Legal provisions on social funds

Legal provisions on social funds
Posted date: 21/01/2021

I have a group of friends who want to set up a social fund not for profit but for the purpose of supporting health-related activities for people. But I am not sure about the condition to set up a social fund? I hope FDVN Law Firm can advise me. I sincerely thank!

FDVN’s opinion:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

“Fund” means a non-governmental organization that is established from certain assets voluntarily donated by individuals or organizations or established under a testament or through a donation, has the organization and operation objectives as defined in Article 3 of the Decree No. 93/2019/ND-CP, and is granted an establishment license and has its charter acknowledged by a competent authority. And a social fund means a fund which is organized and operates on a not-for-profit basis with the aims of supporting and promoting the development of culture, education, healthcare, sports and science as well as for agricultural and rural development purposes.

Pursuant to Article 10 of the Decree No. 93/2019/ND-CP, in order to set up a fund, your group of friends must meet the following conditions:

 

 [1]. Operation objectives of the fund

Operation objectives of the fund are defined in Article 3 of the Decree No. 93/2019/ND-CP: A fund is organized and operates on a not-for-profit basis with the aims of supporting and promoting the development of culture, education, healthcare, sports, science, technology, and charitable and humanitarian activities as well as for community development purposes.

 

 [2].  Founding members of the fund

Firstly, founding members prescribed in Clause 1 Article 11 of the Decree No. 93/2019/ND-CP are required to meet the following conditions:

  • 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 the fund, and a decision on the 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;
  • They have contributed assets to establish the fund;
  • If a founding member is subject to the management of a competent authority, a written approval from such competent authority must be obtained according to regulations on management of officials before submitting an application for establishment license and acknowledgment of the fund’s charter to the competent authority.

Second, founding members shall establish a fund founding board

Such fund founding board is comprised of at least 03 founding members, including its head, deputy head, and member (Pursuant to Clause 2 Article 11 of the Decree No. 93/2019/ND-CP).

The fund founding board shall prepare an application for an establishment license and send it to a competent authority as prescribed in Article 18 hereof. It shall request the Fund Management Council to compile the draft charter and other documents included in the application for establishment license (Under Clause 3 Article 11 of the Decree No. 93/2019/ND-CP).

 

 [3]. The fund founding board has sufficient assets to contribute for the fund establishment

Firstly, assets contributed to funds

Assets contributed to funds complied with Clause 1 Article 14 of the Decree No. 93/2019/ND-CP, including:

  • Amounts of money in Vietnam dong;
  • Assets converted into Vietnam dong (including objects, foreign currencies, financial instruments, and other property rights) of Vietnamese citizens and organizations that are the fund's founding members and those contributed by foreign citizens and organizations to establish the fund with Vietnamese citizens and organizations. Assets which are offices, equipment or technologies must be valued by a duly established valuation organization. Such valuation must be carried out within the last 06 months before the date of submission of application for establishment license;
  • 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 the total value of the fund's assets.

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 (Under Clause 4 Article 14 of the Decree No. 93/2019/ND-CP).

Second, the value of contributed assets converted into Vietnam dong

If a fund is established by Vietnamese citizens and/or organizations, the value of contributed assets shall be converted into Vietnam dong as prescribed in Clause 2 Article 14 of the Decree No. 93/2019/ND-CP:

  • VND 6,500,000,000 (six billion five hundred million dong), if the fund operates nationwide or in more than one province;
  • VND 1,300,000,000 (one billion three hundred million dong), if the fund operates within a province;
  • VND 130,000,000 (one hundred thirty million dong), if the fund operates within a district;
  • VND 25,000,000 (twenty-five million dong), if the fund operates within a commune.

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 shall be converted into Vietnam dong as prescribed in Clause 3 Article 14 of the Decree No. 93/2019/ND-CP:

  • VND 8,700,000,000 (eight billion seven hundred million dong), if the fund operates nationwide or in more than one province;
  • VND 3,700,000,000 (three billion seven hundred million dong), if the fund operates within a province;
  • VND 1,200,000,000 (one billion two hundred million dong), if the fund operates within a district;
  • VND 620,000,000 (six hundred twenty million dong), if the fund operates within a commune.

 

 [4]. Application for establishment of funds

01 set of application for fund establishment shall be made and sent to the competent authority, specifically:

Application for establishment of funds

  • An application form for fund establishment;
  • The draft charter of the fund;
  • The written commitment on asset contribution made by the fund’s founding members or documentary evidences of assets contributed to the fund;
  • CVs and criminal records of members of the fund founding board and other relevant 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;
  • Documents indicating the appointment of title holders of the fund founding board;
  •  Documents certifying the planned head office of the fund.

(Pursuant to Article 15 of the Decree No. 93/2019/ND-CP).

Authority to settle fund-related procedures:

The Minister of Home Affairs is competent to issue establishment licenses and written acknowledgements of charters; give approval for consolidation, merger, full/partial division, dissolution or renaming of funds; suspend the operation of funds for fixed periods; give approval for the resumption of operation of funds after fixed-period suspension; certify funds’ eligibility for operation; certify members of funds’ Management Councils; give approval for modification of or re-issue establishment licenses; give approval for expansion of operation scope and development/conversion of funds; revocation of establishment licenses with regard to:

  • Funds operating nationwide or in more than one province;
  • Funds established with asset contribution by foreign and Vietnamese citizens and organizations and operating within a province.

Chairpersons of provincial-level People’s Committees are competent to:

  • Issue establishment licenses and written acknowledgements of charters; give approval for consolidation, merger, full/partial division, dissolution or renaming of funds; suspend the operation of funds for fixed periods; give approval for the resumption of operation of funds after fixed-period suspension; certify funds’ eligibility for operation; certify members of funds’ Management Councils; give approval for modification of or re-issue establishment licenses; give approval for expansion of operation scope and development/conversion of funds, and revocation of establishment licenses of funds operating within a province;
  • Funds established with asset contribution by foreign and Vietnamese citizens and organizations and operating within a district or commune.

Above is FDVN Law Firm's opinion for your request of a consultant based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.

Nguyen Thi Suong - FDVN Law Firm


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