Today, Lawyer X sends you the article “Types of businesses in Vietnam today” as follows:
Legal grounds:
Enterprise Law 2020
Content
Currently, according to the law, Vietnam includes the following types of businesses:
Limited liability company
Limited liability companies include single-member limited liability companies and limited liability companies with two or more members.
One member limited liability company
– A one-member limited liability company is an enterprise owned by an organization or individual (hereinafter referred to as the company owner). The company owner is responsible for the company’s debts and other property obligations to the extent of the company’s charter capital.
– Secondly, a one-member limited liability company has legal status from the date of issuance of the Certificate of Business Registration.
– Besides, a one-member limited liability company may not issue shares, except in the case of conversion into a joint-stock company.
– A one-member limited liability company may issue bonds by this Law and other relevant laws;
– Regarding the organizational structure of management:
+ A one-member limited liability company owned by an organization shall be managed and operated by the organization under one of two models: company president, director or general director or members’ council, director Director or General Manager.
For a company whose owner is a state-owned enterprise as prescribed in Clause 1, Article 88 of the Enterprise Law 2020, a Control Board must be established; other cases decided by the company. The organizational structure, working regime, standards, conditions, discharge from duty, dismissal, rights, obligations, and responsibilities of the Supervisory Board, the Supervisors shall comply with the provisions of this Decree respectively.
+ A one-member limited liability company owned by an individual has a company president, director, or general director.
Limited liability company with two or more members
– A limited liability company with two or more members is an enterprise with between 02 and 50 members who are organizations and individuals. Members are responsible for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise, except for the case specified in the Law on Enterprise 2020.
– Secondly, a limited liability company with two or more members has legal status from the date of issuance of the Certificate of Business Registration.
– A limited liability company with two or more members may not issue shares, except for the case of conversion into a joint-stock company.
– Then, a limited liability company with two or more members may issue bonds by this Law and other relevant laws;
– Regarding the organizational structure of management:
+ A limited liability company with two or more members has a Members’ Council, a chairman of the Members’ Council, a director, or a general director.
+ A limited liability company with two or more members is a state enterprise according to the provisions of Point b, Clause 1, Article 88 of the Enterprise Law 2020, and a subsidiary of a state enterprise as prescribed in Clause 1, Article 88 of the Law on Enterprises. The Enterprise Law 2020 must establish a Control Board; other cases decided by the company.
Joint Stock Company
– Joint-stock company is an enterprise in which:
+ Charter capital is divided into equal parts called shares;
+ Shareholders can be organizations or individuals; the minimum number of shareholders is 03 and there is no limit to the maximum number;
+ Shareholders are only responsible for the debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise;
+ Shareholders have the right to freely transfer their shares to others unless otherwise specified
– A joint-stock company has legal status from the date of issuance of the Certificate of Business Registration.
– Therefore, joint-stock companies have the right to issue shares, bonds, and other securities of the company.
– Regarding the organizational structure of management:
Unless otherwise provided by the law on securities, a joint-stock company has the right to choose an organization to manage and operate according to one of the following two models:
+ The General Meeting of Shareholders, the Board of Directors, the Supervisory Board, and the Director or General Director. In case a joint-stock company has less than 11 shareholders and the shareholders are organizations holding less than 50% of the total shares of the company, it is not required to have a Supervisory Board;
+ The General Meeting of Shareholders, the Board of Directors, and the Director or General Director. In this case, at least 20% of the members of the Board of Directors must be independent members and have an Audit Committee under the Board of Directors. The organizational structure, functions, and duties of the Audit Committee are specified in the company’s charter or the operation regulations of the Audit Committee issued by the Board of Directors.
Partnerships
– Partnership company is an enterprise in which:
+ There must be at least 02 members who are common owners of the company, doing business together under a common name (hereinafter referred to as general partners). In addition to general partners, the company may have additional capital contributors;
+ Besides, general partners must be individuals, responsible with all their assets for the obligations of the company;
Capital contributors are organizations or individuals and are only responsible for the company’s debts within the amount of capital they have committed to contribute to the company.
– A partnership company has legal status from the date of issuance of the Certificate of Business Registration.
– Particularly, partnerships may not issue securities of any kind.
Private enterprise
– A sole proprietorship an enterprise owned by an individual who is solely responsible for all his/her assets for all activities of the enterprise.
– Private enterprises did not allow to issue securities of any kind.
– Moreover, each individual only entitled to establish a private enterprise. The owner of a private enterprise cannot concurrently be the owner of a business household or a general partner of a partnership.
– A private enterprise is not entitled to contribute capital to the establishment or purchase of shares or contributed capital in a partnership, limited liability company, or joint-stock company.
– Regarding management of private enterprises:
The owner of a private enterprise has the full right to decide on all business activities of the private enterprise, the use of profits after paying taxes, and performing other financial obligations as prescribed by law.
+ The owner of a private enterprise may directly or hire another person to act as the Director or General Director to manage and operate the business; In this case, the sole proprietorship owner is still responsible for all business activities of the private enterprise.
+ The owner of a private enterprise is the legal representative, representing the private enterprise in the capacity of a requester for settlement of civil matters, plaintiff, defendant, a person with related interests and obligations before the Court. financial institutions, courts, and representatives of private enterprises to exercise other rights and perform other obligations as prescribed by law.
Related article:
Procedure to establish a Single-member LLC in Vietnam
Procedures to establish Joint-stock company under Vietnamese legislation
Frequently asked questions:
According to the provisions of Articles 46 and 74 of the Enterprise Law 2020, 1-member limited liability companies and 2-member limited liability companies are both allowed to issue bonds to raise capital.
According to the provisions of the Enterprise Law 2020, only a joint-stock company can issue shares to raise capital and is also the only type of business allowed to participate in the stock market. Therefore, this is a unique advantage of a joint-stock company.
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