the Cooperative and resolve related economic issues.

- Submit the application for merger or division of the Cooperative to the People's Committee of the district, town, city under provincial jurisdiction which issued the business registration certificate, including:

+ The request for merger or division.

+ The resolution of the member assembly regarding the merger or division of the Cooperative. The resolution is passed when three-quarters of the total number of members or member representatives present at the assembly vote in favor.

+ The plan for resolving issues related to the merger or division of the Cooperative discussed with creditors, organizations, and individuals economically related to the Cooperative.

+ The specific Charter of the merged Cooperative or the specific Charter of the newly divided Cooperative.

c. Dissolution of the Cooperative:

- In the case of voluntary dissolution according to the resolution of the member assembly, it must be approved by three-quarters of the total number of members or member representatives present at the assembly. The Cooperative must submit the dissolution request and the assembly resolution to the People's Committee of the district, town, city under provincial jurisdiction; simultaneously, publish in the local newspaper where the Cooperative operates for three consecutive issues about the dissolution request and the debt repayment period, contract termination if applicable. Within thirty days from the end of the debt repayment period and contract termination, the People's Committee receiving the dossier must issue a notification approving or not approving the dissolution request of the Cooperative.

Within thirty days from receiving the approval notification of the People's Committee, the Cooperative must settle dissolution costs, return contributions, and pay out amounts according to the specific Charter of the Cooperative to members.

- In the case of compulsory dissolution:

- The People's Committee issuing the business registration certificate has the authority to compel the Cooperative to dissolve in any of the following cases:

+ The Cooperative ceases operations for twelve months.

+ For six consecutive months, the Cooperative does not have the required ten members as stipulated in the model Charter.

+ For eighteen months, it cannot organize regular member assemblies without valid reasons. + Twelve months after obtaining the business registration certificate without commencing operations.

d. Participation in the Cooperative Alliance Organization:

- Fisheries Cooperatives and Fisheries Cooperative Unions of a province or city may voluntarily join the Provincial or City Cooperative Alliance Organization. The Cooperative Alliance is a non-governmental organization with functions, tasks, powers, financial structure... as prescribed in the Cooperative Alliance Charter.

6. On the conversion of Fisheries Cooperative Registration:

The conversion of Cooperative registration is carried out in accordance with Decree No. 16/CP dated February 21, 1997 of the Government and Circular No. 04/BKH-QLKT dated March 29, 1997 of the Ministry of Planning and Investment, this Circular only refers to some specific points as follows:

1. On Conversion of the Cooperative:

- Cooperatives currently operating or having ceased operations but not yet decided on dissolution, still having unresolved economic relationships within the Cooperative, between the Cooperative and external parties such as asset issues, receivables, payables, public welfare facilities, infrastructure serving the community... must establish a Preparatory Board for Cooperative Conversion to be approved by the District People's Committee. The Preparatory Board includes: the Management Board, Supervisory Board, member representatives, and representatives of the local People's Committee. For Cooperatives that have ceased operations, the composition of the Preparatory Board is proposed by the local People's Committee.

- Upon approval by the District People's Committee, the Preparatory Board for Conversion is tasked with:

+ Organizing propaganda and explanations to members about the purpose and significance of the conversion so that the new Cooperative can operate under the Law on Cooperatives.

+ Organize the inventory and assessment of all assets according to their origin of formation, original value, and remaining value at the time of assessment.

+ Categorize assets: Assets serving the community, assets needed for continued use towards production development goals.

+ Inventory and assess all capital and funds of the Cooperative.

+ Identify and categorize receivables and payables, clarify creditor and debtor lists; origins and values of debts... on this basis, propose solutions for handling to be submitted to the member assembly for decision; specifically for payable debts (bank loans, budget debts with clear origins that cannot be repaid, reasons must be clearly explained and proposed to the State regarding the ratio of debt exemption, reduction, and write-off for each specific debt to be submitted to the district People's Committee for consideration and decision in accordance with State regulations.

+ Develop business operation plans and draft cooperative bylaws. The drafting of new cooperative bylaws shall be based on Article 14 of the Law on Cooperatives and the model bylaws of fisheries cooperatives. For dissolved cooperatives, there is no need to carry out this work.

+ Prepare conditions for convening the member assembly, particularly paying attention to publicly announcing asset disposal plans, capital, funds, debts... to all members at least ten days before organizing the assembly.

+ Convene the member assembly to discuss:

- Voting on each item and the entire asset disposal plan, capital, funds, debts... presented by the preparatory board to the assembly.

- Voting on the decision to convert registration of a new cooperative or dissolve the cooperative. In the case of dissolution, it will proceed according to the provisions at point c, Clause 5, Section II of this Circular.

- If the assembly decides to convert the business registration of a new cooperative, the assembly continues to discuss and approve: member list, share capital, charter capital of the cooperative, business operation plan, election of management positions of the cooperative in accordance with the Law on Cooperatives and the model bylaws of fisheries cooperatives.

Along with implementing conversion procedures, operating cooperatives need to continue to innovate in content, allowing members to take specific control in production units while effectively performing service functions according to members' needs and interests to continuously improve the efficiency of cooperative operations.

2. Regarding business registration for converting cooperatives:

- If the member assembly decides to maintain the cooperative and meet the conditions for conversion, the cooperative shall prepare the application for issuance of the business registration certificate for the cooperative in accordance with Article 17 of Decree 16/CP dated February 21, 1997 of the Government.

- The application for issuance of the business registration certificate for converted cooperatives includes:

+ Minutes of the member assembly for conversion together with the documents specified in point a, Clause 5, Section II of this Circular.

+ Explanation documents on the cooperative's debts, financial situation, and registered capital.

+ Confirmation documents from the county-level finance authority regarding the handling of cooperative debts to the state budget (if any).

Converted cooperatives must re-register within twelve months from the effective date of Decree 16/CP dated February 21, 1997 of the Government. After this period, if any cooperative does not re-register, it must be dissolved or converted to another form and may not operate as a cooperative legal entity.

- Uniformly across the country, use the models attached to Circular No. 04/BKH-QLKT dated March 29, 1997 of the Ministry of Planning and Investment.

III. IMPLEMENTATION:

1. According to the Government Decree, the provincial People's Committees have the responsibility to organize and direct the implementation of the bylaws of fisheries cooperatives in their localities.

The Fisheries Department or the Agriculture and Rural Development Department assists the provincial People's Committees in building plans and specific measures to implement the model bylaws of fisheries cooperatives.

2. Cooperatives that only exist in form and lack the ability to convert, local party committees and authorities should carefully examine, clarify causes, find solutions to help fishermen organize new forms of cooperation suitable to their requirements.

In places where production groups, enterprises, and individual fishers operate, favorable conditions should be created to assist them in developing production and operating effectively, forming cooperatives when conditions permit. Specifically, for production groups and enterprises engaged in fishing that organize and operate in accordance with the model bylaws of fisheries cooperatives but have not completed establishment procedures and obtained business registration certificates from the district People's Committees, they must follow the correct procedures and apply for business registration as if establishing a new cooperative.

3. Learning and implementing the model bylaws of cooperatives must be linked to consolidating and innovating cooperatives, promoting production development, avoiding formalism or leaving everything to the grassroots level.

4. Units under the Ministry of Fisheries within their functional scope have the responsibility to promote, guide, and assist localities and grassroots organizations in implementing the Law on Cooperatives and the model bylaws of fisheries cooperatives.

5. Every quarter, the Fisheries Departments or Agriculture and Rural Development Departments report the results of implementing the model bylaws of fisheries cooperatives to the provincial People's Committees and the Ministry of Fisheries.

This Circular is disseminated to the People's Committees of communes, wards, towns, and fisheries cooperatives.