Private enterprise is one of enterprise types prescribed in Vietnam’s law on enterprises. Private enterprise has distinct characteristics compared to other types of enterprises in Vietnam. Therefore, private enterprise owners also have certain rights and obligations prescribed in enterprise law. In this article, Lawyer X will provide Vietnam legal regulations of rights and obligations of private enterprise owners.
Legal grounds
Vietnam Law on Enterprises 2020
What is private enterprise? What is private enterprise’s owner?
Enterprise means an organization that has a proper name, assets, premises, is established or registered in accordance with law for business purposes. According to Law on Enterprises 2020, there are four types of enterprises including: Private enterprises, Partnerships, Limited Liability Companies, and Shareholding Companies.
Private Enterprise is an enterprise owned by only one individual who shall be liable for entire business operations of the enterprise to the extent of all his or her assets. Private enterprise owner can be examined as the person contributing 100% capital to the enterprise. Therefrom, it could be seen that a private enterprise has some following characteristics:
– Private enterprise owner is just individuals
– Assets liability of private enterprise owner is unlimited liability, which means private enterprise owner shall be liable for all business operations of the enterprise to the extent of all his/her assets.
Rights and obligations of private enterprise owners
Rights and obligations of private enterprise owners hence are mentioned in parallel following some business operations of the enterprise, including:
Private enterprise establishment
Each individual only has the right to establish one private enterprise. Private enterprise owners can not concurrently own a household business or hold the position of general partner of a partnership.
Registering, managing capital in private enterprise
– The capital of a private enterprise shall be registerd by its owner. The private enterprise’s owner shall register the accurate amounts of capital in VND, convertible currencies, gold and other assets, types and quantities of assets.
– All the capital, including loans and leased assets serving the private enterprise’s operation, shall be fully recorded in its accounting books and financial statements as prescribed by law.
During its operation, the sole proprietorship’s owner is entitled to increase or decrease its capital. The increases and decreases in capital shall be fully recorded in accounting books. In case the capital is decreased below the registered capital, the decrease may only be made after it has been registered with the business registration authority.
Administration of private enterprises
– The private enterprise’s owner has total authority to decide all of its business activities, use of post-tax profit and fulfillment of other financial obligations as prescribed by law.
– The owner may directly or hire another person to hold the position of Director/General Director. In case of a hired Director/General Director, the owner is still responsible for every business activity of the enterprise.
– The private enterprise’s owner is its legal representative who will represent it during civil proceedings, as the plaintiff, defendant or person with relevant interests and duties before the court and arbitral tribunals, and in performance of other rights and obligations prescribed by law.
Leasing out a private enterprise
The private enterprise’s owner is entitled to lease out the entire private enterprise, provided a written notification and certified true copies of the lease contract are submitted to the business registration authority and tax authority within 03 working days from the effective date of the contract. During the lease term, the private enterprise’s owner is still legally responsible as its owner. The rights and obligations of the owner and the lessee to the private enterprise’s business operation shall be specified in the lease contract.
Selling a private enterprise
– The private enterprise’s owner is entitled to sell it to another organization or individual.
– After selling the private enterprise, the owner is still responsible for its debts and liabilities that occur before the date of transfer, unless otherwise agreed upon by the owner, the buyer and the creditors.
– The private enterprise’s owner and the buyer shall comply with labor laws.
– The buyer of the private enterprise shall register the change of owner in accordance with law on enterprises.
Exercising the owner’s rights in special cases
– In case the private enterprise’s owner is detained, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, he/she shall authorize another person to perform his/her rights and obligations.
– In case the owner dies, his/her heir or one of the legal heirs or designated heirs shall be the owner under an agreement among the heirs. In case such an agreement cannot be reached, the private enterprise shall be converted into a company or dissolved.
– In case of the owner dies without an heir or the heir refuses the inheritance or is disinherited, the owner’s assets shall be handled in accordance with civil laws.
– In case the owner is incapacitated, has limited legal capacity or has difficulty controlling his/her behaviors, his/her rights and obligations shall be performed through his/her representative.
– In case the private enterprise’s owner is banned by the court to do certain jobs in the enterprise’s business lines, the owner shall suspend or stop doing business in the relevant business lines or transfer the private enterprise to another organization or individual.
Related article:
- Procedures for setting up an insurance business in Vietnam
- Conditions for foreigners to establish a company in Vietnam
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We hope this article is useful for you to answer the question about: “What are rights and obligations of private enterprise owners?”. If you need any further information, please contact LSX Law firm: at +84846175333 or Email: [email protected]
Related questions
Yes! The owner may directly or hire another person to hold the position of Director/General Director. In case of a hired Director/General Director, the owner is still responsible for every business activity of the enterprise.
No! The private enterprise’s owner is its legal representative. Prive enterprise’s owner can be both an owner and a director, but in the case of a hired Director, it is a must to distinguish the owner is its legal representatives
Conclusion: So the above is What are rights and obligations of private enterprise owners in Vietnam?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
