Rights and Obligations of Cooperative Bank Members in Vietnam

A cooperative bank is a credit institution operating under the cooperative model, where members jointly contribute capital, jointly manage, and jointly benefit from banking activities. Unlike a joint-stock commercial bank, the rights and obligations of cooperative bank members are closely tied to membership status and contributed capital, governed by the Law on Credit Institutions 2024 (No. 32/2024/QH15, effective 01/7/2024), which replaced the former Law on Credit Institutions 2010.

Who is a cooperative bank member?

A cooperative bank member is an individual or organization meeting the admission conditions under the cooperative bank’s Charter and the law, having contributed charter capital and being recorded in the member list. Membership status is both the basis for participating in management and the ground for arising financial rights and obligations.

One point to note: a cooperative bank does not operate to maximize profits for shareholders like a commercial bank, but aims to support and enhance the efficiency of production, business, and livelihoods of its members. Therefore, members’ rights and obligations are designed to balance individual and collective interests.

Rights of cooperative bank members

Under the current legal framework, cooperative bank members have the following basic rights:

1. Right to participate in management: Members have the right to attend, discuss, and vote at the General Meeting of Members — the highest decision-making body of the cooperative bank. Each member’s voting right follows the principle recorded in the Charter, not entirely dependent on the capital contribution ratio as in a joint-stock company.

2. Right to stand for election and vote: Members have the right to stand for election and vote for the Board of Directors, the Supervisory Board, and other managerial positions of the cooperative bank under the Charter.

3. Right to be provided with information: Members have the right to be informed about the cooperative bank’s operations and finances; to review financial statements and activity reports of the Board of Directors and the Supervisory Board.

4. Right to benefit from operations: Members are entitled to profit distribution based on operating results and their level of use of the cooperative bank’s services, under the distribution plan decided by the General Meeting of Members.

5. Right to preferential services: Members are given priority in using the cooperative bank’s banking products and services under policies issued by the General Meeting of Members or the Board of Directors.

6. Right to transfer capital contributions and withdraw from the cooperative bank: Members have the right to transfer their capital contributions to other members or persons eligible for admission as new members, and to request capital withdrawal following the order and procedures prescribed by the Charter and the law.

Obligations of cooperative bank members

Alongside the above rights, members have the following obligations:

1. Contribute the committed capital in full: Members must contribute fully and on time the capital registered under the Charter. Contributed capital is the basis for determining membership status and the level of liability.

2. Comply with the Charter and resolutions: Members must comply with the cooperative bank’s Charter and implement resolutions of the General Meeting of Members and decisions of the Board of Directors within their authority.

3. Bear liability within the contributed capital: Members are liable for the cooperative bank’s debts and other financial obligations within the scope of contributed capital — a fundamental difference from the unlimited liability of private enterprise owners.

4. Maintain information confidentiality: Members are obligated to keep the cooperative bank’s internal information confidential under the Charter and the law.

5. Not compete to cause harm: During membership, members must not engage in unfair competition causing harm to the cooperative bank.

Termination of membership

Membership terminates when a member withdraws all contributed capital, is expelled under a resolution of the General Meeting of Members, transfers all capital contributions, or in other cases under the Charter. Upon termination of membership, payment of the contributed capital is carried out under the Charter and the law, ensuring the safe operation of the cooperative bank.

Notes when joining a cooperative bank

Before contributing capital to become a member, individuals and organizations should carefully read the cooperative bank’s Charter, particularly the contents on admission conditions, minimum capital contribution, voting methods, profit distribution mechanisms, and capital withdrawal procedures. The current legal framework governing cooperative banks is the Law on Credit Institutions 2024, which differs significantly from the old 2010 framework regarding management authority, risk governance, and system safety assurance.

Do you need to review a cooperative bank’s Charter, advice on members’ rights and obligations, or resolution of internal disputes? Please contact ANT Legal’s lawyers via Hotline/Zalo 0966.475.966 for advice tailored to your specific case.