Circular No. 31/2012/TT-NHNN on cooperative banks

 

CIRCULAR

Provisions on cooperative banks

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Organizations No. 47/2010/QH12 dated June 16, 2010;

Pursuant to Law on Enterprises No. 60/2005/QH11 dated November 29, 2005;

Based on the Law on Cooperatives No. 18/2003/QH11 dated November 26, 2003;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam shall stipulate the issuance of Licenses, organization and operation, powers and responsibilities of cooperative banks.

Chapter

I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the issuance of Licenses, organization and operation, powers and responsibilities of cooperative banks; procedures and formalities for converting Central Credit Cooperatives into cooperative banks.

Article 2. Applicability

1. Cooperative banks.

2. Central Credit Cooperatives.

3. Organizations and individuals related to participating in establishing, issuing Licenses, organizing and operating, powers and responsibilities of cooperative banks.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. First General Meeting is the first meeting of cooperative bank members, tasked with approving: Charter of the cooperative bank; Project for establishing the cooperative bank; Electing the Chairman and members of the Board of Directors, Head and members of the Supervisory Board for the first term; Deciding other issues related to the establishment of the cooperative bank.

2. Capital contribution establishing member status is the minimum capital contribution required to establish member status when joining a cooperative bank.

3. Annual Capital Contribution is the annual capital that members must contribute to maintain their status as members.

Article 4. Authority to Issue Licenses

1. The State Bank of Vietnam (hereinafter referred to as the State Bank) is the competent authority to examine and issue Licenses for establishment and operation (hereinafter referred to as License) for cooperative banks.

2. The State Bank has the right to refuse to issue a License if the organization applying for a License does not meet the provisions of the Law on Credit Institutions and this Circular.

Article 5. Term of Operation, Operating Area

1. The maximum term of operation of a cooperative bank is ninety-nine (99) years.

2. The operating area of a cooperative bank: throughout the territory of the Socialist Republic of Vietnam.

3. A cooperative bank may establish branches, representative offices, non-profit units within the country; representative offices abroad after being approved in writing by the State Bank.

Article 6. Nature and Objectives of Operations

A cooperative bank is a type of credit institution organized under the cooperative model with the main goal of linking and ensuring the safety of the system through financial support and monitoring activities within the credit cooperative system. Its main activities include regulating capital and conducting banking operations for members which are credit cooperatives.

Article 7. Principles for Establishing Documentation

1. The application for a cooperative bank License must be prepared in Vietnamese.

2. For copies of documents and certificates, they must be certified in accordance with the provisions of the law.

Chapter

II

REGULATIONS ON GRANTING LICENSES

Section 1

ISSUANCE OF COOPERATIVE BANK LICENSE

Article 8. Conditions for Issuing a Cooperative Bank License

1. Having a minimum charter capital equal to the statutory capital level prescribed by the Government at the time of application for establishment.

2. Members who are credit cooperatives and other legal entities must comply with the provisions of Clause 34 of this Circular.

3. Managers, executives, and members of the Supervisory Board must meet the standards and conditions stipulated in the Law on Credit Institutions and Articles 23, 24, and 25 of this Circular.

4. Having a Charter consistent with the provisions of the Law on Credit Institutions, the Law on Cooperatives, and other relevant laws.

5. Having a feasible establishment project and business plan for the first three (3) years of operation.

6. Having a headquarters, material facilities, and information technology systems that ensure the operation of the cooperative bank.

Article 9. Dossier for Application for License

1. Application for issuance of a License signed by the Chairman of the Board of Directors of the proposed cooperative bank (Annex 03 of this Circular).

2. Charter of the cooperative bank.

3. Project for establishing the cooperative bank, including:

a) The necessity of establishing a cooperative bank;

b) Name of the cooperative bank, location of the headquarters, term of operation, charter capital at the time of establishment, business content in compliance with the Law on Credit Institutions and this Circular.

c) Capital contribution structure of members, specifying members contributing 5% or more of the charter capital;

d) Organizational structure and personnel plan:

- Organizational personnel chart;

- Management, supervision, and operational machinery, including:

+ Board of Directors: Chairman, members of the Board of Directors;

+ Supervisory Board: Head, members of the Supervisory Board, specialized members;

+ General Director, Deputy General Directors, Chief Accountant, Branch Directors and equivalent positions as stipulated in the Charter of the cooperative bank;

đ) Risk management capability: Types of risks expected to arise during the course of operation (credit risk, operational risk, market risk, liquidity risk...) and measures to prevent and control these types of risks;

e) Information Technology:

- Financial investment plan for information technology;

- Ability to apply information technology, specifying: implementation time for IT investment; type of IT to be applied; staff and their ability to apply IT; ensuring the information system can integrate and connect with the State Bank's management system to provide information as required by the State Bank;

g) Development strategy, expansion of network operations, provision and development of banking services (clearly analyzing the services to be provided, types of customers...);

h) Internal control and audit system:

- Principles of operation of the internal control and audit system;

- Internal regulations as stipulated in Clause 2, Article 93 of the Law on Credit Institutions.

i) Proposed business plan for the first three years, at least including: Expected business results, minimum capital safety indicators, performance indicators, and explanation of the feasibility of the plan each year.

4. Documentation of those expected to participate in management, supervision, and operation:

a) List of personnel expected to participate in management, supervision, and operation;

b) Curriculum vitae (Annex 01 of this Circular), criminal record as prescribed by law;

c) Copy of Identity Card or passport or other lawful identification;

d) Public disclosure of related interests according to Article 118 of the Enterprise Law;

đ) Copies of certificates proving professional qualifications.

5. Documentation of members:

a) List of members contributing capital to the cooperative bank, including the following main contents:

- Name and main office location; Business registration certificate or establishment permit; amount of capital contribution, percentage of capital contribution, and capital contribution period;

- Full name; permanent residence address; nationality; identification number, date of issuance, and issuing authority of identity card or passport or other lawful personal identification for individuals who are capital contributors;

b) Application to join as a member of the cooperative bank;

c) Business registration certificate or establishment permit or equivalent document (for non-financial institution legal entities);

d) Approval document from the competent authority allowing the organization (excluding people's credit funds) to contribute capital to establish a cooperative bank (if applicable);

đ) Charter (for non-financial institution legal entities)

e) Power of attorney authorizing the legal representative (including the representative of contributed capital portion) to participate as a member at the cooperative bank in accordance with the law;

g) Identity card or passport or other lawful personal identification of the authorized legal representative of non-financial institution legal entities contributing capital to the cooperative bank;

h) Declaration of related parties of members that are not people's credit funds (Annex No. 02 of this Circular);

i) Financial report of the most recent year and financial report up to the latest date but not more than 90 days prior to the date of the application for participation in capital contribution (for non-financial institution legal entities);

k) Declaration specifying the capital contribution, number of shares held, and shareholding ratio of each member in other financial institutions;

6. Document confirming ownership or lawful right to use the location of the main office;

7. Resolution of the first General Assembly on the establishment of the cooperative bank;

8. Resolution of the first General Assembly on the election of the Chairman and members of the Board of Directors, Head and members of the Supervisory Board;

9. Decision of the Board of Directors appointing the position of General Director of the cooperative bank;

Article 10. Procedure for Issuing the License

1. The proposed cooperative bank shall prepare one set of documents in accordance with Article 7 and Article 9 of this Circular and submit it directly or by mail to the State Bank of Vietnam (Bank Inspection and Supervision Department);

2. Within thirty days from the date of receipt of the application for the issuance of the business license, the State Bank of Vietnam (Bank Inspection and Supervision Department) shall send a document to the proposed cooperative bank confirming receipt of all valid documents or requesting additional or completed documents as required;

3. Within one hundred eighty days from the date of confirmation of receipt of all valid documents, the State Bank of Vietnam shall issue the business license or send a document refusing to issue the business license stating the reasons;

Article 11. Commencement of Operations

1. A cooperative bank granted a business license in accordance with Section I Chapter II of this Circular must register for business, disclose information, and report commencement conditions in accordance with Articles 25 and 26 of the Law on Credit Institutions;

2. A cooperative bank must send a direct letter or by mail to the State Bank of Vietnam branch in the province or centrally administered city where the cooperative bank's main office is located, notifying the commencement conditions specified in Clause 1 of this Article at least fifteen days before the planned commencement date;

Section 2

TRANSITION OF CENTRAL PEOPLE'S CREDIT FUNDS TO COOPERATIVE BANKS

Article 12. Procedure and Examination of the Application for Approval to Convert and Issue Cooperative Bank License

1. The Central Credit Cooperative Fund must convene the Conversion Congress to convert the Central Credit Cooperative Fund into a cooperative bank (hereinafter referred to as the Conversion Congress) according to Article 13 of this Circular, and prepare an application for the State Bank's approval of the conversion according to Article 14 of this Circular.

2. Within a maximum period of sixty working days from the date of the State Bank's approval of the conversion of the Central Credit Cooperative Fund into a cooperative bank, the Central Credit Cooperative Fund must organize the first General Meeting of Members to carry out the following tasks:

a) Approve the Charter of the cooperative bank.

b) Officially elect the positions of Chairman and members of the Board of Management, Head and members of the Supervisory Board of the cooperative bank for the first term according to the list of candidates prescribed in Clause 1, Article 22 of this Circular.

c) Approve the business plan for the first three years.

3. Within a maximum period of fifteen working days from the date of organizing the first General Meeting of Members, the Central Credit Cooperative Fund must prepare an application for the cooperative bank license according to the provisions of Article 16 of this Circular.

4. The Banking Inspection and Supervision Authority shall be responsible for receiving, examining the application, and submitting it to the Governor of the State Bank for approval of the conversion and issuance of the cooperative bank license.

Article 13. Conversion Congress

1. The Conversion Congress to convert the Central Credit Cooperative Fund into a cooperative bank (hereinafter referred to as the Conversion Congress) shall be convened by the Board of Management of the Central Credit Cooperative Fund. The organization of the Conversion Congress may take the form of a full membership congress or a representative congress of members of the Central Credit Cooperative Fund, with the method of electing member representatives to attend the Conversion Congress decided by the Board of Management of the Central Credit Cooperative Fund.

2. The Conversion Congress has the following tasks:

a) Approve the Proposal to convert the Central Credit Cooperative Fund into a cooperative bank. The Proposal to convert the Central Credit Cooperative Fund into a cooperative bank must minimally include the following contents:

- The necessity to convert the Central Credit Cooperative Fund into a cooperative bank;

- Name of the cooperative bank, location of the main office, duration of operation, charter capital;

- Content of activities in accordance with the Law on Credit Organizations and this Circular;

- Organizational structure, management, and operation;

- List of proposed personnel, detailing their professional qualifications and work experience in the banking sector:

+ Chairman and members of the Board of Management;

+ Head and members of the Supervisory Board;

+ General Director.

b) Approve the draft Charter of the cooperative bank;

c) Approve the list of cooperative bank members.

Article 14. Documents, Procedure, and Formalities for Approval of the Conversion of the Central Credit Cooperative Fund into a Cooperative Bank

1. After the Conversion Congress, the Central Credit Cooperative Fund shall prepare one set of documents to apply for the State Bank's approval of the conversion of the Central Credit Cooperative Fund into a cooperative bank, to be submitted directly or via postal service to the State Bank (Banking Inspection and Supervision Authority), including:

a) A letter from the Chairman of the Board of Management of the Central Credit Cooperative Fund requesting the State Bank's approval of the conversion of the Central Credit Cooperative Fund into a cooperative bank;

b) Minutes of the Conversion Congress;

c) Resolutions of the Conversion Congress, which minimally include the following contents:

- Approval of the Proposal to convert the Central Credit Cooperative Fund into a cooperative bank;

- Approval of the draft Charter of the cooperative bank;

- Approval of the list of cooperative bank members.

d) The Proposal to convert the Central Credit Cooperative Fund into a cooperative bank;

đ) The Charter of the cooperative bank;

e) The list of cooperative bank members.

2. Within ten working days from the date of receipt of complete and valid documents, the State Bank shall issue a decision approving the conversion of the Central Credit Cooperative Fund into a cooperative bank.

Article 15. Conditions for Issuing a Cooperative Bank License

1. Managers, executives, and members of the Supervisory Board must meet the standards and conditions stipulated for Central Credit Cooperatives at the time of requesting conversion.

2. Have Bylaws consistent with the Law on Credit Institutions, the Law on Cooperatives, and other relevant legal provisions.

3. Possess a main office, physical facilities, and information technology systems that ensure the operation of the bank.

Article 16. Documents for Requesting a Cooperative Bank License

1. A document from the Chairman of the Board of Management of the Central Credit Cooperative proposing the State Bank to issue a Cooperative Bank License;

2. The Bylaws of the Cooperative Bank approved by the first General Assembly;

3. Minutes of the first General Assembly meeting;

4. Resolutions of the first General Assembly approving, including at least the following contents:

a) Approval of the Bylaws of the Cooperative Bank;

b) Official election results for positions on the Board of Management and the Supervisory Board;

c) Approval of the three-year business plan of the Cooperative Bank.

5. Membership documents for credit cooperatives, including: List, location of headquarters, amount of capital contribution.

6. Membership documents for other legal entities that are not credit cooperatives (if any), including: List, location of headquarters, amount of capital contribution.

7. A document confirming the right to ownership or lawful use of the location of the Cooperative Bank's headquarters.

8. Decision of the Board of Management appointing the position of General Director of the Cooperative Bank.

9. The three-year business plan approved at the first General Assembly.

Article 17. Procedure and Formalities for Issuing a Cooperative Bank License

1. Within fifteen working days from the date of convening the first General Assembly, the Central Credit Cooperative shall prepare one set of documents in accordance with Article 16 of this Circular and submit them directly or by mail to the State Bank (Supervision and Inspection Department).

2. Within ten working days from the date of receiving complete and valid documents, the State Bank shall decide to issue the License.

Section 3

LICENSE AND LICENSE FEES

Article 18. Content of the License

1. The License must include the following main contents:

a) License number; issuing authority; date of issuance;

b) Name of the Cooperative Bank:

- Full name and abbreviated name in Vietnamese;

- Full name and abbreviated name in English (if applicable);

- Trading name (if applicable).

c) Location of the main office;

d) Content and scope of operations;

đ) Operating area;

e) Charter capital;

g) Term of operation.

2. The State Bank shall specify the content, scope of operations, operating area, and duration of operations in the License according to the model prescribed in Appendix No. 05 of this Circular.

Article 19. License Fee

1. The level of the license fee for cooperative banks shall be implemented in accordance with the laws on fees and charges.

2. Within fifteen working days from the date of issuance of the License, the cooperative bank must pay the fee at the State Bank's branch.

3. The fee stipulated in Clause 1 of this Article shall not be deducted from the charter capital and shall not be refunded under any circumstances.

Article 20. Use of the License

1. The cooperative bank issued a License must operate under the name and within the scope of activities specified in the License, and may not engage in any business activities outside those specified in the License issued by the State Bank.

2. The cooperative bank may not erase, buy, sell, transfer, lease, or lend the License.

3. In case the License is lost, torn, burned, or destroyed in another manner, the cooperative bank must submit a document explaining the reason directly or by mail to the State Bank (Supervision and Inspection Department) requesting the State Bank to consider issuing a copy of the License from the original record according to the law. Within two days from the date of receipt of the request, the State Bank will examine and issue a copy from the original for the cooperative bank.

Chapter

III

BOARD OF MANAGEMENT, SUPERVISORY BOARD, GENERAL DIRECTOR OF THE COOPERATIVE BANK

Article 21. Organization and operation of the Board of Directors, Supervisory Board, General Director

1. The Board of Directors of the cooperative bank is the governing body of the cooperative bank with the authority to act on behalf of the cooperative bank to decide and implement the rights and obligations of the cooperative bank, except for matters within the jurisdiction of the Members' Congress.

2. The Supervisory Board of the cooperative bank carries out internal auditing, monitoring, and evaluating compliance with laws, internal regulations, Bylaws, resolutions, and decisions of the Members' Congress and the Board of Directors.

3. The General Director is the highest executive officer of the cooperative bank, accountable to the Board of Directors for the performance of his rights and obligations.

4. The State Bank appoints representatives to manage the state capital support at the cooperative bank who meet the standards and conditions stipulated in the Law on Credit Institutions and this Circular to be elected by the Members' Congress into the positions of Chairman of the Board of Directors, Head of the Supervisory Board, and member of the Board of Directors兼任总经理的合作社银行。

5. The organization and operation of the Board of Directors, Supervisory Board, and General Director of the cooperative bank shall be carried out in accordance with the provisions of the Law on Credit Institutions and Articles 22, 23, 24, 25, 26, 27, and Article 28 of this Circular.

Article 22. Approval of the list of candidates for election or appointment as members of the Board of Directors, members of the Supervisory Board, and General Director

1. The list of candidates for election or appointment as members of the Board of Directors, members of the Supervisory Board, and General Director of the cooperative bank must be approved in writing by the State Bank before such elections or appointments take place. Those elected or appointed as members of the Board of Directors, members of the Supervisory Board, and General Director of the cooperative bank must be from the list that has been approved by the State Bank.

2. The cooperative bank must send a written notice directly or through postal service to the State Bank (Bank Inspection and Supervision Authority) the list of individuals elected or appointed to the positions specified in Clause 1 of this Article within 10 (ten) working days from the date of election or appointment.

Article 23. Standards for the Chairman and members of the Board of Directors

1. The Chairman of the Board of Directors must meet the following criteria:

a) Having worked in the banking sector for at least 05 (five) years;

b) Having held a managerial or executive position in an organization operating in the banking sector for at least 02 (two) years;

c) Holding a bachelor's degree or higher in one of the fields of economics, finance, accounting, auditing, banking, or law.

2. Members of the Board of Directors must meet the following criteria:

a) Having worked in the banking sector for at least 02 (two) years;

b) Having held a managerial or executive position in an organization operating in the banking sector for at least 01 (one) year;

c) Holding a bachelor's degree or higher in one of the fields of economics, finance, accounting, auditing, banking, or law.

3. The Chairman and members of the Board of Directors may not be the subjects defined in Article 33 and Article 34 of the Law on Credit Institutions.

Article 24. Standards for members of the Supervisory Board

1. Members of the Supervisory Board must meet the following criteria:

a) Having worked in one of the fields of accounting, auditing, finance, or banking for at least 03 (three) years;

b) Holding a bachelor's degree or higher in one of the fields of economics, finance, accounting, auditing, or banking.

2. Full-time members of the Supervisory Board must reside in Vietnam during their term of office and may not concurrently hold other positions or work at credit institutions or other enterprises.

3. Members of the Supervisory Board may not be the subjects defined in Article 33 and Article 34 of the Law on Credit Institutions.

Article 25. Standards for the General Director

1. Having worked in the banking sector for at least 05 (five) years;

2. Having held a managerial or executive position at an organization operating in the banking sector for at least 03 (three) years;

3. Holding a bachelor's degree or higher in one of the following fields: economics, finance, banking, business administration, or law.

4. Reside in Vietnam during their term of office.

5. Not being an object as defined in Articles 33 and 34 of the Law on Credit Institutions.

Article 26. Duties and Powers of the Chairman of the Board of Directors

The Chairman of the Board of Directors is the legal representative of the cooperative bank, responsible for performing the following duties and powers:

1. Establishing the program and plan of activities of the Board of Directors, assigning tasks, monitoring, and supervising the implementation of these tasks by members of the Board of Directors.

2. Preparing the content, program, convening, and chairing meetings of the Board of Directors and the Members' Congress.

3. Being accountable to the Members' Congress and the Board of Directors for assigned work.

4. Signing documents of the Members' Congress and the Board of Directors in accordance with the law and the Charter of the cooperative bank.

5. Performing other rights and duties as stipulated in the Charter of the cooperative bank.

Article 27. Meetings of the Board of Directors

1. A meeting of the Board of Directors is valid when at least 2/3 (two-thirds) of the members of the Board of Directors attend. The Board of Directors operates based on the principle of collective responsibility and decides by majority vote. In case of voting where the number of votes in favor and against are equal, the vote of the person chairing the meeting shall be decisive.

2. In the event that the first regular meeting of the Board of Directors is convened but does not have enough attendees as required, the Chairman of the Board of Directors must convene a second meeting within 15 working days thereafter. If two consecutive meetings of the Board of Directors do not have enough attendees, the Chairman of the Board of Directors has the responsibility to report to the Members' Congress during the nearest Members' Congress about the status of Board of Directors members who did not attend the meeting and take appropriate measures.

3. The content and conclusions of each session of the Board of Directors must be recorded in the minutes; the minutes of the meeting of the Board of Directors must have signatures of the chairperson and the secretary of the session. The chairperson and the secretary are jointly responsible for the accuracy and truthfulness of the minutes of the Board of Directors meeting. Board of Directors members have the right to reserve their opinions, which are recorded in the minutes of the session.

Article 28. Duties and Powers of the Head of the Supervisory Board

1. Being responsible for assigning and directing members of the Supervisory Board to implement the duties and powers of the Supervisory Board.

2. Establishing programs and plans for inspection, supervision, and monitoring the performance of specific tasks by each member.

3. Convening and chairing meetings of the Supervisory Board.

4. Delegating authority to one of the members of the Supervisory Board to act as the Head during his absence.

5. Proposing the Board of Directors to convene an extraordinary session to handle cases of violation of laws and regulations and the Charter of the cooperative bank.

6. Convening and chairing an extraordinary Members' Congress as provided for in Clause 3, Article 37 of this Circular.

7. Performing other duties and powers as prescribed in the Charter of the cooperative bank.

Chapter

IV

CHARTER CAPITAL, CONTRIBUTED CAPITAL, TRANSFER AND REFUND OF CONTRIBUTED CAPITAL OF THE COOPERATIVE BANK

Article 29. Registered Capital

1. Registered capital is the amount of capital recorded in the Charter of the cooperative bank, including:

a) Capital contributions from member people's credit funds;

b) State support capital;

c) Capital contributions from other legal entities.

2. Members participating in capital contribution shall not use entrusted capital or borrowed capital under any form to establish a cooperative bank and must clearly identify the source of capital, commit to, and be responsible for the legality of the contributed capital.

3. The capital participating in establishing a cooperative bank must comply with the current laws and ensure the following conditions:

a) For legal entities licensed in the banking, securities, and insurance sectors: The capital contribution must comply with the relevant laws;

b) For legal entities operating in industries requiring statutory capital: The maximum committed capital contribution shall not exceed the net worth minus the statutory capital;

c) For other legal entities: The maximum committed capital contribution shall equal the net worth minus the difference between long-term investments and long-term debts (specific determination method according to Appendix No. 04 of this Circular).

Article 30. Forms of Contributing Registered Capital

The registered capital of a cooperative bank can be contributed in Vietnamese dong and other assets.

In cases where capital is contributed in other assets, such assets must have legal documents proving ownership or usage rights (assets necessary for the direct operation of the cooperative bank). The valuation and transfer of ownership of contributed assets shall be carried out in accordance with the current legal regulations.

Article 31. Contributing Capital to Participate in Cooperative Banks

1. The minimum level of capital contribution to establish membership status when joining a cooperative bank is 10,000,000 (ten million) Vietnamese dong.

2. The annual minimum capital contribution for members of a cooperative bank is 1,000,000 (one million) Vietnamese dong.

The specific level of capital contribution is decided by the Member Assembly. Members of a cooperative bank are not required to make annual capital contributions in the first financial year since the commencement of operations. Annual capital contributions must be completed no later than thirty days from the end date of the Member Assembly.

3. The total capital contribution (including: capital contribution to establish membership status and annual capital contribution) maximum of a member (including transferred capital) is decided by the Member Assembly and recorded in the Charter of the cooperative bank, but shall not exceed 30% of the registered capital of the cooperative bank at the time of capital contribution and transfer, except for the state capital in the cooperative bank.

Article 32. Dividend Distribution Method

Dividend distribution based on capital contribution (capital contribution to establish membership status and annual capital contribution), and the extent of using services of the cooperative bank is decided by the Member Assembly and in compliance with the provisions of the law.

Article 33. Transfer and Refund of Capital Contributions

1. The transfer of capital contributions by members is carried out as follows:

a) Members who are people's credit funds: may only transfer part of their capital contribution (but must maintain the minimum level of capital contribution to establish membership status and annual capital contribution) to other legal entities meeting the conditions stipulated in Article 34 of this Circular;

b) Members who are not people's credit funds: may transfer all or part of their capital contribution to other legal entities meeting the conditions stipulated in Article 34 of this Circular. In case of transferring part of the capital contribution, the member must maintain the minimum level of capital contribution to establish membership status and annual capital contribution as stipulated in Article 31 of this Circular.

2. When ceasing membership status as prescribed in Article 35 of this Circular, members may transfer their capital contribution, rights, and obligations to other legal entities or be refunded their capital contribution, interest on capital contribution (if any), and other benefits as stipulated in Clause 4 of this Article.

3. When ceasing membership status, the transfer of capital contribution to other legal entities must meet the conditions stipulated in Article 34 of this Circular.

4. The refund of capital contribution, interest on capital contribution (if any) to members must be based on the financial situation of the cooperative bank at the end-of-year settlement and only considered when the following conditions are met:

a) Not reducing the registered capital of the cooperative bank below the statutory capital;

b) Not leading to a violation of the minimum capital adequacy ratio as prescribed by the State Bank;

c) Ensuring liquidity at that point in time;

d) The member has settled all financial obligations towards the cooperative bank including:

- Fully repaying all loan amounts (both principal and interest);

- Fully compensating all losses they are responsible for or jointly liable for;

- Handling business losses and operational risks corresponding to the proportion of capital contribution that the member shares responsibility for, as decided by the Member Assembly.

5. The refund or transfer of the entire capital contribution of a member must be approved by the Member Assembly.

Chapter

V

PROVISIONS ON MEMBERS OF COOPERATIVE BANKS

Article 34. Conditions to become a member

1. For people's credit funds and other credit organizations: Not being subject to special control measures as provided for in Clause 3, Article 146 of the Law on Credit Organizations at the time of requesting to join as a member.

2. For other legal entities: Operating profitably in the year immediately preceding the year of requesting to join as a member.

3. The subjects specified in Clauses 1 and 2 of this Article must contribute their share capital as prescribed in Article 31 of this Circular, submit a request form, and appoint a legal representative to participate.

Article 35. Termination of Member Status

A cooperative bank member terminates their member status when:

1. The member ceases to be a legal entity.

2. The member is a legal entity other than a People's Credit Fund:

a) Does not have a representative meeting the conditions stipulated by law and the Charter of the Cooperative Bank;

b) Does not contribute the annual share capital as prescribed in Clause 2, Article 31 of this Circular;

c) Has transferred their entire share capital to another legal entity as prescribed in Clause 1, Article 33 of this Circular.

3. The member is approved to leave or expelled from the Cooperative Bank by the Members' Assembly in accordance with the provisions of law and the Charter of the Cooperative Bank.

Chapter

VI

MEMBERS' ASSEMBLY OF THE COOPERATIVE BANK

Article 36. First Members' Assembly

The first Members' Assembly is a meeting of all members or their representatives of the Cooperative Bank to implement the following minimum contents:

1. Approving the project to establish the Cooperative Bank.

2. Approving the Charter of the Cooperative Bank.

3. Electing the positions of Chairman and members of the Board of Directors, Head and members of the Supervisory Board for the first term according to the list of candidates prescribed in Clause 1, Article 22 of this Circular.

4. Approving the business plan for the first three years.

Article 37. Members' Assembly of the Cooperative Bank

1. The Members' Assembly is the highest decision-making body of the Cooperative Bank, performing tasks and exercising powers as prescribed in Article 80 of the Law on Credit Organizations.

2. The Members' Assembly must convene annually once a year, convened by the Board of Directors within three months from the end of the fiscal year.

3. Extraordinary Members' General Meetings shall be convened in the following cases:

a) The Board of Directors convenes if it deems necessary for the benefit of the Cooperative Bank or upon a written request from at least one-third of the total number of members;

b) Upon the request of the Supervisory Board as prescribed in Clause 6, Article 84 of the Law on Credit Organizations;

c) Upon the request of the State Bank in cases where events occur affecting the safety of the Cooperative Bank's operations;

d) Other cases as prescribed in the Charter of the Cooperative Bank.

Within fifteen days from the date of receipt of the written request to convene an extraordinary Members' Assembly from at least one-third of the total number of members, if the Board of Directors does not proceed to convene the Members' Assembly, the members who requested the convening of the Members' Assembly may request the State Bank to supervise the organization and conduct of the meeting if deemed necessary.

Article 38. Authority of the Members' Congress

The Members' Congress of a cooperative bank has the authority to discuss and decide on the following matters:

1. Annual business operation report; Report on the activities of the Board of Directors and the Supervisory Board.

2. Proposal for profit distribution.

3. Business operation direction for the upcoming year.

4. Increase or decrease in charter capital, contribution levels of members.

5. Election, appointment, and removal of the Chairman and other members of the Board of Directors, Head and other members of the Supervisory Board.

6. List of new members admitted; expulsion of members from the cooperative bank at the proposal of the Board of Directors.

7. Amendment and supplementation of the Charter of the cooperative bank.

8. Dissolution and bankruptcy of the cooperative bank.

9. Other matters proposed by the Board of Directors, the Supervisory Board, or at least one-third (one third) of the total number of cooperative bank members.

Article 39. Organization of the Members' Congress

1. The Members' Congress of a cooperative bank may be organized in the form of a General Meeting of All Members or a Delegates' Meeting (referred to collectively as the Members' Congress).

2. The General Meeting of All Members or the Delegates' Meeting of a cooperative bank have the same duties and powers. Based on actual circumstances, the Board of Directors decides on the method of organizing the Members' Congress, the method of electing delegates, and the number of delegates participating in each session of the Members' Congress.

3. The number of delegates summoned to attend the Delegates' Meeting must not be less than 20% of the total number of members.

4. The Members' Congress is considered valid when at least two-thirds (two thirds) of the members or delegates summoned attend the meeting.

5. In cases where the number of members (delegates) attending does not meet the requirements stipulated in Clause 4 of this Article, the Board of Directors or the Supervisory Board must temporarily postpone the Members' Congress and reconvene within thirty (30) days from the date of postponement of the Members' Congress (for annual Members' Congresses, the temporary postponement and reconvening period shall not exceed the time limit for organizing the Members' Congress specified in Clause 2 of Article 37 of this Circular).

6. Decisions to amend and supplement the Charter, dissolve, or declare bankruptcy of the cooperative bank can only be passed if at least three-quarters (three quarters) of the total number of members or delegates present at the Members' Congress vote in favor.

7. Decisions on other issues are passed if more than half (one half) of the delegates present at the Members' Congress vote in favor.

8. Voting at the Members' Congress is not dependent on the amount of contributed capital or the position held by members in the cooperative bank. Each member has only one voting ballot. The voting ballot of a delegate corresponds to the number of members that the delegate represents.

Article 40. Notice of Summoning the Members' Congress

The entity summoning the Members' Congress must send a notice of meeting invitation to each member or delegate at least seven (7) working days before the opening day if the Charter of the cooperative bank does not specify a different time limit. The meeting invitation notice must include the time, location, agenda, and discussion materials.

Chapter

VII

ACTIVITIES OF THE COOPERATIVE BANK

Article 41. Activities with member people's credit funds

1. Open deposit accounts for member people's credit funds.

2. Accept deposits and provide capital adjustment loans to member people's credit funds according to the Capital Adjustment Regulation approved by the Cooperative Bank Council and publicly disclosed to all member people's credit funds. The content of the Capital Adjustment Regulation must include the following principles:

a) Idle capital of member people's credit funds must be deposited into the capital adjustment deposit account at the cooperative bank and maintained at a minimum level specified by the Cooperative Bank Member Assembly.

b) Member people's credit funds may borrow capital adjustment loans from the cooperative bank when they have a need or temporary liquidity difficulties.

c) Clear and transparent interest rate mechanisms for deposit and loan capital adjustments; ensuring mutual support among members within the system, contributing to enhancing the system's connectivity and safety, not solely for profit objectives.

d) Provisions on conditions, procedures, and related documents concerning capital adjustment.

3. Develop, promote, and apply new products and services in the activities of member people's credit funds to meet the needs of member people's credit fund members and serve the development of community benefits in the area.

4. Carry out other banking activities in accordance with the provisions of the Law on Credit Organizations for member people's credit funds.

Article 42. Activities with customers who are not member people's credit funds

1. The cooperative bank may carry out certain banking activities and other business operations as stipulated in Section 2, Chapter IV of the Law on Credit Organizations after obtaining written approval from the State Bank.

2. The cooperative bank may lend to customers who are not member people's credit funds after prioritizing the fulfillment of capital adjustment needs of member people's credit funds.

3. In necessary cases, the State Bank may prescribe restrictions on the provision of credit by cooperative banks to customers who are not member people's credit funds.

Article 43. Application of safety regulations in banking activities

The cooperative bank implements safety regulations in banking activities in accordance with the Law on Credit Organizations and specific guidelines of the State Bank.

Chapter

VIII

RIGHTS AND RESPONSIBILITIES OF THE COOPERATIVE BANK TOWARDS PEOPLE'S CREDIT FUNDS

Article 44. Powers

2. Requesting savings and credit cooperatives to provide reports for the purpose of capital adjustment and system safety monitoring.

3. Inspecting and supervising the use of borrowed capital and the ability to repay loans of member savings and credit cooperatives at credit cooperatives."

3. Inspect and supervise the operational activities and compliance with safety regulations of people's credit funds.

4. Audit, guide, and assist in internal audits of member people's credit funds.

5. Provide opinions on personnel plans of people's credit funds before the people's credit funds proceed with the election or appointment of members of the Board of Directors, Supervisory Board, and General Director of the people's credit funds.

Article 45. Responsibilities

1. Guide and train banking and information technology skills for member credit unions.

2. Support banking activities for member credit unions in accordance with the provisions of the law.

3. Participate in handling situations where member people's credit funds encounter difficulties or show signs of operational instability.

4. Manage the capital adjustment deposits of the system of people's credit funds.

5. Fulfill other responsibilities as prescribed by the Charter and laws.

Chapter

IX

IMPLEMENTATION

Article 46. Responsibilities of the Banking Inspection and Supervision Authority

1. Serve as the focal point for resolving issues during the implementation of this Circular.

2. Coordinate with other units within the State Bank to implement and organize the review of applications for Cooperative Bank licenses, and make recommendations to the Governor of the State Bank for decisions on issuing Cooperative Bank licenses.

3. Lead and coordinate with relevant units to conduct inspection and supervision of cooperative bank activities.

4. Provide information and data to competent agencies and units regarding the activities of cooperative banks and their compliance with relevant laws.

Article 47. Responsibilities of Units under the State Bank of Vietnam

1. Monitor and coordinate with Banking Inspection and Supervision Authorities to manage cooperative bank activities within their functional scope and authority.

2. In necessary cases, participate in coordinating with Banking Inspection and Supervision Authorities to review applications for Cooperative Bank establishment licenses according to the directives of the Chairman of the Licensing Committee.

Chapter

X

IMPLEMENTING PROVISIONS

Article 48. Transitional Provisions

1. The cooperative bank shall succeed and continue to perform all rights, obligations, and lawful benefits, as well as be responsible for handling all existing and arising issues from the Central People's Credit Fund in accordance with the provisions of the Law on Credit Institutions and relevant laws.

2. The cooperative bank and customers shall continue to implement contracts and transactions signed between the Central People's Credit Fund and customers that are still valid until the expiration date of the contract as agreed. Any amendments, supplements, or termination of contracts and transactions shall be carried out based on the agreement of all parties, in compliance with the provisions of the Law on Credit Institutions and relevant laws.

Article 49. Effective Date

This Circular takes effect from January 1, 2013.

Article 50. Implementation organization

The Head of the Office, the Inspector General of Banking Supervision, Heads of units under the State Bank, Governors of the State Bank branches in provinces and centrally-administered cities, Chairmen and members of the Board of Directors, Heads and members of the Supervisory Board, General Directors of cooperative banks, related organizations, and individuals are responsible for implementing this Circular./.