Decision No. 77/2005/QĐ-BNV on approving the amended Charter of the Vietnam Association for Disabled Children

CIRCULAR

||| Guidelines for the Financial Management Regulations of the Development Investment Fund
Hanoi City

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

The Ministry of Finance hereby issues guidelines for financial management regulations for the Hanoi City Investment Development Fund as follows:

I. GENERAL PROVISIONS

1. These Circulars apply to the Hanoi City Investment Development Fund (hereinafter referred to as the Fund).

||| 2. The Development Investment Fund of Hanoi City is a state financial organization directly under the People's Committee of Hanoi City. The Fund was established to receive capital from the State Budget; to mobilize idle funds from organizations and individuals belonging to various economic sectors both within and outside the country for investment development, providing loans to support important projects and programs aimed at promoting the socio-economic development of Hanoi City.

||| 3. The Fund has legal personality, registered capital, and enjoys rights according to the law and is responsible for its assets within the limit of the registered capital managed by the Fund. The Fund is allowed to open accounts at the State Treasury and commercial banks legally operating in Vietnam to serve transaction and settlement activities.

4. The Fund's operations are carried out on the principle of financial autonomy, preservation and development of capital, self-compensation for costs, and bearing risks independently.

5. The Fund is responsible for registering, declaring, and fully fulfilling its obligations to the State regarding taxes payable and enjoying tax incentives as prescribed by law.

||| II. CONTENTS OF FINANCIAL MANAGEMENT

1. Operating Capital

The operating capital of the Fund consists of registered capital and raised capital.

1.1. The registered capital of the Fund when established is 1,000 (one thousand) billion Vietnamese dong, formed from the following sources:

a) Receiving existing registered capital of the Hanoi City Housing Development Fund;

b) The Hanoi City budget allocated outside the portion already balanced to implement the annual expenditure plan;

c) Reserve fund for supplementary registered capital;

d) Voluntary contributions, grants, and sponsorships from organizations and individuals within and outside Vietnam to form registered capital.

Any change in the registered capital of the Fund shall be decided by the People's Committee of Hanoi City based on the consensus opinion of the Minister of Finance.

1.2. Raised capital: The Fund may raise medium and long-term capital from organizations and individuals within and outside Vietnam, including:

a) Direct borrowing from organizations and individuals;

b) Issuing investment bonds of the Fund;

c) Other forms of raising capital as prescribed by law.

||| Within the first two years from the date the Fund officially commences operations, to ensure capital safety, the total amount of capital raised shall not exceed one time the actual registered capital; in case of necessity, the Fund shall report to the Ministry of Finance for a decision to adjust the limit on raising capital.

2. Entrusted Managed Capital

||| 2.1. The Fund may accept mandates for investment, lending, and debt recovery; accept mandates for disbursing investment capital for projects and works from the State Budget, organizations, and individuals both within and outside the country through mandate contracts between the Fund and the mandating organizations or individuals.

2.2. The sources of entrusted managed capital mentioned in Point 2.1 of this Section shall not be included in the Fund's operating capital.

3. Principles for Using Capital

The use of the Fund's capital must comply with the following principles:

3.1. Financial autonomy, preservation, and development of capital;

3.2. Proper use of capital for intended purposes, correct target groups, and efficiency;

3.3. Timely recovery of principal and interest to ensure repayment and cover costs;

3.4. Meeting the Fund's regular payment requirements.

4. Limits on Using Capital

4.1. Maximum direct investment limit in projects by the Fund equal to 50% of the total actual registered capital and raised capital at the time of implementation.

4.2. Maximum lending limit for a single project equal to 15% of the total actual registered capital and raised capital of the Fund at the time of implementation.

4.3. Maximum contribution limit to establish economic organizations equal to 20% of the total actual registered capital and raised capital at the time of implementation.

||| 4.4. The limit for investment in the capital market (excluding Government Bonds) shall be a maximum of 20% of the total actual registered capital and raised capital at the time of implementation. The limit for investment in a single type of security shall be a maximum of 2% of the total actual registered capital and raised capital at the time of implementation.

5. Payment and Preservation of Capital

5.1. The Fund is responsible for fully and timely repaying principal and interest on all domestic and foreign loans, including international credit facilities permitted by the Government for the Fund to receive.

5.2. The Fund is responsible for purchasing asset insurance, business risk insurance, and other types of insurance as currently prescribed by the State.

5.3. In case of risk or loss of capital and assets, the Fund must promptly identify the cause, extent of loss, and develop a resolution plan:

||| a) In cases where losses result from subjective reasons of individuals or groups, those individuals or groups causing the loss must compensate. The level of compensation shall be decided by the Management Board of the Fund in accordance with the provisions of the law.

||| b) In cases where risks and losses arise from objective reasons, they will be covered by the risk reserve fund. If the risks and losses are due to force majeure such as natural disasters, typhoons, floods, fires, etc., after receiving insurance compensation (if any) and using the risk reserve fund to cover the losses but still insufficient, the Management Board of the Fund shall report the cause and extent of the damage to the People's Committee of Hanoi City for consideration and decision (after consulting the opinion of the Ministry of Finance).

6. Depreciation of Fixed Assets, Construction Expenditure, Purchase, and Management of Fixed Assets

6.1. The Fund implements the system of depreciation of fixed assets according to current regulations applicable to state-owned enterprises.

6.2. Sources of capital for new construction, repair, and purchase of fixed assets of the Fund are formed from the following sources:

||| a) A portion of the registered capital for constructing initial physical facilities. The maximum level of capital usage for constructing initial physical facilities shall not exceed 8% of the actual registered capital and shall be reported by the Director of the Fund to the Management Board of the Fund for approval by the People's Committee of Hanoi City.

b) Depreciation funds for fixed assets.

c) Other sources such as grant funds from organizations within and outside Vietnam under sponsorship projects.

6.3. The Fund shall carry out basic construction work and purchase fixed assets within the scope of existing construction funds and in accordance with the Government's regulations on investment management and construction.

||| III. INCOME AND EXPENSES

1. Revenue items of the Fund

- Income from direct investment activities;

- Interest income from lending capital;

- Interest income from deposits at State Treasury and commercial banks;

- Fees for agency services under agency contracts;

- Income from capital market activities;

- Subsidies to cover interest rate differences provided by the Hanoi City budget (if applicable);

- Proceeds from the liquidation of fixed assets;

- Other revenue generated during operations.

2. Operating expenses

2.1. Business-related expenses:

- Payment of interest on raised funds;

- Expenses related to establishing economic organizations through capital contributions (if applicable);

- Agency service fees paid according to agency contracts;

- Expenses for issuing bonds, stocks, and raising capital;

- Expenses for participating in capital markets;

- Service and brokerage commissions as per budget estimates and economic contracts;

- Expenses incurred in assessing investments, lending, inspecting, and recovering debts from investment projects or entities receiving investment loans from the Fund;

||| - Expenses for establishing the risk reserve fund. The specific rate is determined annually by the Management Board of the Fund but shall not be lower than 0.2% of the average outstanding loan balance for the year (excluding entrusted loans).

- Insurance costs for property, business risks, and other types of insurance as prescribed by law;

- Compensation for asset losses as prescribed;

- Other business-related expenses.

2.2. Administrative expenses:

- Wages and various wage supplements;

- Contributions to social insurance, health insurance, and other deductions based on wages as currently prescribed;

- Provision for unemployment assistance reserve fund. The establishment of the unemployment assistance reserve fund follows the regulations applicable to state-owned enterprises;

- Union dues;

- Depreciation of fixed assets as currently prescribed;

- Purchase of labor tools and working equipment;

- Rent payments for office space and other fixed assets (if applicable);

- Repair and maintenance costs for assets;

- Travel expenses;

- Communication and advertising fees;

- Office supplies and seals;

- Training and professional development costs;

- Research and scientific study costs;

- Uniforms and occupational safety equipment costs;

- Midday meal expenses: the expense per person must not exceed the minimum wage stipulated by the State for workers and staff;

- Other necessary and reasonable expenses such as electricity, water, sanitation, hospitality, conferences, transactions, etc.;

- Provision for asset depreciation;

- Costs associated with the liquidation of fixed assets;

- Allowances for members of the Management Board who hold concurrent positions and other concurrent positions; hiring of domestic and foreign experts (if applicable);

- Other expenses as prescribed by law.

3. Financial income and expenditure management of the Fund

The Fund’s revenues and expenditures are recorded according to the categories listed above and based on valid and legitimate vouchers.

||| 3.1. The Fund is responsible for collecting income accurately, fully, and promptly during its operation to record it as revenue; it shall not allow any income to remain off the books or fail to be recorded as revenue.

3.2. The Fund may allocate funds for its operations as follows:

a) Business-related expenses: according to the actual amounts incurred for the expenses specified in Clause 2.1, Section 2, Part III of this Circular.

b) Administrative expenses:

- The Fund Director establishes economic and technical norms, indirect cost standards, which are submitted to the People's Committee of Hanoi for approval as the basis for managing the Fund's operations.

- Wages: the salary, bonus, and allowance system of the Fund is implemented similarly to state-owned enterprises.

- Fixed asset depreciation costs: All fixed assets of the Fund must be utilized in business operations and depreciated according to the provisions set forth in Clause 6.1, Section 6, Part II of this Circular.

||| - For expenses that do not comply with regulations, the individual who decides on the expense shall bear responsibility for reimbursement; expenses exceeding approved standards must clearly identify responsibility and propose a solution to the People's Committee of Hanoi City for handling.

The Fund shall not record the following expenses as costs:

- Expenses exceeding national standards;

- Expenses for reward and welfare funds such as bonuses, hardship allowances, support for social organizations, agencies, and localities;

- Expenses covered by sponsored funding sources.

4. Distribution of surplus income and expenses of the Fund

4.1. Determining the surplus income and expenses:

Surplus income and expenses = Income minus legitimate and reasonable expenses.

4.2. Distributing the surplus income and expenses in the following sequence:

a) Fulfill tax obligations as prescribed by current tax laws;

b) Deduct fines for disciplinary violations paid to the state treasury and legitimate expenses not deducted before calculating corporate income tax payable;

c) Deduct losses not deductible from taxable income;

d) Allocate profits to capital contributors according to joint venture contracts (if applicable);

e) Remaining profits are allocated to the following reserves:

- Capital reserve fund: at a rate of 15% until it equals the registered capital;

- Financial reserve fund: at a rate of 10% until it reaches 25% of the registered capital;

- Operational development fund: at a rate of 50%;

- Reward and welfare fund: the allocation of these two funds follows the regulations applicable to state-owned enterprises;

Any remaining profit after allocating the aforementioned reserves is fully added to the operational development fund.

5. Purpose of the Funds

5.1. The capital reserve fund is used to supplement the registered capital of the Fund.

5.2. The financial reserve fund is used to address financial losses as prescribed by authorized authorities.

5.3. The operational development fund is used to finance the development of the Fund's business activities (investment, upgrading, technological innovation, equipping working conditions, etc.).

5.4. The unemployment assistance reserve fund is used to provide unemployment benefits to employees regularly affected by job loss as prescribed by law, and for retraining Fund staff.

||| 5.5. The reward fund is used to award end-of-year or periodic bonuses to staff of the Fund, and to provide special bonuses to individuals or groups with initiatives or improvements that enhance the Fund's operational effectiveness.

5.6. The welfare fund shall be used to construct or repair welfare facilities of the Fund; to support public welfare activities for the collective of staff members of the Fund.

||| IV. ACCOUNTING, STATISTICAL RECORDS, AND AUDIT REGULATIONS

||| 1. The Fund shall implement income and expenditure, maintain accounting records, record vouchers, account for income and expenditure, prepare financial statements, and submit financial reports in accordance with the laws on accounting and statistics and the regulations of the Ministry of Finance.

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

3. The Fund shall periodically conduct asset inventory and revaluation in accordance with current regulations.

4. Financial reports of the Fund must be audited in accordance with the law. The Director of the Fund is responsible for the accuracy and truthfulness of the reported figures.

||| 5. The Fund shall publicly disclose the results of its operations, assets, capital, and debts annually in accordance with the guidelines of the Ministry of Finance and shall be responsible under the law for the accuracy and truthfulness of the disclosed content.

6. The Fund has the responsibility to report annual tax settlements to the tax authority in accordance with the law and the guidance of the tax authority.

7. The Fund shall regularly report to the People's Committee of Hanoi City, the Ministry of Finance, and concurrently send to the Department of Finance of Hanoi City and the Department of Planning and Investment of Hanoi City the following documents:

a) Quarterly, no later than 25 days after the end of each quarter:

- Report on sources of capital and utilization of capital;

- Report on income and expenses.

b) Annually, no later than 45 days after the end of the fiscal year:

- Balance sheet;

- Final report on income and expenses;

- Report on sources and utilization of capital.

The Fund shall be subject to inspection, examination, and supervision by financial authorities in accordance with the law.

||| V. PREPARATION OF FINANCIAL PLANS

The Fund shall be responsible for developing annual and long-term financial plans to be submitted to the People's Committee of Hanoi City for approval, including:

1. Plan for sources of capital and utilization of capital;

2. Plan for financial revenues and expenditures;

3. Plan for distribution of revenue and expenditure differences.

The Fund shall submit the approved financial plan to the Ministry of Finance, and concurrently send it to the Department of Planning and Investment of Hanoi City and the Department of Finance of Hanoi City.

||| VI. IMPLEMENTATION ORGANIZATION

||| 1. The Fund shall be responsible under the law for the effective use, preservation, and development of state property and capital raised from other organizations and individuals during its operations in accordance with the Fund's objectives.

2. This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

During implementation, if there are difficulties or obstacles, they should be promptly reflected to the Ministry of Finance for consideration and resolution./.