Review of Co-op Laws in Vietnam (1997)

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)

Part II - Review of Country Laws in Vietnam (1997)

Source: Co-operative Laws in Asia and the Pacific
by G.K. Sharma (pp.181-187)

In Vietnam during the centrally planned economy co-operatives
were governed by their regulations or bye-laws, approved by the
concerned authorities. After the introduction of market reforms
or Doi-Moi in 1985 they remained without any legal status till the
law on co-operatives was passed by the Parliament in March 1996
which has become operative since January 1, 1997. This law has 56
articles divided into 10 chapters.

The preamble of the law states: "To promote the important role of the
co-operative economy, to create legal basis for organisation and operation
of co-operatives in a socialist oriented multi-sector commodity economy
driven by the state regulated market mechanism" in accordance with
articles 15, 20, and 84 of the 1992 constitution of the Socialist Republic
of Vietnam.

This law sets forth the provisions concerning co-operatives:

Article 1 defines co-operatives as under: 
"A co-operative shall mean self-control economic entity established
by working persons who have common needs and interests, and
contribute voluntarily capital or labour in accordance with the
provisions of the law to promote strength of collectives and carry
out manufacturing, business, service activities and in improving
living standard, contributing to socio-economic development of the country."

Article 2 provides that "Co-operative groups under various names
and forms of organisation shall be guided, aided and encouraged by
the state to become co-operatives when they meet full requirements."

Article 5 provides policy of the state towards co-operatives as  "The
state shall protect legal rights and interests of co-operatives, ensure
equality of co-operatives in manufacturing, business, service activities;
promulgate legal acts and policies encouraging development of
co-operatives; shall through co-operatives, exercise policies on aid,
assistance to co-operative members to eliminate hunger and reduce
poverty, to ensure equality, fairness and social progress. The state
shall respect the right to self-control, self-responsibility in
manufacturing, business, service activities of co-operatives, shall
not intervene with legitimate management and operation of

Under article 7 co-operatives are expected to operate on the
following principles:

1.      Voluntary Joining and Withdrawing;
2.      Democratic and Equal Management;
3.      Self-responsibility and Mutual Benefit;
4. Combination of benefit of the co-operative members
        and development of co-operative in sharing of profits; and
5.      Community Co-operation and Development.

Article 9  deals with duties of co-operative in detail which basically
include functions, operations and objectives of co-operative in
11 clauses. It also includes under article 10(11) to create favourable
conditions for social-political organisation recognised by the law to
operate within the co-operative.

One typical article No. 11 deals with party and other organisation in
co-operative as under:

"The communist party organisation of Vietnam in co-operatives
shall operate under the constitution, laws of the state of Socialist
Republic of Vietnam and regulations of the Communist party
of Vietnam.

Trade Union, Farmer association, other socio- political organisations
and people's volunteer corps in the co-operatives shall operate under
the Constitution, laws and their Regulations."

Chapter II : Establishment and Business Registration
The chapter provides the subjects to be included in the bye-laws, the
procedure of registration and opening of branches etc. Under article
16 (2) the minimum membership of a co-operative shall be as provided
in the model bye-laws of that type of co-operative.

Chapter III : Members
Under article 22 only Vietnamese citizens and a household can
become member of a co-operative. The chapter also includes rights
of members, their duties and termination of membership. 

Chapter IV : Management of Co-operatives
Article 28 provides quorum of two-thirds members for a general meeting.
In case of no quorum, the meeting can be re-convened by managing
committee or audit and central committee.

Under article 30 the strength of the managing committee is to be
provided in the bye-laws. The tenure shall not be less than 2 years
and more than five years. The committee is expected to meet every
month. The chairman also acts  as a manager (article 30).

Under article 31 members qualification for managing committee
include good moral, educational background and ability to
administrate the co-operative.

Under article 30 where the membership of a co-operative is less than
15 they will elect only a chairman/manager who shall function as
managing committee. Article 33 provides powers of Chairman/
Manager which are like that of a chairman-cum-manager.

Article 34 deals with election of audit and control committee and
article 35 deals with its functions. This committee has to supervise
the proper functioning of the society including the managing committee,
to hear complaints and settle them and responsible to the General Body.

Chapter V : Funds of a Co-operative
Article 39 deals with the profit of a co-operative and provide as under:

1. Profits of the co-operative, as priority shall be used to set up
        a business expansion fund and reserve fund, other funds may be
        set up according to provisions of the bye-laws or decisions of the
        General Meeting of members depending on specific conditions of
        each co-operative.

2. The purpose, methods of administration and use of the funds of
        the co-operative shall be provided by the bye-laws.

Under article 40 (2) "The co-operative shall not share:  state subsidiary,
public building, infrastructure designed to serve community of residents
to serve community of residents to the co-operative members."

Under article 41 after winding up procedure the public assets as
mentioned in article 40 (2) will be transferred to the local authorities
and the balance can be distributed to the members.

Under article 42 General Body is empowered for profit distribution
including declaring dividend and patronage rebate.

Under article 43 General Meeting can decide to recover any
losses incurred due to fault of any member.

Chapter VI : Merger, Division, Dissolution, Bankruptcy of a Co-op
The General Meeting of members shall decide on the merger
of two or more co-operatives into one co-operative or division of
one co-operative into one or more co-operatives.

Article 46 deals with voluntary and compulsory dissolution. In case
of voluntary dissolution the winding process has to be done by the
society and in case of compulsory dissolution people's committee
is to appoint commission for dissolution.

Chapter VII : Union of Co-operatives, Alliance of Co-ops
Article 48 describes union of co-operatives as:
Co-operatives may voluntarily establish a Union of co-operatives if
they desire to do so.

Union of Co-operatives is an economic entity and operating under
principles of a co-operative with the purpose to enhance effectiveness
of manufacturing, business and service activities of the member
co-operatives, assist each other in business as well as satisfy other
needs of the members.

Article 49 (1) explains alliance of co-operatives as:
Central Alliance of co-operatives shall be recognised by a decision of
the Prime Minister. Provincial Alliance of co-operative shall be
recognised by a decision of the Chairman of Provincial People's

Chapter VIII : State Administration Over Co-operatives
Article 50 states the role of government with regard to co-operatives
as under:
1. The Government shall exercise overall state administration
over co-operatives throughout the country on the following
a. To make and direct the implementation of strategy, plans on
co-operative's development throughout the country.
b. Based on the law on co-operatives to promulgate the model
bye-laws of Co-operatives applied to all type of co-operatives
according to special features of each industry in the national
c. Based on development of demand of co-operatives as well
as specific conditions of each industry and locality, make policy
of priority, assist co-operatives on matters relating to land,
taxation, credit, investment, export, import, training of personnel,
science technology information make policy on reduction or
exemption of corporate tax applied to certain industries or
localities suffering difficulties;
d. To create favourable conditions for alliance of co-operatives
at central and local level to operate in accordance with laws;
e. To specify duties and powers of the cadres, branches and
Provincial People's Committees on state administration over
f. To exercise inspection, control over co-operatives operation
according to the provisions of the law.

2. The ministries, bodies of ministerial ranking, bodies of the
government shall within their functions, duties and powers, assist
the Government in the implementation of State administration over
co-operatives in respective areas assigned.

Article 51 deals with role of people's councils as:
The People's Councils at all levels shall decide policies, measures
on building and developing local co-operatives, conduct propaganda
and encourage the people to join co-operatives, supervise the
implementation of laws on co-operatives.

Chapter IX  : Reward, Dealing with Breaches
Article 53 proposes rewards for good co-operators and co-operative
and article 54 provides action against those who breach the law.