Legal regulation of partnership in Vietnam

Partnership is one of the four main types of enterprises in our country today. Let’s find out with Lawyer X about the legal regulations of the partnership through the following situation: “Hello, Lawyer! I would like to ask, what aspects of a partnership are generally regulated by the current corporate law? We hope to receive an answer!”

Legal grounds

Enterprise Law 2020

What is a partnership company?

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 (hereinafter referred to as general partners). In addition to general partners, the company may have additional capital contributors;
• 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.

– The partnership company has legal status from the date of issuance of the Certificate of Business Registration.

– Partnerships may not issue securities of any kind.

Capital in Partnership Company

Make capital contribution and issue certificates of capital contribution
– General partners and capital contributors must contribute in full and on time the committed capital amount.

– General partners who fail to contribute in full and on time the committed capital, causing damage to the company, shall be responsible for compensating the company for damage.

In case a capital-contributing member fails to contribute fully and on time the committed capital amount, the unpaid capital amount shall be considered a debt of that member to the company; in this case, the relevant capital contributor may be expelled from the company by decision of the Members’ Council.

– At the time of fully contributing the committed capital, the member is granted a certificate of capital contribution. The certificate of capital contribution must include the following principal contents:

• Name, enterprise code, address of the company’s head office;
• Charter capital of the company;
• Name, contact address, nationality, number of legal papers of the individual, for members being an individual; name, enterprise code or number of legal papers of the organization, head office address, for members being organizations; membership type;

• Value of capital contribution and type of assets contributed as capital by members;
• Number and date of issuance of the certificate of capital contribution;
• Rights and obligations of the holder of the capital contribution certificate;
• Full name and signature of the holder of the certificate of capital contribution and of the general partners of the company.

– In case the certificate of capital contribution is lost, damaged or destroyed in another form, the member shall be re-issued with a certificate of capital contribution by the company.

Assets of the partnership company

The assets of a partnership include:

• Assets contributed as capital by members have been transferred to the company;
• Assets created in the name of the company;
• Assets obtained from business activities performed by the general partner in the name of the company and from business activities of the company by the general partner in the name of an individual;
• Other property as prescribed by law.

Members, management organization of the partnership

Rights and obligations of general partners

– General partners have the following rights:

• Attend meetings, discuss and vote on company issues; each general partner has one vote or another number of votes specified in the company’s charter;
• Doing business in the company’s business lines on behalf of the company; negotiate and conclude contracts, transactions or covenants with the terms that the general partner deems most beneficial to the company;
• Using the company’s assets to do business in the company’s lines of business; in case of advance money to do business for the company, they have the right to request the company to return both principal and interest at the market interest rate on the advance principal amount;
• Request the company to compensate for damage from business activities within the scope of assigned tasks if such damage occurs not due to the personal mistake of that member;
• To request the company or other general partners to provide information about the company’s business situation; inspect assets, accounting books and other documents of the company when necessary;
• To be distributed profits in proportion to the proportion of contributed capital or as agreed upon in the company’s charter;

• When the company is dissolved or goes bankrupt, the remaining asset value will be divided according to the proportion of capital contributed to the company if the company’s charter does not provide for a different ratio;
• In case a general partner dies, the member’s heirs are entitled to a portion of the value of assets in the company after deducting the debt and other property obligations under the liability of that member. The heir may become a general partner if approved by the Members’ Council;
• Other rights as prescribed by the Law on Enterprises and the company’s charter.

– General partners have the following obligations:

• Conduct management and conduct business activities honestly, carefully and in the best way to ensure maximum legal benefits for the company;
• Manage and conduct business activities in accordance with the provisions of law, the company’s charter and resolutions and decisions of the Members’ Council; if they violate the provisions at this point, causing damage to the company, they must be responsible for compensating for the damage;
• Not to use the company’s assets for personal gain or to serve the interests of other organizations and individuals;
• Return to the company the money and property received and compensate for damage caused to the company in the case of receiving money or other property on behalf of the company, in the name of an individual or in the name of another person. business activities of the company that are not submitted to the company;
• Jointly responsible for paying off the remaining debts of the company if the company’s assets are not enough to cover the company’s debts;
• Bear a loss corresponding to the capital contributed to the company or as agreed upon in the company’s charter in case the business company suffers a loss;
• To report on a monthly basis honestly and accurately in writing the situation and results of their business to the company; provide information about their business situation and results to members who request;
• Other obligations as prescribed by the Law on Enterprises and the company’s charter.

Rights and obligations of capital contributors

Capital-contributing members have the following rights:

• Attend meetings, discuss and vote at the Members’ Council on amendments and supplements to the company’s charter, amendments and supplements to the rights and obligations of capital contributors, on reorganization and dissolution. company and other contents of the company’s charter are directly related to their rights and obligations;
• To receive annual profit-sharing in proportion to the proportion of contributed capital in the charter capital of the company;
• To be provided with the company’s annual financial statements; have the right to request the Chairman of the Members’ Council and general partners to provide fully and truthfully information on the company’s business situation and results; review the company’s accounting books, minutes, contracts, transactions, records and other documents;
• Transferring his/her capital contribution in the company to another person;
• Conduct business in the name of an individual or on behalf of another person in the company’s line of business;
• To dispose of their contributed capital by inheritance, donation, mortgage, pledge and other forms as prescribed by law and the company’s charter; in case of death, the heir shall replace the deceased member as a capital contributing member of the company;
• To receive part of the remaining asset value of the company in proportion to the percentage of contributed capital in the company’s charter capital when the company is dissolved or goes bankrupt;
• Other rights as prescribed by the Law on Enterprises and the company’s charter.

Capital-contributing members have the following obligations:

• To be responsible for the company’s debts and other property obligations within the amount of capital committed to contribute;

• Not allowed to participate in the management of the company, not to conduct business on behalf of the company;
• Comply with the company’s charter, resolutions and decisions of the Members’ Council;
• Other obligations as prescribed by the Law on Enterprises and the company’s charter.

Termination of partnership membership

– A general partner is terminated in the following cases:

Voluntarily withdrawing capital from the company;

• Dead, missing, restricted or incapacitated for civil acts, having difficulties in cognition and behavior control;
• Being expelled from the company;

a/ To serve an imprisonment penalty or be banned by a court from practicing certain professions or doing certain jobs as prescribed by law;

• Other cases prescribed by the company’s charter.

Welcoming new members

– The company can accept more general partners or capital contributors; The admission of new members of the company must be approved by the Members’ Council.

– General partners or capital contributors must fully pay the amount of capital committed to contribute to the company within 15 days from the date of approval, unless the Members’ Council decides otherwise.

– New general partners must be jointly liable with all their assets for the company’s debts and other property obligations, unless that member and the remaining members agree other.

Council members

– Council of members includes all members. The Members’ Council elects a general partner to be the Chairman of the Members’ Council and concurrently the Director or General Director of the company, unless otherwise provided for in the company’s charter.

– General partners have the right to request to convene a meeting of the Members’ Council to discuss and decide on the business of the company. The member requesting to convene the meeting must prepare the meeting agenda, agenda and documents.

– The Members’ Council has the right to decide on all business activities of the company. Unless otherwise provided for in the company’s charter, decisions on the following issues must be approved by at least three-quarters of the total number of general partners:

• Orientation and development strategy of the company;
• Amending and supplementing the company’s charter;
• Accepting new members;
• Approve general partners to withdraw from the company or decide to expel members;
• Decide on investment projects;
• To decide on borrowing and mobilizing capital in other forms, lending with a value of 50% or more of the company’s charter capital, unless the company’s charter stipulates a higher percentage;
• Decide to buy and sell assets with a value equal to or greater than the charter capital of the company, unless the company’s charter stipulates a higher percentage;
• Through the annual financial statements, the total profit divided and the profit divided among each member;
• Decision on dissolution; company bankruptcy petition.
• Decisions on matters other than those specified in Clause 3, Article 182 of the Law on Enterprises shall be adopted if approved by at least two-thirds of the total number of general partners; The specific ratio shall be prescribed by the company’s charter.
• The right to participate in voting of capital contributors shall comply with the provisions of the Enterprise Law and the company’s charter.

Managing the business of a partnership company

The general partners are the legal representatives of the company and the organization that runs the company’s daily business activities. Any restriction on a general partner in carrying out the day-to-day business of the company becomes effective against a third party only when that person is made aware of such restriction.

In running the company’s business activities, general partners assign each other to take on the positions of management and control of the company.

When some or all of the general partners carry out some business, the decision is adopted by majority approval.

Activities performed by general partners outside the scope of business activities of the company are not the responsibility of the company, unless such activities have been approved by the remaining members.

– The company can open one or several accounts at the bank. The Members’ Council appoints the authorized member to deposit and withdraw funds from such accounts.

The Chairman of the Members’ Council, the Director or General Director has the following obligations:

• Manage and run the company’s daily business as a general partner;
• To convene and organize meetings of the Members’ Council; sign resolutions and decisions of the Members’ Council;
• Assign and coordinate business activities among general partners;
• Organize, fully and honestly keep the accounting books, invoices, vouchers and other documents of the company in accordance with the law;
• Representing the company as a requester for settlement of civil matters, plaintiffs, defendants, persons with related interests and obligations before arbitration or courts; represent the company to exercise other rights and obligations as prescribed by law;
• Other obligations prescribed by the company’s charter.

Related article:

• PROCEDURES TO ESTABLISH PARTNERSHIP IN VIETNAM
• WHAT ARE RIGHTS AND OBLIGATIONS OF GENERAL PARTNERS IN A PARTNERSHIP IN VIETNAM?

Frequently asked question:

Services of LawyerX

Prestigious professional services: Firstly, the team of consultants and consultants for many years in the field of civil status, and customer support.

On-time: Certainly, with the motto “Get your lawyer right at your fingertips”, we ensure the service always performs on time. The rights and interests of customers always come first.

Cost: Besides, Lawyer X’s service costs are highly competitive; depending on the nature of the particular case. So, we want our guests to have the best possible service experience. Therefore, costs which guaranteed to be the most suitable and economical for customers.

Confidentiality of client information: Finally, all brand information of client Lawyer X will be 100% confidential.

Please contact us immediately if you have any questions about “Legal regulation of partnership in Vietnam”

Contact LSX Lawfirm

Finally, we hope this article is useful for you to answer the question about: “Legal regulation of partnership in Vietnam”. If you need any further information, please contact  LSX Law firm: +84846175333 or Email: [email protected]

Conclusion: So the above is Legal regulation of partnership in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com