Circular No. 05/1997/TT-NHNN17 guiding the conversion and registration of People's Credit Funds (PCF) and Credit Cooperative Societies (CCS) pursuant to Decree No. 16/CP dated February 21, 1997 of the Government.

 CIRCULAR

Guidelines for converting and registering People's Credit Funds and Credit Cooperatives in accordance with Decree No. 16/CP dated February 21, 1997 of the Government

On February 21, 1997, the Government issued Decree No. 16/CP on "conversion, registration of cooperatives and organization of activities of Cooperative Unions"; the State Bank provides guidance on implementing the following specific points:

A. GENERAL PROVISIONS

1. The subjects subject to this circular are:

a. People's Credit Funds at the grassroots level (PCF) established and operating pursuant to Decision No. 390/TTg dated July 27, 1993 of the Prime Minister regarding the pilot establishment of People's Credit Funds.

b. Credit Cooperatives that have been granted licenses to operate by the State Bank under the Banking Ordinance, Credit Cooperatives, and Financial Companies.

2. Central People's Credit Funds (CPF), regional People's Credit Funds (RPF) are organizations that link and ensure safety for the operation of the system of PCFs, therefore they do not fall within the scope of conversion.

3. For PCFs that have not reached the minimum charter capital requirement and other conditions, during the conversion period, they must develop plans to achieve the required charter capital and meet the remaining conditions within a specified time frame, to be submitted to the provincial steering committee for cooperative conversion for examination and approval.

4. PCFs and Credit Cooperatives shall not convert their operations under the Law on Cooperatives in the following cases:

- The members' congress decides voluntarily to dissolve;

- Forced dissolution due to serious violation of laws, prolonged losses without the ability to overcome.

B. CONTENTS AND PROCEDURES FOR CONVERSION

I. ESTABLISHING THE PREPARATORY BOARD FOR CONVERSION:

1. The preparatory board for conversion at PCFs and Credit Cooperatives is headed by the Chairman of the Board of Directors, with members including the Chief Auditor, Managing Director, a representative of the members, and a representative of the local government.

The preparatory board for conversion of PCFs and Credit Cooperatives is decided to be established by the steering committee for cooperative conversion at the district level.

2. The preparatory board for conversion of PCFs and Credit Cooperatives will cease operations after completing the conversion process, re-registration, or dissolution.

II. TASKS OF THE PREPARATORY BOARD FOR CONVERSION:

The preparatory board for conversion of PCFs and Credit Cooperatives has the following tasks:

1. Propaganda and explanation about the purpose, significance, content, and requirements of conversion for PCFs and Credit Cooperatives to operate under the Law on Cooperatives.

2. Conducting inventory and evaluation of all assets and funds, comparing them with the balance sheet, statements, and related documents. After verifying the accuracy of the data, determining the source of formation and classifying assets, receivables, and payables of PCFs and Credit Cooperatives, proposing solutions for asset and fund management to be submitted to the members' congress for consideration.

3. Based on the Law on Cooperatives, Banking Ordinance, Credit Cooperatives, and Financial Companies, and the model regulations of PCFs, drafting new regulations; developing operational plans.

4. For PCFs and Credit Cooperatives currently operating across multiple wards or communes, the preparatory board for conversion needs to redefine the scope of operations in accordance with Decree No. 42/CP dated April 29, 1997 of the Government.

5. Summoning the members' congress (or the congress of member representatives) to decide on the conversion or dissolution of PCFs and Credit Cooperatives. In particular, PCFs should conduct the conversion process in conjunction with the annual congress.

III. ORGANIZING THE MEMBERS' CONGRESS:

1. For PCFs: In the case where the members' congress decides to convert and register business operations under the Law on Cooperatives, the congress will approve the following contents:

a. Resolution on the conversion of PCFs and registration under the Law on Cooperatives;

b. New regulations consistent with the model regulations;

c. Plan for handling capital, assets, and other issues;

d. Operational plan for PCFs in the future;

đ. Electing the Board of Directors, Chairman of the Board of Directors, Supervisory Board, and Managing Director if their terms have expired; or electing additional or replacement members of the Board of Directors, Chairman of the Board of Directors, Supervisory Board, and Managing Director if their terms have not yet expired.

2. For Credit Cooperatives: In the case where the members' congress decides to convert to the PCF model, the congress will approve the following contents:

a. Resolution on the conversion from Credit Cooperatives to PCFs operating under the Law on Cooperatives;

b. List of PCF members;

c. Name and emblem of the PCF;

d. Regulations and internal rules of the PCF;

đ. Charter capital, established capital, and regular capital;

e. Operational plan;

g. Electing the Board of Directors, Chairman of the Board of Directors, Supervisory Board, and Managing Director of the PCF;

h. Plan for handling capital and assets of Credit Cooperatives;

When approving the plan for handling capital and assets of Credit Cooperatives to convert to PCFs, it is particularly important to note:

- For debts: It is necessary to classify debts that can be recovered and those that cannot be recovered, clearly identifying the reasons and assigning responsibility for outstanding debts:

+ Debts that can be recovered must calculate and collect interest up to the date of conversion, and establish new debt agreements.

+ Debts that cannot be recovered due to objective reasons, existing losses must be resolved by the members' congress through the appropriation of undistributed reserves, if insufficient, then deducted from the members' contributions.

+ Debts that cannot be recovered due to subjective reasons must clearly assign responsibility and require the responsible party to compensate according to regulations.

- For deposits from residents and other organizations, interest must be calculated and paid, and new deposit books issued.

- For undistributed reserves after deducting losses (if any), they should be transferred entirely to the PCF.

Specifically, the contributions of Credit Cooperative members: after deducting losses (if any), will become the established and regular capital of PCF members, members must contribute sufficient capital as stipulated in the PCF regulations.

- For fixed assets and other assets, they need to be re-evaluated, classified, and proposed for handling plans to be approved by the members' congress and handed over to the PCF for continued management and use.

3. For PCFs and Credit Cooperatives that cannot be converted, the preparatory board for conversion will submit plans for handling capital, assets, and debts to the congress for approval:

- For debts:

+ Recover all loans (including interest) and other receivables;

+ Fully settle all payable debts: deposits, loans (including interest payable) and other payable debts.

- Process the deficit (if any) in the following sequence:

+ Deduct from undivided funds;

+ Deduct from capital contributions;

+ Deduct from proceeds from liquidation of assets.

- Capital and asset value receiving public assistance must be handed over to local authorities.

- After settling debts, fulfilling state obligations, and dissolution costs, remaining capital and funds shall be distributed among members according to their contribution to the Credit Cooperative (QTDND) and Rural Credit Cooperative (HTXTD). The distribution plan shall be decided by the General Assembly of Members.

- In cases where the asset value, capital, and remaining funds are insufficient to settle debts, they will be resolved in accordance with the law on business bankruptcy.

C. REGISTRATION OF ACTIVITY AND BUSINESS REGISTRATION

I. REGISTRATION OF ACTIVITY:

1. Credit Cooperatives (QTDND) that have been granted operating licenses by the State Bank, when transitioning operations under the Law on Cooperatives, do not need to reapply for operating licenses but must obtain confirmation from the State Bank allowing the application of the charter and approval of the list of Board of Directors, Supervisory Board, and General Director members. These QTDNDs must submit the following documents to the State Bank:

- Minutes of the General Assembly of Members deciding on the transition;

- Charter of the QTDND approved by the General Assembly of Members;

- Plan for handling capital and assets;

- Operation plan of the QTDND;

- List and curriculum vitae of Board of Directors, Supervisory Board, and General Director members.

2. Credit Cooperatives transitioning to the QTDND model under the Law on Cooperatives must submit the following documents to the State Bank:

- Minutes of the General Assembly of Members deciding on the transition;

- Application for an operating license;

- Charter of the QTDND approved by the General Assembly of Members;

- List and curriculum vitae of Board of Directors, Supervisory Board, and General Director members;

- Short-term and long-term operation plans;

- List of members registering and their capital contributions;

- Certificate from the People's Committee of the commune or ward regarding ownership or usage rights of the QTDND headquarters;

- Plan for handling residual liabilities of the old Rural Credit Cooperative (HTXTD).

II. BUSINESS REGISTRATION:

1. After completing the procedures for transitioning operations under the Law on Cooperatives and obtaining an operating license from the State Bank, QTDNDs and Rural Credit Cooperatives (HTXTD) must prepare and submit a dossier to the Provincial Department of Planning and Investment to apply for a business registration certificate from the provincial People's Committee. The dossier includes:

- Application for a business registration certificate accompanied by minutes of approval at the General Assembly of Members;

- Operating license issued by the State Bank;

- Charter approved by the General Assembly of Members (two copies);

- List and curriculum vitae of Board of Directors, Supervisory Board, and General Director members;

- List of members registering and their capital contributions;

- Operation plan of the QTDND;

- Certificate from the People's Committee of the commune regarding ownership or usage rights of the QTDND headquarters.

D. IMPLEMENTATION ORGANIZATION

1. This Circular takes effect fifteen days from the date of signature. Previous regulations contrary to this Circular are no longer in force.

2. Credit Cooperatives established under Decree No. 42/CP dated April 29, 1997, are exempt from the transition procedures after the effective date of this Circular.

3. Credit Cooperatives and Rural Credit Cooperatives must implement the transition within the time frame specified by the Government.

Credit Cooperatives transitioning to the QTDND model under the Law on Cooperatives must fully transfer all books and records according to the prescribed format for QTDNDs.

4. The Head of the Governor's Office, the Director of the Department of Management of Credit Cooperatives, and heads of relevant units under the State Bank of Vietnam, the Governor of the State Bank Branches in provinces and cities, and the Chairmen of the Boards of Directors of QTDNDs and Rural Credit Cooperatives are responsible for strictly implementing the provisions of this Circular.

5. The Governors of State Bank Branches in provinces and cities are responsible for reporting the contents of this Circular to the People's Committees of provinces and cities and submitting plans for the transition and registration of QTDNDs in their respective areas.

Any issues encountered during implementation should be promptly reported to the State Bank of Vietnam for resolution.