Prohibited acts upon dissolution of cooperatives and cooperative unions in Vietnam

Prohibited acts upon dissolution of cooperatives and cooperative unions in Vietnam (Internet image) 

Prohibited acts upon dissolution of cooperatives and cooperative unions in Vietnam

According to Article 100 of the Law on Cooperatives 2023, from the issuance date of the dissolution resolution, the decision to revoke the cooperative registration certificate or the effective court decision, the legal representative, chairperson and members of the Board of Directors, Director (General Director) and members of the cooperative or cooperative union are prohibited from the following acts:

- Concealing, disguising assets;

- Denying or reducing the creditors’ claims to the debts;

- Converting unsecured debts into debts secured with the cooperative or cooperative union’s assets;

- Concluding new contracts, except for those serving the dissolution of the cooperative or cooperative union;

- Pledging, donating, leasing out assets;

- Terminating effective contracts;

- Raising capital in any shape or form.

The persons who commit the violations mentioned in Clause 1of this Article, depending on the nature and severity of each violation, will be held liable to administrative penalties or criminal prosecution and pay compensation for any damage caused to the cooperative or cooperative union in accordance with regulations of law.

Cases of dissolution of cooperatives and cooperative unions in Vietnam 

A cooperative or cooperative union shall follow dissolution procedures in one of the following cases (according to Articles 97, 98, 99 of the Law on Cooperatives 2023):

- The General Meeting of Members shall ratify the resolution on dissolution of the cooperative or cooperative union. The resolution shall, inter alia, contain the following information:

+ Name and head office’s address of the cooperative or cooperative union;

+ Reasons for dissolution;

+ Time limit and procedures for transfer of undistributed assets and undistributed fund;

+ Time limit and procedures for finalizing contracts and paying debts, debt settlement plan. The debt settlement plan must contain creditors’ names and addresses, debt amounts, deadline, location and method of payment, method and deadline for settlement of creditors' complaints;

+ Plan for settlement of obligations under employment contracts.

- The cooperative or cooperative union is compulsorily dissolved under a court decision or in case its cooperative registration certificate is revoked, unless otherwise prescribed by laws. Within 10 days from the receipt of the decision to revoke the cooperative registration certificate or the effective court decision, the cooperative or cooperative union shall follow the guidelines in Clauses 1, 2, 3, 5 and 6 Article 98 of this Law. When being sent as prescribed in Point a Clause 3 Article 98 of the Law on Cooperatives 2023, the dissolution resolution must be accompanied with the copy of the decision to revoke the cooperative registration certificate or the effective court decision.

A cooperative or cooperative union may only be dissolved after all of its debts and liabilities are fully paid and it is not involved in any disputes at a Court or arbitral tribunal. The legal representative, chairperson and members of the Board of Directors Director (General Director) and relevant title holders of the cooperative or cooperative union shall be jointly responsible for debts of that cooperative or cooperative union; individually responsible for any damage caused by their failure to comply or strictly comply with regulations on dissolution laid down in the Law on Cooperatives 2023.

Tran Trong Tin

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