HOW DO FOREIGNERS ESTABLISH A CHARITY FUND IN VIETNAM?

I have a foreign friend, who wants to build and run a charity (non-profit) in Vietnam. He wanted me to help with the conditions as well as prepare the documents for the establishment, but I did not understand this issue very well. Looking forward to the lawyer's answer. Thank you.

FDVN’s Opinions:

Issues related to the organization and operation of social funds and charity funds are specified in Decree 93/2019/ND-CP of the Government, effective from January 15, 2020. Specifically, to establish and operate a charity fund, the following points should be noted:

1. Conditions for establishing a charity fund:

First of all, conditions on purposes and operating rules (Article 5, Decree No. 93/2019/NĐ-CP):

- Funds are established and operate for not-for-profit purposes.

- They are organized and operate on the voluntariness and self-financing basis and shall take responsibility before law with their assets.

- They are organized and operate according to their charters acknowledged by competent authorities and relevant laws.

- They shall make public their organization and operations as well as all their revenues, expenditures, finances and assets.

- Their assets shall not be divided.

Secondly, conditions on founders:

They must be Vietnamese citizens or organizations. If the founding member is a Vietnamese citizen, he/she must have full capacity for civil acts and no previous criminal convictions. If the founding member is a Vietnamese organization, it must be duly established and have its charter or document defining its functions and tasks, a resolution of its leadership or decision of its head on the establishment of fund, and a decision on appointment of a representative to act as a fund's founding member; in case of a foreign-invested organization, its representative who acts as a fund’s founding member must be a Vietnamese citizen. (Clause 1, Article 11, Decree No. 93/2019/NĐ-CP).

Thus, Since your friend is a foreigner, he cannot establish a charity fund by himself, but can only contribute to establish the fund.

Thirdly, conditions for foreign individuals and organizations to contribute assets with Vietnamese citizens and establish charity funds in Vietnam (Clause 1, Article 12, Decree No. 93/2019/NĐ-CP):

- Commit to pay taxes and take responsibility for the lawfulness of his/her/its contributed assets;

- Commit to strictly comply with the law of Vietnam and the fund’s operation objectives; and

- Contribute assets to establish the fund as prescribed in Article 14: amounts of money in Vietnam dong or assets converted into Vietnam dong. If other assets, excluding the amounts of money in Vietnam dong, are contributed to the fund, the amounts of money in Vietnam dong must be accounted for at least 50% of total value of the fund's assets.

- The value of assets contributed by foreign citizens and organizations shall not exceed 50% of total value of assets contributed to establish the fund as prescribed herein.

Forthly, conditions of operating charity fund (Clause 3, Clause 4, Article 14, Deecree No. 93/2019/NĐ-CP):

- If a fund is established by asset contribution by foreign citizens and/or organizations and Vietnamese citizens and/or organizations, the value of contributed assets converted into Vietnam dong must meet the following limits:

a) VND 8,700,000,000 (eight billion seven hundred million), if the fund operates nationwide or in more than one province;

b) VND 3,700,000,000 (three billion seven hundred million), if the fund operates within a province;

c) VND 1,200,000,000 (one billion two hundred million), if the fund operates within a district;

d) VND 620,000,000 (six hundred twenty million), if the fund operates within a commune.

- The ownership of assets contributed to a fund must be transferred to that fund within 45 business days from the date on which the fund is granted an establishment license and has its charter acknowledged. Assets contributed to a fund must not be under any disputes or used for fulfillment of any financial liabilities.

2. Dossiers to establish a charity fund (Article 15, Decree No. 93/2019/NĐ-CP):

01 set of application for fund establishment shall be made and sent to the Minister of Internal Affairs:

a) An application form for fund establishment;

b) The draft charter of the fund;

c) The written commitment on asset contribution made by the fund’s founding members or documentary evidences of assets contributed to the fund;

d) CVs and criminal records of members of the fund founding board and documents. If a founding member is subject to the management of a competent authority, a written approval from such competent authority must be submitted according to regulations on management of officials;

dd) Documents indicating the appointment of title holders of the fund founding board;

e) Documents certifying the planned head office of the fund.

Within 40 business days from the receipt of a sufficient and valid application, the competent authority shall issue the establishment license and written acknowledgment of the fund's charter. If an application is refused, it shall issue a written response clearly stating reasons for such refusal.

Bùi Trần Thùy Vy – FDVN Law Firm.

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