Decision No. 59/2007/QD-BTC Approves the Charter on Organization and Operation of the Cooperative Development Support Fund

Pursuant to …;

Approving the Charter on organization and operation of the Cooperative Development Support Fund

Cooperative Development Support Fund

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THE MINISTER OF FINANCE

Pursuant to the Law on Cooperatives dated November 26, 2003;

Pursuant to Decree No. 77/2003/ND-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance

Pursuant to Decree No. 88/2005/ND-CP dated July 11, 2005 of the Government on certain support policies and incentives for cooperative development;

Pursuant to Decision No. 246/2006/QD-TTg dated October 27, 2006 of the Prime Minister on the establishment of the Cooperative Development Support Fund;

At the proposal of the Chairman of the Vietnam Union of Cooperatives, the Director of the Department of Financial Institutions and Financial Organizations,

DECISION:

Article 1. This Decision promulgates the Charter on organization and operation of the Cooperative Development Support Fund.

Article 2. This Decision takes effect 15 days from the date of publication in the Official Gazette.

Article 3The Chairman of the Vietnam Union of Cooperatives, the Director of the Department of Financial Institutions and Financial Organizations, the Chairman of the Management Board of the Cooperative Development Support Fund, the Director of the Cooperative Development Support Fund, and the Heads of relevant units shall be responsible for implementing this Decision./.

CHARTER

ORGANIZATION AND OPERATIONS OF THE COOPERATIVE DEVELOPMENT SUPPORT FUND

(Annexed to Decision No. 59/2007/QD-BTC dated July 11, 2007 of the Minister of Finance)

PART I
GENERAL PROVISIONS

Article 1. Legal status of the Cooperative Development Support Fund

1. The Cooperative Development Support Fund is a state financial organization established pursuant to Decision No. 246/2006/QD-TTg dated October 27, 2006 of the Prime Minister and is subject to management by the Vietnam Union of Cooperatives.

2. The Cooperative Development Support Fund has legal personality, registered capital, separate balance sheets, seals, and bank accounts at the State Treasury and domestic and foreign commercial banks.

3. The Cooperative Development Support Fund has the English name "Cooperative Assistance Fund" and the abbreviation "CAF".

4. The headquarters of the Cooperative Development Support Fund is located in Hanoi.

Article 2. Purpose of operations

The operations of the Cooperative Development Support Fund aim to support the development of cooperatives and cooperative unions, support activities for product innovation and development; technological and technical innovation and development; market development and expanded product consumption; construction and replication of exemplary cooperative models and cooperative union models.

Article 3. Principles of Operation

1. The operations of the Cooperative Development Support Fund are not for profit, but must ensure the preservation of capital and cover management costs.

2. The Cooperative Development Support Fund is exempt from tax and budget contributions for activities supporting the development of cooperatives and cooperative unions as specified in Article 2 of this Charter.

PART II
TASKS AND POWERS OF THE COOPERATIVE DEVELOPMENT SUPPORT FUND

Article 4. Tasks of the Cooperative Development Support Fund

1. Receiving state budget funds assigned; mobilizing voluntary contributions from cooperatives and cooperative unions, and financial resources both domestically and internationally as prescribed by law to create sources of funding for cooperative development.

2. Receiving, managing, and utilizing sponsored and donated funds, entrusted funds from domestic and international organizations and individuals to serve the Fund’s activities and support the development of cooperatives and cooperative unions.

3. Implementing investment loans and providing repayable support to cooperatives and cooperative unions with feasible investment projects and business plans.

4. Managing the Fund’s capital and assets in accordance with the law.

5. Performing other tasks assigned by the Prime Minister and the Chairman of the Vietnam Union of Cooperatives.

Article 5. Powers of the Cooperative Development Support Fund

1. Right to mobilize, manage, and utilize various sources of funds in accordance with the law and this Charter.

2. Right to select projects and plans to decide on support; entrust support.

3. Right to hire organizations and experts to review and assess loan projects and plans, requests for support and sponsorship from the Fund.

4. Right to request entities with ongoing or supported projects to provide relevant information about their operational, production, business, financial, and credit situations.

5. Regularly or unexpectedly inspect the management and use of support funds as well as issues related to project implementation by supported cooperatives and cooperative unions.

6. Cease support, loan, or recover funds ahead of schedule, sell collateral to recover debts; initiate legal proceedings against entities and individuals violating commitments to the Fund or regulations related to the Fund's activities.

7. Refuse to provide information, financial resources, or human resources to any organization or individual if such requests contravene this Charter and the law.

8. Directly engage with domestic and international organizations and individuals to perform the Fund’s tasks.

9. Send Fund staff abroad for research, study, work, observation, and survey in accordance with the law.

10. Use idle funds not originating from the state budget to purchase government bonds in accordance with the law.

Chapter III
OPERATIONS OF THE COOPERATIVE DEVELOPMENT SUPPORT FUND

Article 6. Activities of the Cooperative Development Support Fund

1. Mobilizing and receiving domestic and international financial resources to support cooperative and cooperative union development in accordance with the law and this Charter.

2. Providing investment loans.

3. Providing repayable support.

4. Entrusting loans and support.

5. Accepting entrustment.

6. Receiving, managing, and utilizing sponsored and donated funds from domestic and international organizations and individuals to serve the Fund’s activities and support cooperative and cooperative union development.

7. Purchasing government bonds.

8. Other activities as prescribed by law and this Charter but shall not include investment in securities or contribution under the form of securities trading.

Article 7. Investment Loans

1. The objects eligible for investment loans are cooperatives and cooperative unions with needs and feasible projects for investment capital to innovate and develop products, innovate and develop technological techniques; develop markets, expand product consumption; build, develop and replicate new models, exemplary advanced models. Based on the Fund's capital capacity, loan demand, the Management Board may specify a priority lending portfolio for each period.

2. Loan conditions, application procedures, loan process, capital recovery, re-lending, debt extension, transfer and handling of overdue debts shall be carried out according to the Regulation issued by the Management Board. An investor meeting all the following conditions may be considered for a loan from the Cooperative Development Support Fund:

2.1. Belongs to the object defined in Clause 1 of this Article.

2.2. Has completed investment procedures as prescribed by the State.

2.3. Has a production and business plan that generates profit and ensures repayment of principal and interest.

2.4. Has committed to purchasing insurance for assets formed from borrowed capital that fall within the compulsory insurance category at a licensed insurance company in Vietnam.

3. Loan amount: The loan amount for each specific project shall be reviewed and decided by the Fund Director, but shall not exceed 80% of the total investment amount of the project.

4. The interest rate for loans from the Cooperative Development Support Fund shall be stipulated by the Minister of Finance.

5. The loan term shall be reviewed and decided by the Fund Director based on the ability to recover capital, suitability with the characteristics of each project, and the borrower's ability to repay, but shall not exceed five years.

6. Loan Guarantees

6.1. The Cooperative Development Support Fund decides on guarantee forms for each project, including collateral, mortgage, third-party guarantee, asset guarantee formed from borrowed capital, or no asset guarantee, and assumes responsibility as prescribed by law.

6.2. Procedures and formalities for guaranteeing loans, handling guaranteed assets shall be carried out according to the provisions of the law on loan guarantees.

7. Risk Handling and Authority to Handle Risks

7.1. For projects encountering risks due to objective and unavoidable factors (natural disasters, fires, earthquakes, epidemics...), leading to inability to repay part or all of the loan, risk handling measures such as debt extension, debt write-off, and debt cancellation (including principal and interest) shall be considered and handled.

7.2. The Director of the Cooperative Development Support Fund decides on debt extension. The maximum extension period shall be one-third of the repayment period stated in the initial credit contract.

7.3. Debt write-off shall be considered and decided by the Chairman of the Cooperative Development Support Fund's Management Board based on the proposal of the Fund Director.

a. The maximum write-off period is three years. During the write-off period, the project owner does not have to pay interest on the written-off debt, but must fulfill the obligation to repay any remaining interest owed to the Fund (if any). At the end of the write-off period, the project owner must fully repay the Fund the principal that was written off.

b. At the end of the write-off period, if the project owner has the ability to repay but deliberately delays repayment, the Fund shall transfer the case file to the competent authority and initiate legal proceedings against the project owner according to the law; if the project owner truly cannot repay, the Fund shall consider writing off the debt according to the regulations.

7.4. Interest write-off and principal write-off shall be considered and decided by the Cooperative Development Support Fund's Management Board based on the proposal of the Fund Director. This applies to cases specified in Subparagraph 7.1, Clause 7, Article 7 of this Charter where the project investor cannot repay after exhausting all available payment sources.

Article 8. Capital Repayment Support

1. The objects eligible for capital repayment support from the Cooperative Development Support Fund are cooperatives and cooperative unions with needs and feasible plans to innovate and develop products, innovate and develop technological techniques; develop markets, expand product consumption; build, develop and replicate new models, exemplary advanced models.

2. Support conditions, application procedures, and capital recovery shall be carried out according to the regulation issued by the Cooperative Development Support Fund's Management Board.

3. The level of support depends on each project, but shall ensure a maximum of 80% of the implementation costs for a project.

4. The repayment term for the support shall be reviewed and decided by the Cooperative Development Support Fund Director for each project, but shall not exceed three years.

5. To cover management costs, the Cooperative Development Support Fund may charge a management fee when providing capital repayment support for cooperative applications. The management fee is 2% per year of the supported capital.

6. In cases where the supported capital repayment project encounters risks due to objective and unavoidable factors (natural disasters, fires, earthquakes, epidemics...), leading to inability to repay part or all of the supported capital, risk handling measures such as debt write-off and debt cancellation shall be considered and handled.

6.1. Debt write-off shall be considered and decided by the Chairman of the Cooperative Development Support Fund's Management Board based on the proposal of the Fund Director.

a. The maximum write-off period is three years. During the write-off period, the supported entity does not have to pay additional management fees, but must fulfill the obligation to repay any remaining management fees (if any). At the end of the write-off period, the supported entity must fully repay the Cooperative Development Support Fund the principal that was written off.

b. At the end of the write-off period, if the supported entity has the ability to repay but deliberately delays repayment, the Cooperative Development Support Fund shall transfer the case file to the competent authority and initiate legal proceedings against the entity according to the law; if the supported entity truly cannot repay, the Cooperative Development Support Fund shall consider writing off the debt according to the regulations.

6.2. The debt write-off shall be carried out in accordance with the provisions of paragraph 7.4, Clause 7, Article 7 of this Charter.

Article 9. Acceptance of Entrustment and Entrusting

1. Acceptance of Entrustment

1.1. The Fund may accept entrustment for lending and supporting activities for cooperatives and cooperative unions from organizations and individuals both within and outside the country pursuant to the entrustment acceptance contract.

1.2. The Fund shall enjoy service fees for accepting entrustment. The level of service fees for accepting entrustment shall be agreed upon by the parties in the entrustment acceptance contract.

2. Entrusting

2.1. The Fund has the right to entrust financial and credit organizations to carry out lending and support activities according to the entrustment contract.

2.2. The entrustment fee paid by the Fund to the entrusted organizations shall be agreed upon by the parties in the entrustment contract.

Article 10. Aid and Sponsorship

The Fund shall manage and utilize aid and sponsorship sources from organizations and individuals both within and outside the country to implement support activities for developing cooperatives and cooperative unions in accordance with the objectives and requirements of the sponsors, but not contrary to the laws of Vietnam.

Article 11. Purchase of Government Bonds

The Fund may use idle capital not originating from the state budget to purchase government bonds.

Chapter IV
SOURCES OF FUNDS FOR THE COOPERATIVE DEVELOPMENT SUPPORT FUND

COOPERATIVES

Article 12. Registered Capital

1. The initial registered capital of the Cooperative Development Support Fund is 100 billion VND provided by the state budget from the time the Fund commences operations.

2. Adjustments and supplements to the registered capital of the Fund shall be decided by the Prime Minister based on the proposal of the Vietnam Union of Cooperatives and the Ministry of Finance.

Article 13. Capital Raised from Other Sources

1. Voluntary contributions from cooperatives and cooperative unions.

2. Voluntary contributions from organizations and individuals both within and outside the country.

3. Aid and sponsorship from organizations and individuals both within and outside the country.

4. Entrusted capital from local budgets, organizations, and individuals both within and outside the country to support the development of cooperatives and cooperative unions.

5. Capital from domestic and foreign programs and projects to support the development of cooperatives and cooperative unions.

6. Other capital raised in accordance with the law.

CHAPTER V
ORGANIZATIONAL STRUCTURE OF THE COOPERATIVE DEVELOPMENT SUPPORT FUND

Article 14. Organizational Structure

1. The management and operational structure of the Cooperative Development Support Fund includes the Management Board, the Audit Board, and the Executive Office.

2. The management and operational structure of the Fund operates in accordance with this Charter and relevant laws.

Article 15. Management Board

1. The Management Board is appointed and relieved of duty by the Chairman of the Vietnam Union of Cooperatives, consisting of: the Chairman of the Board being a leader of the Vietnam Union of Cooperatives; three representatives of the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam; and the Director of the Fund.

2. Duties and powers of the Management Board.

2.1. Reviewing and approving directions, plans of operation, capital raising, lending investment, support, and sponsorship; financial plans and final reports of the Cooperative Development Support Fund.

2.2. Issuing regulations on the management and use of capital and assets of the Cooperative Development Support Fund; loan issuance, debt recovery, support, and other operational activity regulations of the Fund as stipulated in this Charter.

2.3. Approving the program of work of the Audit Board; reviewing the audit results report of the Audit Board.

2.4. Inspecting and supervising the operational activities of the executive office in compliance with state policies, the Fund's Charter, and decisions of the Management Board.

2.5. Receiving state-owned capital assigned to the Fund by the Ministry of Finance.

2.6. Based on the Director's proposal, reviewing and deciding on the organizational structure and executive office machinery, establishing, and dissolving assistance units of the executive office machinery.

Deciding on the appointment and removal of Deputy Directors and Chief Accountants of the Fund at the Director's proposal; the position of Audit Board Chair; Audit Board members at the Audit Board Chair's proposal.

2.7. Submitting to the Chairman of the Vietnam Union of Cooperatives and the Ministry of Finance for the Prime Minister's approval to supplement the registered capital of the Fund.

2.8. Submitting to the Ministry of Finance for amendments and supplements to the Charter of organization and operation of the Fund.

2.9. Using the Fund's seal in transactions and performing duties and powers of the Management Board as stipulated in this Charter.

3. Working system of the Management Board.

The Management Board works under a collective system, deciding by majority. Meetings of the Management Board must have at least 3 out of 5 members of the Board present. In case of equal votes, the vote of the meeting chairperson will be decisive.

The Management Board convenes regularly once every three months to review and decide on matters within its authority. In cases of necessity, the Management Board may convene extraordinary meetings upon the request of the Chairman of the Management Board, the Audit Board Chair, or the Fund Director.

4. Members of the Management Board (excluding the Director) work under a concurrent system and are entitled to benefits as prescribed by the state.

5. Operating expenses of the Management Board are included in the Fund's operating costs.

Article 16. Audit Board

1. The Audit Board of the Cooperative Development Support Fund consists of three people. The Chair is appointed and relieved of duty by the Management Board. Members are appointed and relieved of duty by the Management Board based on the Chair's proposal.

Members of the Audit Board work under a concurrent system.

2. The Audit Board has the following duties and powers:

2.1. Building work programs and plans to submit to the Management Board for approval and independent implementation.

2.2. Inspecting and supervising the Fund's activities in accordance with the law, the Charter, and Management Board decisions; reporting to the Management Board and competent authorities on inspection and supervision results and recommending measures for handling.

3. The Audit Board Chair or a member authorized by the Chair may attend and participate in discussions at Management Board meetings but without voting rights.

4. Operating expenses of the Audit Board are included in the Cooperative Development Support Fund's operating costs.

Article 17. Executive Office Machinery Structure

The organizational structure of the Executive Office of the Cooperative Development Support Fund includes the Director, Deputy Directors, Chief Accountant, specialized departments, and units.

Article 18. Fund Director

1. The Director of the Cooperative Development Support Fund shall be appointed and relieved from duty by the Chairman of the Vietnam Union of Cooperatives.

2. The Director of the Cooperative Development Support Fund is the legal representative of the Fund, accountable to the Chairman of the Vietnam Union of Cooperatives, the Management Board of the Fund, and the law for all activities of the Fund.

3. The Director of the Cooperative Development Support Fund has duties and authorities:

3.1. To establish the organizational structure and operational machinery to fulfill tasks and submit them to the Management Board of the Cooperative Development Support Fund for consideration and decision.

3.2. To manage and direct the activities of the Fund according to the Charter; decisions of the Management Board and legal provisions.

3.3. To develop programs, plans of activities, capital mobilization schemes, investment loans, support, and sponsorship; financial plans and prepare final accounts reports of the Fund for approval by the Management Board of the Fund and organize their implementation.

3.4. To issue or submit to the Management Board for issuance within its authority, guiding documents on business operations of the Fund as prescribed.

3.5. To select and propose to the Management Board to appoint or relieve from duty Deputy Directors and Chief Accountants of the Fund. The Director of the Fund decides on the appointment and relief from duty of Heads and Deputy Heads of Departments of the Fund; decides on recruitment, placement, and utilization of staff of the Fund in accordance with labor laws.

3.6. To perform tasks according to the delegation of the Management Board.

3.7. To participate in sessions of the Management Board.

3.8. To engage organizations and experts for consultation to review and assess projects, loan schemes, requests for support and sponsorship of the Fund; to utilize collaborators.

3.9. To manage and use the Fund's capital, assets, and other resources in accordance with the provisions of this Charter and the law.

Article 19: Staff Regulations

1. Staff of the Cooperative Development Support Fund shall enjoy salaries, bonuses, welfare benefits, and other entitlements as prescribed for state-owned enterprises. Specific levels are determined by the Management Board of the Fund.

2. Part-time staff working for the Cooperative Development Support Fund shall enjoy benefits under the part-time employment regulations of the State.

CHAPTER VI
FINANCIAL REGULATIONS, ACCOUNTING, AND AUDITING

Article 20: Financial Regulations

1. The financial regulations of the Cooperative Development Support Fund shall be implemented in accordance with the guidance of the Ministry of Finance.

2. The fiscal year of the Cooperative Development Support Fund begins on January 1 and ends on December 31 of each calendar year.

Article 21: Establishment of Reserve Funds

The Cooperative Development Support Fund may establish reserve risk funds; supplementary registered capital funds, development investment funds, reward funds, and welfare funds from financial income, following the guidance of the Ministry of Finance.

Article 22: Accounting and Auditing Work

1. The accounting system of the Cooperative Development Support Fund shall apply the accounting system of the Vietnam Development Bank to conduct accounting entries.

2. The Cooperative Development Support Fund shall organize internal auditing of its activities or engage independent auditors.

3. The Chairman of the Vietnam Union of Cooperatives shall be responsible for approving the annual final accounts report of the Cooperative Development Support Fund.

Chapter VII
IMPLEMENTATION

Article 23: Implementation

Amendments and supplements to the Charter of organization and operation of the Fund shall be proposed by the Management Board of the Fund and submitted by the Chairman of the Vietnam Union of Cooperatives to the Ministry of Finance for approval.

The Chairman of the Management Board and the Director of the Cooperative Development Support Fund are responsible for organizing the implementation of this Charter./.