Member Contributing Over 20% of a Cooperative’s Charter Capital: Penalties

Under the Law on Cooperatives 2023 (No. 17/2023/QH15, effective from 01/7/2024), an official member may contribute capital up to a maximum of 30% of the cooperative’s charter capital. Therefore, a cooperative cannot be found in violation merely because a member contributes more than 20% but not exceeding 30% of the charter capital. Administrative penalties in this case must be considered carefully under the transitional provisions between the Law on Cooperatives 2023 and Decree 122/2021/ND-CP.

1. Maximum capital contribution under the Law on Cooperatives 2023

Clause 1, Article 74 of the Law on Cooperatives 2023:

“Charter capital contribution of cooperatives and cooperative unions
1. The capital contribution of an official member shall be made by agreement and in accordance with this Law and the charter on minimum and maximum capital contributions. The maximum capital contribution shall not exceed 30% of the charter capital for a cooperative and 40% of the charter capital for a cooperative union.
…”

Accordingly, the 30% cap is the current rule. The former 20% cap belonged to the Law on Cooperatives 2012 (now expired).

2. Penalty provisions and points to note

Point b, Clause 2, Article 67 of Decree 122/2021/ND-CP imposes a fine of VND 20,000,000 to VND 30,000,000 for “allowing members or member cooperatives to contribute capital exceeding the prescribed maximum”. However, this document was issued when the Law on Cooperatives 2012 was still in force (20% cap), so some application guidance still records the 20% threshold.

Therefore:

• Member contributes more than 20% but not exceeding 30% of the charter capital: consistent with the Law on Cooperatives 2023; no basis to conclude a violation;
• Member contributes more than 30% of the charter capital: signs of violating the cap under the Law on Cooperatives 2023; applying sanctions requires consulting the current penalty provisions and transitional rules, and a lawyer or the competent authority should be consulted before concluding;
• Decree 288/2026/ND-CP (amending and supplementing Decree 122/2021/ND-CP, effective from 21/7/2026) does not amend Article 67, so the fine of VND 20,000,000 to VND 30,000,000 in Article 67 remains unchanged.

3. What should a cooperative do?

• Review the cooperative’s charter to ensure the maximum capital contribution rule matches the 30% cap of the Law on Cooperatives 2023;
• Check the actual contribution ratio of each official member and promptly handle cases exceeding the cap;
• Keep complete member registers, capital contribution certificates, and contribution dossiers for working with functional agencies when needed.

Notes on applying current legal provisions

This article belongs to the Enterprise & M&A Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type, and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, please contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Mechanically applying the 20% threshold of the expired Law on Cooperatives 2012.
• Concluding an administrative violation when the contribution ratio is still within the 30% cap of the current law.
• The cooperative’s charter not yet updated with the capital contribution cap under the Law on Cooperatives 2023.
• Signing, filing, or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations, or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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