When the country enters a period of strong development, it also leads to an explosion in businesses. The type of legal business belongs to the top concern for individuals and organizations wishing to establish a business or convert a new business. So, in this article, LSX legal firm would like to introduce: “Types of businesses under Vietnam Law on Enterprise 2022”
Legal ground
- Law on Enterprise 2020
Types of businesses under Vietnam Law on Enterprise 2020
According to Clause 10, Article 4 of the Law on Enterprise 2020, “enterprise” means an organization that has a proper name, assets, premises, established or registered in accordance with the law for business purposes.
Type of enterprise means the form and structure of an enterprise recognized by the Law on Enterprise 2020 and its guiding documents. Choosing a type for a company or enterprise is one of the steps that need to be taken when establishing a new enterprise or changing the type of business.
Currently, according to the provisions of the Law, the types of enterprises include:
- Single-member Limited Liability Company (Single-member LLC).
- Multi-member Limited Liability Company (From 2 or more members – Multi-member LLC).
- Joint-stock Company.
- Partnership.
- Sole-proprietorship.
- State-owned company.
Each type of business has different characteristics.
Single member limited liability company (Single-member LLC)
A single-member limited liability company – an enterprise owned by a single organization or individual (hereinafter referred to as “owner”). The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital.
In the case of a single-member limited liability company owned by an individual, the company management structure includes Company President, Director, or General Director. The owner of the company (the president of the company) can hold the position of director (general director) or hire someone to take on this position.
In the case of a single-member limited liability company owned by an organization, the company management structure may follow one of the following two models:
- A company with a President and the Director/General Director;
- A company with a Board of Members and the Director/General Director.
The Board of Members shall have 03 – 07 members. The members shall be designated and dismissed by the owner with a 5-year term of office. The Board of Members shall perform the owner’s rights and obligations in the owner’s name; perform the company’s rights and obligations in the company’s name, except the rights and obligations of the Director/General Director; take responsibility for the law and the owner for their performance as prescribed by the company’s charter, the Law on Enterprise 2020 and relevant laws.
A meeting of the Board of Members shall be conducted when it is participated in by at least two-thirds of the members. Unless otherwise prescribed by the company’s charter, each member shall have one vote with equal value. The Board of Members may ratify its resolutions and decisions by questionnaire survey.
According to Article 74 of the Law on Enterprise 2020, a single-member limited liability company has legal status and has the right to issue bonds but cannot issue shares.
Multi-member Limited Liability Company (Multi-member LLC)
A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise, except for the cases specified in Clause 4 Article 47 of the Law on Enterprise.
The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. During this period, the members shall have rights and obligations corresponding to their promised contribution. The members may only contribute assets that are different from the promised ones if the change is approved by more than 50% of the remaining members.
The organizational structure of a limited liability company with two or more members specified in Article 54 of the Law on Enterprise 2020 including the Board of Members, President of the Board of Members, and Director/General Director.
The Board of Members plays the role of the supreme governing body of the company and consists of all members as individuals and authorized representatives of members as organizations. The company’s charter shall specify the frequency of meetings of the Board of Members but at least one meeting per year.
The Members’ Council may convene a meeting at the request of the Chairman of the Board of Members or at the request of a member or group of members specified in Clauses 2 and 3, Article 49 of the Law on Enterprise 2020.
A multi-member limited liability company has legal status, has the right to issue bonds, but not allowed to issue shares.
Partnership
A partnership has at least 02 partners as joint owners of the company and do business under the same name (hereinafter referred to as “general partner”). There can be limited partners in addition to general partners;
A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets and a limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital contribution.
A partnership has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
Besides, a partnership must not issue any kind of securities.
The organizational structure of a partnership includes a Board of members, chairman of the Board of Members, and director (general director). The chairman of the Board of Members (a general partner) elected by the Board of Members and this person can concurrently hold the position of director (general director) unless otherwise provided for in the company’s charter.
Joint-stock company
A joint stock company has the charter capital divided into units of equal value called shares.
Shareholders can be organizations and individuals, the minimum number of shareholders is 03 and there is no limit on the maximum number of shareholders.
A shareholder’s liability for the company’s debts and liabilities equal to the amount of capital contributed to the company by the shareholder.
Shareholders may transfer their shares to other persons except for the cases specified in Clause 3 Article 120 and Clause 1 Article 127 of the Law on Enterprise 2020
A joint stock company has the status of a juridical person from the day on which the Certificate of Enterprise Registration issued.
Besides, the joint stock company may issue shares, bonds, and other kinds of securities.
A joint-stock company converted from a state-owned enterprise or from a limited liability company or divided, split, consolidated, or merged from another joint-stock company does not necessarily have founding shareholders; In this case, the company’s charter in the enterprise registration dossier must be signed by the legal representative or the common shareholders of that company.
Sole proprietorship
A sole proprietorship owned by an individual. The owner has responsibility for all his assets for all activities of the enterprise according to article 118 of the Law on Enterprise 2020. A sole proprietorship has no legal status and not allowed to issue any type of securities under the law.
An individual may only establish one sole proprietorship. The owner of a sole proprietorship must not concurrently own a household business or hold the position of the general partner of a partnership.
A sole proprietorship must not contribute capital upon the establishment or purchase of shares or stakes of partnerships, limited liability companies, or joint stock companies.
Regarding the organizational structure, the owner of a sole proprietorship has full decision-making power over all business activities of the enterprise as well as using profits after paying taxes and performing other financial obligations as prescribed by law.
The owner of a sole proprietorship may directly or hire another person to act as the Director or General Director to manage and operate the business but still responsible for all business activities of the sole proprietorship.
State-owned company
State-owned enterprise means enterprises in which 100% of charter capital held by the State according to Point a, Clause 1, Article 88 of the Law on Enterprise 2020. This type of company organized and managed in the form of a single-member limited liability company.
Enterprises in which more than 50% of charter capital is held by the State under the provisions of Point b, Clause 1, Article 88 of the Law on Enterprise 2020 shall be organized and managed in the form of a limited liability company with two or more members or a joint-stock company.
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
Contact LSX
Finally, hope this article is useful for you to answer the question about “Types of businesses under Vietnam Law on Enterprise 2020”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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Related questions
At present, there are three ways to apply for company registration:
Firstly, submit directly at the business registration office where the company’s headquarters is located.
Secondly, submit business registration documents by post office.
Thirdly, submit online through the electronic portal.
– Company’s name
– Address of head office
– Company’s business lines
– Charter capital
Firstly, register the investment project
Secondly, apply for Certificate of investment registration
Thirdly, apply for the certificate of business registration
Fourthly, publish the content of the business registration
Then, registered business stamp
Next, notice of use of stamp
Equally important, open bank account
After all, the post licensing procedures
Conclusion: So the above is Types of businesses under Vietnam Law on Enterprise 2022. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
