Nghị định 39/2019/NĐ-CP về tổ chức và hoạt động của Quỹ Phát triển doanh nghiệp nhỏ và vừa

DECREE

ORGANIZATION AND OPERATION OF SMALL AND MEDIUM ENTERPRISE DEVELOPMENT FUND

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Small and Medium Enterprise Support dated June 12, 2017;

Pursuant to the Law on Enterprises dated November 26, 2014;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Law on Management and Use of State Capital Invested in Production and Business Activities at Enterprises dated November 26, 2014;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on Amendments and Supplements to the Law on Credit Institutions dated November 20, 2017;

Upon the request of the Minister of Planning and Investment,

The Government hereby promulgates the Decree on Organization and Operation of Small and Medium Enterprise Development Fund.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of application

1. This Decree provides detailed instructions on implementation of Article 20 in the Law on Small and Medium Enterprise Support regarding organization and operation of small and medium enterprise development fund (hereinafter referred to as Fund).

2. This Decree shall apply to small and medium enterprise development funds, medium and small enterprises and organizations or individuals involved in support for small and medium enterprises.

Article 2. Legal status and legal personality of the Fund

1. Small and medium enterprise development fund is an out-of-budget state financial fund operating for not-for-profit purposes which is established by the Prime Minister.

2. The Fund shall adopt the operational structure of single-member limited company whose chartered capital is wholly owned by the State.

3. The Fund shall have legal personality, chartered capital, independent financial report and seal and may open an account at the State Treasury and other commercial banks operating legally in Vietnam in accordance with law.

4. Ministry of Planning and Investment shall be authorized to play its role as and implement its rights and obligations of an agency representing the state owner of the fund.

5. The Fund’s main office shall be located in Hanoi capital.

Article 3. Operational principles and objectives of the fund

1. Operational principles

a) The Fund is operated according to the financial autonomy and capital adequacy principle;

b) The Fund shall assume limited liability not exceeding its equity;

c) The Fund shall give support to right beneficiaries that meet requirements specified in this Decree.

2. Fund’s operational objectives

a) Improving the competitiveness of small and medium enterprises, contributing to increasing income and offering employment opportunities to workers;

b) Creating funding sources available to support and develop small and medium enterprises;

c) Promoting effectiveness in management of state capital used for supporting small and medium enterprises.

Article 4. Interpretation

For the purposes of this Decree, terms used herein shall be construed as follows:

1. “Fund’s manager” refers to persons holding the position or title of Chairperson of Members' Board, commissioner of Members’ Board, Comptroller, Director or Deputy Director.

2. “Fund’s employee" refers to a worker recruited to work for the Fund in accordance with law on employment but not holding the title or position as defined in clause 1 of this Article.

3. “Direct lending” refers to the Fund’s directly granting loans to small and medium enterprises.

4. “Indirect lending” refers to the Fund’s granting loans to small and medium enterprises through entrusting capital to commercial banks established and operated under law.

5. “Financing” refers to the situation in which the Fund gives its capital as a sponsorship and carries out activities in support of enhancing the capability of small and medium enterprises.

6. “Risk acceptance ratio” refers to the highest percentage of risk in a financial year that the Fund may accept in case any loss occurs. The risk acceptance ratio is measured by the value of loss leading to reduction in the chartered capital divided by the actual amount of chartered capital at the time of determination of the risk acceptance ratio.

Chapter II

DUTIES, RIGHTS AND ORGANIZATIONAL STRUCTURE OF SMALL AND MEDIUM ENTERPRISE DEVELOPMENT FUND

Article 5. Fund’s duties and rights

1. Fund’s duties

a) Support small and medium enterprises in accordance with this Decree;

b) Receive, manage and use capital legally;

c) Carry out reporting and accounting regimes under the provisions of this Decree and relevant laws;

d) Submit to inspection, examination and audit of competent regulatory authorities in accordance with law;

dd) Purchase property and other insurance as required by law to ensure safety for the Fund;

e) Provide data and publicly disclosing operational rules, financial mechanism and operational outcomes of the Fund and annual financial statements already audited under the provisions of this Decree and relevant law.

2. Fund’s rights

a) Ensure its operation and organization adhere to defined principles and goals;

b) Recruit, place, utilize and train employees and develop its personnel in accordance with this Decree and provisions of other relevant law;

c) Conduct the periodic and unscheduled inspection and control of use of the Fund’s capital; withdraw financial support from those entities violating requirements and commitments to the Fund;

d) Hire independent service providers, experts and scientists to support the Fund’s operations;

dd) Render or use services of consulting, assessment of management, financial, technological and credit rating capability for small and medium enterprises;

e) Request enterprises to pay costs of participation in the Fund’s support activities;

g) Organize seminars, carry out communication, training, consulting, investment and trade promotion, provide information, databases, support research and development, invest in establishing business incubation centers, technical facilities, coworking spaces and other supporting activities as provided in this Decree under the Law on Support for Small and Medium Enterprises.

Article 6. Fund’s organization and management structure

The Fund’s organization and management structure shall include:

1. Members’ Board;

2. Comptroller;

3. Director and assistant apparatus.

Article 7. Members’ Board

1. The Members' Board shall act on behalf of the Fund to implement the rights and obligations of the Fund in accordance with this Decree and other relevant laws.

2. The Members' Board shall be composed of Chairperson and 02 commissioners. Chairperson and board commissioners shall work under the full-time working regime, shall be appointed, dismissed, discharged, rewarded and disciplined under the decision of the Minister of Planning and Investment.

3. Chairperson and board's commissioners shall hold office for 05 years and may be reappointed.

4. Members’ board shall have the following rights and obligations:

a) Decide the 5-year and annual business strategy and plan of the Fund after receipt of approval from the Ministry of Planning and Investment;

b) Enforce rules of operation of the Fund in conformance to provisions laid down herein;

c) Decide the plan for management of investment and construction capital; purchase, sale, management and use of property under its jurisdiction as required by law;

d) Make a decision to approve financial statements, distribute profits, set up annual funds and determine norms for use of funds after obtaining assessment opinions from the comptroller and consent from the Ministry of Planning and Investment;

dd) Make a decision to plan, appoint, dismiss, recruit, assess, reward, discipline, pay salaries and bonuses to and provide other benefits and compensation policies to position holders under its authority stipulated in this Decree;

e) Make a decision to establish, reorganize and close business of branches and representative offices and other dependent accounting units after receipt of consent from the Ministry of Planning and Investment;

g) Make a decision to establish, reorganize and dissolve its specialized affiliates;

h) Make a decision on functions, duties, rights and organizational structure of its specialized affiliates, branches, representative offices and other dependent accounting units.

5. Standards and requirements for being elected as Chairperson and board’s commissioners

a) The Chairperson of the Members' Board must have a university degree or higher, with at least 5 years' experience as a manager and executive in the fields of economy, finance, banking, business administration, law, accounting and audit;

b) Commissioners of the Members' Board must have a university degree or higher and must have experience as a manager and executive in the fields of economy, finance, banking, business administration, law, accounting and audit;

c) Not a husband or wife, natural father, adoptive father, natural mother, adoptive mother, blood child, adopted child, natural sibling, elder brother-in-law, younger brother-in-law, elder sister-in-law, younger sister-in-law of the Fund’s manager;

d) Not a public official or servant working for state agencies, political organizations, socio-political organizations or not a manager or executive of other enterprise;

dd) Have not ever been dismissed from the Chairperson of the Members' Board, commissioners of the Members' Board or the Chairperson of the Company, Director, Deputy Director or General Director, Deputy General Director of a state enterprise.

6. Rights and obligations of commissioners of the Members’ Board

a) Participate in a meeting to discuss, propose and vote on issues under the authority of the Members' Board;

b) Perform duties and tasks assigned by the Chairperson of the Members' Board according to its competence;

c) Inspect and assess the Fund’s performance;

d) Implement other rights and obligations in accordance with this Decree.

7. Responsibilities of the Chairperson and commissioners of the Members’ Board

a) Comply with laws and provisions of this Decree and decisions of the Ministry of Planning and Investment;

b) Comply with resolutions of the Members' Board;

c) Bear personal responsibility when abusing the Fund’s reputation to commit violations against law;

d) If any commissioner of the Members' Board breaches their obligations during the period of implementation of their assigned rights and obligations, other commissioners of the Members' Board will be obliged to report in writing to the Ministry of Planning and Investment.

8. Operating expenses of the Members’ Board

Operating expenses of the Members’ Board shall be recorded as Operating expenses of administrative expenses of the Fund. The Fund’s Director shall guarantee to provide conditions and means necessary for operations of the Members’ Board.

9. Working regime, conditions and rules for conducting the Members' Board’s meeting shall be subject to law applied to single-member limited liability companies whose chartered capital is wholly owned by the State.

Article 8. Chairperson of the Members’ Board

The Chairperson of the Members’ Board shall be the legal representative of the Fund. The Members’ Board shall have the following rights and obligations:

1. Act on behalf of the Members’ Board to certify capital and other resources assigned to the Fund by the State and other related entities.

2. Act on behalf of the Members’ Board to sign documents under the jurisdiction of the Members’ Board.

3. Convene and preside over the meeting of the Members' Board or consult with commissioners of the Members' Board.

4. Approve the quarterly and annual business plan proposed by the Members’ Board.

5. Assign duties to commissioners of the Members’ Board to implement duties and rights of the Members' Board.

6. Take charge of performing duties of the Members’ Board, monitoring and overseeing implementation of resolutions and decisions of the Ministry of Planning and Investment and the Members’ Board.

7. Take charge of overseeing, directly overseeing and assessing results of accomplishment of objectives of the business strategy, plan and results of operations of the Fund and the Director’s performance in management and administration of the Fund.

8. Where necessary, the Chairperson of the Members’ Board may give written authorization to one of commissioners of the Members’ Board or the Director to act on his/her behalf to perform functions and duties. The authorized person shall be responsible to the Chairperson of the Members’ Board for assigned tasks.

9. Implement other rights and obligations upon the request of the Ministry of Planning and Investment.

Article 9. Comptroller

1. The Fund shall have 01 Comptroller appointed by the Minister of Planning and Investment. Comptroller shall hold office for 05 years and may be reappointed.

2. Standards and requirements for being appointed as the Comptroller

a) Have a university degree or higher, with at least 3 years' experience as a manager and executive in the fields of economy, finance, banking, business administration, law, accounting and audit;

b) Not a spouse, natural father, adoptive father, natural mother, adoptive mother, blood child, adopted child, natural sibling, elder brother-in-law, younger brother-in-law, elder sister-in-law, younger sister-in-law of the Fund’s manager;

c) Not being dually appointed as the Director or the General Director of another enterprise;

d) Not a public official or servant working for state agencies, political organizations, socio-political organizations or not a manager or executive of other enterprise;

3. Rights and obligations of the Comptroller

a) Oversee the implementation of the annual and 5-year business strategy and plan of the Fund;

b) Oversee the implementation of rights and obligations of the Members’ Board and the Director of the Fund upon the request of the Ministry of Planning and Investment;

c) Consider assessing the current status of finance and operations of the Fund, the current conditions of operation and validity of internal management rules of the Fund;

d) Supervise the implementation of major investment projects, other purchase, sale and economic transactions on a large scale of the Fund at the request of the Ministry of Planning and Investment;

dd) Prepare and send evaluation reports and recommendations on the issues specified at points a, b, c and d of this clause to the Ministry of Planning and Investment and the Members' Board.

4. Responsibilities of the Comptroller

a) Comply with laws and decisions of the Ministry of Planning and Investment and professional ethics in implementing the rights and obligations stipulated in this Decree;

b) Implement the rights and obligations assigned in an honest, discreet and best manner to protect the interests of the State and the legitimate interests of the parties involved in the Fund;

c) Bear personal responsibility when abusing the Fund’s reputation to commit violations against law.

5. Working regime of the Comptroller

a) The Comptroller shall work full-time at the Fund;

b) The Comptroller must perform planned on an independent and proactive manner;

c) Comptroller shall assume responsibility for developing the work plan and reporting on the level of fulfillment of duties to the Ministry of Planning and Investment.

6. Salaries and remunerations of the Comptroller

a) The Comptroller shall be entitled to salary and remuneration according to the results of control, performance and efficiency of the Fund;

b) Ministry of Planning and Investment shall decide the pay rate and pay salaries and remunerations to the Comptroller based on the level of fulfillment of the tasks and the provisions of law;

c) Working costs of the Comptroller shall be included in costs of management of the Fund in accordance with law.

Article 10. Director

1. The Director shall be appointed or hired by the Members’ Board according to the personnel plan after receipt of approval from the Minister of Planning and Investment. The Director shall be appointed to hold office for 5 years and may be reappointed.

2. Standards and requirements for being appointed as Director shall be subject to provisions laid down in points b, c, d and dd of clause 5 of Article 7 herein.

3. Rights and obligations of the Director

a) Take charge of operating the Fund; implement and assess the results of implementation of resolutions and decisions of the Members' Board; bear responsibility to the Members' Board for operational outcomes of the Fund under his/her jurisdiction in accordance with this Decree;

b) Issue internal management documents to meet management requirements of the Fund and conform to regulations laid down herein;

c) Request the Members’ Board to make a decision on the 5-year and annual business plan and the annual financial report of the Fund and implement such plan or report after approval;

d) Request the Members' Board to make a decision on distributing profits, setting up annual funds and setting limits on use of funds;

dd) Manage property and capital of the Fund in accordance with law;

e) Propose the plan for reorganization of the assistant apparatus;

g) Request the Members’ Board to make a decision on planning, appointing, dismissing, assessing, rewarding and disciplining the Fund’s manager under his/her jurisdiction in accordance with this Decree;

h) Make a decision on recruiting employees according to the plan; assessing, rewarding, disciplining and granting policies and benefits to the Fund’s employees in accordance with this Decree;

i) Perform other duties as assigned or entrusted by the Members’ Board in accordance with this Decree.

4. The Director’s responsibilities

a) Comply with law and implement rights and obligations assigned under the provisions of this Decree;

b) Comply with resolutions and decisions of the Members' Board;

c) Bear personal responsibility when abusing the Fund’s reputation to commit violations against law.

Article 11. Relationship between the Members' Board, Comptroller and the Director in management and administration of the Fund

1. In the process of taking charge of implementation of the resolutions and decisions of the Members' Board, if the Director finds that there is any problem disadvantageous to the Fund, the Director shall report to the Members' Board to consider adjusting their resolutions and decisions. Even if the Members’ Board does not adjust their resolution or decision, the Director must still implement it but must report to the Ministry of Planning and Investment to request it to take proper action according to his/her competence.

2. The Director shall be responsible for periodically reporting to the Members’ Board on the Fund’s performance. Where necessary, the Members’ Board’s Chairperson must request the Director to directly report to the Members’ Board or second the representative of the Members' Board to attend the Fund's meetings.

3. The Members’ Board shall authorize the Director to perform the Fund’s assigned duties and bear responsibility for their authorization. The Director shall bear responsibility to the Members’ Board and before law for assigned duties.

4. The relationship between the Comptroller and the Ministry of Planning and Investment, the Members’ Board and the Director shall be subject to laws applied to single-member limited companies whose charter capital is wholly owned by the State and operational rules of the Comptroller and the Members’ Board.

Article 12. Assistant apparatus

The assistant apparatus of the Fund shall be composed of Deputy Directors, specialized divisions, branches and representative office (hereinafter referred to as specialized affiliates).

1. Deputy Directors

a) Deputy Directors shall assist the Director in performing assigned duties and bear responsibility to the Director or before law for assigned or fiduciary duties. The Deputy Director shall be appointed or hired according to the personnel plan, dismissed, discharged, rewarded or disciplined upon the Director’s request. The Deputy Director shall be appointed to hold office for 5 years and may be reappointed;

b) The number of Deputy Directors shall not be greater than 03 persons;

c) Standards and requirements for being appointed as Deputy Directors shall be subject to provisions laid down in points b, c, d and dd of clause 5 of Article 7 herein;

2. Specialized affiliates shall have the function of counseling and assisting the Members’ Board and the Director to manage and supervise the Fund.

Article 13. Fund’s personnel management

1. The Fund shall exercise staffing autonomy and may make decisions on work positions and the number of employees relevant to assigned functions and duties and conformable to regulations of the Ministry of Planning and Investment.

2. Employees shall have the right to participate in discussions, opinion surveys and recommend personnel to competent entities under labor law and other relevant legislation.

3. All employees in the Fund shall have the right to get involved in supervising implementation of the resolutions made by the employees’ meeting; implementation of the rules and regulations of the Fund; implementation of the collective labor agreement; implementation of labor contracts; implementation of regimes and policies for employees; collection and use of funds contributed to by employees; results of handling of complaints and denunciations and labor disputes; annual emulation and commendation results of employees.

4. Annually, the Fund shall preside over and cooperate with the Executive Committee of the Fund’s Trade Union in organizing the employees’ meeting to discuss solutions to realizing the operation plan targets adopted by the Members' Board; assessing the implementation of the collective labor agreement, the rules and regulations of the Fund and other issues related to the legitimate rights and interests of employees.

5. Relationship between the Fund and employees

a) Relationship between the Fund and employees shall be subject to regulations of law on labor;

b) The Director shall submit the plan to the Members’ Board to seek their approval of issues related to recruitment of employees, staff severance, salaries and insurance benefits in accordance with law, welfares, rewards and disciplines for employees as well as relationship between the Fund and trade unions of employees.

Article 14. Operations of political or socio-political organizations

1. Member organization of the Communist Party of Vietnam at the Fund shall be operated under the Constitution, law and regulations of the Communist Party of Vietnam.

2. Trade union, member organization of the Ho Chi Minh Communist Youth Union and other socio-political organizations of the Fund shall be operated under the Constitution, law and regulations of these entities.

Chapter III

LENDING, FINANCING AND CAPACITY PROMOTION SUPPORT ACTIVITIES

Section 1. DIRECT LENDING

Article 15. Direct lending principles

1. Lending activities of the Fund shall be carried out under agreements between the Fund and small and medium enterprises and must conform to provisions laid down herein.

2. Small and medium enterprises borrowing funds from the Fund must ensure the correct use of borrowed funds and repay principal and interest in an adequate and timely manner as agreed upon with the Fund.

3. Currency used for lending and debt repayment must be Vietnamese dong.

Article 16. Lending requirements

1. Small and medium enterprises running innovative startups shall be entitled to loans granted by the Fund provided that they meet the following requirements:

a) Meet regulations set forth in Article 4 in the Law on Support for Small and Medium Enterprises;

b) Have feasible production and business projects and plans, exploit intellectual property assets prescribed in the Intellectual Property Law or new technologies prescribed in the Law on Technology Transfer or new business models according to regulations of law;

c) Ensure the equity participation in a production and business project or plan makes up at least 20% of the total investment capital to implement that production and business project or plan, and ensure sufficient capital for implementation of a production and business project or plan;

d) Meet regulations on loan guarantee laid down herein.

2. Small and medium enterprises participating in inter-sectoral complexes shall be entitled to loans extended by the Fund when meeting the following requirements:

a) Comply with regulations set forth in points a, c and d of clause 1 of this Article;

b) Have feasible production and business projects or plans, locate their offices within geographical areas of inter-sectoral complexes and have cooperation or business contracts with other enterprises in these inter-sectoral complexes or jointly build and use regional brands. Identification of inter-sectoral complexes shall be subject to provisions enshrined in the Law on Support for Small and Medium Enterprises and other documents giving instructions on implementation thereof.

3. Small and medium enterprises participating in value chains shall be entitled to loans extended by the Fund when meeting the following requirements:

a) Comply with regulations set forth in points a, c and d of clause 1 of this Article;

b) Have production and business projects or plans that are feasible and are put to use to directly create the additional value of products in these value chains, or have cooperation and business contracts with enterprises directly creating the additional value of products in these value chains. Identification of value chains shall be subject to regulations laid down in the Law on Support for Small and Medium Enterprises and other relevant documents providing instructions on implementation thereof.

Article 17. Direct lending interest rate

1. Direct lending interest rate shall be 80% as much as the lowest interest rate on commercial lending. The lowest interest rate on commercial lending shall be determined by comparing interest rates between 04 state-invested commercial banks and selecting the interest rate of the bank whose total asset is greatest at the time of determination of the Fund's lending interest rate.

In certain particular cases, the Minister of Planning and Investment shall decide the lending interest rate upon the request of the Members’ Board.

2. On a yearly basis or over periods of time, based on the principles of identification of interest rate stipulated in clause 1 of this Article, the Members' Board shall publicly inform the lending interest rate decided by the Fund.

Article 18. Lending rate and tenure

1. Lending rate applied to each production and business plan or project shall not be 80% greater than total investment outlay of that plan or project. Total rate of lending of the Fund to small and medium enterprises shall not be 15% greater than the actual chartered capital of the Fund.

2. Lending tenure shall be determined depending on capital recovery and repayment capacity of each enterprise and specific conditions of each production and business plan or project, but shall not exceed seven (07) years.

Article 19. Documentation requirements, processes and procedures for direct lending

1. Application documentation for borrowing shall include:

a) Request form for borrowing of fund submitted by small and medium enterprises;

b) Documentation on production and business plan or project, other documents evidencing enterprises eligible for borrowing in accordance with Article 16 herein.

2. Small and medium enterprises shall have to submit application documentation for borrowing of funds at the Fund’s main office or by post.

3. The Fund shall be responsible for receiving and assessing the adequacy of application documentation for borrowing; assessing the feasibility of production and business plan or project and other borrowing requirements as provided herein; making a decision on borrowing and informing small and medium enterprises. In case of rejection, the Fund shall inform applicant in writing and clearly state reasons for such rejection.

4. The Fund shall be responsible for adopting the processes for assessment and making a decision on direct lending according to the principles of ensuring the clear distinction of responsibilities and obligations of individuals and organizations involved in the processes for assessment of and grant of decision on lending.

5. Where necessary, the Members’ Board shall consider making a decision on establishing a Committee to make an assessment before deciding whether lending is accepted or not.

6. The Fund may hire independent consultants or establish an advisory group giving counsel on lending, including scientists, administrators and experts with relevant specializations.

Article 20. Direct lending agreement

1. Lending agreement between the Fund and small and medium enterprise must be made in writing in compliance with provisions set forth herein and shall include at least the followings:

a) Information about the Fund’s legal person, small and medium enterprise, location and time of conclusion of the agreement;

b) Agreements on lent sum, borrowing purposes, maturity period, lending currency unit, lending method, borrowed fund distribution method, lending interest, transformation of borrowed funds, recovery of lending interest and principal, security for borrowed funds and contingency measures, handling of risks (if any), and effect of the lending agreement;

c) Rights, obligations and responsibilities of each party involved in the lending process; method for resolving disputes and discrepancies that may arise during the period of implementation of the lending agreement and other agreements reached to meet the Fund's management requirements.

2. Notwithstanding provisions laid down in clause 1 of this Article, contracting parties may agree on other issues as prescribed herein and in other relevant laws.

Article 21. Loan guarantee

1. Upon lending funds from the Fund, small and medium enterprise must adhere to loan security measures. As for each production and business plan or project, the Fund must consider making decision on specific loan security measures in line with the actual context and provisions of law.

2. Formation and execution of secured transactions and disposal of collateral must be subject to provisions of law on secured transactions and other relevant legislation.

Section 2. INDIRECT LENDING

Article 22. Indirect lending principles

1. The Fund may choose a commercial bank (hereinafter referred to as bank) with which an indirect lending agreement is signed.

2. The designated bank shall apply law on borrowing of funds by credit institutions and financial organizations in order to receive funds from the Fund.

3. The designated bank shall assess and decide whether lending is approved with respect to small and medium enterprises meeting requirements defined in Article 23 herein and shall be liable for any risk incurred from such lending decision.

4. The designated bank shall be held responsible for repaying indirect lending principal and interest in full to the Fund by the maturity date agreed upon with the Fund.

5. The currency unit used for lending and debt repayment must be Vietnamese dong.

Article 23. Requirements for lending of funds available in the Fund

1. Small and medium enterprises running innovative startups may be entitled to loans derived from the Fund's available capital when meeting the following requirements:

a) Comply with provisions laid down in point a, point b and point c of clause 1 of Article 16 herein;

b) Meet regulations on loan guarantee under relevant laws.

2. Small and medium enterprises participating in inter-sectoral complexes may have access to loans derived from the Fund's available capital when meeting the following requirements:

a) Comply with provisions laid down in point a and point c of clause 1 and point b of clause 2 of Article 16 herein;

b) Meet regulations laid down in point b of clause 1 of this Article.

3. Small and medium enterprises participating in inter-sectoral complexes may have access to loans derived from the Fund's available capital when meeting the following requirements:

a) Comply with provisions laid down in point a and point c of clause 1 and point b of clause 3 of Article 16 herein;

b) Meet regulations laid down in point b of clause 1 of this Article.

Article 24. Indirect lending tenure and rate

Indirect lending tenure and rate shall be subject to provisions laid down in Article 18 herein.

Article 25. Indirect lending interest rate and fee

1. Indirect lending interest rate refers to the interest rate of a loan that a bank grants to a small and medium enterprise and which is equal to the direct lending interest rate as stipulated in clause 1 of Article 17 herein.

2. Indirect lending fee refers to a sum that the Fund has to pay to the bank designated to extend loans and which is agreed upon between both parties provided that it does not exceed 50% of total indirect lending interest sum collected from each production and business plan or project.

Article 26. Documentation requirements and procedures for indirect lending

1. Application documentation for borrowing of funds shall include:

a) Application form for borrowing of funds submitted from small and medium enterprises;

b) Dossiers on production and business plans and projects of small and medium enterprises, other documents evidencing enterprises meeting lending requirements prescribed in Article 23 herein.

2. The designated bank’s application documentation for receipt of available capital for indirect lending shall be composed of the followings:

a) Application form for receipt of available capital submitted by the designated bank;

b) Documents defined in point b of clause 1 of this Article and other relevant ones.

3. Small and medium enterprises shall submit application package for borrowing of funds at a transaction office of the designated bank or by post.

4. The designated bank shall be responsible for receiving the application package for borrowing of funds, verifying it and making a decision on approval of lending of funds to small and medium enterprise, and shall simultaneously request the acceptance of funds for indirect lending in writing at the Fund’s main office or by post.

5. The designated bank shall assume responsibility for adopting procedures for verification and assessment, and issuing the decision on approval of indirect lending according to the principles of public disclosure and transparency.

6. The Fund shall be held responsible for receiving and assessing the application package for receipt of the Fund’s available capital for indirect lending and shall make its decision on whether it will give its available funds to the designated bank’s indirect lending of these funds to small and medium enterprises. In case of refusal to give available funds, the Fund must inform the designated bank in writing with clear reasons for such refusal.

7. The Fund shall be held responsible for issuing the procedures for making assessment and making decision on giving capital for indirect lending purposes according to the principles of the clear distinction of responsibilities and obligations of parties involved in the indirect lending process.

Article 27. Indirect lending agreement

1. Indirect lending agreement between the Fund and the designated bank shall be made in writing, must comply with provisions laid down herein and must include at least the followings:

a) Information about the legal person of the Fund and the designated bank, place and time of entry into such agreement;

b) Agreements on loan sum, purposes of use of loan, lending tenure, lending currency unit, lending interest rate, receipt of funds available for lending purposes, repayment of lent funds, recovery of lending principal and interest, transformation of overdue debts, rescheduling of debt repayment term and effect of indirect lending agreement;

c) Rights, obligations and liabilities of each party involved in the indirect lending process; method for dealing with disputes or difficulties arising from the process of implementation of agreement and other arrangements in conformity with the Fund’s managerial requirements.

2. Notwithstanding provisions laid down in clause 1 of this Article, involved parties may agree on other matters in compliance with provisions laid down herein and other relevant laws.

3. Lending agreement between the designated bank and a small and medium enterprise must be made in writing and must be consistent with the indirect lending agreement between the Fund and the designated bank as provided in clause 1 and clause 2 of this Article.

Section 3. FINANCING

Article 28. Fund’s financing principles

1. The Fund shall partially finance construction of facilities and purchase of machinery and equipment for use in production and business plans or projects of small and medium enterprises that meet requirements defined in clause 1 of Article 29 herein.

2. The financing currency unit must be Vietnamese dong.

Article 29. Financing requirements and rate

1. Small and medium enterprise shall be eligible for the Fund's consideration and decision to approve financing when meeting requirements set out in point a, b and c of clause 1 or point a and b of clause 2 or point a and b of clause 3 of Article 16 herein.

2. The maximum financing rate shall be 01 billion dong per each production and business plan or project, but not exceeding 50% of total investment in construction of workshops and purchase of machinery and equipment.

Article 30. Application requirements and procedures for financing

1. Application documentation for financing shall be composed of the followings:

a) Application form for financing submitted from small and medium enterprises;

b) Dossiers on production and business plans and projects of small and medium enterprises, other documents evidencing that enterprises meet financing requirements prescribed in clause 1 of Article 29 herein.

2. Small and medium enterprises shall submit the application package for financing at the Fund’s main office or by post.

3. The Fund shall receive and verify the adequacy of application documentation for financing; assess the feasibility of production and business plan or project and other financing requirements prescribed herein; issue a decision on approval of financing and inform requesting small and medium enterprises in writing. In case of refusal of financing, the Fund shall inform the requesting enterprise with clear reasons for such refusal.

4. The Fun shall be responsible for issuing verification and assessment procedures, making a decision on whether application for financing is accepted, disbursing financing capital according to the principles of clear distinction of responsibilities and obligations of individuals or organizations involved in the process of verification, assessment and grant of the financing decision and disbursement of financing capital.

5. The Fund shall establish a review committee to consider granting decisions on approval of financing. The Members' Board of the Fund shall decide the organizational structure of the review committee.

6. The Fund shall have the right to hire independent consultant or establish the financing advisory group composed of scientists, administrators and/or experts with proper specializations to give their counsels on financing.

Article 31. Financing agreement

1. Financing agreement between the Fund and the receiving small and medium enterprise shall be made in writing, must comply with provisions laid down herein and must include at least the followings:

a) Information about the legal person of the Fund and the receiving small and medium enterprise, place and time of entry into such agreement;

b) Contractual terms and conditions regarding financing form, amount, purposes of finances and financing currency unit, disbursement of finances and effect of the financing agreement;

c) Rights, obligations and liabilities of each party involved; method for dealing with disputes or difficulties arising from the process of implementation of the agreement and other arrangements in conformity with the Fund’s managerial requirements.

2. Notwithstanding provisions laid down in clause 1 of this Article, involved parties may reach other agreement in compliance with provisions laid down herein and other relevant laws.

Article 32. Acceptance testing on constituents of investment projects receiving finances

1. Based on dossiers on acceptance testing of financing presented by the receiving small and medium enterprise, the Fund shall carry out the acceptance testing on financing.

2. Dossiers on acceptance testing on financing shall comprise the followings:

a) Application form for acceptance testing on financing, submitted by the receiving enterprise;

b) Documents and payment evidences related to investment in development of premises, purchase of machinery and equipment of production and business plan or project.

3. The Fund shall receive and assess the adequacy of dossiers on acceptance testing on financing; verify such dossiers and conduct the acceptance testing on its financing.

4. The Fund shall be responsible for issuing verification, assessment and acceptance testing procedures to ensure compliance with the principles of fairness and public disclosure.

5. On an annual basis, the receiving enterprise shall be responsible for sending the Fund a review report on performance of production and business plan or project already receiving finances or its financial statement.

Section 4. CAPACITY IMPROVEMENT SUPPORT

Article 33. Capacity improvement support activities

1. After considering funds available for its operations and annual business plan, the Fund shall decide to host seminars, communicate, train in, counsel, promote investment and trade, provide information and data for capacity improvement support for small and medium enterprises, and must ensure efficient support for right beneficiaries.

2. After considering funds available for its operations and annual business plan, the Fund shall decide to formulate a research and development support project or scheme; formulate project or scheme for development of incubation facilities, technical establishments and coworking spaces as a way to support small and medium enterprise, and petition the Prime Minister or the Ministry of Planning and Investment to approve it under their respective jurisdiction.

Chapter IV

RECEIPT, MANAGEMENT AND USE OF BORROWED FUNDS, FINANCING, AIDS, CONTRIBUTIONS AND FIDUCIARY FUNDS

Article 34. Principles of receipt, management and use of borrowed funds, financing, aids, contributions and fiduciary funds

1. Borrowed funds, financing, aids, contributions and fiduciary funds existing in monetary form or in kind from organizations and individuals shall be received, managed and used.

2. Receipt, management and use of borrowed funds, financing, aids, contributions and fiduciary funds must be subject to provisions of Vietnam’s laws and international treaties to which Vietnam is a signatory. The Fund may receive fiduciary funds provided that such funds are not beyond the Fund’s reimbursement capacity.

3. Avoid using borrowed funds, financing, aids, contributions or fiduciary funds that are likely to harm national interests, security, national defence and violate laws on prevention and control of corruption, money laundry and terrorism financing and illegal acts.

Article 35. Receipt and management of borrowed funds, financing, aids, contributions and fiduciary funds

1. The Fund shall receive, manage and use borrowed funds and aids in accordance with law.

2. The Fund shall directly give finances and contributions in monetary form or in kind from organizations and individuals.

a) Receipt of financing and contributions shall be confirmed in writing by the Fund, sponsor or contributor, and must conform to provisions laid down herein and other relevant law;

b) Financing or contributions in kind given to the Fund must be converted into cash. As for financing or contribution in kind which is property having great value or not yet present in Vietnam, the Fund shall be required to hire a legally established appraisal body to value the property given as financing or contribution. The valuation time shall not be longer than 06 months till the time of conclusion of the financing and contribution agreement;

c) The financing or contribution party shall be responsible for the legitimacy of financing or contribution.

3. The Fund shall receive funds entrusted by other organizations and individuals.

a) The Fund shall only be allowed to receive trust to give support for small and medium enterprises under its scope of duties and rights prescribed herein;

b) The trust receipt shall be confirmed in writing according to provisions laid down herein and other relevant laws;

c) The Fund shall guarantee physical infrastructure and personnel necessary for performing entrusted tasks;

d) The Fund shall be entitled to entrustment fees and required to use fiduciary funds to serve right purposes and entrusted tasks that have already agreed upon in an entrustment contract;

dd) The entrusting party must assign the fiduciary fund ahead of the agreed-upon schedule, take all risks and enjoy interests from fiduciary activities.

Article 36. Use of borrowed funds, financing, aids, contributions and fiduciary funds

1. Pursuant to regulations enshrined in Vietnam's law, international treaties and agreements with other organizations and individuals, the Fund shall use borrowed funds, financing, aids, contributions, fiduciary funds and profits generated therefrom (if any) for performing the following activities:

a) Supplementing funds necessary for the Fund’s operations;

b) Lending funds to or providing financing for small and medium enterprises under regulations of the entrusting or sponsoring party. In default of regulations of the entrusting or sponsoring party, the Fund shall comply with regulations laid down in Section 1, Section 2 and Section 3 of Chapter III herein;

c) Performing activities aimed at supporting capacity enhancement for small and medium enterprises as provided in Section 4 of Chapter III herein.

2. The Fund shall cooperate with other organizations or individuals in performing activities specified in this Article.

Chapter V

DEBT CLASSIFICATION, SETTING-ASIDE OF LOAN LOSS PROVISIONS AND RISK TREATMENT

Section 1. DEBT CLASSIFICATION AND SETTING-ASIDE OF LOAN LOSS PROVISIONS

Article 37. Debt classification

1. The Fund shall classify all outstanding debts incurred from indirect lending in accordance with regulations of the State Bank of Vietnam on debt classification with respect to credit institutions.

2. Banks shall be responsible for classifying all outstanding debts incurred from indirect lending in accordance with regulations of the State Bank of Vietnam on debt classification with respect to credit institutions.

Article 38. Setting aside of provisions for lending risks

1. The Fund shall set aside loan loss provisions for indirect lending risks which may be charged into the Fund’s operating expenses as follows:

a) Setting aside a general loan loss provision which is 0.75%/year as much as total outstanding debt incurred from indirect lending at the setting-aside time;

b) Setting aside a specific loan loss provision: Based on the results of debt classification, the Fund shall set up a provision for specific risk to the outstanding debt incurred from indirect lending. The set-aside amounts specific to debt groups shall be subject to regulations of the State Bank of Vietnam applied to credit institutions.

2. Banks shall set aside loan loss provisions for outstanding debts incurred from indirect lending in accordance with regulations of the State Bank of Vietnam regarding the setting-aside of loan loss provisions of credit institutions.

Section 2. RISK TREATMENT

Article 39. Principles of treatment of lending risks

1. The Fund’s treatment of lending risks must ensure conformance to regulations of law.

2. Risk treatment shall take place after causes of risks, risk levels, business and production conditions, financial status, repayment capacity of the borrowing enterprise and conformance to the requirement for sufficient related dossiers are considered, must be on time and follow the right processes defined herein. 3. Risk treatment may be carried out with the aim of minimizing losses or damage to the state and charging the Fund, borrower and other organizations involved with recovery of debt repayments.

4. Risk treatment approaches are arranged in order of priority and the one that does not cause or less causes loss of state capital will be preferred.

5. A debt may be subject to one or multiple risk treatment approaches prescribed herein.

6. The Fund’s risk acceptance ratio shall not exceed 5% on the date ending the fiscal year.

Article 40. Risk treatment approaches

1. Approaches to treating risks incurred from direct lending debts owed of the Fund shall be comprised of the followings:

a) Adjustments in debt repayment term/debt owed;

b) Debt rescheduling;

c) Debt charge-off;

d) Outstanding interest write-off;

dd) Outstanding principal write-off;

e) Debt sale;

g) Disposal of property put up as security for borrowed funds;

h) Other risk treatment measures prescribed by law.

2. Risk treatment approaches to indirect lending outstanding debt shall be subject to regulations adopted by the State Bank of Vietnam on risk treatment approaches to credit operations.

Article 41. Authority to treat risks

1. Authority to treat risks arising from direct lending

a) Prime Minister shall consider deciding on the risk treatment approaches prescribed in point dd, e and g of clause 1 of Article 40 herein in the event that such risk causes the depreciation of the Fund’s chartered capital;

b) Minister of Planning and Investment shall consider deciding on the risk treatment approaches prescribed in point c, d and dd of clause 1 of Article 40 herein in the event that such risk does not cause the depreciation of the Fund’s chartered capital;

c) The Fund shall consider deciding on the risk treatment approaches prescribed in point a, b, e, g and h of clause 1 of Article 40 herein in the event that such risk does not cause the depreciation of the Fund’s chartered capital;

d) In case where the risk acceptance rate exceeds 5% at end of a fiscal year, the Ministry of Planning and Investment shall preside over cooperating with the Ministry of Finance in reporting to the Prime Minister to consider making his decision.

2. Authority to treat risks arising from indirect lending

Authority to decide approaches to treating indirect lending risks shall be subject to regulations adopted by the State Bank of Vietnam on authority to treat risks from credit operations.

Article 42. Use of loan loss provisions for treatment of lending risks

1. The Fund shall use loan loss provisions for treatment of direct lending risks

a) If the loan loss provision amount is not sufficient for treatment of all of lending risks from debts to be treated, the Fund shall set aside part of the financial reserve fund as provided in Article 51 herein. After using up available funds included in the financial reserve fund, in case of deficiency remaining, the Fund shall directly record the negative difference in operating expenses;

b) If the residual amount of loan loss provision already set aside is greater than the amount of loan loss provision to be set aside, the Fund shall reversely record it as the positive difference.

2. Banks may use loan loss provisions for treatment of risks from outstanding indirect lending debts in accordance with regulations of the State Bank of Vietnam on use of provisions for treatment of risks arising from operations of credit institutions.

Chapter VI

FINANCIAL MANAGEMENT

Article 43. Fund’s operating capital

1. Owner’s equity shall include:

a) The Fund's minimum chartered capital which is 2,000 billion dong and is derived from the state budget's capital expenditure. The Ministry of Planning and Investment shall preside over and cooperate with the Ministry of Finance in petitioning the Prime Minister to approve the Fund’s chartered capital amount over periods of time;

b) Supplementary capital derived from the Fund’s income;

c) Capital derived from non-refundable financing, aids and contributions of persons and entities;

d) Other capital under the Fund’s ownership.

2. Capital acquired from receipt of reimbursable borrowed funds, contributions and fiduciary funds of persons and entities.

3. Other capital prescribed by law.

Article 44. Principles of management and use of capital, assets, revenues, expenses and distribution of the Fund's income

1. The Fund must manage and use capital according to the principles of right purposes, efficiency and capital safety maintenance.

2. The Fund shall apply regulations enshrined in law on development, purchase, management and use of fixed assets, management of revenues, other income, expenses and distribution of income with respect to single-member limited liability companies whose chartered capital is wholly owned by the State.

3. Revenues and expenses of the Fund must be managed in a strict, due, faithful and legitimate manner; must be supported by all required dossiers or evidencing documents prescribed in law and must be recorded in detail in accounting books according to the applied accounting regime and provisions of other relevant laws.

Article 45. Purposes of use of capital

1. The operating capital defined in Article 43 herein shall be used for lending to small and medium enterprises running innovative startups or those participating in inter-sectoral complexes or value chains.

2. The capital defined in point b, c and d of clause 1 of Article 43 herein shall be used for offering finances to small and medium enterprises running innovative startups or those participating in inter-sectoral complexes or value chains.

3. The capital defined in point b, c and d of clause 1 and clause 3 of Article 43 herein shall be used for giving capacity promotion support to small and medium enterprises.

4. The capital defined in point b of clause 1 of Article 43 herein shall be used for implementing investment and development projects of the Fund; treating risks and compensating for any loss or damage to assets or bad debts that may arise from the Fund's operations.

5. The operating capital defined in Article 43 herein shall be used for spending on management and administration of the Fund; spending on investment, development and purchase of fixed assets, tools or accessories under the provisions of Article 48 herein for the Fund's operational purposes.

6. The available capital included in the operating capital under Article 43 herein shall be used for making saving deposits into accounts opened at commercial banks provided that safety for such deposits is ensured.

Article 46. Asset management

1. Purchase of fixed assets by the Fund

a) Authority to decide investment in and purchase of fixed assets, standards, norms, processes, procedures for investment in, purchase and repair of fixed assets shall be subject to regulations applied to single-member limited liability companies whose chartered capital is wholly owned by the State, must adhere to the principles of public disclosure, transparency, cost efficiency and effectiveness;

b) Purchase of fixed assets serving the Fund’s activities must stick to the principles whereby the remaining value of total fixed asset does not exceed 7% of the Fund’s actual chartered capital at the time of purchase.

2. Principles of depreciation, regimes for management, use and time of depreciation of fixed assets of the Fund shall be subject to law on depreciation of fixed assets applied to single member limited liability companies whose chartered capital is wholly owned by the State.

3. Renting of fixed assets

a) The Fund may rent fixed assets according to the principles of effectiveness and compliance with law applied to single member limited liability companies whose chartered capital is wholly owned by the State;

b) Authority to decide to rent fixed assets shall be subject to regulations applied to single member limited liability companies whose chartered capital is wholly owned by the State.

4. Liquidation, disposal and sale of fixed assets

a) The Fund shall have the right to liquidate, dispose of and sell fixed assets which have been damaged, technically outdated, have no longer been used, are useless or are used ineffectively in order to recovery capital according to the principles of public disclosure, transparency, capital safety and compliance with regulations in force;

b) Authority to decide to liquidate, dispose of and sell fixed assets; processes and procedures for liquidation and disposal of fixed assets shall be subject to regulations applied to single member limited liability companies whose chartered capital is wholly owned by the State.

5. Stocktaking and revaluation of fixed assets

a) Stocktaking of assets

The Fund must make a periodic or unscheduled inventory of fixed assets to determine the number of these assets in the following cases: Closing of accounting book for preparation of annual financial statement; after natural disasters, hostility acts or for certain reasons resulting in variation in the Fund’s assets; under regulations adopted by competent regulatory authorities.

If there is surplus or deficiency, it shall be mandatory to clearly determine causes and responsibilities of entities and persons concerned as well as material compensation rate in accordance with law.

b) Revaluation of assets

The Fund must carry out the revaluation of assets in accordance with regulations applied to single member limited liability companies whose chartered capital is wholly owned by the State. Any increase or decrease in value of assets after revaluation shall be determined in accordance with the Fund’s regulations applied to specific cases.

6. Handling of assets subject to loss or damage

In case any loss or damage to an asset occurs, the Fund must value the affected asset, determine causes, responsibilities and take action as follows:

a) Pointing out whether such loss may result from objective causes (i.e. natural disasters, conflagration or sudden accidents) or subjective causes, or both;

b) If such loss or damage results from subjective causes, entities or persons causing loss or damage must compensate and implement relief actions as prescribed by law. The Fund must impose detailed regulations on compensation and determine the compensation rate conforming to law; must bear responsibility for its own decision;

c) If the asset subject to loss or damage has been insured as required by law, action shall be taken under terms and conditions of the insurance policy;

d) If value of the asset subject to loss or damage after being compensated for by indemnity of the entity or person causing such loss or damage or the insurer, and by loss provisions, is inadequate, such value shall be recorded in the Fund's expenses arising during the accounting period;

dd) In special cases where serious loss or damage is caused by natural disasters or force majeure events, and the Fund is unable to mitigate consequences therefrom on its own, the Director must report to the Members' Board on the plan of action against such loss or damage which is then presented to the Minister of Planning and Investment to seek his/her decision.

7. The Fund shall be responsible for issuing rules in purchasing and managing fixed assets in accordance with regulations laid down herein and provisions of other relevant law.

Article 47. Revenues

The Fund’s revenue is an account receivable that may arise during an accounting period, including:

1. Revenues generated from the Fund’s services and operations:

a) Revenues from lending activities, including direct and indirect lending interest, and others;

b) Revenues from management of lending funds, finances, aids, contributions and fiduciary funds (if any);

c) Revenues from support for enhancement of capacity given to small and medium enterprises;

d) Other revenues from services or operations.

2. Revenues from deposit interest.

3. Revenues from liquidation and disposition of assets; revenues from insurance indemnity (the residual amount after compensation for loss or damage occurring; revenues from penalties or compensation for breach of economic contract; revenues from debts written off by loss provisions and now collected successfully; revenues from exchange rate difference (if any).

4. Other revenues required by law.

Article 48. Fund's expenses

The Fund's expenses are those expenses arising within the accounting period which are necessary for the Fund’s operations, including:

1. Expenses for the Fund’s operations and services:

a) Expenses for lending and financing activities, including: Indirect lending and financing fees; spending on lending application verification; fees for assessment and valuation of property put up as security for loans; spending on inspection, surveillance and review of finances and other spending related to financing and lending operations;

b) Spending on support for enhancement of capacity given to small and medium enterprises;

c) Costs of receipt and management of borrowed funds, financing, aids, contributions and fiduciary funds from persons and entities;

d) Spending on setting aside loan loss provisions and other provisions (if any);

dd) Spending on debt treatment operations;

e) Spending on insurance, spending on depositing of idle capital and spending on foreign exchange difference;

g) Spending on other services and operations.

2. Spending on operation of the Fund’s machinery

a) Spending on payments to employees and managers, including: Spending on salaries, wages, remunerations, bonuses, allowances and other salary-based spending; spending on salary-based contributions (e.g. social insurance contributions, health insurance contributions, labor insurance contributions, unemployment insurance contributions and trade union dues); spending on reward and social welfare; spending on uniform worn during transactions; spending on subsidies; spending on payment of shift meal costs; spending on medical costs; spending on payment of female worker’s costs, prescribed in current regulations; other spending on payments to employees and managers under law;

b) Overheads, including: Travelling costs; training expenses; spending on scientific and technological research and application; communication, advertisement and marketing costs; spending on information technology; spending on activities of Party organizations and unions; spending on stationery, documents and newspapers; spending on payment for electricity, water, phone, telecommunication bills and office cleaning costs; spending on payment of costs of conferences, seminars, training and communication courses, printing of handouts and guest reception activities; spending on purchase of goods and services; spending on transactions, external relations, participation in forums and networks; spending on inspection, surveillance and audit; spending on hiring of foreign and domestic experts and consultants; costs of transportation and other spending on operations management activities;

c) Capital expenditures, spending on purchase, maintenance and repair of assets; spending on fixed asset depreciation; spending on renting of assets under leases; spending on disposition and liquidation of assets; spending on property insurance; spending on purchase of equipment and accessories; other spending on management and use of assets.

3. Spending on payment of taxes, fees and charges under law.

4. Spending on unearned revenues that are neither collected in reality nor recorded as decreases in the revenue account; spending on liabilities of which creditors have not been found, which have been recorded as entries in the income account and of which creditors, however, are eventually found; spending on recovery of written-off debts and payment of bad debt recovery costs; spending on payment of fines and indemnities owing to breach of economic contracts under the Fund’s duties; spending on handling of asset losses under law; spending on corporate social responsibility activities; spending on payment of legal costs and law enforcement charges.

5. Other expenses.

6. Expense limits prescribed in clause 1, 2, 3, 4 and 5 of this Article shall be subject to law on those applied to single member limited liability companies whose chartered capital is wholly owned by the State. In default of such law, the Fund may, depending on its financial capacity, set the limit and make the decision on spending to ensure relevance and effectiveness.

Article 49. Salaries and allowances

The Fund shall exercise its authority over labor, salaries, remunerations and bonuses of its employees and managers in accordance with regulations on single member limited liability companies whose chartered capital is wholly owned by the State in alignment with the characteristics, model and operations of the Fund under the provisions of this Decree and according to instructions given by the Ministry of Labor, War Invalids and Social Affairs.

Article 50. Distribution of profit

1. The Fund’s annual profit is the difference between total income and total expenses incurred in a fiscal year.

2. After payment of fines for violations against law and compensation for losses from previous years, payment of corporate income taxes under law, if total income is greater than total expenses, the difference shall be deemed 100% and shall be distributed as follows:

a) Setting aside 25% of the difference for the capital investment fund;

b) Setting aside 20% of the difference at maximum for the financial reserve fund on condition that the maximum amount available in this fund does not exceed 25% of the Fund’s actual chartered capital;

c) Setting aside part of the difference which is equal to 03 months' salary paid to employees at maximum in the fiscal year for the reward fund or the welfare fund, and which is equal to 1.5 month’s salary paid to managers at maximum in the fiscal year for the manager’s reward fund;

d) Residual amounts remaining after setting up the aforesaid funds (if any) shall be used as supplements to the capital investment fund;

dd) If the revenue-expense difference existing after setting up the capital investment fund is not adequate to be set aside for the reward fund, the welfare fund and the manager's reward fund that meet the limits prescribed by regulations in force, the Fund may be entitled to reduction in amounts set aside for the capital investment fund to supplement the available funds to be adequate to set up the reward fund, the welfare fund and the manager’s reward fund meeting the limits prescribed by regulations in force, and the maximum reduction must not exceed the amount set aside for the capital investment fund in a fiscal year;

e) Members’ Board shall decide the amount set aside for the capital investment fund, the financial reserve fund, the reward and welfare fund and the manager’s reward fund.

3. Setting aside the Fund’s profits for the reward fund and the welfare fund:

a) The A-rated Fund may be allowed to set aside 3 months’ earned salary paid to employees for both reward and welfare fund;

b) The B-rated Fund may be allowed to set aside 1.5 months’ earned salary paid to employees for both reward and welfare fund;

c) The C-rated Fund may be allowed to set aside 01 month’s earned salary paid to employees for both reward and welfare fund.

4. Setting aside the Fund’s profits for the manager’s reward fund:

a) A-rated Fund may be entitled to set aside 1.5 month's earned salaries paid to managers for this fund;

a) B-rated Fund may be entitled to set aside 01 month's earned salaries paid to managers for this fund;

c) C-rated Fund shall not be entitled to set aside part of its profits for this fund.

5. Members’ Board or the person authorized to decide on setting aside or temporarily setting aside part of the Fund’s profits for the reward fund, the welfare fund, the manager’s reward fund, the capital investment fund and the financial reserve fund in accordance with clause 2 of this Article.

6. In case where the Fund incurs losses based on its income statement, the Fund may bring forward such losses to the following fiscal year and the permissible period during which losses are brought forward shall not be longer than 05 years from the year subsequent to the year in which these losses are incurred. After the 5-year period, if the Fund fails to bring forward all losses, the Ministry of Planning and Investment shall preside over and cooperate with the Ministry of Finance in reporting to the Prime Minister to seek his approval decision.

Article 51. Management and utilization of funds

1. Funds must be used to meet regulations, serve correct purposes and beneficiaries.

a) The Fund must design and issue regulations on management and use of funds in accordance with law and according to the principles of democracy, transparency and involvement of the Executive Committee of the Fund's trade union and internal circulation within the Fund before bringing them into effect;

b) In a fiscal year, the Fund may, at its discretion, temporarily set aside amounts for the aforesaid funds on the basis of its profits in order for these funds to be able to spend on accomplishing predetermined purposes;

c) Limits on spending on rewards offered to employees and spending on welfare benefits shall be set by the Members’ Board.

2. The capital investment fund shall be used for:

a) Implementing capital development projects such as: Investment in, expansion and development of the Fund’s support activities; programs and projects for new construction, refurbishment, innovation and expansion of construction projects, projects for purchase of assets, even including non-installed equipment and machinery, projects for repair and improvement of assets and equipment; projects and proposals for scientific research, technological development, application, technical assistance and basic investigation; training and improvement of professional, technical and administrative qualification for the Fund’s employees and managers; other capital investment programs, projects and proposals;

b) Financing activities of small and medium enterprises running innovative startups, small and medium enterprises participating in the inter-sectoral complexes and value chains; providing supports for enhancement of capacity for small and medium enterprises;

c) Supplementing the Fund’s chartered capital.

3. The financial reserve fund may be used in the following order of priority:

a) Compensating for losses or damage to assets or unrecoverable debts arising from operations after these losses or damage have been offset by using indemnities from persons or entities at fault or insurance agencies, and using provisions recorded in the expense account within an accounting period;

b) Dealing with lending risks after using up all of loan loss provisions recorded as entries in the expense account under the decision of the Members' Board;

c) At the end of a fiscal year, if the financial reserve fund has not been used up, the balance shall be brought forward to the subsequent year, and the amounts collected from accounts to which risks have already been treated shall be recorded as other revenues of the Fund.

4. The reward fund may be used for giving rewards at end of a fiscal year, periodic rewards and spontaneous rewards and rewards prescribed in law on emulation and rewards to the Fund’s employees and collective; giving managers rewards prescribed in law on emulation and rewards; giving rewards to independent persons or units that make multiple contributions to the Fund’s activities.

5. The manager’s reward fund may be used for offering rewards at end of a fiscal year, periodic reward, spontaneous rewards and rewards at end of term in office of managers. The reward rate shall be decided by the Ministry of Planning and Investment, depending on performance and efficiency of the Fund, upon the request of the Chairperson of the Members’ Board.

6. The welfare fund may be used for spending on sports, culture and well-being activities for employees and managers; spending on public assistance and charity activities; spending on subsidies for regular, sudden hardship or spending on payment of allowance for employees and managers in public holidays or lunar new year’s holidays; spending on investment in construction or repair of welfare facilities and others of the Fund.

Article 52. Accounting and auditing regime

1. The Fund shall be responsible for performing accounting duties prescribed in law and according to the instructions given by the Ministry of Finance.

2. The Fund’s fiscal year shall start on January 1 and end on December 31 each year.

3. The Fund’s accounting structure shall be established under law on accounting and the Fund’s internal rules.

Article 53. Financial reporting

1. The Fund shall be required to prepare quarterly and yearly financial statements. The Fund’s financial statements must be audited by independent audit bodies established and operated under laws.

2. Yearly financial statements must be submitted within the maximum period of 90 days from the ending date of a fiscal year. Reports on results of yearly financial statements of the Fund must be made by independent audit bodies and sent within the maximum period of 120 days from the ending date of a fiscal year.

3. After obtaining comptroller’s opinions, the Director shall request the Members’ Board to approve financial statements and shall send them to the Ministry of Planning and Investment and the Ministry of Finance.

4. The Fund shall make a public financial disclosure in accordance with law on this matter applied to single member limited liability companies whose chartered capital is wholly owned by the State.

Chapter VII

SURVEILLANCE AND ASSESSMENT OF THE FUND’S OPERATIONS

Article 54. Surveillance of the Fund’s operations

1. The Fund shall be responsible for setting up and operating the internal surveillance system which must be efficient and corresponding to its functions, duties and powers prescribed herein.

The Fund’s internal surveillance system must comprise regulatory policies, regulations, procedures, organizational and personnel structure that conform to provisions enshrined herein and are implemented to control, prevent, detect and promptly treat risks arising from the Fund’s operations.

2. The Fund must develop and release the 5-year and annual business plan by using the sample plan given in the Appendix I and II hereto before submitting it to the Ministry of Planning and Investment for monitoring and management purposes.

3. The Fund shall annually report to the Ministry of Planning and Investment on its operational results, efficiency in management of capital, assets, assessment of risks and restrictions arising from the Fund's operations, and shall make recommendations and suggest proper solutions.

4. Ministry of Planning and Investment shall oversee the Fund’s operations.

a) Such oversight shall be carried out by the Comptroller’s service;

b) Tasks involved in such oversight shall be subject to regulations laid down in point a, b, c, d and dd of clause 3 of Article 9 herein.

Article 55. Assessment of operational results and rating of the Fund

1. The Ministry of Planning and Investment shall make an annual assessment of operational results and rating of the Fund.

2. Indices used in the annual assessment of the Fund’s operational results, including:

a) Index 1: Growth of outstanding loan debts and financing sales;

b) Index 2: Bad debt ratio;

c) Index 3: Total income minus total expenses;

d) Index 4: Compliance with laws on investment, management and use of the Fund’s capital and assets, obligations to the state bank, and compliance with regulations on the regime for making annual financial reports and operational review reports of the Fund.

3. Objective factors may be taken into consideration, except in case of assessment of the Fund’s operations:

a) Natural disasters, conflagration, epidemics, economic and political changes, wars and other force majeure events;

b) Changes in concerned regulatory policies which cause impacts on support for small and medium enterprises and operating results of the Fund.

Article 56. Information disclosure

1. The Fund must periodically disclose the following information to the public:

a) Fund’s basic particulars;

b) General objectives, specific goals and targets included in the annual business plan;

c) Annual financial status report and executive summary which have already been audited;

d) Assessment report on results of implementation of the annual operational plan;

dd) Report on actual state of management and organizational structure of the Fund.

2. The Fund must publicize information about abnormalities on its website, printed publications (if any) and post up the public notice of such information within 36 hours since one of the events mentioned below happens:

a) The Fund's bank accounts frozen or resumed after being frozen;

b) Temporary suspension of part or all of the Fund's operations;

c) Change of managers, including commissioners of Members’ Board, Chairperson of the Members’ Board, Comptroller, Director or Deputy Directors;

d) Obtaining the decision on disciplinary actions, initiating legal proceedings, having the Court’s verdict or judgment against the Fund’s manager;

dd) Obtaining conclusions from the inspection or tax authorities regarding the Fund's violations against law;

e) Receiving the decision on replacement of independent auditing organization or being met with refusal to audit financial statements.

3. The Fund’s legal representative or authorized persons shall publicize information and bear responsibility for adequacy, accuracy, authenticity and timeliness of information to be disclosed.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 57. Responsibilities of the Ministry of Planning and Investment

1. Preside over and cooperate with the Ministry of Finance in reporting to the Prime Minister to seek his approval of allocation of chartered capital; his decision on increase or reduction in the Fund's chartered capital.

2. Provide instructions on planning, appointment, discharge, secondment of, and benefits and policies granted to the Fund’s manager.

3. Provide instructions for treatment of risks, assessment of the Fund's operational results and rating.

4. Provide instructions for receipt of the Fund’s grants, aids, contributions or fiduciary funds.

5. Have opinions on whether the 5-year or annual business plan of the Fund is approved.

6. Make decisions on appointment, re-appointment, discharge, assessment, reward, discipline, benefits and policies which are applied to the Chairperson, commissioners of the Members’ Board or Comptroller; agree to approve the request of the Members' Board for appointment, reappointment and discharge of the Director.

7. Make decisions on, preside over or cooperate with the Ministry of Finance in reporting to the Prime Minister to seek his decision on measures to treat the Fund’s risks under its jurisdiction in accordance with provisions laid down herein.

8. Issue practice rules of the Comptroller.

9. Carry out the Fund’s rating under law.

10. Make an annual assessment of operational results and rating of the Fund.

11. Implement other rights and obligations of the state owner’s representative under the provisions hereof and other relevant law.

Article 58. Responsibilities of the Ministry of Finance

1. Provide guidance on the Fund’s accounting regime.

2. Allocate its capital as the Fund’s chartered capital approved under the Prime Minister’s decision.

Article 59. Responsibilities of the Ministry of Labor, War Invalids and Social Affairs

Provide instructions on the Fund’s rating and management of labor, salaries, wages and bonuses paid to the Fund’s employees and managers.

Article 60. Responsibilities of small and medium enterprises receiving the Fund’s support

1. Use borrowed funds and finances for right purposes and in conformance to agreements with the Fund and other involved parties.

2. Comply with laws, strictly and fully conform to commitments and obligations under agreements between the Fund and other involved parties.

3. Provide information and documents related to lending and use of the Fund’s capital in a timely, sufficient, accurate and truthful manner, and bear legal liability for accuracy and legitimacy of provided information and documents.

Article 61. Transitional provision

1. Production and business projects and plans of small and medium enterprises that have already been entrusted to lending commercial banks before the entry into force of this Decree shall be continued under agreements signed under the provisions of the Prime Minister’s Decision No. 601/QD-TTg dated April 17, 2013 on establishment of small and medium enterprise development fund until end of the lending entrustment period.

2. The Fund shall continue to apply the accounting regime specified in current regulations applied to small and medium enterprises until instructional documents are issued by the Ministry of Finance.

3. The Fund shall continue to implement regulations on salaries, wages, remunerations and bonuses paid to managers and employees under the provisions of the Government's Decree No. 52/2016/ND-CP dated June 13, 2016 on salaries, remunerations and bonuses paid to managers of single member limited liability companies whose chartered capital is wholly owned by the State, the Government’s Decree No. 51/2016/ND-CP dated June 13, 2016 on management of labor, salaries and bonuses paid to employees working in single member limited liability companies whose chartered capital is wholly owned by the State and the Circular No. 38/2016/TT-BLDTBXH dated October 25, 2016 of the Ministry of Labor, War Invalids and Social Affairs on instructions for management of labor, salaries and remunerations paid to the small and medium enterprise development fund until instructional documents are issued by the Ministry of Labor, War Invalids and Social Affairs.

Article 62. Effect and implementation responsibilities

1. This Decree shall enter into force on July 1, 2019.

2. Ministers, Heads of Ministry-level agencies, Heads of Governmental bodies, Chairmen/Chairwomen of People’s Committees of provinces and centrally-affiliated cities, Chairperson of Members' Board, commissioners of the Members' Board and Director of the small and medium enterprise development fund, organizations and individuals involved, shall be responsible for enforcing this Decree./

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