Private enterprises in particular and the private economy in general in Vietnam are recognized quite late compared to enterprises of the state economic sector and collective economic organizations. The recognition of private enterprises has also produced many legal documents to regulate relationships in the private economy. So what is a private enterprise? What is the law on private enterprises? What is a legal entity? Today, LSX Lawfirm will give you an article about “Private enterprises according to the provisions of Vietnamese law“, as follows:
Legal grounds
Enterprise Law 2020
Civil Code 2015
Law on cadres and civil servants and the revised Law on Public Employees 2019
And Law on Public Employees 2010
The Law on cadres and civil servants 2008
Law on anti-corruption 2020.
What is a sole proprietorship?
According to Article 188 of the Enterprise Law 2020, a private enterprise is understood as follows:
- Firstly, A sole proprietorship is an enterprise owned by an individual who is solely responsible for all his assets for all activities of the business.
- Secondly, Private enterprises may not issue securities of any kind.
- Thirdly, Each individual is only entitled to set up a private enterprise. The owner of a private enterprise cannot concurrently be the owner of a business household or a general partner of a partnership.
- Finally, A private enterprise is not entitled to contribute capital to the establishment or purchase of shares or contributed capital in a partnership, limited liability company, or joint-stock company.
Accordingly, each individual may only establish one private enterprise, be self-employed, and cannot concurrently be the owner of a business household or a general partner of a partnership.
* Note: Those who are currently cadres, civil servants, and public employees will not be allowed to establish or manage an enterprise according to the provisions of Points Clause 2, Article 17 of the Law on Enterprises 2020 and Points b, d Clause 2, Article 20 of the Law on Anti-Corruption 2020.
What is the law on private enterprises?
Lawson private enterprises are set of legal provisions, related to operation regulations, organizational structure, relationships in private enterprises,… which rights and obligations. that the stakeholders have to do. The legal provisions for private enterprises are set forth in the Enterprise Law 2020 as follows:
1. Firstly, the investment capital of private business owners
- The investment capital of a private business owner register by the business owner himself. The owner of a private enterprise 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, it requires to clearly state the type of property, quantity and a residual value of each type of asset.
- 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 law.
- During the 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 fully recorded in the accounting books. In case the investment capital reduce 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.
2. Secondly, private enterprise management
- The owner of a private enterprise has full discretion overall business activities of the private enterprise, the use of profits after tax has paid, and other financial obligations fulfilled 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 sole proprietorship owner is still responsible for all business activities of the private enterprise.
- The 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, a person with related interests and obligations before arbitration. The court represents private enterprises to exercise other rights and obligations as prescribed by law.
3. Thirdly, leasing to a private enterprise
The owner of a private enterprise has the right to lease out his or her entire private enterprise but must notify in writing, enclosed with a notarized copy of the lease contract, the business registration authority, or tax authority within 03 months. working days from the effective date of the rental contract. During the lease term, the owner of the private business is still responsible before the law as the owner of the private business. The rights, obligations, and responsibilities of owners and tenants for the business activities of a private enterprise are specified in the lease contract,
4. Fourthly, selling a private business
- Private business owners have the right to sell their private businesses to other individuals or organizations.
- After the sale of a sole proprietorship; the owner of 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 business; unless the owner of the sole proprietorship transferred. The private enterprise, 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 purchaser of a private enterprise must register the change of the owner of a private enterprise in accordance with the provisions of this Law.
5. Fifthly, exercising the rights of private business owners in some special cases
- In case the owner of a private enterprise temporarily detained, is serving a prison sentence, or is serving an administrative handling measure at a compulsory detoxification establishment or compulsory education institution, he/she shall authorize another person to exercise his/her rights. and its obligations.
- And In case the owner of a private enterprise dies, the heir or one of the heirs according to the will or by law shall be the owner of the private business according to the agreement between the heirs.
- In case the heirs cannot reach an agreement, they shall register to convert into a company or dissolve such a private enterprise.
- In case the owner of a private enterprise dies without an heir, the heir refuses to receive the inheritance; or deprived of the right to inherit, the property of the owner of the private enterprise; shall handled according to the provisions of civil law.
- And In case the owner of a private business has limited or lost civil act capacity; has difficulties in perception and behavior control; the rights and obligations of the private business owner perform through a representative. In case the owner of a private enterprise banned by the Court from practicing certain professions or doing certain jobs within the scope of the business lines of the enterprise, the owner of the private enterprise shall suspend or terminate the relevant business lines according to the provisions of law. Court decision or transfer of private enterprise to another individual or organization.
6. Sixthly, the obligations of a sole proprietorship
- Satisfy the conditions for business investment when conducting business in conditional business lines; industries and professions with conditional market access for foreign investors in accordance with law and ensure that such conditions fully maintained throughout the course of business operations.
- To fully and promptly fulfill obligations regarding enterprise registration, registration of changes in enterprise registration contents, disclosure of information on the establishment and operation of enterprises, reports, and other obligations as prescribed by law This law.
- To take responsibility for the truthfulness and accuracy of information declared in the enterprise registration dossier and reports; in case of detecting inaccurate or incomplete declared or reported information, it must promptly amend and supplement such information.
- Organize accounting work, pay taxes and perform other financial obligations as prescribed by law.
- Ensuring the lawful and legitimate rights and interests of employees according to the provisions of law; non-discriminatory, offend the honor and dignity of employees in the enterprise; not mistreat labor, forced labor or illegally use juvenile workers; support and create favorable conditions for employees to participate in training to improve professional qualifications and skills; implement policies and regimes of social insurance, unemployment insurance, health insurance and other insurance for employees according to the provisions of law.
- Other obligations as prescribed by law.
What is a legal entity?
A legal person considered a legal entity has independent status and can participate in activities as prescribed by law. An enterprise has legal status when it fully meets the 4 conditions specified in Clause 1, Article 74 of the 2015 Civil Code as follows:
- Established in accordance with this Code and other relevant laws;
- Having an organizational structure as prescribed in Article 83 of this Code;
- Having assets independent of other individuals or legal entities and taking responsibility for their own property;
- Independently participate in legal relations on their own behalf.
Thus, in order for an enterprise to have legal status, it is necessary to fully satisfy the above 04 conditions and a number of other relevant legal provisions.
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Above is LSX Lawfirm’s advice on the content of the problem “Private enterprises according to the provisions of Vietnamese law“. And all the above knowledge to use in work and life. If you have any questions and need more advice and help, please contact the hotline for the reception. Lawyer X is a place that provides reputable and fast business services at reasonable prices. Customers will be extremely satisfied when using our services.
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Related questions
– Established and owned by an individual
– No legal status
– There is no enterprise capital contribution
– The business owner has the right to decide on all issues related to the operation of the business
– All profits of the business belong to the business owner.
– The ability to raise capital is still limited.
– Matters needing attention
+ Select a name.
+ Select headquarters upon establishment.
+ Choose a business line
+ Charter capital
– Steps to set up a private business
+ Drafting the establishment dossier, including A request for registration of a private enterprise, a valid copy of the personal identification paper of the business owner, and a written authorization if any.
+ Submit the application to the competent authority.
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