What is an enterprise? (Article 4.

7, LOE 2014)

Comparison: Own name

• Cooperative
• Business
Households/ Establishment
Sole proprietorship registration Assets

Enterprise
=
Organization

• Gain profits Conduct

regularly and Transaction office
Conduct business
professionally
• Involved parties are
traders/business
Exceptions: Education & Health care
entities
(Article 4.16 – LOE 2014)
 Limited liability
company

Joint stock company

Based upon legal
forms
Partnership company

Private enterprise

Enterprise Private owned

Based upon State owns 100% capital
ownership (Article 4.8, LOE 2014)
State owned
State owns 50% capital
(LOE 2005 & 2020)
Limited Liability
Base upon the scope of
liability of owner
Unlimited Liability 3
 What is a legal person/legal entity? (Article 74, Civil Code 2005)

In order to be a legal person, a company must has all the following features:

Lawfully Well-organized
establishment structure

Independently
Independent property
entering into civil
& liability
transactions
4
 LLC 1 LLC 2+ JSC PARTNERSHIP PRIVATE

Individual & Organization Individual

Establishment requirements
1 Max: 50 Min: 3 Min: 2 1

• GP/ULP: Unlimited
Scope of liability Limited Unlimited
• LP/LLP: Limited

Raise capital
Bonds only Shares and Bonds Limited partners Cannot raise capital
(Gọi vốn; Góp vốn)

• GP/ULP: Approval
Restricted Cannot transfer
Rights to transfer capital Freely Freely of other GP/ULP
(Article 51.2; 52; 53; 54; 68, LOE 2014) unless sell
• LP/LLP: Limited

Management power Full Contributed capital Amount of shares Number of members Full

Legal person Yes No

Which of those can be a state-owned enterprise? (Article 88, LOE 2014)

 Transfer Capital Withdraw Capital

Registered Capital Paid Capital

 What is a confusingly similar name? (Article 40, LOE 2014)

Example:
1. Doanh nghiep tu nhan Hoang Hao – Doanh nghiep tu nhan Hoan Hao
2. Cong ty TNHH mot thanh vien Binh Minh – Cong ty TNHH mot thanh vien Binh Minh 1
3. Cong ty TNHH TM AB – Cong ty TNHH TM A&B
4. Cong ty co phan Hoan Cau – Cong ty co phan Tan Hoan Cau
5. Cong ty hop danh Hoa Sen – Cong ty hop danh Hoa Sen mien nam
6. Doanh nghiep tu nhan Hoan Hao and Cong ty TNHH Hoang Hao
 How can enterprise re-organize? (Article 192 - 199, LOE 2014)
Forms or reorganisation
1 Division of enterprises
2 Separation of enterprises
3 Consolidation of enterprises
4 Merger of enterprises
5 Transformation of enterprises
Transformation:
1. LLC  JSC
2. JSC  LLC
3. Private  LLC
Which type of enterprises can be reorganised Consequences of the reorganisation
- Divided companies cease to exist
- Limited liability companies - New companies are established
- Joint stock companies - Separated companies still exist
- New companies are established
- New companies are established
- Partnership companies
- Consolidated companies cease to exist
- Limited liability companies
- No new companies
- Joint stock companies
- Merged companies cease to exist
- Limited liability companies
- Joint stock companies Transformed enterprises ceases to exist
- Private enterprises
Article 183 – 187, LOE 2014
 Who can establish a (private) enterprise? (Article 18 & 183, LOE 2014)

Example:
1. Minh, a 16-year-old high school student.
2. Hanh, a limited partner of ABC Partnership Company
3. Hao, a shareholder of Vin Group.
4. Hai, a police officer
5. Hoa, an owner of MTV Private Enterprise (an existing company)
6. Trung, a prisoner.
7. Trang, a member of TF Limited Liability Company
What is the owner’s scope of liability when sale or lease? (Article 186-187, LOE 2014)
Example 1:
According to the law on enterprises 2014, who will be liable for the debt in the following case? Nguyen Gia
private enterprise is owned by Long. In 2010 Long leased the enterprise to Dung for 2 years. Dung
employed My to work as a director in the enterprise. In 2011, My was authorized to take out a 2 billion
dong loan from OCB to buy a car valued at 3 billion dong for the enterprise. In 2015, OCB requested the
enterprise to pay off the due loan.
Example 2:
According to the law on enterprises 2014, who will be liable for the debt in the following case? Thanh was
the owner of Thien Thanh Private Enterprise. In January 2015 due to personal issues, Thanh was unable to
manage the enterprise. Therefore she sold the enterprise to Binh. In September 2015, Binh borrowed 200
million dong from An on behalf of the enterprise which had not been returned by March 2016. In January
2016, Tuan was appointed to help Binh operate the enterprise.
Article 172 – 182, LOE 2014
 What is the organizational structure? (Article 177, LOE 2014)

Can limited partners

join?
Elect from Chairman of
General Partners Member’s Council
Function:
Member’s Council

concurrently
Decide all

Can work
business matters

General Director/ Director

 How to convene meeting and pass resolution? (Article 177; 178, LOE 2014)

Necessary
Chairman of member’s council
Who convene? General partners’ requirement
Fail to
Any general partners convene

Normal cases: At least 2/3 total general partners

When pass
resolution?
Special cases: At least 3/4 total general partners
Note for special cases:
• Article 177.3, LOE 2014
 Who responsible for liability after terminating GP status? (Article 180, LOE 2014)

Example 1:
According to the law on enterprises 2014, which owners will be liable for the debt in the following case? Viet Cuong

Partnership Company had 4 general partners including Toan, Huong, Nghia and Van. In 2015, Toan decided to
withdraw his contributed capital and Van transferred her contributed capital to Nam. In March 2016, Vietinbank
requested the company to pay off the 5 billion dong loan from 2014.

Example 2:
According to the law on enterprises 2014, who will be liable for the debt in the following case? Hong Hai Partnership
Company was established by Hong and Hai. In 2010 Hong donated his capital to Nhat and Phuong who were approved

to become general partners of the company. In January 2012, Nhat withdrew his capital and Hai transferred his capital
to Ngan who was approved to become a general partner of the company. In December 2015, Vietcombank requested
the company to pay off the 10 billion dong debt which the company borrowed in 2009.
• LLC2+: Article 47 – 72, LOE 2014
• LLC1: Article 47 – 86, LOE 2014
 What is the organizational structure? (Article 55, LOE 2014)

Chairman of
Member’s Council
Elect
Member’s Council

• MC ≥ 11: compulsory
Inspection Board • MC < 11: optional

Can work General Director/

concurrently Director
 What is the organizational structure? (Article 78; 85, LOE 2014)

MODEL 1: MODEL 2:

Decide number Decide number

Company Owner Company Owner
Appoint Appoint
concurrently
Can work

Appoint
Chairman of

Appoint
Company Elect Member’s Council
Appoint President
concurrently
Can work

Inspector Member’s Council

Inspectors

General Director/ General Director/

Director Can work
Director
concurrently
 How to convene meeting? (Article 58; 59 & 79, LOE 2014)
Fail to
Chairman of Member’s Council convene
Who convene?
Member/ Group of members hold ≥ 10%
contributed capital

LLC1 LLC2+

𝟐 Attendees hold ≥ 65%

1st meeting ≥ members
𝟑 contributed capital

2nd meeting Attendees hold ≥ 50%

contributed capital

3rd meeting Irrespective

 How to pass resolution in meeting? (Article 60; 79, LOE 2014)

LLC1 LLC2+

1
Normal cases > attending members ≥ 65% total contributed capital of attendees
2

3
Special cases ≥ attending members ≥ 75% total contributed capital of attendees
4

How to know whether • Normal cases: Article 79.6, LOE 2014 • Normal cases: Article 60.3a, LOE 2014
normal or special? • Special cases: Article 79.6, LOE 2014 • Special cases: Article 60.3b, LOE 2014
Example 1:
According to the law on enterprises 2014, in order to pass a resolution on restructuring the following company in the
first meeting, it needs at least approvals of who in the following case. FED limited liability company (hereafter FED)
was established by Cosmos joint stock company (hereafter Cosmos). Cosmos appointed 4 representatives in FED
including Binh, Viet, Hoai and Trang. Binh is the chairman of the members council in FED who represents 6 billion
dong of the contributed capital while Viet represents 1 billion dong, Hoai 1 billion dong, and Trang 2 billion dong.
Trang is unable to attend the meeting.
Example 2:

In order to pass a resolution relating to annual financial statement, whose approval must the members council at least
have in the following case? Cao Viet Limited Liability Company has 5 members including Binh, Trang, Nguyen, Hieu
and Tuan. Trang and Hieu contributed 250 million dong (25% of the charter capital) each. Binh contributed 50 million
dong (5%) while Tuan contributed 170 million dong (17% of the charter capital). Nguyen contributed 280 million dong
(28 % of the charter capital). For the meeting, only Trang, Hieu and Tuan attends.
Article 110 – 171, LOE 2014
 How many type of shares? (Article 113, LOE 2014)

Voting? Transferring? Buying back? Converting?

Ordinary shares Y Y Restricted Y
Voting preference shares Y N Restricted Y
Dividend preference shares N Y Restricted N
Redeemable preference shares N Y Prioritized N

Which shareholders can join shareholders’ meetings in a joint stock company?

 What is the organizational structure? (Article 134, LOE 2014)

MODEL 1: MODEL 2:

General Meeting General Meeting

Of Shareholders Of Shareholders
Elect Chairman Of MB
Elect
Elect

Chairman Of MB

Elect
Elect Dependent
Management Board/ Management Board/ member
Control Board
Board Of Directors Board Of Directors
Independent
member
General Director/ Can work
General Director/ Can work
Director concurrently Director concurrently
 How to convene meeting? (Article 136; 153.8, LOE 2014)

Management Board General Meeting Of Shareholders

𝟑
1st meeting ≥ members Attendees hold ≥ 51% votes
𝟒

𝟏
2nd meeting > members Attendees hold ≥ 33% votes
𝟐

3rd meeting Irrespective

• Management Board
• Chairman of
Who • Control Board
Management Board
convene? • Shareholders or Group of shareholders ≥ 10% of total shares
• Individual who give request
 How to pass resolution in meeting? (Article 144; 153.9, LOE 2014)
Management Board General Meeting Of Shareholders

Written Direct votes

Written opinions Direct votes at meeting
opinions at meeting

Normal cases ≥ 51% total votes of

𝟏 attendees
≥ attending members ≥ 51% total votes
𝟐 ≥ 65% total votes of
Special cases
attendees

How to know • Normal cases: Article

Can votes from
unattended Can votes from unattended 144.2, LOE 2014
whether normal
members be shareholders be counted? • Special cases: Article
or special? counted? 144.1, LOE 2014
Article 135.2 &
What is the scope Article 136.2, LOE 2014
Article 149.2, LOE 2014 Article 143.2, LOE 2014
of decision? (Excluding scope from
Article 143.2, LOE 2014)
Example 1:
According to the law on enterprises 2014, in order to pass a resolution on the price of shares offered for sale in the
first meeting, it needs approvals of who in the following case. The management board of Nuvento Joint Stock
Company has 7 members including Ngoc, Thuy, Hien, Trang, Nguyet, An and Quynh. Thuy and An are unable to attend
the meeting while Ngoc disagrees with the resolution.
Example 2:
According to the law on enterprises 2014, in order to pass annual financial statements, shareholders general meetings
in Joint Stock Companies need to gain at least approvals of………………………………..

a. Shareholders who hold at least 51% of the total vote

b. Shareholders who hold more than ½ of the total vote of all attending shareholders.
c. Shareholders who hold at least 65% of the total vote
d. None of above
Example 3:

DECISION WHO
Buy back 35% issued shares
Issue 500,000 ordinary shares
Pay $10 dividend per share
Purchase a hotel valued 20% total assets
Buy back 15% issued ordinary shares
Pay dividend at the end of each quarter
Offer $10 per new issued share
 What is cumulative vote? (Article 144.3, LOE 2014)

𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝑣𝑜𝑡𝑒𝑠
= 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑡ℎ𝑒 ℎ𝑜𝑙𝑑𝑖𝑛𝑔 𝑠ℎ𝑎𝑟𝑒𝑠 × 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑡𝑜 𝑏𝑒 𝑒𝑙𝑒𝑐𝑡𝑒𝑑 𝑚𝑒𝑚𝑏𝑒𝑟𝑠 𝑜𝑓 𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝐵𝑜𝑎𝑟𝑑

Example 1:
Thuong is a shareholder of Clinell Joint Stock Company (hereafter Clinell) who is holding 300 ordinary, 150 voting and

50 redeemable preference shares. In July 2017, Clinell has to select 5 new members of the director board out 9
candidates. How many vote will Thuong have in this case?
 Why cumulative vote?

Without • 300 ordinary shares

cumulative vote • 150 voting shares
• 50 redeemable
preference shares
Maximum votes can get:
450 votes

With Total shares: 450

cumulative vote

Maximum votes can get:

2250 votes 5 members
 When a company is bankrupt? (Article 4.2; 79, LOB 2014)
BANKRUPT DISSOLUTION
Operation duration
expires
Decision of owners
Insolvency In insolvency Require minimum
Reason numbers no longer
situation
remaining for 6
consecutive months
Registration
BANKRUPT withdrawn
Business
Authority to settle Court
registration office
Does not always
Terminate
Declaration Outcome terminate
operations
of court operations
Managers banned
No restrictions
to hold posts in a
State’s attitude applied for
set of period of
managers
time
 When a company/ cooperative is insolvent? (Article 4.1, LOB 2014)

Failure to pay due debts within 3 months

Lose capability of payment = Does not own assets?

Example:
1. Thuong Tin Limited Liability Company is unable to pay 1 million dong due debt for more than 4 months.
2. Binh Minh Joint Stock Company has no property left and took out a loan from a bank to pay off its 3 billion dong
due debt.
3. A&Z Private enterprise has still not paid off its 1 billion dong due debt for over 180 days.
4. Hoang Ha limited liability company which has no property left got a loan from a friend to pay off due debt of 3
billion dong.
5. Binh Minh Joint stock company has not paid its director s salary for 6 months
6. Hoang Gia private enterprise has not paid 1 million dong under a service contract for 1 years since the due day
NOTES:
Reflects serious financial difficulties

Does not mean having no property left

Not always shown in the appearance

Does not matter how much debt an

enterprise/cooperative cannot pay

Does not always result in bankruptcy

Who can send bankruptcy request? (Article 26; 27 & 28, LOB 2014)

Classification Period Of Time

CREDITORS Unsecured debts || Secured debts
After 3 months
EMPLOYEES Employees || Internal/ Superior trade union
• Private: Company owner
• Partnership: General Partner
• LLC1: Company Owner
• LLC2+: Chairman Of Member Council
ENTERPRISES/ • JSC:
When entity is insolvent
COOPERATIVES o Chairman Of Management Board
o Shareholder/ Group of shareholders
hold ≥ 20% of total ordinary share
consecutively in ≥ 6 months
• Cooperative: Representative at law
Example 1:
According to the law on bankruptcy 2014, who can request for a bankruptcy process in the following case? OTS
Limited Liability Company has three members including Ngoc (25% of the charter capital), Thang (65% of the charter
capital), and Duy (10% of the charter capital). Ngoc is the representative in law and Duy is the chairman of the
member s council. In 2013, the company mortgaged its office which was valued at 10 billion dong to take out a 6
billion dong loan from Citybank.
Example 2:
According to the law on bankruptcy 2014, who can request for a bankruptcy process in the following case? Jesson

Limited Liability Company has three members including An (25% of the charter capital), Thinh (45% of the charter
capital), and Thuong (30% of the charter capital). Thuong is the representative in law and Thinh is the chairman of the
member s council. In 2013, the company mortgaged its office which was valued at 10 billion dong to get 6 billion dong
loan from Citybank.
 Where to send bankruptcy request? (Article 8, LOB 2014)

Provincial people’s court District people’s court

(entities registered in) (the headquarter located in)

Overseas assets or
involving entities Cases not under the
competence of the
Branches/representative office provincial people’s
located in district of various court
provinces

Real estate in district of

various provinces
What about high court
Complicated bankruptcy cases
under the competence of
and supreme high court?
district people’s court
 What the difference between regular and simplified procedures?
When can a
Regular: Simplified:
bankruptcy be
settled by a
Request for a Request for a
bankruptcy
simplified bankruptcy
process procedure? process
(Article 105.1,
LOB 2014)
Accept the Dismiss the Accept the Dismiss the
request request request request

Refuse to Refuse to
Initiate Initiate
initiate initiate
bankruptcy bankruptcy
bankruptcy bankruptcy
process process
process process

Declare Declare
Resume Resume
bankrupt and bankrupt and
business business
liquidate liquidate
operations operations
assets assets
 How to declare a bankruptcy? (Article 79; Article 81.2, LOB 2014)

CREDITOR’S
MEETING

Who attend: creditor (secured, unsecured & partly secured creditors)

When perform: ≥ 51% total unsecured debts

How convene?
What decided: Declaration bankruptcy OR Resume operations

𝟏
When ratified: > attending unsecured debts AND presenting ≥ 65% total unsecured debts
𝟐
Example :
According to the law on bankruptcy 2014, in order to resume business operations, the following insolvent enterprise

needs at least approvals of who in the following case. In 2013, Mezamart Limited Liability Company took out a 10
billion dong loan from Daikin Joint stock company which was secured by a property valued at 8 billion dong, while it
borrowed from Toan 2 billion dong and from Huong 1 billion dong. In 2014, the company entered into a construction

contract, which was valued at 15 billion dong, to build a factory in Binh Duong with Becamex Limited liability
Company. In December 2015, the company was in an insolvent situation and decided to request for a bankruptcy
process. Til December 2015, the company still owed Becamex Limited Liability Company 5 billion dong. Daikin Joint
Stock Company disagrees with the resolution on resuming the business operation.
What if Creditor’s Meeting pass resolution to resume operation?

Enterprises/ Make plans within 30 days

Cooperatives
Get plan ratified: approvals from ≥ 51% total unsecured debts
MUST
Implement plan within 3 years
F
A
I
L

Liquidate asset
Suspend Declare
implementation bankrupt
Redistribute asset
How does bankruptcy affect the creditors and managers? (Article 130, LOB 2014)

SUBJECTS EFFECTS
Creditors Debt collection risks
Chairman, general directors,
Can not hold such
directors, members of
Attention: post in any other
management board – 100% state
Article state-owned company
owned companies
130.4,
LOB 2014 Can not be a manager
Managers Representatives of the capital
in any state-invested
contribution of the state
company
Can not be a manager
Managers of bankrupt entities of any entities for 3
years