Can the owner of a Limited Liability Company providing food service business establish a charity fund for his Company?

What is the charity fund of a limited liability company and the purpose of the charity fund?

Clause 3, Article 4 of Decree 93/2019/ND-CP defines a charity fund as following:

“Article 4. Explanation of terms

…

3. Charity fund: A fund organized and operated for the purpose of supporting troubleshooting caused by natural disasters, fires, epidemics, accidents and other disadvantaged and vulnerable people in need of social assistance, not for profit purposes.”

The operating purposes of charity funds in particular and other funds in general are specified in Article 3 of Decree 93/2019/ND-CP as follows:

“Article 3. Purpose of organization and operation of the fund

The Fund is organized and operates for the purpose of supporting and encouraging the development of culture, education, health, fitness, sports, science, technology, community and charity, humanity, not for profit purposes.”

Can a limited liability company establish a charity fund?

According to the provisions of Clause 1, Article 11 of the Decree 93/2019/ND-CP, standards to become a founder of a charity fund include:

“Article 11. Founders establish the fund

1. Founders must ensure the following conditions:

a) The founder of the fund must be a Vietnamese citizen or organization;

b) For citizens: Have full capacity for civil acts and no criminal record;

c) For organizations: Legally established, with a charter or document stipulating the functions and tasks of the organization; There is a resolution of the leadership collective or a decision of the competent head on participation in establishing the fund; decide to appoint a representative of the organization to join as a founder to establish the fund; In case a Vietnamese organization has foreign investment capital, the representative of the organization as the founder establishing the fund must be a Vietnamese citizen;

d) Contribute legal assets to establish a fund according to the provisions of Article 14 of this Decree;

d) The founder establishing a fund, if under the management of a competent authority, must obtain written consent from the competent authority according to regulations on decentralization of personnel management before sending the dossier to the competent state authority as prescribed in Article 18 of this Decree to license the establishment and recognize the fund’s charter.”

Thus, in your case, it is a Limited Liability Company, that is, a business that wants to establish a charitable fund must meet the following conditions:

– Legally established;

– There is a charter or document regulating the functions and tasks of the organization;

– There is a resolution of the leadership collective or a decision of the competent head on participation in establishing the fund;

– Decision to appoint a representative of the organization to participate as founder in establishing the fund; In case a Vietnamese organization has foreign investment capital, the representative of the organization as the founder establishing the fund must be a Vietnamese citizen.

What are the asset conditions for a Limited Liability Company to establish a charity fund?

When a Limited Liability Company has been approved to become the founder of a charity fund, the Limited Liability Company must ensure the assets specified in Article 14 of Decree 93/2019/ND-CP as follows:

“Article 14. Assets contributed to establish the fund

1. Assets contributed to establish the fund include:

a) Vietnamese Dong;

b) Assets converted into Vietnamese Dong (including: Artifacts, foreign currencies, valuable papers, other property rights) of Vietnamese citizens and organizations that are founders, and of foreign individuals and organizations contributed to Vietnamese citizens and organizations to establish a fund. For assets that are headquarters, equipment, and technology, they must be valued by a legally established valuation organization. The time of asset valuation must not exceed 06 months from the time of submitting the application to establish the fund;

c) In case the assets contributed to establish the fund include other assets excluding Vietnamese Dong, the amount of Vietnamese Dong must ensure at least 50% of the total asset value.

2. For funds established by Vietnamese citizens or organizations, it is necessary to ensure that assets contributed to establish the fund are converted into Vietnamese Dong as follows:

a) Fund operating nationwide or inter-provincially: 6,500,000,000 (six billion five hundred million VND);

b) Fund operating within the province: 1,300,000,000 (one billion three hundred million dong);

c) Fund operating within district level: 130,000,000 (one hundred and thirty million VND);

d) Fund operating within the commune level: 25,000,000 (twenty-five million VND).

3. In cases where foreign individuals or organizations contribute assets to Vietnamese citizens or organizations establishing a fund, they must ensure that the assets contributed to establish the fund are converted into Vietnamese Dong as follows:

a) Fund operating nationwide or inter-provincially: 8,700,000,000 (eight billion seven hundred million VND);

b) Fund operating within the province: 3,700,000,000 (three billion seven hundred million VND);

c) Fund operating within district level: 1,200,000,000 (one billion two hundred million dong);

d) Fund operating within commune level: 620,000,000 (six hundred and twenty million VND).

4. Assets contributed to establish the fund must have ownership transferred to the fund within 45 working days from the date the fund is granted an establishment license and its charter is recognized. Assets contributed to establish the fund are not subject to dispute or other financial obligations.”