Cases where a local development investment fund is dissolved in Vietnam

According to Article 43 of the Decree No. 147/2020/NĐ-CP of the Vietnam’s Government, a local development investment fund shall be dissolved in one of the following cases:

- The Fund has been established and operated but after 03 years from the effective date of this Decree, the actual charter capital is less than VND 300 billion.

- The Fund is assessed as not fulfilling its tasks and has a ratio of outstanding loans and investments (excluding entrusted loans) to equity of less than 20% for 5 consecutive years.

- Ratio of bad debt to total loan balance is higher than 50% or ratio of bad debts to total invested capital is higher than 80% and accumulated negative revenue - expenditure difference is greater than or equal to 75 % of the actual charter capital of the Local Development Investment Fund for 5 consecutive years.

- Cases where the Fund is not operated effectively or it is not necessary to maintain the Fund as assessed by the Provincial People's Committee.

The process of dissolution of the Local Development Investment Fund

The Dissolution Council shall develop a dissolution plan, report it to the People's Committee of the province and submit it to the People's Council for approval. The dissolution plan includes the following contents:

- Assessment of an independent auditing organization on the financial situation and determination of the true value of the charter capital of the local development investment fund, unless the Fund has had independent audited financial statements within 06 months before the decision on dissolution of the Fund.

- Plan for liquidation of assets, handling of charter capital, on-going loans and investments, and payment of debts of the Local Development Investment Fund.

- The plan for transferring the entrusted amounts of the entrusting organizations.

- A plan to handle obligations arising from the labor contract.

- Terms of termination of all rights and interests of the Local Development Investment Fund.

* After the dissolution plan is approved by the People's Council of the province, the People's Committee of the province shall decide to dissolve the Local Development Investment Fund, and at the same time report it to the Ministry of Finance and announce the dissolution on various channels. local and central mass media.

* Within 10 working days from the effective date of the dissolution decision:

- Local development investment funds are responsible for implementing the provisions of Article 46 of this Decree.

- The dissolution council is responsible for implementing the provisions of Article 47 of this Decree.

* The Dissolution Council shall automatically terminate its operation when the Local Development Investment Fund has completed the dissolution procedures as prescribed in this Decree and relevant laws.

* The time for dissolution of a local development investment fund shall not exceed 2 years from the effective date of the dissolution decision. In case of necessity according to practical requirements of the locality, the People's Committee of the province shall decide to extend the dissolution time but not exceeding 01 year.

(Article 45 of the Decree No. 147/2020/NĐ-CP)

More details at the Decree No. 147/2020/NĐ-CP of the Vietnam’s Government, effective from February 05, 2021.

Le Thanh

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