Vietnam: Dissolution of venture capital fund according to Decree No. 38/2018/NĐ-CP

According to Decree No. 38/2018/NĐ-CP of Vietnam’s Government, cases of fund dissolution as well as activities that the fund management company shall not do since the dissolution date. To be specific:

- A fund shall be liquidated or dissolved in the following cases:

+ The operating period specified in the fund’s Charter ends;

+ The General meeting of investors decides to dissolve the fund before the end of its operating period specified in the fund’s Charter;

+ The fund management company is dissolved, or declared bankrupt, or has its company registration certificate revoked but the fund’s Board of representatives is unable to establish a new fund management company within 02 months from the date on which one of such events occurs;

+ Other cases as prescribed in the fund's Charter.

- Within 30 days from the date on which the fund is dissolved as prescribed in Points b, c, d Clause 1 Article 14 of this Decree, or at least 03 months prior to the fund dissolution as prescribed in Point a Clause 1 Article 14 of this Decree, the fund management company shall convene the General meeting of investors to consider giving approval for the plan of fund dissolution.

- The General meeting of investors shall have the right to select an independent audit firm to supervise the liquidation, valuation and distribution of the fund’s assets to its investors; or appoint the existing Board of representatives or Director of the fund to supervise the liquidation and distribution of the fund’s assets.

- The fund management company shall carry out the liquidation and distribution of assets to investors according to the dissolution plan approved by the General meeting of investors.

- The General meeting of investors shall vote on the dissolution date. Since the dissolution date, the fund management company shall not:

+ Make investments or purchase assets for the fund;

+ Give or donate fund’s assets to other organizations and individuals;

+ Perform other transactions for the purposes of illegally liquidating the fund’s assets.

- The assets of the fund being dissolved include:

+ The assets and asset-related rights of the fund existing at the time of compulsory dissolution;

+ The profits, assets and asset-related rights that the fund will obtain from transactions made before the dissolution date.

- The proceeds from the liquidation of the fund’s assets and remaining assets shall use for:

+ Fulfilling financial obligations to the State;

+ Making payment for amounts payable to the fund management company and the fund’s Board of representatives or Director, other amounts payable and dissolution expenses. In case the fund is dissolved according to Point c Clause 1 Article 14 of this Decree, the fund shall not pay contractual fees to the fund management company, the fund’s Board of representatives or Director from the date on which the dissolution event occurs;

+ The rest of assets shall be distributed to the fund’s investors according to the capital contribution percentage of each investor.

- Liquidation results must be certified by the fund management company and approved by the fund’s Board of representatives or Director in charge of supervising the liquidation process.

This is the contents specified in Article 14 of Decree No. 38/2018/NĐ-CP of Vietnam’s Government, effective from March 11, 2018.

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