Currently, a lot of businesses are being born, however, there are many different types of businesses being born. One type of company that many people are interested in and most known today is a partner company. Choosing the type of business is an extremely important and essential issue in order to suit the business conditions and long-term operation orientation of that business. However, not everyone knows about this type of partner company. What are the characteristics of this type and what are the advantages and disadvantages? LSX Lawfirm will give you an article about: “Advantages and disadvantages of the partner company in Vietnam”, as follows:
Legal grounds
Law on enterprises 2020
The concept of a partner company
A partnership company – a type of enterprise established on the basis of trust and close association between members. Members who have close and trusting relationships with each other will jointly contribute capital, establish a company, and jointly bear all unlimited liability for the company’s debts.
With this type of partnership, the members have independent merchant status and are subject to personal income tax, while the company itself will not taxed.
Characteristics of the partner company
Firstly
When establishing a partnership company, they do not pay attention to the member’s capital contribution, the members themselves have independent business status and are subject to personal income tax, the company itself company will not taxed. However, due to the problem of not paying attention to the amount of capital contribution, the operation is based on trust, so when there is a legal problem, it is often difficult for members to determine the amount of capital and profit. collect. In addition, the risk tolerance of members in the company is very large, because there is no separation of members’ personal assets and company assets. Or in case the business company suffers a loss, the members must bear a loss in proportion to the capital contributed to the company or in accordance with the previously prescribed charter of the company.
Secondly
The members are jointly and severally liable for the assets or at least one member is liable with the entire property under his/her ownership for the company’s debts and property obligations. There is no separation between personal assets and company assets.
In case the company is no longer able to pay all the debts of the company, the members must be jointly responsible with other members to pay off the remaining debts of the company.
Especially, when a member voluntarily withdraws capital from the company; or expelled from the company; before the date of termination of membership within 2 years from the date of termination of the contract membership; such member is still jointly liable with all his/her assets for the debts of the company which have arisen immediately.
Thirdly
The number of members is often small, so the organizational structure and operation of the partner company are often simple.
The main type of existence of a partnership company is that of a partnership. According to the law, a partnership does not specify the maximum number of members. However, in Article 177 of the Enterprise Law 2020; “a partnership must have at least 2 members who are the owner of the partnership. joint ownership of the company; doing business together under a common name. In addition to general partners, the company may have additional capital contributors. In addition, because the establishment is based on trust; the number of members of a partner company is relatively small and the organizational structure is often simple.
It is easy to identify the partner company through 3 main characteristics: the number of members; separation between personal property and company property; Individuals themselves are taxed and companies are not; members formed together on the basis of trust and jointly responsible with all their assets for the debts and obligations of the company. the company. However, due to these characteristics, the current situation of setting up a partnership company is very few; the reason is that the responsibility regime of the members of the company makes many individuals; when registering for establishment. are often shy and do not want to choose this type of business.
In what form does a counterpart company exist?
A counterpart company is essentially a partnership company.
Clause 1, Article 177 of the Enterprise Law 2020 specifically stipulates that a partnership 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 (called general partners). In addition to general partners, the company may also have additional capital contributors;
General partners must be individuals, responsible with all their assets for the obligations of the company;
Capital contributors are organizations and individuals and are only responsible for the company’s debts to the extent of the amount of capital they have committed to contribute to the company.
What are the characteristics of a partnership company?
As mentioned above, a partnership is actually a partnership company, based on capital contribution between members; and the amount of capital contributed between members is not equal; there is no separation between personal and corporate assets. However, in Clause 1, Article 34 of the Enterprise Law 2020, the law stipulates that assets contributed as capital are Vietnam Dong, freely convertible foreign currencies, gold; land use rights; intellectual property rights, technology, and secrets. technical decisions, other assets that can be valued in Vietnam Dong. This regulation on capital contribution often leads to various inadequacies when there is a dispute about the capital contribution between members or the member’s assets with the company.
The organizational structure of this type of partner company is simple; the members have the right to agree in the contract on the organization, operation and representation of the company. Because it established on the basis of trust among members, in addition to general partners, the company may have additional capital contributors. General partners are concurrently the legal representative and the representative of the company to exercise important rights and obligations. As for capital contributors, they only allowed to comment on less important issues. These contributing members usually have limited and unlimited liability. A partnership has a simple organizational model consisting of the Chairman of the Members’ Council, the Members’ Council and the Director or General Director.
On legal status
On legal status: Clause 2, Article 177 of the Enterprise Law 2020, a partnership has legal status from the date of issuance of the Certificate of Business Registration. However, the partnership does not have the right to issue securities of any kind. A type of enterprise with limitations in terms of charter capital, operation scale and number of members in the company. The members in a partnership usually have unlimited or limited liability, especially when a dispute occurs; the member must bear the full liability with his; or her assets to the company and there is no separation between personal assets and company assets; leading to no clear division, unable to bear the risk ratio with other securities investors. The buying and selling of securities will restricted when this is a type of establishment based on trust among members.
The assets of a partnership
About assets: The assets of a partnership are specified in Article 179 of the Enterprise Law 2020, including:
Assets contributed as capital by members transferred to the company;
The assets created are in the name of the company;
Assets obtained from business activities performed by a general partner in the name of the company; and from business activities of the company performed by a general partner in his or her own name;
Other property as prescribed by law.
Because it is a type of partnership company; a partnership company has typical characteristics such as a small number of members; difficulty in controlling between personal assets and company assets; members are responsible for debts of the company within the amount of capital that they have committed to contribute and are jointly responsible with all their assets for the obligations of the company. The legal status of a partnership established when it has a business registration certificate; and the assets of the partnership are specified in Article 179 of the Enterprise Law 2020.
Related questions
Representative offices do not have business functions and activities of production and services, so they do not have to issue and use invoices.
Representative offices are only allowed to conduct market research, brand advertising, display and introduction of their goods. Any business activities that bring profits to a representative office violates the regulations for a representative office and may result in loss of its operating license.
The law specifically stipulates that a foreign trader may not establish more than one representative office or branch with the same name within a province or centrally run city. And there is no mandatory regulation on the number of representative offices of foreign enterprises. Therefore, your business can comfortably set up its office in many locations and regions across the country.
Related articles:
- Change of business registration to increase charter capital of the company in Vietnam
- Differences between charter capital and legal capital in Vietnam
- Things to know for foreigners about joint stock companies in Vietnam
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