SOLE PROPRIETORSHIP &

BUSINESS HOUSEHOLD

Assoc.Prof.Dr. Dư Ngọc Bích

SOLE PROPRIETORSHIP

Assoc.Prof.Dr. Dư Ngọc Bích

 CHARACTERISTICS (Article 188)
▪ owned by an individual (the owner) who is liable for all
activities of the enterprise with all his/her assets.
▪ Each individual may establish only one sole proprietorship.
The owner must not concurrently be a business household
owner or a partner in a partnership.
▪ Sole proprietorship may not issue securities of any type.

▪ Sole proprietorship may not contribute capital for the

establishment of, or purchase shares or capital contributions
in, a partnership, limited liability company or joint stock
company.
 Registration dossier (Article 19)
1. A written request for enterprise registration.

2. Copy of the legal paper of the owner

 Investment capital of the sole owner (Article 189)
▪ The owner shall:

➢ himself/herself register his/her investment capital.

➢ The owner is obliged to register accurately the total investment capital,
specifying the amounts in Vietnam dong, freely convertible foreign
currencies, gold and other assets; for the amount in other assets, the
types of asset, quantity and residual value of each type of assets.

▪ All capital and assets, including loans and leased assets, which are used
for the business operations of an enterprise, shall be recorded fully in its
accounting books and financial statements in accordance with law.
▪ The owner may increase or reduce his/her capital amount invested in the
business operations of the enterprise:
➢ be recorded fully in the accounting books.
➢ The owner may reduce the investment capital below the amount of
investment capital registered only after registration with the business
registration agency.
▪ assets used for business operations of the owner of

a sole proprietorship are not required to carry out the

procedures for the transfer of their ownership to the
enterprise.
 Management of sole proprietorships (Article 190)
▪ The owner has total discretion:
➢ in making decisions on all business operations of the sole proprietorship;
➢ in deciding on the use of profits after paying taxes and fulfilling other financial
obligations in accordance with law.

▪ The owner may:

➢ personally act as the Chief Executive Officer to manage and administer
business operations; or
➢ employ another person to do so. The owner shall remain responsible for all
business operations of the sole proprietorship.

▪ The owner shall act as the at-law representative representing the sole
proprietorship as a petitioner for the resolution of civil matters, plaintiff,
defendant or person with related interests and obligations in arbitration or
court proceedings, or representing the sole proprietorship to exercise
other rights and perform other obligations in accordance with law.
 Lease of enterprises (Article 191)
▪ The owner may lease his/her whole enterprise

▪ a written notice and a notarized copy of the lease contract

sent to the business registration agency and the tax agency
within 3 working days after the lease contract becomes
effective.
▪ During the lease term, the owner shall remain responsible
before law as the owner of the enterprise.
▪ The rights and responsibilities of the owner and the lessee
with respect to the business operations of the enterprise shall
be provided in the lease contract.
 Sale of the enterprise (Article 192)

▪ The owner may sell his/her enterprise to another

person/organisation.
▪ After selling the enterprise, the owner shall remain liable for all
debts and other property obligations of the enterprise incurring
before the date of handing over the enterprise, unless
otherwise agreed by the owner, the purchaser and creditors of
the enterprise.
▪ The owner and the purchaser must comply with the labor law.

▪ The purchaser shall register for the change of the owner of the
enterprise in accordance with this Law.
Exercise of the rights of the owner of a sole proprietorship in a
number of special cases (Article 193)
▪ the owner (in temporary detention, in jail, at a compulsory drug rehabilitation
establishment or compulsory educational institution):
➢ authorize another person to exercise rights and perform obligations.

▪ the owner dies:

➢ his/her heir or one of the heirs by testament or by law shall become the owner as so
agreed upon among the heirs.
➢ fail to reach an agreement, they shall register the sole proprietorship into a company
or dissolve the sole proprietorship.
➢ without any heir or the heir disclaims the inheritance or is deprived of the right to
inherit, the property of the owner of the sole proprietorship shall be handled in
accordance with the civil law
▪ the owner’s civil act capacity restricted or lost or difficulty in perceiving and
controlling his/her acts: exercised and performed by a representative.
▪ the owner banned by a court from practicing certain professions or performing
certain jobs related to business lines and sectors of the sole proprietorship:
suspend or terminate business operations in these relevant sectors and lines
under court rulings or transfer the sole proprietorship.
BUSINESS HOUSEHOLD
 BUSINESS HOUSEHOLD

A Business household (Article 79 of Decree 01/2021)

▪ establishment by an individual or members of the household,
▪ responsible for the business operation with all of their property.
▪ The individual or a member of a household authorized to be
the representative of business household is the owner of the
business household.
▪ Households engaged in agriculture, forestry, aquaculture or
salt production, peddlers, petty food sellers, traders from a
distance, itinerant business people, and service providers
earning low incomes: not be required to conduct the
registration of business households, except for cases of
engaging in conditional business lines.
 The right to establish business households and the obligation
of business households to register (Art.80 of Decree 01/2021)
▪ Who can establish business households ?: Vietnamese citizens and
full civil act capacity, except for the following cases:
➢ Minors, persons with limited civil act capacity; people with loss of civil act
capacity; people with cognitive or behavioral difficulties;
➢ Persons being examined for penal liability, being held in custody, serving
a prison sentence, serving an administrative handling measure at a
compulsory detoxification establishment or a compulsory education
institution, or banned by the Court from holding certain positions, from
practicing certain occupations or doing certain jobs;
▪ register for only one business household nationwide
▪ have the right to contribute capital, buy shares or capital contribution
portions of enterprises in his/her own capacity.
▪ Cannot be concurrently the owner of a private enterprise, or the
general partner of a partnership unless otherwise agreed by the other
general partners.
Rights and obligations of the owners of business households and
members of households (Art 81 of Decree 01/2021)

▪ The owners of business households:

➢ perform tax obligations, financial obligations and business
activities.
➢ represent as the petitioners of civil matters, plaintiffs, defendants,
persons with related interests and obligations before the
Arbitration, the Court and other rights and obligations.
➢ can hire other people to manage and operate business activities.
In this case, the owners, household members still be responsible
for debts and other property obligations arising from business
activities.
▪ The owners of business households, household members shall
be responsible for business activities of their business
households.
 Business locations of business households
(Art. 86 of Deree 01/2021)
▪ The business location of a business household: where such

business household conduct its business activities.

▪ A business household might conduct its business activities in a

number of different business locations but must select a fixed

location for registration of the business household headquarter and
must notify the tax administration agency, the market surveillance
agency of the business locations other than the business
household headquarter.
Registration of business households (Art. 87 of Decree 01/2021)

The dossier of business household registration shall include:

▪ A written request for registration of business households;
▪ Legal documents of individuals for business household owners,
household members;
▪ A copy of minutes of meeting of household members on the
establishment of the business household in cases where household
members conduct business household registration;
▪ A copy of a power of attorney of household members for a member
to own the business household in cases where household members
conduct business household registration.
 Business household registration certificates
(Article 82 Decree 01/2021)
Business households shall be granted the business household registration

certificate when satisfying all of the following conditions:

a) The registered business line is not prohibited;

b) The name of the business household is set in accordance with provisions

in Article 88 of this Decree;

c) Having a valid dossier of registration for business household;

d) Settle all fees of registration for business households in accordance with

law provisions.
Naming of business households (Art. 88 of Decree 21/2021)

▪ Each business household must have its own name. The name of
business households shall consist of two elements:
➢ The business type “Hộ kinh doanh” (Business household)
➢ The proper name of the business household.
The proper name must be written in letters in Vietnamese alphabet, with letters
F, J, Z and W, and possibly with numerals and symbols.
▪ Prohibited to use words or symbols that violate Vietnam’s tradition,
history, culture, ethics and fine customs in a business household’s
proper name.
▪ must not contain the word “cong ty” (company) or “doanh nghiep”
(enterprise).
▪ proper name must not be identical to that of another registered business
household in the same district.
 Business lines of business household (Art. 89 of Decree
01/2021)
• write the business line(s) on the written request for business
household registration or the notice of changes in business
household registration contents.
• The district-level business registration section shall state the
business line(s) on the registration certificate.
• Prohibited sectors and line of business
• Conditional sector and line of business