THE MINISTRY OF FINANCE -------	THE SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom – Happiness ---------------
No. 147/2014/TT-BTC	Hanoi, October 08, 2014

 

CIRCULAR

PROVIDING GUIDANCE ON IMPLEMENTING SEVERAL ARTICLES OF THE PRIME MINISTER’S DECISION NO.58/2013/QD-TTG DATED OCTOBER 15, 2013 ON PROMULGATING THE REGULATIONS ON ESTABLISHMENT, ORGANIZATION AND OPERATION OF CREDIT GURANTEE FUNDS FOR MEDIUM AND SMALL ENTERPRISES

Pursuant to the Law on State Budget dated December 16, 2002;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Law on Enterprises dated November 29, 2005;

Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 23, 2013 defining the functions, tasks, entitlements and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No. 56/2009/ND-CP dated June 30, 2009 on supporting the development of medium and small enterprises;

Pursuant to the Government’s Decision No.58/2013/QD-TTg dated October 15, 2013 on promulgating the regulations on establishment, organization and operation of credit guarantee fund for medium and small enterprises;

At the request of the Director of the Department of Financial Affairs for banks and credit institutions, the Minister of Finance hereby promulgates this Circular on providing guidance on implementing several articles of the Prime Minister’s Decision No.58/2013/QD-TTg dated October 15, 2013 on promulgating the regulations on establishment, organization and operation of credit guarantee fund for medium and small enterprises.

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope

1. This Circular shall provide guidance on implementing several articles of the Prime Minister’s Decision No.58/2013/QD-TTg dated October 15, 2013 on promulgating the regulations on establishment, organization and operation of Credit Guarantee Fund for medium and small enterprises (hereinafter referred to as Credit Guarantee Fund), including:

a) Management and administration of the operation of Credit Guarantee Fund under Article 12 concerning the regulation on establishment, organization and operation of Credit Guarantee Fund for medium and small enterprises introduced together with the Prime Minister’s Decision No. 58/2013/QD-TTg dated October 15, 2013 (hereinafter referred to as the regulation on establishment and operation of Credit Guarantee Fund);

b) Financial system applied to the Credit Guarantee Fund under Article 31 concerning the Regulations on establishment and operation of Credit Guarantee Fund.

2. Other contents shall comply with the regulation on establishment and operation of Credit Guarantee Fund.

Article 2. Applied entities

1. Credit Guarantee Fund.

2. Credit institutions whose establishment and operation conform to the Law on Credit Institutions.

3. Medium and small enterprises (hereinafter referred to as enterprises) that are extended the credit guarantee.

4. Other relevant agencies, organizations, and individuals.

Chapter II

ADMINISTRATION OF CREDIT GUARANTEE FUND’S OPERATIONS

Article 3. Credit Guarantee Fund’s direct administration of their operations

1. The Credit Guarantee Fund directly administers all of their related tasks under provisions set out in the Regulations on establishment and operation of Credit Guarantee Fund and other relevant legislative documents.

2. Financial and accounting system of the Credit Guarantee Fund shall comply with provisions laid down in this Circular.

Article 4. Credit Guarantee Fund’s entrusting other financial institutions to administer their operations under provisions laid down at Points b, Circular Clause 1 Article 12 of the Regulations on establishment and operation of Credit Guarantee Fund

1. Entrusted entity refers to Branches of the Vietnam Development Bank or local financial funds located in the same area where the Credit Guarantee Fund is operating.

2. Conditions for local financial funds' extension of credit guarantee to enterprises

Local financial funds entrusted with the task of administering the credit guarantee operation are required to conform to the following standards:

a) Have the legal status and independent organization mechanism;

b) Perform their functions or tasks to extend credits to clients in accordance with laws;

c) Maintain their financial health, and achieve positive business outcomes for 2 consecutive years;

d) Members of the Steering Committee of local financial funds and officers in charge of extending credits to enterprises must achieve a university degree and gain at least 5-year experience whilst working in the economic, financial and banking domains.

3. As regards the entrustment contract, the Credit Guarantee Fund and entrusted party must conclude an entrustment contract. That entrustment contract must enclose the basic information such as rights and obligations of contracting parties; entrustment fee and modes of payment; entrustment contract term; reporting standards; handling of disputes and risks; other relevant terms and conditions stipulated by laws.

4. Rights and obligations of the Credit Guarantee Fund:

a) Rights of the Credit Guarantee Fund:

- Authorize the entrusted party to exercise the rights and take on the obligations of the Credit Guarantee Fund to extend the credit guarantee to clients as stipulated in Articles 24, 25 of the Regulations on establishment and operation of Credit Guarantee Fund and as agreed upon in the entrustment contract signed by the entrusted party and the Credit Guarantee Fund. Authorize the entrusted party to sign the compulsory loan contract with clients, to collect outstanding principal and interest from clients;

- Inspect and supervise the entrusted party to ensure their compliance with the rules and processes of the Credit Guarantee Fund’s task performance.

b) Obligations of the Credit Guarantee Fund:

- Prepare and introduce the rules and processes of task performance which serve as the guideline for the operation of Credit Guarantee Fund, and then forward it to the entrusted party as a basis for their implementation;

- Provide information about the policy applied to clients provided with credit guarantee for each period in order for the entrusted party to consider extending the credit guarantee to enterprises;

- Pay the entrustment fee to the entrusted party as agreed upon in the entrustment contract;

- Transfer a full amount of money to the entrusted party so that the commitment to extending the credit guarantee to credit institutions shall be honored;

- Bear full responsibility for any risk or dispute that arises as agreed upon in the entrustment contract signed by Credit Guarantee Fund and the entrusted party;

- Handle any risk within their area of competence.

5. Rights and obligations of the entrusted party:

a) Rights of the entrusted party:

- Exercise the rights and take on the obligations of the Credit Guarantee Fund to extend the credit guarantee to clients as stipulated in Articles 24, 25 of the Regulations on establishment and operation of Credit Guarantee Fund;

- Collect the entrustment fee agreed with the Credit Guarantee Fund.

b) Obligations of the entrusted party:

- Receive and verify application documents in accordance with the rules and processes of guarantee task performance of the Credit Guarantee Fund in order to decide to extend or refuse to extend the credit guarantee to clients;

- Fulfill the commitment to the credit guarantee after the full receipt of money transferred from the Credit Guarantee Fund. When fulfilling the guarantee commitment to clients, the entrusted party shall request clients to be liable for coerced debts at the interest rate equal to 150% as against loan interest rate specified within a common loan term that commercial banks in the area are applying to loans with respective loan term;

- Make a comprehensive report on the current performance of transactions entrusted by the Credit Guarantee Fund on the periodic or spontaneous basis at the request of the Credit Guarantee Fund. Especially for forced loans, the entrusted party shall be responsible for sending a monthly report to the Credit Guarantee Fund on the financial condition of clients, debt recovery and insolvency;

- Bear full responsibility for any risk or dispute that may arise as agreed upon in the entrustment contract signed by Credit Guarantee Fund and the entrusted party;

- Perform other tasks as agreed by the Credit Guarantee Fund and the entrusted party.

6. Financial and accounting system of the Credit Guarantee Fund in the case of entrustment shall comply with provisions laid down in this Circular.

Article 5. Assigning the task of credit guarantee to local financial funds

1. Local financial funds after being tasked with the credit guarantee must fully meet rigorous conditions regulated in Clause 2 Article 4 of this Circular.

2. When assigning the capital management task to local financial funds and performing the task of guaranteeing credits as stipulated at Point c Clause 1 Article 12 of the Regulations on establishment and operation of the Credit Guarantee Fund, the People’s Committee of centrally-affiliated cities and provinces must supplement at least VND 30 billion to assigned local financial funds for the purpose of performing the task of guaranteeing credits as prescribed in provisions laid down in Clause 1 Article 5 of the Regulations on establishment and operation of the Credit Guarantee Fund.

3. In the case of assigning the task of guaranteeing credits, the Credit Guarantee Fund shall not establish the Management Council, Control Board and Steering Committee.

4. Local financial funds shall perform the capital management and utilization, and separately account for and keep track of all of allotted budget to spend on the credit guarantee task in accordance with this Circular.

5. Local financial funds shall perform the management of revenues and expenditures, distribute the marginal income gained from the participation in the credit guarantee in accordance with legal regulations on local financial fund's activities.

6. Local financial fund shall extend the credit guarantee to enterprises in compliance with provisions laid down in the Regulations on establishment and operation of the Credit Guarantee Fund, guidelines described in this Circular and other relevant legislative documents.

7. Local financial funds shall be responsible for stringently complying with provisions on making quarterly or yearly reports (including report on credit guarantee tasks or report on revenues and expenditures of local financial funds) and spontaneous report required by the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment, People’s Committee of centrally-affiliated cities and provinces where the local financial fund is located in accordance with laws.

Chapter III

FINANCIAL MANAGEMENT SYSTEM OF THE CREDIT GUARANTEE FUND

Article 6. Principles of financial management, applied to the Credit Guarantee Fund

1. The Credit Guarantee Fund is a non-profit financial institution, performs its function to extend its credit guarantee to entities stipulated in Article 13 of the Regulations on establishment and operation of the Credit Guarantee Fund.

2. Credit Guarantee Fund must have independent legal status, stamp, balance sheet, and is eligible to open its account at the State Treasury and domestic commercial banks legally located in the same area in accordance with laws. The Fund can be granted the tax exemption or must pay tax in accordance with applicable laws.

3. The Credit Guarantee Fund must autonomously cover all of their expenses, engage in the capital and asset conservation, and make up for expenses and risks incurred during their operation in accordance with applicable laws and provisions laid down in this Circular.

Article 7. Operating capital of the Credit Guarantee Fund comprises:

1. Equity capital

a) Article 7. Charter capital of the Credit Guarantee Fund includes:

- A portion of capital derived from the local government budget of centrally-affiliated cities and provinces, upon establishment of the Fund, is at least VND 30 billion;

- Paid-in capital of credit institutions;

- Paid-in capital of other enterprises;

- Paid-in capital of trade associations, or organizations in charge of representing and supporting medium and small enterprises.

Any change to the charter capital of the credit guarantee fund shall be approved under the decision made by the People’s Committee of centrally-affiliated cities and provinces. When changing the charter capital, the Credit Guarantee Fund shall be responsible for notifying the Ministry of Finance, the Ministry of Planning and Investment, Branches of the State Bank of centrally-affiliated cities and provinces where the main office of Credit Guarantee Fund is located for the purpose of supervision and monitoring;

b) Reserve fund for supplement to the charter capital; fund for the professional investment and development, financial contingency fund;

c) Differences generated by the asset reassessment (if any);

d) Undistributed income;

dd) Other capital owned by the Credit Guarantee Fund.

2. Legal aids granted by domestic and foreign organizations or individuals (including ODA fund) with the objective of developing medium and small enterprises.

3. Other legal capital sources as stipulated by applicable laws.

Article 8. Capital utilization and safety of the Credit Guarantee Fund

1. The Credit Guarantee Fund is entitled to use its capital in order to:

a) Fulfill its contractual obligations to guarantee credits of the obligor as stipulated in the Regulations on establishment and operation of Credit Guarantee Fund;

b) Invest in the purchase of fixed assets used for the operation of Credit Guarantee Fund, which conforms to the principles that the remaining value of fixed assets does not exceed a maximum of 7% of the actual charter capital held by the Credit Guarantee Fund at the time of purchase;

c) Open its account at the State Treasury and commercial banks whose operations are legal in accordance with Vietnam's laws and is located in the same centrally-affiliated city and province;

d) Make use of idle fund for the purpose of investing in the purchase of government bonds.

2. The Credit Guarantee Fund shall bear responsibility for complying with regulations on ensuring the safety for its operating capital, including:

a) Manage and use its capital to serve the right purpose and run its business efficiently; comply with regulations on ensuring the capital safety during its operation in accordance with laws;

b) Purchase asset insurance and other types of insurance in accordance with laws;

c) Set up a contingency fund in accordance with regulations laid down in Article 9 of this Circular;

d) Conform to credit guarantee limits under Article 17 concerning the Regulations on establishment and operation of Credit Guarantee Fund;

dd) Forbid utilizing the operating capital for the purpose of currency trading, securities investment (except for government bonds), real estate business, financial investment and other prohibited business activities;

e) Implement other measures to ensure the capital safety as prescribed by laws.

Article 9. Debt classification, contingency fund and risk management of the Credit Guarantee Fund

1. Debt classification:

The Credit Guarantee Fund shall classify debts that have been repaid on behalf of the obligor (the client is required to be liable for coerced debts) according to regulations of the State Bank of Vietnam applied to credit institutions.

2. Setting up a contingency fund for risks: The Credit Guarantee Fund shall retain an amount of expenditures to create a contingency fund as follows:

a) General contingency fund equals to 0.75% per annum, which is calculated on the borrower’s outstanding loan guaranteed by the Credit Guarantee Fund at the time when such contingency fund is set up;

b) Based on the result of debt classification and the statement on annual revenues and expenditures of the Credit Guarantee Fund, the Credit Guarantee Fund shall set up a specific contingency fund for its repayment of debts on behalf of the obligor, and the maximum amount used to set up such contingency fund shall conform to regulations applied to credit institutions.

3. The amount of money is collected from guaranteed credits of which all risks have been treated, inclusive of the amount of money collected from the guaranteed asset treatment accounted for into other incomes of the Credit Guarantee Fund in accordance with legal regulations.

4. The Credit Guarantee Fund shall be allowed to use provisions for risks to make up for bad debts incurred by forced loans that it has taken out to discharge its obligations to guarantee the obligor’s credits. At year end, if the contingency fund is not used up, the remaining amount of such fund shall be brought forward in the subsequent year.

5. The Management Council of the Credit Guarantee Fund shall issue regulations on setting up, managing and utilizing the provisions for risks.

Article 10. Credit Guarantee Fund’s permission for exemption from and reduction in forced loan interest rate and credit guarantee fee

1. The Management Council of the Credit Guarantee Fund shall promulgate the regulations on the Credit Guarantee Fund's permission for exemption from and reduction in forced loan interest rate and credit guarantee fee in accordance with provisions laid down in the Charter of organization and operation of the Credit Guarantee Fund after obtaining the approval from the People’s Committee of centrally-affiliated cities and provinces.

2. The Credit Guarantee Fund shall grant the permission for exemption from and reduction in forced loan interest rate and credit guarantee fee in accordance with provisions laid down in the Regulations that have been already adopted.

Article 11. Credit Guarantee Fund’s construction investment, purchase and depreciation of fixed assets

1. The Credit Guarantee Fund shall be entitled to invest in and purchase fixed assets, which must stick to the principles stipulated at Point b Clause 1 Article 8 of this Circular. The written request for investing in and purchasing the fixed assets used for the operation of Credit Guarantee Fund shall be submitted by the Director with the aim of obtaining the Management Council’s decision in conformity with the annual financial plan and within the permitted capital source of the Credit Guarantee Fund.

2. Processes and procedures for investment in and purchase of fixed assets of the Credit Guarantee Fund shall comply with legal regulations on investment management and purchase of fixed assets, and applicable regulations applied to single member limited companies of which 100% charter capital is held by the State. The Credit Guarantee Fund shall be responsible for purchasing the asset insurance in accordance with laws.

3. The Credit Guarantee Fund shall perform the management, utilization and depreciation of fixed assets in accordance with applicable laws applied to single member limited companies of which 100% charter capital is held by the State.

Article 12. Dealing with damage or harm to assets owned by the Credit Guarantee Fund

When any harm or damage to assets may arise, the Credit Guarantee Fund must clarify reasons, responsibilities and then take the following actions:

1. If personal faults are found, those who cause such harm or damage shall have to provide some compensation; the Management Council of Credit Guarantee Fund shall be eligible to make a decision or authorize the Director of the Credit Guarantee Fund to decide the compensation rate in accordance with legal regulations, and bear their responsibility for that decision.

2. In the case of insured assets, such harm or damage shall be subject to punitive actions under legal regulations applied to the insurance sector.

3. If the amount of compensation for such harm or damage to assets that shall be paid at the expense of individuals, collectives and insurance agencies is still insufficient, the Credit Guarantee Fund shall use its contingency fund to make up for the rest.

Article 13. Revenues of Credit Guarantee Fund

Revenue of Credit Guarantee Fund means the accounts receivable within a specified period, including:

1. Revenue gained from its task performance:

a) Fee paid for the verification of applications for the extension of credit guarantee;

b) Fee paid for the credit guarantee;

c) Interest on forced loans obtained from clients.

2. Revenue gained from its financial transactions:

a) Interest on the deposits held at the State Treasury, commercial banks where the Credit Guarantee Fund opens its account;

b) Interest generated from the investment in the government bonds.

3. Other proceeds:

a) Gained from the disposal and liquidation of assets; b) Gained from the payment of insurance on damaged or harmed assets;

c) Gained from penalties imposed for any breach of economic contracts;

d) Other legal earnings in accordance with laws.

Article 14. Expenditures of Credit Guarantee Fund

Expenditure of the Credit Guarantee Fund means the accounts payable within a specified period, which is indispensable for the operation of the Credit Guarantee Fund and is documented in the form of a legal receipt or voucher. The spending amount and entities shall comply with laws. In case there is no regulation on these issues, the Credit Guarantee Fund shall rely on its financial capability to determine the limited spending amount, make spending decisions and bear its legal responsibility. All of expenses must be defined in the annual financial plan approved by the Management Council, including:

1. Expenditures on its task performance:

a) Spending on fees for capital derived from mobilization and aids of domestic and foreign organizations in accordance with laws (if any);

b) Spending on the entrustment fee paid to the entrusted party as agreed upon in the entrustment contract;

c) Spending on setting up a contingency fund in accordance with regulations laid down in Article 9 of this Circular;

d) Spending on taking out insurance against risk of its task performance and other types of insurance in accordance with laws;

dd) Paying tax and fees or charges in accordance with applicable laws;

e) Paying other expenses incurred by the performance of its tasks in accordance with legal regulations.

2. Spending on payments to officials, staff of the Credit Guarantee Fund shall comply with the State’s regulations applied to single member limited companies of which 100% of charter capital is held by the State as follows:

a) Spending on payment for wage, salary and other salary or wage-based expenses to officials and staff of the Credit Guarantee Fund;

b) Spending on payment of allowances to members of the Management Council, Control Board of the Credit Guarantee Fund;

c) Spending on social insurance, medical insurance and unemployment insurance for staff of the Credit Guarantee Fund;

d) Spending on payments for shift meals, allowance for female employees, protective suits or equipments, business clothing, severance pay to employees.

3. Expenditures on its work management:

a) Spending on payment for travel expenses to officials, officers of the Credit Guarantee Fund when they take business trips throughout the country or overseas in accordance with governmental regulations applied to single member limited companies of which 100% charter capital is held by the State;

b) Spending on purchase of office materials and supplies; stationery, printouts, books, magazines and others;

c) Spending on payment services;

d) Spending on depreciation of fixed assets in accordance with regulations applied to enterprises; purchase of asset insurance; asset repair and maintenance; asset liquidation and disposal (including the remaining value of disposed or liquidated asset); procurement of labor tool kits;

dd) Spending on compensation for any harm or damage to assets as prescribed in regulations;

e) Spending on postage, telephone and communications bills;

g) Spending on lease of assets or equipment used for the operation of Credit Guarantee Fund;

h) Spending on payments relating to conferences, workshops, training sessions for officers of Credit Guarantee Fund, scientific researches in accordance with the State’s regulations applied to regulatory bodies and public non-business agencies. Credit Guarantee Fund shall be entitled to pay meal and accommodation expenses as well as travel costs to participants at the level regulated in the State's policies; spend on petrol used for the operation of the Fund;

i) Spending on propagation, handouts, printouts, formalities, guest reception, transactions, external relations, conferences, advertisements in accordance with laws;

k) Spending on the work of examination, inspection and auditing for the operation of the Credit Guarantee Fund;

l) Spending on assistance in operating the Communist Party's institutions and unions of the Credit Guarantee Fund;

m) Spending on electricity, water supply, sanitation, environmental protection and medical bills;

n) Other relevant expenses in conformity with laws.

Article 15. Expenditures that are not reported in the expense statement of the Credit Guarantee Fund

1. Any loss or damage supported by the State, insurance agency and compensated for by defaulting parties.

2. Expenditures on administrative penalties, including offences against traffic regulations, the law on the statistical accounting and other administrative offences in accordance with laws.

3. Expenditures that are not documented in the form of a legitimate invoice or documentary evidence.

4. Other expenditures funded by other sources.

Article 16. Marginal income of Credit Guarantee Fund

1. Marginal income of the Credit Guarantee Fund refers to the difference between total revenues and total expenditures in accordance with laws, which is generated within a specified fiscal year.

2. The income statement with the bottom line of net profit refers to the positive (+) result of the difference between revenues and expenditures in a specified fiscal year.

3. The income statement with the bottom line of net loss refers to the negative (+) result of the difference between revenues and expenditures in a specified fiscal year.

Article 17. Distribution of marginal incomes and brought-forward loss of the Credit Guarantee Fund

1. In respect of the income statement with the bottom line of net profit, after paying monetary penalties for violations against legal regulations and compensating for the loss brought forward from the preceding year (if any), the remaining portion of profit shall be wholly distributed to:

a) 15% of the reserve fund for supplement to the charter capital;

b) 20% of the financial contingency fund;

c) 30% of the fund for professional investment and development;

d) 02 funds such as the reward and welfare fund with a maximum rate equal to realized 03-month pay within a specified year. Where the Return on Equity rate (ROE) in the subsequent year is higher than in the preceding year, the Credit Guarantee Fund shall be set up at the maximum rate equal to realized 03-month pay within a specified year. Where the ROE rate in the subsequent year is lower than or equal to that rate in the preceding year, the Credit Guarantee Fund shall be set up at the maximum rate equal to realized 02-month pay within a specified year.

The method of defining ROE rate: ROE = Profit/ Equity Capital

Where:

- Profit shall be defined under regulations laid down in Clause 1, 2 Article 16 of this Circular.

- Equity capital shall be defined under regulations laid down in Clause 1 Article 7 of this Circular by the following formula:

Equity capital =	Σ closing balance of equity capital in each quarter
	4

dd) The remaining profit shall be used to provide dividends to paid-in capital owners.

Dividends on the contributed capital derived from the local government budget of centrally-affiliated cities and provinces shall serve as a supplement to the charter capital of the Credit Guarantee Fund under the decision made by the President of the People’s Committee of centrally-affiliated cities and provinces with reference to the consent and approval from the People’s Council of such cities and provinces.

2. In respect of the income statement with the bottom line of net loss in a specified fiscal year, the Credit Guarantee Fund shall be entitled to carry such loss forward in the subsequent year in which the successive period that the loss is brought forward is not permitted to exceed 5 years since the consecutive year of the year when the loss is recorded. If the loss is not entirely brought forward after 5 years, the Credit Guarantee Fund is required to notify the President of the People’s Committee of centrally-affiliated cities and provinces for consideration and decision to reduce the operating capital, restructure or dissolve the Credit Guarantee Fund.

Article 18. Use purpose of funds set up from the distribution of marginal income of the Credit Guarantee Fund

1. The reserve fund for supplement to the charter capital serves as a supplement to the charter capital of the Credit Guarantee Fund.

2. Financial contingency fund is used to make up for the remaining portion of losses on assets and public debts incurred during the operation of the Fund after being compensated for by sums of money provided by defaulting organizations or individuals, or insurance agencies.

3. The fund for professional investment and development is used to expand the Fund’s operation and business, renovate equipment, and improve working conditions with the aim of making tasks relating to credit guarantee activities become more perfect.

4. Reward fund:

a) Reward fund is used to offer periodic or spontaneous rewards to individuals or collectives who have contributed creative ideas of improving technologies and processes for highly-efficient task performance for the Credit Guarantee Fund; confer awards on collectives or individuals inside or outside the Credit Guarantee Fund to recognize their contribution to improving the operation of the Credit Guarantee Fund;

b) The Management Council of Credit Guarantee Fund shall provide guidance on setting the limited amount of rewards conferred upon each beneficiary to which the Credit Guarantee Fund must adhere for its implementation.

5. Welfare fund:

a) Welfare fund is used to provide financial support for sports and cultural activities, welfare and benefit for staff and employee working for the Credit Guarantee Fund; regular or spontaneous allowance for needy staff and employees of the Credit Guarantee Fund; expenditures on construction or repair of the Fund's community works;

b) The Director of Credit Guarantee Fund shall cooperate with the Executive Board of Trade Union to prepare the plan to use the welfare fund for submission to the Management Council for approval in a specified year.

6. The Management Council of the Credit Guarantee Fund shall consider and decide the authority to use such funds as the reserve fund for supplement to the charter capital, financial contingency fund, fund for professional investment and development, reward fund and welfare fund.

Chapter IV

ACCOUNTING SYSTEM, STATISTICS, AND FINANCIAL STATEMENT AUDITING

Article 19. Accounting and statistical report of the Credit Guarantee Fund

1. Where the Credit Guarantee Fund runs its own business or entrust branches of the Vietnam Development Bank or local financial fund, the Credit Guarantee Fund shall report all of economic transactions into the financial statement, open accounting books, record vouchers, prepare financial statements in accordance with applicable laws and regulations adopted by the Ministry of Finance.

2. Where the People’s Committees of centrally-affiliated cities and provinces assign local financial funds to manage the credit guarantee capital and perform the credit guarantee tasks for enterprises:

a) Local financial funds shall be responsible for separately bookkeeping and tracking all of its operation, utilize its capital to serve the right purpose in an effective manner, and ensure the safety for its capital. All of incomes and expenses generated from the credit guarantee transactions shall be reported in the income and expense statement of local financial funds in order to determine the marginal income of these funds.

b) Local financial funds shall set up, manage and utilize contingency funds for credit guarantee activities under the regulations set out in Article 9 of this Circular;

c) Accounting system applied to credit guarantee activities shall comply with regulations on local financial funds.

3. The Credit Guarantee Fund shall conform to the bookkeeping and statistical system stipulated by applicable laws, and keep a record of all financial transactions in a sufficient, timely, honest, accurate and objective manner.

4. Fiscal year of the Credit Guarantee Fund begins on January 01 and ends on December 31 of every calendar year.

Article 20. Preparation for the financial plan of Credit Guarantee Fund

1. The Credit Guarantee Fund shall assume its responsibility for preparing the annual financial plan, revenue and expenditure plan, and plan for the purchase of fixed assets for submission to the Management Council of the Fund for approval, which is specified in the Appendix 1, 1a and 1b attached hereto.

2. The processes for approving and announcing the annual financial plan as follows:

a) Before December 01 of every year, the Management Council of the Credit Guarantee Fund shall send a report on the annual financial plan to the People’s Committee of centrally-affiliated cities and provinces;

b) After referring to the written advice from the People’s Committee of centrally-affiliated cities and provinces, the Management Council of the Fund shall approve the annual financial plan which serves as the basis for the implementation.

Article 21. Financial statement and information supply

1. The Credit Guarantee Fund shall be responsible for formulating and submitting the financial statement on the quarterly or yearly basis to the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment, the People’s Committees, the Department of Finance, Branches of the State Bank located at the cities or provinces where the Credit Guarantee Fund is operating.

2. Types of report:

a) Quarterly report:

- The report on financial matters: Balance sheet; income statement; cash flow statement; statement of changes in equity; demonstration of financial statement;

- The report on task performance issues: Summary report on the current condition of guaranteed projects.

b) Annual report:

- All of reports regulated at Point a of this Clause;

- The auditing report on the annual financial statement;

- Other reports: Report on revenues and expenditures; report on distribution of marginal incomes and utilization of funds according to Appendix 2 and 3 attached hereto.

3. Time limit for submission of reports:

a) Quarterly reports shall be submitted for the period of no later than 45 days from the closing date of a specified quarter;

b) Annual report shall be submitted for the period of no later than 90 days form the closing date of a specified fiscal year; particularly, the auditing report on the annual financial statement of the Credit Guarantee Fund shall be conducted by an independent audit organization and submitted for the period of no later than 120 days from the closing date of a specified fiscal year.

4. The Credit Guarantee Fund shall be responsible for providing information and making spontaneous reports requested by the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment, the People’s Committee of centrally-affiliated cities and provinces where the Credit Guarantee Fund is operating in accordance with laws.

Article 22. Audit and public disclosure of financial statements

1. Annual financial report prepared by the Credit Guarantee Fund must be audited by an independent auditor in accordance with applicable laws.

2. Every year, the Head of the Control Board of the Credit Guarantee Fund shall request the Management Council of the Credit Guarantee Fund to choose one independent auditor who is established and runs its own business in Vietnam for the purpose of auditing financial statements of the Credit Guarantee Fund.

3. The Control Board of the Credit Guarantee Fund must inspect and monitor the compliance with financial and accounting standards at the Credit Guarantee Fund and report the inspection and monitoring result to the Management Council of the Credit Guarantee Fund.

4. The public disclosure of financial statements of the Credit Guarantee Fund must comply with applicable laws.

Chapter V

RESPONSIBILITY OF REGULATORY BODIES

Article 23. Responsibility of the Ministry of Finance

1. Assume their responsibility as stipulated in Article 37 concerning the Regulations on establishment and operation of Credit Guarantee Fund.

2. Amend and provide any supplement to financial management principles that the Credit Guarantee Fund must stick to (when necessary).

Article 24. Responsibility of the People’s Committees of centrally-affiliated cities and provinces

1. Assume their responsibility as stipulated in Article 40 concerning the Regulations on establishment and operation of Credit Guarantee Fund.

2. Administrate and supervise the Management Council of the Credit Guarantee Fund and the Credit Guarantee Fund to conform to the financial system stipulated in this Circular.

3. Make a decision to increase and reduce the charter capital; give consent to annual incomes and other relevant contents within their authority as stipulated by applicable laws.

4. Make a decision to supplement the dividends on contributed capital derived from the government budget of centrally-affiliated cities and provinces to the charter capital of the Credit Guarantee Fund with reference to the consent and approval from the People’s Council of centrally-affiliated cities and provinces.

5. Periodically inspect and examine the financial condition of the Credit Guarantee Fund.

6. Perform periodic or spontaneous inspection and supervision of whole operations of the Credit Guarantee Fund, which is aimed at ensuring the efficiency of its operations, capital safety and growth.

Article 25. Responsibility of the Credit Guarantee Fund

1. The Credit Guarantee Fund shall extend its guarantee to enterprises who take out loans at credit institutions under the Decision No.58/2013/QD-TTg, detailed guidance provided in this Circular and other related legislative documents.

2. Comply with the financial management principles stipulated in regulations laid down in this Circular and other related legislative documents.

3. With reference to regulations set out in this Circular and other relevant statutes, the Credit Guarantee Fund shall take its responsibility for introducing regulations on task performance and financial standards in order to ensure the safety and effectiveness in its management and utilization of the State-owned capital and assets.

Chapter VI

IMPLEMENTATION

Article 26. Transitional provisions

In respect of Credit Guarantee Funds whose establishment and operation conform to the financial system stipulated in the Circular No. 93/2004/TT-BTC dated September 29, 2004 issued by the Ministry of Finance on providing guidance on several contents described in the Regulations on establishment, organization and operation of Credit Guarantee Funds for medium and small enterprises, the closing balance of funds (such as Reserve fund for task performance, Reserve fund for supplement to operating capital, financial contingency fund, Fund for professional investment and development, Reward fund and Welfare fund) recorded on December 31, 2013 shall be dealt with in accordance with the Circular No. 93/2004/TT-BTC as follows:

1. The closing balance of the Reserve fund for task performance shall be carried forward to the provision account as stipulated in Article 9 hereof.

2. The closing balance of funds set up from the marginal income shall be carried forward to the fund which serve the same use purpose as stipulated in Article 18 hereof.

Article 28. Effect

1. This Circular has taken effect since November 25, 2014 and is applicable as from the fiscal year 2014, and replaces the Circular No. 93/2004/TT-BTC dated September 29, 2004 on providing guidance on several contents described in the Regulations on establishment, organization and operation of credit guarantee funds for medium and small enterprises.

2. In course of implementation, if any difficulty arises, relevant entities are requested to send their feedbacks to the Ministry of Finance to get instructions in accordance with laws./.

 

PP. MINISTER DEPUTY MINISTER Tran Xuan Ha