As the economy develops, the demand for business in society also increases. One of the common types of Vietnamese people doing business is a private enterprise. Choosing the type of sole proprietorship to do business is related to many factors such as history; suitable for small and medium business; simple legal procedures,etc. LSX Lawfirm will give you an article about: “Size of private enterprise in Vietnam”, as follows:
Legal grounds
Law on enterprises 2020
What is private enterprise?
Private enterprise is a term that refers to one of several types of businesses; and this name has been maintained since the first Enterprise Law of Vietnam was issued in 1990 until now.
The reality of Vietnam shows that, whenever we mention private enterprises, Vietnamese people often use it to refer to the business community of the private sector in the counterbalance to state-owned enterprises.
According to the provisions of Article 188, a private enterprise is understood as:
A sole proprietorship is an enterprise owned by an individual and is solely responsible with all his assets for all activities of the enterprise.
Characteristics of a Private enterprise
A private enterprise established and owned by an individual investing capital:
During the operation of a private enterprise, only one person is only an individual; A sole proprietorship cannot be owned by an organization. And an individual owns only one private business at a time.
The owner of a private business is solely responsible with his or her own assets for all activities of the business:
This phenomenon in legal science is called unlimited property liability. Its expression is that the owner himself will be responsible with all his assets for all activities of the business; from the time the business was born until it went bankrupt. Because of that factor, when a dispute arises with the subject being a private enterprise; business owners can act as plaintiffs; the accused; persons with related interests and obligations; etc..vv in civil/criminal/administrative cases.
Private enterprises are not allowed to issue securities:
In essence, securities activities are a form of calling for capital widely from the public. In the economic field, people divide securities into two types of capital securities; and debt securities. The Law on Enterprises prohibits private enterprises from issuing securities. Therefore, when you want to raise capital, the business owner must use his/her own assets to contribute to the business.
Private enterprises without legal status:
So, considering a condition for an organization to recognize a legal entity, there are two characteristics that a private enterprise cannot meet, which are:
A sole proprietorship has no assets owned by itself.
In procedural relations law, it is not possible to take responsibility independently of relevant legal issues.
It is these two basic characteristics that private enterprises have not recognized as having legal status.
Size of private enterprise in Vietnam
Investment capital of a private business owner
- Firstly Investment capital of a private enterprise owner registered by the business owner himself. The owner of a private business obliged to accurately register the total amount of investment capital; which clearly states the capital amount in Vietnam Dong; freely convertible foreign currency, gold; and other property; for capital in other assets, the type of property must also be specified; quantity; and the carrying amount of each asset class.
- Secondly full capital; and assets including loans; leased assets used in business activities of the enterprise fully recorded in the accounting books; and financial statements of the enterprise in accordance with the law.
- Thirdly in the course of operation, the owner of a private enterprise has the right to increase or decrease his investment capital in the business activities of the enterprise. The increase or decrease in the investment capital of the private business owner fully recorded in the accounting books. In case the investment capital reduced to less than the registered investment capital, the owner of the private enterprise may reduce the capital only after having registered with the Business Registration Authority.
Thus, financially, the owner of a private business has the right to increase or decrease the capital invested in his business activities freely; There no legal limit on the maximum amount of capital invested. The source of investment capital registered by the business owner at the business registration office. One disadvantage, however, is that a sole proprietorship cannot transfer ownership of assets to his or her own private business.
Private business management
- Firstly the owner of a private enterprise has full decision-making power over all business activities of the private enterprise; the use of profits after taxes paid; and perform other financial obligations as prescribed by law.
- Secondly Private business owners can directly; or hire someone else to act as a Director; or the General Director to manage and administer business activities; In this case, the sole proprietorship owner is still responsible for all business activities of the private enterprise.
- Thirdly the owner of a private enterprise is the legal representative; represent a private enterprise in the capacity of a requester to settle a civil matter; plaintiff; the accused; persons with related interests and obligations before the arbitration; Court; represent private enterprises to exercise their rights; and other obligations as prescribed by law.
You can also refer to the article related to Procedures to establish a real estate brokerage company in Vietnam or Prohibited acts in real estate business in Vietnam.
Related questions
Private business owners have the right to sell their private businesses to other individuals or organizations.
After the sale of the sole proprietorship, the sole proprietorship is still liable for the debts; and other property obligations of the private enterprise arising in the period prior to the date of transfer of the enterprise; except for private business owners; The buyer and the creditor of the private enterprise agree otherwise.
Owners of private businesses and buyers of private businesses must comply with the provisions of the law on labor.
The business owner must notify the Business Registration Authority when the enterprise investment capital changes.
Enterprises are responsible for notifying changes to business registration contents within 10 days; from the date of the change.
Within 03 working days from the date of receiving the notice; The business registration agency is responsible for reviewing the validity; and make changes to business registration contents; if the application is not valid, the business registration agency must notify in writing of the content to be amended; supplement for business. In case of refusal to amend or supplement information according to the content of the notice of change of business registration; must notify the enterprise in writing; and state the reason.
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