Classification of cooperatives according to 4 sizes in Vietnam as of July 1, 2024

According to the new regulations on the classification of cooperatives, is it true that there will be 4 sizes of cooperatives in Vietnam? - Ngoc Hien (Ben Tre)

Classification of cooperatives according to 4 sizes in Vietnam as of July 1, 2024

Classification of cooperatives according to 4 sizes in Vietnam as of July 1, 2024 (Image from the internet)

Regarding this matter, LawNet would like to answer as follows:

1. Classification of cooperatives by 4 sizes in Vietnam as of July 1, 2024 

According to Article 16 of the Cooperative Law 2023 (effective from July 1, 2024), the classification of cooperatives is as follows:

- Cooperatives shall be classified into micro, small, medium and large cooperatives according to the number of their official members and one of the following two criteria:

+ Revenue;

+ Total capital.

- Micro, small, medium and large cooperatives shall be determined according to their scope of operation.

Thus, according to the new regulations, cooperatives are classified into 4 sizes: micro, small, medium, and large.

2. What are the regulations on management models of cooperatives and cooperative unions in Vietnam?

- Cooperatives and cooperative unions shall be managed adopting two management models as follows:

+ The fully-organized management model consists of the GMM, Board of Directors, Director (General Director), and Board of Controllers. The Chairperson of the Board of Directors may concurrently hold the position of Director (General Director);

+ The simplified management model consists of the GMM, Director and Controller.

- A small, medium or large cooperative or cooperative union that has 10 members or more must adopt the fully-organized management model.

- A micro cooperative or cooperative union that has less than 10 members may adopt either fully-organized management model or simplified management model.

- In case a cooperative or cooperative union that is adopting the simplified management model is developed into a small, medium or large cooperative or cooperative union that has 10 members or more, the adoption of the fully-organized management model must be decided in the nearest GMM.

(Article 56 of the Cooperative Law 2023)

3. What are the policies for assistance in financial consultancy and risk assessment in Vietnam?

According to the provisions of Article 27 of the Cooperative Law 2023, regulations on policies for assistance in financial consultancy and risk assessment are as follows:

- Micro and small cooperatives shall be granted audit fee subsidies when they are eligible for the State’s assistance policies as prescribed.

- Representative bodies and Vietnam Cooperative Alliance system shall be given assistance in carrying out risk assessment and financial consultancy; conducting their internal control and providing internal control consulting for artels, cooperatives and cooperative unions.

Thus, micro and small cooperatives shall be granted audit fee subsidies when they are eligible for the State’s assistance policies as prescribed.

4. What are prohibited acts related to cooperatives in Vietnam?

- Regulatory authorities are prohibited from:

+ Issuing cooperative or artel registration certificate to ineligible applicants; refusing to issue cooperative or artel registration certificate to applicants that meet eligibility requirements laid down in the Cooperative Law 2023;

+ Obstructing the performance of legitimate rights and obligations of artels, cooperatives, cooperative unions and their members as prescribed in the Cooperative Law 2023;

+ Giving assistance or incentives to artels, cooperatives or cooperative unions without complying with principles and provisions on eligible entities, authority, contents and procedures laid down in laws;

+ Abusing their positions and powers to violate regulations of law on assistance and provision of incentives for artels, cooperatives and cooperative unions;

+ Delaying, obstructing or harassing artels, cooperatives, cooperative unions and relevant organizations and individuals during registration, operation of, or provision of assistance to, artels, cooperatives or cooperative unions;

+ Deliberately reporting or providing incorrect or untruthful information on assistance or incentives for artels, cooperatives or cooperative unions.

- Artels, cooperatives and cooperative unions are prohibited from:

+ Operating without obtaining registration certificate as prescribed in this Law; operating without satisfying eligibility requirements laid down in the Cooperative Law 2023 and relevant laws;

+ Providing untruthful or incorrect information in the application for registration of artel, cooperative or cooperative union;

+ Improperly implementing or applying principles for organization, management and operation laid down in this Law;

+ Providing false or untruthful information or forging documents for personal gain;

+ Using resources for the purposes other than the intended ones.

- Members of artels, cooperatives and cooperative unions are prohibited from:

+ Abusing positions and powers to obtain personal gain or interests for a group of members;

+ Providing untruthful information for their artels, cooperatives and cooperative unions.

(Article 7 of the Cooperative Law 2023)

Nguyen Ngoc Que Anh

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