Latest regulations on acquisition of cooperatives and cooperative unions in Vietnam

Latest regulations on acquisition of cooperatives and cooperative unions in Vietnam (Internet image)

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Regulations on acquisition of cooperatives and cooperative unions in Vietnam

According to Article 95 of the Law on Cooperatives 2023 (effective from July 1, 2024), regulations on acquisition of cooperatives and cooperative unions in Vietnam are as follows:

- One or some cooperatives or cooperative unions (hereinafter referred to as “acquired cooperative(s) or cooperative union(s)”) may be acquired by another cooperative or cooperative union of the same business type (hereinafter referred to as "acquiring cooperative or cooperative union”) by transferring all of their assets, rights, obligations and lawful interests to the latter.

- Acquisition procedures:

+ The acquiring cooperative or cooperative union and the acquired cooperative or cooperative union shall prepare the draft acquisition contract and the draft charter of the former.

Note: The acquisition contract shall, inter alia, include the following information: name and head office’s address of the acquiring cooperative or cooperative union; name and head office’s address of the acquired cooperative or cooperative union; employment plan; methods, procedures, time limit and conditions for transfer of assets, including undistributed funds and undistributed assets; transfer of stakes from the acquired cooperative or cooperative union to the acquiring cooperative or cooperative union; time limit for completing acquisition procedures;

+ The GMMs of the acquiring cooperative or cooperative union and the acquired cooperative or cooperative union shall ratify the acquisition contract and the charter of the former;

+ The acquisition contract shall be sent to all creditors, made known to employees, and sent to the People’s Committee that has issued the cooperative registration certificate within 15 days from its ratification date;

+ Registration of revisions to the cooperative registration certificate and notification of changes in registration information of the acquiring cooperative or cooperative union shall comply with the provisions of Articles 41, 47 and 48 of the Law on Cooperatives 2023. In this case, the submitted application must include the acquisition contract and resolutions on ratification of the acquisition contract of the acquiring cooperative or cooperative union and the acquired cooperative or cooperative union.

- After completing procedures for registration of the acquiring cooperative or cooperative union, the acquired cooperative or cooperative union shall cease to exist. The acquiring cooperative or cooperative union shall inherit rights and lawful interests, and assume responsibility for unpaid debts, ongoing employment contracts and other obligations of the acquired cooperative or cooperative union. The acquiring cooperative or cooperative union shall obviously inherit all rights, obligations and lawful interests of the acquired cooperative or cooperative union under the acquisition contract.

- Undistributed assets and undistributed funds of the acquired cooperative or cooperative union shall be transferred to and used as undistributed assets and funds of the acquiring cooperative or cooperative union.

Cases of dissolution of cooperatives and cooperative unions in Vietnam

Pursuant to Article 97 of the Law on Cooperatives 2023, regulations on cases of dissolution of cooperatives and cooperative unions in Vietnam are as follows:

- A cooperative or cooperative union shall follow dissolution procedures in one of the following cases:

+ The cooperative or cooperative union is voluntarily dissolved under the resolution of its GMM;

+ 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.

- 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.

Doan Duc Tai

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