The partnership is a typical form of enterprise in business markets. Viet Nam Law on Enterprises has clear regulations on the legal status of partnerships. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I would like to ask what are characteristics of the partnership according Viet Nam law? What are rights and obligations of this form of enterprises? Thanks for answering me!”
Legal grounds
Viet Nam Law on Enterprises
What is a partnership?
– A partnership is an enterprise in which:
+ There are least 02 partners that are joint owners of the company and do business under the same name ((hereinafter referred to as “general partner”). There can be limited partners in addition to general partners;
+ A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets;
+ A limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital contribution.
– A partnership has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
– A partnership must not issue any kind of securities.
Capital contribution and issuance of the capital contribution certificate
– General partners and limited partners shall contribute capital fully and punctually as promised.
– A general partner who fails to contribute capital fully and punctually as promised and thus causes damage to the company shall pay compensation.
– In case a limited partner fails to contribute capital fully and punctually as promised, the uncontributed capital shall be considered that partner’s debt to the company, in which case the limited partner can be excluded from the company under a decision of the Board of Partners.
– When capital is fully contributed, the partner shall be granted the capital contribution certificate, which shall contain the following information:
+ The company’s name, EID number, headquarter address;
+ The company’s charter capital;
+ Full name, signature, mailing address, nationality and legal document number if the partner is an individual; EID number or legal document number, headquarters address if the partner is an organization; type of partner;
+ The value of capital contributed and types of contributed assets;
+ The number and date of issuance of the certificate of capital contribution;
+ Rights and obligations of the certificate holder;
+ Full names and signatures of the certificate holder and the company’s general partners.
– In case the capital contribution certificate is lost or damaged, the partner will be reissued with another certificate by the company.
A partnership’s assets
A partnership’s assets include:
– Assets that are contributed by the partners and have been transferred to the company;
– Assets created under the partnership’s name;
– Assets obtained from business activities performed by general partners on behalf of the company and from business activities of the partnership performed by general partners in their own names;
– Other assets prescribed by law.
Rights and obligations of general partners
– A general partner has the rights to:
+ Participate in meetings, discuss and vote on the partnership’s issues; each general partner shall have one vote or a specific number of votes specified in the partnership’s charter;
+ Do business in the partnership’s business lines on its behalf; negotiate and enter into contracts, transactions or agreements under conditions that the partner believes to be most beneficial to the partnership;
+ Use the partnership’s assets to do business in its business lines. In case a general partner advances money to do business on behalf of the partnership, he/she is entitled to request the partnership to reimburse the principal and interest thereon at market rate;
+ Request the partnership to pay compensation for damage that is not on account of that partner.
+ Request the partnership and other general partners to provide information about the partnership’s business performance; inspect the partnership’s assets, account records and other documents where necessary;
+ Receive distributed profits in proportion to his/her stake or as agreed;
+ Receive the remaining assets in proportion to his/her stake upon the partnership’s dissolution or bankruptcy unless another ratio is specified in the charter;
+ When a general partner dies, his/her hair shall receive a value of assets minus the partner’s debts and other liabilities. The heir may become a general partner if accepted by the Board of Partners;
+ Other rights prescribed by this Law and the company’s charter.
– A general partner has the following obligations:
+ Manage and do business in an honest and prudent manner to ensure the partnership’s lawful and best interests;
+ Manage and do business in accordance with law, the charter, resolutions and decisions of the Board of Partners; pay compensation for the damage caused by his/her violations of these;
+ Do not use the partnership’s assets for personal gain or to serve the interests of any other organization or individual;
+ Return to the partnership the money or assets that he/she received when doing business in his/her own name, in the partnership’s or another person’s name and has not returned to the partnership and pay for any damage caused by this action;
+ Jointly pay the partnership’s remaining debts (if any) after all of the partnership’s assets are used to pay them;
+ Incur the loss that is proportional to his/her stake or as agreed in the charter in case the partnership makes a loss;
+ Submit monthly written reports on his/her performance to the partnership; provide information on his/her performance for other partners on request;
+ Other obligations prescribed by Law and the charter.
Rights and obligations of limited partners
– Limited partners have the rights to:
+ Participate in meetings, discuss and vote at the meetings of the Board of Partners on revisions to the charter, changes in rights and obligations of limited partners, reorganization and dissolution of the company and other contents of the charter directly affecting their rights and obligations;
+ Receive distributed profits in proportion to their holdings;
+ Be provided with the partnership’s annual financial statements; request the President of the Board of Partners and general partners to fully and accurately provide information about the partnership’s business performance; examine accounting books, records, transactions and other documents of the company;
+ Transfer their stakes to other persons;
+ Do business within the partnership’s business lines in their own names in other persons’ names;
+ Leave as inheritance, give away, pledge or otherwise dispose of their stakes in accordance with regulations of law and the charter. In case a limited partner dies, his/her heir shall be a new limited partner;
+ Receive part of the partnership’s remaining assets in proportion to their holdings in case the partnership is dissolved or goes bankrupt;
+ Other rights prescribed by Law and the company’s charter.
– Limited partners have the obligations to:
+ Take on a liability for the partnership’s debts and other liabilities which is equal to their promised capital contribution;
+ Do not participate in administration of the partnership; do not do business in the partnership’s name;
+ Comply with the partnership’s charter, resolutions and decisions of the Board of Partners;
+ Other obligations prescribed by Law and the partnership’s charter.
The Board of Partners
– The Board of Partners consists of all partners and shall elect a partner as the President of the Board of Partners, who may concurrently hold the position of Director/General Director of the partnership unless otherwise prescribed by the charter.
– A general partner is entitled to request a meeting of the Board of Partners to discuss and decide its business. The requesting partner shall prepare the meeting documents and agenda.
– The Board of Partners is entitled to decide all business activities of the partnership. Unless otherwise prescribed by the charter, the following issues are subject to approval by at least three fourths (3/4) of the general partners:
+ Orientation for development of the partnership;
+ Revisions to the charter;
+ Admission of new partners;
+ Permission for withdrawal or exclusion of a partner;
+ Investment in projects;
+ Taking of loans and other methods for raising capital; granting a loan that is worth at least 50% of the partnership’s charter capital, unless a higher rate is prescribed by the charter;
+ Purchase or sale of assets that whose value is equal to or greater than the partnership’s charter capital, unless a higher value is prescribed by the charter;
+ Ratification of the annual financial statement, total distributable profit and distributed profit of each partner;
+ Dissolution or bankruptcy of the company.
– Other issues that are not mentioned in Clause 3 of this will be ratified if approved by at least two thirds (2/3) of the general partners; a specific ratio shall be specified in the charter.
– The rights to vote of limited partners shall comply with this Law and the charter.
Business administration of partnerships
– Partners are the partnership’s legal representative and shall administer its everyday business. A limitation to general partners is only applied to a third party when it is known by the third party.
– General partners shall assume different managerial positions in the partnership under agreement.
When some or all general partners perform certain business activities together, it will be decided under the majority rule.
A general partner’s activities beyond the scope of operation of the partnership are not responsibility of the partnership unless they are accepted by the other partners.
– A partnership may open one or some bank accounts. The Board of Partners authorize certain partners to deposit and withdraw money from such account.
– The President of the Board of Partners, the Director/General Director has the following rights and obligations:
+ Manager the partnership’s everyday business as general partners;
+ Convene and organize meetings of the Board of Partners; sign resolutions and decisions of the Board of Partners;
+ Assign tasks and coordinate operation of general partners;
+ Organize and fully retain accounting records, invoices and other documents of the partnership as prescribed by law;
+ Represent the company in civil proceedings, as the plaintiff, defendant, person with relevant interests and duties in front of the court or arbitral tribunal; represent the company in performance of other rights and obligations prescribed by law;
+ Other obligations specified in the charter.
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Frequently asked questions
Yes! General partners and limited partners shall contribute capital fully and punctually as promised.
A general partner who fails to contribute capital fully and punctually as promised and thus causes damage to the company shall pay compensation.
In case a limited partner fails to contribute capital fully and punctually as promised, the uncontributed capital shall be considered that partner’s debt to the company, in which case the limited partner can be excluded from the company under a decision of the Board of Partners.
Conclusion: So the above is The legal status of partnerships under Viet Nam Law on Enterprises. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
