Decree No. 37/2013/ND-CP of April 22, 2013, on the amendments to the government's Decree No. 138/2007/ND-CP dated August 28, 2007 on the organization and operation of local development investment funds

DECREE

ON THE AMENDMENTS TO THE GOVERNMENT'S DECREE NO. 138/2007/ND-CP DATED AUGUST 28TH 2007 ON THE ORGANIZATION AND OPERATION OF LOCAL DEVELOPMENT INVESTMENT FUNDS

Pursuant to the Law on Government organization dated December 25th 2001;

Pursuant to the Law on the Organization of People’s Councils and People’s Committees dated November 26th 2003;

Pursuant to the Law on State budget dated December 16th 2002;

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

Pursuant to the Law on credit institutions dated June 16th 2010;

At the request of the Minister of Finance;

The Government issues a Decree on the amendments to the Government's Decree No. 138/2007/ND-CP dated August 28th 2007 on the organization and operation of local Investment and development funds (hereinafter referred to as the Decree No. 138/2007/ND-CP)

Article 1. Amendments to the Decree No. 138/2007/ND-CP

1. Article 5 is amended as follows:

“Article 5. Responsibilities of state management authorities

1. The Ministry of Finance shall:

a) Cooperate with other Ministries in requesting the Government to establish a policy on the organization and operation of local development investment funds;

b) Issue a model Charter of the organization and operation of local development investment funds;

c) Issues regulations on accounting, financial management, and reporting applicable to local development investment funds.

2. The State bank of Vietnam shall:

a) Perform the function of monetary management and banking activities relating to the loans of local development investment funds;

b) Cooperate with the Ministry of Finance in formulating policies, monitoring and assessing the grant of loans and investments of local development investment funds.

3. Provincial People’s Councils shall

a) Approve plans for establishing local development investment funds;

b) Approve plans for providing and supplementing charter capital for local development investment funds from provincial budgets at the request of provincial People’s Committees;

c) Consider and approve lists of prioritized investments in local socio-economic infrastructures as prescribed in Clause 2 and Clause 4 Article 1 of this Decree;

d) Perform other tasks as prescribed by law.

4. Provincial People’s Committees shall:

a) Formulate and submit plans for establishing local development investment funds to provincial People’s Councils for approval as prescribed in the Decree No. 138/2007/ND-CP and this Decree;

b) Decide the establishment of local development investment funds after those plans are approved by provincial People’s Councils;

c) Request provincial People’s Councils to approve plans for providing and supplementing charter capital for local development investment funds; mobilize capital sources for providing and supplementing charter capital for local development investment funds according to the plans approved by provincial People’s Councils;

d) Approve the charters or amended charters of local development investment funds at the requests of the Presidents of the Management Boards of local development investment funds;

dd) Approve the organizational structures of local development investment funds at the requests of Presidents of the Management Boards of local development investment funds

e) Make lists of prioritized investments in local socio-economic infrastructures as prescribed in Clause 2 and Clause 4 Article 1 of this Decree;

g) Decide the minimum loan interest rates of local development investment funds in each stage as prescribed in Clause 5 Article 1 of this Decree;

h) Approve the investment in a project in which the investment is over 10% equity capital of the local development investment fund;

i) Decide to grant a loan to a project to which the loan granted is over 15% of equity capital the local development investment fund or the loan period is longer than 15 years;

k) Approve the capital contribution to an enterprise to which the contribution is over 10% of equity capital of the local development investment fund;

l) Decide the number of members of Management Boards of local development investment funds;

m) Manage, inspect, and supervise the operation and finances of local development investment funds;

n) Perform other tasks as prescribed by law.

2. Article 6 is amended as follows:

“Article 6. Investment targets

1. The investment targets are projects in the lists of prioritized investments in local socio-economic infrastructures made by provincial People’s Committees as prescribed in Clause 2 of this Article.

2. Every year or in each period, depending on local socio-economic development strategies and socio-economic infrastructures in Appendix I to this Decree, provincial People’s Committees shall make lists of prioritized investments in local socio-economic infrastructures after obtaining approvals from provincial People’s Councils.

3. Local development investment funds shall select, appraise, and make direct investments in specific projects that satisfy the investment conditions prescribed in the Decree No. 138/2007/ND-CP and this Decree according to the list of prioritized investments in local socio-economic infrastructures prescribed in Clause 2 of this Article.

3. Point a Clause 1 of Article 9 is amended as follows:

“a) Make investment in the form of business cooperation contracts (BCC), Build – Operate – Transfer (BOT) contracts, Build – Transfer – Operate (BTO) contracts, Build – Transfer (BT) contracts, and other forms of direct investments as prescribed by the laws on investment.”

4. Article 11 is amended as follows:

“Article 11. Borrowers

1. Borrowers are projects in the lists of prioritized investments in local socio-economic infrastructures made by provincial People’s Committees as prescribed in Clause 2 of this Article.

2. Every year or in each period, depending on local socio-economic development strategies and socio-economic infrastructures in Appendix I to this Decree, provincial People’s Committees shall make lists of prioritized investments in local socio-economic infrastructures after obtaining approvals from provincial People’s Councils.

3. Local development investment funds shall select, appraise, and grant loans to specific projects that satisfy the investment conditions prescribed in the Decree No. 138/2007/ND-CP and this Decree according to the lists of prioritized investments in local socio-economic infrastructures prescribed the Clause 2 of this Article”.

5. Article 15 is amended as follows:

“Article 15. Loan interest rates

1. Loan interest rates of local development investment funds shall not be lower than the average interest rates of capital sources, ensure the recovery of management expense and other expenses relating to the grant of loans of local development investment funds, preserve and develop the equity capital.

2. Every year or period, according to the rules for determining interest rates in Clause 1 of this Article, Directors of local development investment funds shall make calculations and request the Management Boards and provincial People’s Committees to issue minimum loan interest rates of local development investment funds.

3. Local development investment funds shall decide the loan interest rates applicable to each particular project. Such rates shall not be lower than the minimum loan interest rates decided by provincial People’s Committees as prescribed in Clause 2 of this Article.

4. Where a provincial People’s Committees decide to grant a loan to a project on investment in socio-economic infrastructures at an interest rate lower than the minimum interest rate prescribed Clause 2 of this Article, such provincial People’s Committee shall cover the difference between the minimum interest rate of the local development investment fund and the selected interest rate.

5. Where a provincial People’s Committee decide to support the post-investment interest rate on a particular project, the following conditions must be satisfied:

a) The beneficiary of post-investment interest rate support is the investor in the project in the list of prioritized investments in local socio-economic infrastructure as prescribed in Clause 2 and Clause 4 of this Decree.

b) Provincial People’s Committee makes a decision to support the post-investment interest rate on each particular project, specifying the beneficiaries of support; the methods, times, and level of post-investment support; the obligations and entitlements of local development investment fund in the appraisal of the project and the release of post-investment support, obligations and entitlements of the beneficiaries and involved parties.

c) The provincial People’s Committee shall provide adequate post-investment support for local development investment funds according to Point b of this Clause without affecting the capital sources of local development investment funds.

6. For projects funded by international sponsors whose regulations on loan interest rates are different from those in this Decree, the agreements signed with such sponsors shall be complied with.”

6. Article 17 is amended as follows:

“Article 17. Syndicated loans

1. A local development investment fund may grant syndicated loans or cooperate with other local development investment funds, credit institutions, and organization to grant loans to projects.

2. When granting a syndicated loan to a project outside the province where the local development investment fund is situated, the grant must satisfy the following conditions:

a) The project is in the list of prioritized investments in local socio-economic infrastructures that as prescribed in Clause 4 Article 1 of this Decree;

b) The project is intended to support the inter-regional socio-economic development, including the province where the local development investment fund is situated;

c) The President of the People’s Committee of the province where the local development investment fund is situated approves the grant of syndicated loan outside that province.

3. The grant of the syndicated loan must be included in a contract in accordance with the Decree No. 138/2007/ND-CP and this Decree.

4. The syndicated loan interest rates shall be decided by local development investment funds that grant syndicated  loans, written in the contracts, and not be lower than the minimum loan interest rate of each fund according to Clause 5 Article 1 of this Decree.”

7. Article 21 is amended as follows:

“Article 21. Capital contribution modalities

Local development investment funds may contribute capital to establish joint-stock companies and limited liability company in accordance with the Law on Enterprises to make direct investments in socio-economic infrastructures in the list of investments in socio-economic infrastructures made by provincial People’s Committees as prescribed in Clause 2 Article 1 of this Decree”.

8. Clause 2 of Article 23 is amended as follows:

“2. Local development investment funds may be authorized to manage credit guarantee funds of medium and small enterprises, housing development funds, land development funds, cooperative development funds, and other local financial funds established by provincial People’s Committees. Local development investment funds shall be authorized in accordance with current law.”

9. Article 25 is amended as follows:

“Article 25. Investment limits

1. The maximum direct investment in a project is 50% of the equity capital of the local development investment fund at that time.

2. Loan limits:

a) A loan granted to a project shall not exceed 20% of the equity capital of fund at that time, and not exceed 80% total capital of that project. Where a local development investment fund simultaneously makes a direct investment in and grant a loan to a project, the sum of the direct investment and loan must not exceed 30% of the equity capital of the fund at that time.

b) The total loan granted to a client of a local development investment fund shall not exceed 25% of the equity capital of that local development investment fund.

3. 3. The maximum contribution to the establishment of economic organizations is 20% of the equity capital of the local development investment fund at that time..

4. For projects funded by international sponsors whose regulations on limits on loans and direct investments are different from those in this Decree, the agreements signed with such sponsors shall be complied with.”

10. Clause 1 of Article 26 is amended as follows:

“1. The equity capital of a local development investment fund includes:

a) Actual charter capital: is the capital provided to the local development investment fund by the owner as prescribed in the Decree No. 138/2007/ND-CP and this Decree;

b) financial reserve funds and development investment funds;

c) Other capital sources of the owner as prescribed by law.”

11. Article 32 is amended as follows:

“Article 32. Operation principles of local development investment fund

1. Local development investment funds are local state financial institutions, operate as banks for social policies, are financially independent, non-profit, and aim to preserve and develop capital.

2. Local development investment funds shall take limited liability within their equity capital.”

12. Article 36 is amended as follows:

“Article 26. Composition of the management board of a local development investment fund;

1. A management board consists of no more than 05 members. Provincial People’s Committees shall decide the number of members of the management board provided such number must be an odd number.

2. The President, Deputy President, and other members of the management board are appointed and dismissed by the President of the provincial People’s Committee.

3. Members of the management board must have knowledge and experience of finance, capital investment, and company administration.

4. The composition, structure, standards, number, and tenure of the management board are specified in the Charter of the local Investment and development fund.”

13. Clause 2 of Article 38 is amended as follows:

“2. The Control Board has not more that 03 members. These members are entitled to benefits and other interests as prescribed by law.”

14. Clause 4a is added to Article 39 as follows:

“4a. The recruitment of employees, planning, and designation of senior officials of local development investment funds shall comply with their Charters.”

15. Clause 3 of Article 40 is amended as follows:

3. The wages, bonuses, and rankings of local development investment funds shall comply with the regulations applicable to 100%-state-owned single member limited companies  The rankings of local development investment funds shall comply with the ranking standards applicable to financial companies”.

Article 2. Implementation

1. Within 02 years from the effective dated of this Decree, operating local development investment funds must review and reorganize their apparatus as prescribed in this Decree.

2. The loan contracts and direct investment contracts signed with local development investment funds before this Decree takes effect shall keep being executed in accordance with the signed agreements according to the loan and investment limits in the Decree No. 138/2007/ND-CP until such contract expire. Where the limits in such loan contracts and direct investment contracts are adjusted, the adjustments must comply with the limits on loans and direct investments prescribed in this Decree.

3. The loans and direct investments made after this Decree takes effect shall comply with the limits on loans and direct investment prescribed in the Decree No. 138/2007/ND-CP and this Decree.

4. The capital mobilization, loans, direct investments, and other activities according to the functions of local development investment funds of Finance and Investment State Company of Ho Chi Minh city shall comply with the Decree No. 138/2007/ND-CP and this Decree.

Article 3. Effect and responsibility to implement

1. This Decree takes effect on June 10th 2013.

2. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of the provincial People’s Committees, involved organizations and individuals are responsible for the implementation of this Decree./.

APPENDIX I

LIST OF INVESTMENTS IN SOCIO-ECONOMIC INFRASTRUCTURES ELIGIBLE FOR DIRECT INVESTMENTS AND LOANS FROM LOCAL DEVELOPMENT INVESTMENT FUNDS
( To the Government's Decree No. 37/2013/ND-CP dated April 22nd 2013)