Instructions for converting a cooperative into a limited company

Fri, 25 Jun 2021 14:49:00  |  Print  |  Email   Share:

The Thai Duong Cooperative (Cooperative) was established in 1986, the main activity is the production and export of traditional fine art ceramics. Through the receiving and responding to businesses’ recommendations, the Thai Duong Cooperative proposes to guide the conversion to a multi-member limited liability company to ensure the legal status in production, business and transactions.

Regarding this issue, The Ministry of Planning and Investment has the following comments:

Cooperative conversion order

The Ministry of Planning and Investment has issued Official Letter No. 3763/BKHĐT-HTX dated June 5, 2019 guiding the process of converting a cooperative to another type of organization.

Accordingly, based on Article 62 of the Law on Cooperatives and Clause 2, Article 32 of Decree 193/2013/ND-CP dated November 21, 2013 of the Government detailing a number of articles of the Law on Cooperatives, cooperatives self-review and evaluate organization and its activities. If the organization and operation of the cooperative is not in accordance with the provisions of the law, or there is a need to convert to another type of organization and does not fall into the state of “insolvency” as specified in Clause 1, Article 2 of this Decree. 4 Bankruptcy Law 2014, the following conversion steps are carried out:

Step 1: Conduct a general meeting of members

Hold a general meeting of members and issue a resolution on the transformation of the cooperative:

- Prepare a general meeting of members as prescribed in Articles 31, 32 and 33 of the Law on Cooperatives and Clause 2, Article 32 of Decree 193/2013/ND-CP.

- The general meeting of members shall vote and issue a resolution on the voluntary dissolution to carry out the transformation of the cooperative in accordance with the provisions of Article 34 of the Law on Cooperatives 2012.

Step 2: Perform voluntary dissolution

The cooperative is voluntarily dissolved according to the provisions of Clause 1, Article 54 of the Law on Cooperatives 2012. The procedures for voluntary dissolution shall comply with Clause 1, Article 19 of Decree 193/2013/ND-CP.

The dissolution council shall perform the tasks specified at Point a, Point b, Clause 1, Article 54 of the Law on Cooperatives 2012, refer to the following order:

- Making an inventory report, assessing the entire operation and financial situation of the cooperative in accordance with the provisions of Circular 83/2015/TT-BTC dated May 28, 2015 of the Ministry of Finance guiding the financial management regime for cooperatives and Circular 31/2018/TT-BTC dated 30/3/2018 of the Ministry of Finance, note the following contents:

+ Determining the value of assets, capital and funds specified in Article 48 of the Law on Cooperatives.

+ Identify and classify receivables and payables (including: Social insurance debts; debts to employees; debts to other organizations and individuals; tax debts,...); list of creditors and debtors; debt origin and debt value.

+ Make a list of members, employees and obligations of the cooperative towards the above subjects.

+ Make a list of economic contracts and obligations of the cooperative with the above subjects (in addition to the labor contract).

- Develop a plan to handle assets, capital, debts, liquidate economic contracts of the cooperative and publicly notify members, employees, individuals and related organizations about the deadline, payment of debts, liquidation of contracts, handling of assets and capital of cooperatives according to Article 49 of the Law on Cooperatives 2012 and Circular 31/2018/TT-BTC dated March 30, 2018 of the Ministry of Finance guiding the handling of assets, assets formed from many sources of capital when the cooperative is dissolved or bankrupt.

- If the members, employees, individuals and organizations related to the cooperative accept the voluntary dissolution plan, the Dissolution Council shall make a record of agreeing on the voluntary dissolution plan with the above target groups

-- Carry out procedures for termination of operation of branches, representative offices and business locations of cooperatives at the registration office of cooperatives where the Certificate of registration of branches, representative offices and locations has been issued. business activities of cooperatives (if any) according to Article 16 of Circular 03/2014/TT-BKHDT dated May 26, 2014 of the Ministry of Planning and Investment, guiding the registration of cooperatives and the mode of reporting on the operation of cooperatives and Clause 1, Article 2 of Circular 07/2019/TT-BKHDT dated April 8, 2019 of the Ministry of Planning and Investment amending and supplementing a number of articles of Circular 03/2014/TT-BKHDT (effective from May 28, 2019).

- The cooperative sends the dossier as prescribed in Article 17 of Circular 03/2014/TT-BKHDT to the agency that has issued the registration certificate to the cooperative where the cooperative is headquartered.

- The cooperative registration agency issues a certification of the voluntary dissolution of the cooperative in accordance with the provisions of Article 17 of Circular 03/2014/TT-BKHDT and amendments to Clause 12, Article 1 of Circular 07/2019/TT-BKHDT.

Step 3: Establish a new organization in accordance with the law

The establishment of a new organization shall comply with the provisions of current laws applicable to the respective new organization.

-Step 3: Establish a new organization in accordance with the law

The establishment of a new organization shall comply with the provisions of current laws applicable to the respective new organization.

Guiding handling related issues

In case a member wishes to leave the cooperative before the time limit for voluntary dissolution, the provisions of Article 51 of the Law on Cooperatives 2012 must be complied with and must be resolved before proceeding with the voluntary dissolution of the cooperative. For other members, the remaining asset value will be refunded according to the ratio of contributed capital to the total charter capital as prescribed in Clauses 2 and 3, Article 49 of the Law on Cooperatives 2012.

Issues related to assets formed from multiple sources of capital: For undivided assets, assets formed from multiple capital sources, including the State's support, shall be handled in accordance with Article 3, Article 4, Article 5 of Circular 31/2018/TT-BTC dated March 30, 2018 of the Ministry of Finance guiding the handling of assets formed from multiple capital sources when the dissolved cooperative voluntarily goes bankrupt. The remaining assets of the cooperative have been reported to be inventory, if there are no disputes or complaints, they will be liquidated according to Article 49 of the Law on Cooperatives 2012.

Issues on State support policies: The State's support policies for cooperatives expire from the time the cooperative announces voluntary dissolution.

During the implementation process, in case the legal documents referred to in this Official Dispatch are amended, supplemented or replaced with new documents, the new documents will apply.

By: Online Newspaper of the Government / Translator: HaiYen-Bizic

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