If a member is allowed to contribute more than 20% of the cooperative’s charter capital, how will the cooperative be punished?

Cooperative members cannot own more than 20% of the cooperative’s charter capital, right?

Can cooperative members own more than 20% of the cooperative’s charter capital, according to the provisions of Clause 1 Article 17 of the 2012 Cooperative Law is as follows:

charter capital contribution and capital contribution certificate

1. For cooperatives, members’ capital contributions are made according to the agreement and according to the provisions of the charter but must not exceed 20% of the cooperative’s charter capital.

2. For cooperative unions, the capital contribution of member cooperatives shall comply with the agreement and the provisions of the charter but must not exceed 30% of the charter capital of the cooperative union.

3. The term, form and level of charter capital contribution are according to the provisions of the charter, but the time limit for full capital contribution does not exceed 06 months from the date the cooperative or cooperative union is granted a registration certificate or from the date of admission.

Accordingly, cooperative members cannot own more than 20% of the cooperative’s charter capital.

If a member is allowed to contribute more than 20% of the cooperative’s charter capital, how will the cooperative be punished?

The level of administrative sanctions for cooperatives allowing a member to contribute more than 20% of charter capital is specified in Point b Clause 2, Point e Clause 4 Article 67 Decree 122/2021/ND-CP as follows:

Violations of capital contribution to cooperatives and cooperative unions

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2. Fine from 20,000,000 VND to 30,000,000 VND for one of the following acts:

a) Contributing capital, buying shares, establishing businesses of cooperatives or unions of cooperatives without the decision and approval of the General Assembly of members;

b) Allowing a member to contribute capital greater than 20% of the total amount The capital contribution of the cooperative or a member cooperative is greater than 30% of the total capital contribution of the cooperative union.

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4. Remedial measures:

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e) Forced adjustment of capital contribution ratio in accordance with regulations for violations specified in Point b, Clause 2 of this Article.

According to Clause 2, Article 4, Decree 122/2021/ND-CP stipulates the fine levels as follows:

Fine level

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2. The fines specified in this Decree are the fines applicable to organizations (except the fines specified in Point c, Clause 2, Article 28; Points a and b, Clause 2, Article 38; Articles 62 and Article 63 of this Decree are the fines applicable to individuals). For the same administrative violation, the fine for individuals is equal to 1/2 (one-half) of the fine for organizations.

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According to the above regulations, cooperatives that allow a member to contribute more than 20% of charter capital may be subject to administrative sanctions with a fine from 20,000,000 VND to 30,000,000 VND.

At the same time, this cooperative was also forced to adjust its capital contribution ratio in accordance with regulations.

What is the statute of limitations for sanctioning administrative violations against cooperatives that allow a member to contribute more than 20% of charter capital?

Pursuant to Article 5 of Decree 122/2021/ND-CP stipulating the statute of limitations and the time to determine the statute of limitations for sanctioning administrative violations as follows:

Statute of limitations and time to determine the statute of limitations for sanctioning administrative violations

1. The statute of limitations for sanctioning administrative violations in the fields of investment, bidding, and business registration is 01 year; for the planning field, it is 02 years.

2. Administrative violations specified in Article 7; Article 9; Article 10; Article 13; Article 14; Clause 2, Article 15; Clause 3, Article 16; Article 17; Article 18; Article 19; Article 20; Article 21; Article 22; Article 23; Article 24; Article 30; Article 36; Article 37; Article 43; Article 44; Article 45; Article 46; Article 47; Article 48; Article 49; Article 50; Article 51; Article 52; Article 53; Article 54; Article 55; Article 56; Article 57; Article 58; Article 59; Article 60; Article 61; Article 62; Article 63; Article 64; Article 65; Article 66; Article 67; Article 68, Article 69; Article 70; Articles 71 and 72 of this Decree are administrative violations in progress.

For violations in progress, the statute of limitations is calculated from the time the violation is discovered. In case the violation has ended, the statute of limitations is calculated from the time the violation ended.

3. The administrative violations specified in this Decree (except for the administrative violations specified in Clause 2 of this Article, Article 12 and Article 25) are administrative violations that have ended.

For violations that have ended, the statute of limitations is calculated from the time the violation ended.

Thus, the statute of limitations for sanctioning administrative violations for cooperatives allowing a member to contribute more than 20% of charter capital is 01 year.