Today, there are many different types of businesses in the market. Investors are choosing for themselves the most suitable types, including private enterprises. So about the matter “Can an individual contribute capital to a private enterprise in Vietnam?” Let’s find out in the article below.
Legal grounds
- Enterprise Law 2020
What is a private enterprise?
Pursuant to Article 183 of the Enterprise Law 2020, a private enterprise is understood as follows:
Sở hữu độc quyền là doanh nghiệp do một cá nhân làm chủ và tự chịu trách nhiệm bằng toàn bộ tài sản của mình về mọi hoạt động của doanh nghiệp.
Private enterprises may not issue securities of any kind.
Each individual is only entitled to establish a private enterprise. The owner of a private enterprise cannot concurrently be the owner of a business household or a member of a partnership.
A private enterprise is not entitled to contribute capital to the establishment or purchase shares or contributed capital in a partnership, limited liability company or joint-stock company.
Characteristics of private enterprises today
When establishing a private enterprise, investors must understand the characteristics of this type of business to make the right choice.
A private enterprise established and owned by an individual with capital
Private enterprises do not appear to contribute capital like in multi-owner companies, the capital of enterprises also mainly comes from the assets of a single individual.
Regarding capital ownership in the Enterprise
The initial capital of a private enterprise comes mainly from the property of the owner of the business. In the course of operation, the business owner has the right to increase or decrease the invested capital, only having to declare to the Business Registration Authority in case the capital is reduced below the registered level. Therefore, there is no limit between the capital and assets put into the business of a Sole Proprietorship and the remainder owned by the Business owner. That means it is not possible to separate the assets of the owner of the Sole Proprietorship and the assets of the Sole Proprietorship itself.
Ownership determines the management relationship
A private enterprise has only one investor, so the individual has the right to decide on all matters related to the organization and operation of the private enterprise. The Owner of a Private Enterprise is the legal representative of the Private Enterprise.
About profit distribution
The issue of profit sharing does not arise for a private enterprise because a private enterprise has only one owner and all profits earned from its business activities will belong to the owner of the enterprise alone. However it also means that the sole individual will be obligated to bear all the risks in the business.
Private enterprise without legal personality
A juridical person must have its own property, that is, there must be a separation between the assets of that juridical person and the creators of the juridical person. A Sole Proprietorship is not independent of its assets because the assets of a Sole Proprietorship are not independent in relation to the assets of the owner of the Sole Proprietorship.
Can a person contribute capital to a private enterprise in Vietnam?
According to Article 189 of the Enterprise Law 2020, the capital of private business owners is as follows:
“Article 189. Investment capital of private enterprise owners
1. Investment capital of a private enterprise owner is registered by the business owner himself. The owner of a private enterprise is obliged to accurately register the total investment capital, clearly stating the capital amount in Vietnam Dong, freely convertible foreign currencies, gold and other assets; for capital in other assets, the type of property, quantity and residual value of each type of property must also be clearly stated.
2. All capital and assets including borrowed capital and leased assets used in business activities of the enterprise must be fully recorded in the accounting books and financial statements of the enterprise in accordance with the provisions of law. the law.
3. 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 must be fully recorded in the accounting books. In case the investment capital is 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.”
Accordingly, the investment capital of the owner of a private enterprise is registered by the business owner himself. The owner of a private enterprise is obliged to accurately register the total investment capital, clearly stating the capital amount in Vietnam Dong, freely convertible foreign currencies, gold and other assets; for capital in other assets, the type of property, quantity and residual value of each type of property must also be clearly stated. Thus, according to Lawyer X, individuals are not allowed to contribute capital to private enterprises.
Is the owner of a private enterprise entitled to contribute capital to another company?
According to the provisions of Clause 3, Article 188 of the Law on Enterprises, each individual is only entitled to establish a private enterprise and the owner of a private enterprise cannot concurrently be the owner of a business household or a general partner of a partnership. .
The reason why the Law on Enterprises has such a provision is because the owner of a private business must be responsible with all his assets for all activities of the business. This is also similar to the responsibilities of the owner of the business household (According to Clause 1, Article 79 of Decree No. 01/2021/ND-CP) and general partners in a partnership (according to Point b, Clause 1, Article 177 of the Law on Enterprises). Karma). Therefore, to ensure the interests of customers and partners, including creditors of private enterprises, the Law only allows each individual to establish only one private enterprise, so you cannot establish another business. other private sector.
Clause 4, Article 188 of the Law on Enterprises stipulates that “Private enterprises are not entitled to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies or joint-stock companies”. Thus, this law only restricts the right to contribute capital to establish or buy shares, contributed capital of a private enterprise in a partnership, limited company or joint-stock company without limiting the above rights to with private business responsible.
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Please see more
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- The differences between a cooperative and an enterprise in Vietnam.
- Types of enterprises subject to audit in Vietnam
Frequently asked questions
Investment capital of a private business owner is registered by the business owner himself.
If a private enterprise wants to import capital contributed from other people, it must convert the type of enterprise into a limited liability company or a joint stock company.
Assets contributed as capital can be Vietnam Dong, freely convertible foreign currency, gold, value of land use rights, value of intellectual property rights, technology, technical know-how, other identifiable assets. The price is in Vietnam Dong.
Intellectual property rights used for capital contribution include copyright, copyright-related rights, industrial property rights, rights to plant varieties and other intellectual property rights as prescribed by law on Intellectual Property.
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 owner of the private enterprise is still responsible for all business activities of the private enterprise.
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, 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.
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