Violation of business without a license in Vietnam

by Quang Minh

Many individuals and organizations do business but do not register with the State agency in recent days. Besides, many of them do not have a license to perform business in conditional lines. This violation causes a business to take responsibility before the law. So, in this article, LSX legal firm will inform you about: “Violation of business without a license in Vietnam”

  • Law on Enterprise 2020
  • Decree 01/2021/ND-CP
  • Decree 122/2021/ND-CP

Business license

Business License: a type of paper issued to enterprises with conditional business lines. This type of paper is usually issued after the Certificate of Business Registration. 

According to Clause 1, Article 8 of the Law on Enterprise 2020:

Article 8. Obligations of enterprises

1. Maintain the fulfillment of conditions for conducting restricted business lines and business lines restricted to foreign investors (hereinafter referred to as “restricted business lines”) prescribed by law throughout the course of business operation.”

The business condition means the requirements that an enterprise must have or must fulfill when conducting business in a specific line of business such as a business license, certificate of business eligibility, practice certificate, certificate of professional liability insurance, legal capital requirements, or other requirements). In fact, we often refer to all these papers as business licenses for short.

A business registration certificate is not necessarily a business license because the business registration certificate is an individual or organization’s registration and a business license is an individual or organization’s application for a permit to operate business.

In which case do business must have a license?

According to Article 7 of the Commercial Law 2005, traders must register their business according to regulations. 

Trader means individuals or organizations conducting commercial activities independently, regularly, with business registration, operating in industries, geographical areas, and other forms not prohibited by law.

Currently, there are many forms of business such as cooperative, business establishment, individual business household… However, the most popular business model that many people know is individual business households. On the other hand, the law regulates the business registration obligations as follows:

  • Apply for enterprise registration; register changes to enterprise registration information; publish information about the establishment and operation of the enterprise; submit reports and fulfill other obligations prescribed by this Law (Clause 2, Article 8 of the Law on Enterprise 2020).
  • Households engaged in agriculture, forestry, aquaculture, salt production, street vendors, nomadic or seasonal businesspeople, and service providers earning low revenues are not required to apply for the establishment of household businesses, except for conditional business lines. The provincial People’s Committees shall specify the low revenues applied within their provinces (Clause 1, Article 3 of Decree 01/2021/ND-CP).
  • Individuals who trade in street vendors, trade in small businesses, trade in trips, polish shoes, lottery tickets, repair cars, keep cars, wash cars, cut hair, etc. are not subject to business registration (Clause 1, Article 3 of the Decree). 39/2007/ND-CP).

Thus, in addition to the above cases, businesses must register with the state. When following the correct order and procedures for business registration, the organization or individual will be granted a Certificate of Business Registration (for enterprises); Certificate of business household registration (for household businesses).

The fine for doing business without a license?

According to Decree 122/2021/ND-CP, fines for violations of business registration:

  • Firstly, doing business in the form of an enterprise without registration: 50-100 million VND. Also, forced to register to establish a business.
  • Secondly, still doing business after having the business registration certificate revoked or asked to suspend business or suspend operations: 50-100 million VND.
  • Thirdly, still doing business in conditional lines despite the business registration agency’s request to suspend: 15-20 million VND.
  • Also, still setting up a business household even though not allowed, or did not register a business household in case required to register: 5 – 10 million VND.
  • Continue doing business in conditional lines even though the business registration office of the district has asked to suspend: 10-20 million VND.
  • Lastly, resume doing business before the announced deadline but failing to send a written notice to the district-level registrar where it has registered: VND 5 – 10 million.

So, doing business without a license will be administratively sanctioned according to the above levels. Currently, business registration procedures are not too complicated, organizations and individuals must register their businesses to not be fined.

LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:

  • Legal advice related to new regulations in business suspension;
  • Representing in drafting and editing documents;
  • We commit the papers to be valid, and legal for use in all cases;
  • Represent to submit documents, receive results, and hand them over to customers.

With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.

Furthermore, using our service, you do not need to do the paperwork yourself, We guarantee to help you prepare documents effectively and legally.

Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.

After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.

Content of the enterprise registration application form?

Firstly, The enterprise’s name;
Secondly, The enterprise’s headquarters, phone number, fax number, email address (if any);
Thirdly, The enterprise’s business lines;
Fourthly, The charter capital (or investment capital if the enterprise is a sole proprietorship);
Next, Types of shares, face value of each type and total authorized shares of each type if the enterprise is a joint stock company;
Also, Tax registration information;
Expected quantity of employees;
Full name, signature, mailing address, nationality and legal documents of each partner (for partnerships) or the owner (for sole proprietorships);
Lastly, Full name, signature, mailing address, nationality and legal documents of the legal representative (for limited liability companies and joint stock companies).

Application for registration of a limited liability company?

1. The enterprise registration application form.
2. The company’s charter.
3. The list of members.
4. Copies of:
a) Legal documents of members who are individuals and legal representatives;
b) Legal documents of members that are organizations, documents about designation of authorized representatives and their legal documents.
Legalized copies of legal documents of the members that are foreign organizations.
c) The Certificate of Investment Registration of foreign investors as prescribed by the Law on Investment.

Which subject is granted a business registration certificate?

Domestic enterprises, economic organizations, and foreign-invested economic organizations.

Contact LSX

Finally, hope this article is useful for you to answer the question about “Violation of business without a license in Vietnam”. If you need any further information, please contact  LSX Law firm+84846175333 or Email: [email protected]

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