Instructions to convert a Private Enterprise into a Partnership Company in Vietnam
“Previously, the Enterprise Law 2014 stipulated that private enterprises (SOEs) could only be converted into limited liability companies. However, from January 1, 2021, the Enterprise Law 2020 takes effect; leading to many changes related to businesses and companies. In particular, there are new regulations on private enterprises that can convert into partnerships. Therefore, in recent times, there have been many private enterprises carrying out procedures to convert the type of business, from private enterprise to partnership. So should I convert a private enterprise into a partnership? What are the documents and procedures for conversion? Instructions to convert a Private Enterprise into a Partnership Company in Vietnam Let’s find out with the Corporate Law Consulting Room of LSX Law Firm now!
Legal grounds
Enterprise Law 2020.
Decree No. 01/2021/ND-CP.
Consulting content
What is business transformation?
Enterprise transformation is the transformation of businesses from one type of business to another to better suit the size, development, and orientation of the business. On the other hand, the transformation of the enterprise type also helps the enterprise not to dissolve due to an insufficient minimum number of members.
The Enterprise Law 2020 takes effect from January 1, 2021, replacing the 2014 Enterprise Law. under the decision of the owner of a private enterprise if the following conditions are fully satisfied:
a) The converted enterprise must satisfy all the conditions specified in the regulations on the application of the Certificate of Business Registration.
b) The owner of the private enterprise commits in writing to be personally responsible with all his/her assets for all unpaid debts and commits to paying the full amount of the debt when it is due;
c) The owner of the private enterprise has a written agreement with the parties of the contract that has not been liquidated on the receipt and continued performance of such contracts by the converted company;
d) The owner of the private enterprise commits in writing or has a written agreement with other capital contributors on the receipt and use of existing labor of the private enterprise.
Should a private enterprise be converted into a partnership?
Compared with private enterprises, partnerships have many advantages such as:
▪ A partnership has at least 2 general partners and may have capital contributors:
Many members contribute capital and do business together; there is a link to contribute capital, immediately meeting the large capital needs for business. Attention should be paid to the procedures for capital contribution by land use rights. Moreover, the ability to raise capital is easier from capital contributors. A sole proprietorship owned by one person. So we can only raise capital through our relationships from outside.
▪Having a combination of prestige and reputation, creating more trust for partners.
Having legal status:
A partnership company has a legal personality. Therefore, a partnership can become a member or Shareholder of another company. Moreover, partnerships easily create trust before customers when transacting; because it has a separation of assets and a higher ability to take responsibility when there is a risk. A sole proprietorship has no legal status. Therefore, when there is a lack of business capital, it is difficult to create trust with credit institutions.
▪Liability of property: because the partnership is jointly liable for the assets, the liability is higher.
From the above reasons, it can be seen that to develop and create favorable conditions for business, the transformation from a private enterprise to a partnership is necessary. It is also an inevitable trend when the economy is growing.
Dossier to convert private enterprise into partnership
Dossier to convert a private enterprise into a partnership includes:
– An application for enterprise registration according to the form.
– Charter of the converted company
– List of debts and unpaid debts: tax debts, payment deadlines; the list of existing employees; list of unliquidated contracts;
– A valid copy of one of the personal identification papers of the company’s members in case the member is an individual;
– A valid copy of the business registration certificate; or other equivalent documents in case the company member is an organization;
– A written undertaking by the owner of the private business to be personally responsible with all his assets for all unpaid debts of the private business; and commit to paying the debt in full when it is due;
– A written commitment of the owner of the private enterprise or an agreement between the owner of the private enterprise and other capital contributors on the receipt and use of existing labor of the private enterprise.
Instructions to convert a Private Enterprise into a Partnership Company in Vietnam
Step 1:
Prepare documents corresponding to the type of business that converted.
Accordingly, at this step, it is necessary to prepare a dossier of the establishment of a company a partnership.
Step 2:
Apply to the Business Registration Office of the district where the company is located.
Private business owner; or an authorized person shall carry out the procedures for enterprise registration by the following methods:
Register your business directly at the Business Registration Office;
Business registration via postal service;
Business registration via electronic information network; at the National Portal on Business Registration.
Step 3:
Get results of administrative procedures.
After that, within 03 working days from the date of receipt of the application, the Business Registration Office shall consider the application; issue the Certificate of Business Registration if the conversion conditions are met. Then update the legal status of the business on the National Business Registration Database.
Service of converting a private enterprise into a partnership of Lawyer X
▪Consulting on processes and procedures
▪ Assist in the collection and declaration of necessary documents.
▪ Assist in drafting valid documents.
▪Representative to carry out procedures with state administrative agencies.
▪ Hand over after valid results are available.
With a team of consultants and consultants with many years in the business field; as well as customer support. When using Lawyer X; Customers can rest assured about the legal procedure after it is done. The professional consulting team is enthusiastic in the working process.
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Related question
A general partner may not be a general partner of another partnership unless otherwise agreed by the remaining general partners.
General partners may not transfer part or all of their capital contribution to the company to other organizations or individuals without the consent of the remaining general partners.
The Enterprise Law 2020 stipulates: A partnership may not issue securities of any kind. But bonds are one of the types of securities, so it can be seen that a partnership is not allowed to issue bonds.
The Enterprise Law 2020 stipulates: 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;
Contact information for Lawyer X
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