SOLE

PROPRIETORSHIP

IBC04 – 04/02/2023
Diệu My Thúy Hiền Mai Ngọc Phương Thảo
MEMBERS

Hồng Minh Nhật Thư Khánh Hà Gia Hưng

 CONTENT
01 OVERVIEW OF SOLE PROPRIETORSHIPS

02 ESTABLISHMENT AND REGISTRATION OF SOLE PROPRIETORSHIPS

03 RIGHTS OF SOLE PROPRIETORSHIPS

04 LEGAL ENTITY OF SOLE PROPRIETORSHIPS

05 RIGHTS AND OBLIGATIONS OF CAPITAL AND ASSETS

06 EXERCISING THE OWNER’S RIGHTS IN SPECIAL CASES

07 LIMITATIONS OF SOLE PROPRIETORSHIPS

 01

OVERVIEW OF A SOLE
PROPRIETORSHIP.
 HOW IS
A SOLE PROPRIETORSHIP
STARTED?
When business activities of business individuals:

+ Beyond the business scale in one location.

+ Have different business branches => A sole proprietorship appears.

+ Large-scale employers
 THE CONCEPT
OF
A SOLE PROPRIETORSHIP
A sole proprietorship is an enterprise
owned by a single individual whose
liability for its entire operation is
equal to his/her total assets.
 EXAMPLE
SOLE PROPRIETORSHIP
• Mr. A owns a convenience store in District 5. After 3 years, he opened
2 more branches in District 10 and District 1 with the number of
employees up to 30 people. At this time, Mr. A registered to establish a
private business and distributes consumer supplies named A Market.
CHARACTERISTICS OF SOLE
PROPRIETORSHIPS
Owned by a single individual whose liability for its entire operation

Must not issue any kind of securities.

An individual may only establish one sole proprietorship.

Must not contribute capital upon establishment or purchase shares or

stakes of partnerships,limited liability companies or joint stock
companies.
 02

ESTABLISHMENT AND
REGISTRATION OF a SOLE
PROPRIETORSHIP
a. Subjects permitted to establish sole proprietorship.

Article 17. The rights to establish, contribute capital, buy shares/stakes and manage enterprises
• 1. Organizations and individuals have the right to establish and manage enterprises in Vietnam in
accordance with this Law, except for the cases specified in Clause 2 of this Article.
• 2. The following organizations and individuals do not have the right to establish and manage enterprises
in Vietnam:
a) State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their
own interests;
b) Officials and public employees defined by the Law on Officials and the Law on Public Employees;
…(You can learn more by yourself)
 b) Registration process of a sole proprietorship.
• Step 1: Prepare documents:

Article 16. Business registration file of the sole

proprietorship

• 1. Application form as standardized by the business

registrar.
b) Registration process of a sole proprietorship.
• 2. Copy of the identification card, passport or other
relevant personal certification.
(For Vietnamese citizens: valid Vietnamese
ID/CCCD/Passport; for foreign nationals: Foreign
passport or valid alternative document.)
b) Registration process of a sole proprietorship.
• 3. Certification of legal capital issued by the competent
agencies in regard to business activities required legal
capital as stipulated by laws.

• 4. Professional certificate of a director or

other individual in regard to business
activities required professional certificate as
stipulated by laws
 b) Registration process of a sole
proprietorship.
• Step 2: Submit your application

• Enterprise founders or persons authorized to carry out enterprise

registration shall submit 01 set of business registration file to
the Business Registration Authority by one of the following
methods:
 Directly at the Business Registration Authority;
 Via postal service;
 Through the electronic information network.
 b) Registration process of a sole
proprietorship.
• Step 3: Processing the application
• Within 03 working days from the receipt of the application, the business registration authority shall
consider the validity of the application and decide whether to issue a Certificate of
Branch/Representative Office Registration. 
• The business registration authority shall inform the applicant of necessary supplementation in writing
if the application is not satisfactory or inform the applicant and provide explanation if the application
is rejected.
c. Administration of sole proprietorships
• 1. The sole proprietorship’s owner has total authority to decide all of its business activities.

• 2. 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.

• 3. The sole proprietorship’s owner is its legal representative.

 03

The rights of sole

proprietorships:
Article 191. Leasing out a sole proprietorship
• - The sole proprietorship’s owner is entitled to lease out the
entire sole proprietorship, 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 sole proprietorship’s owner is still legally
responsible as its owner. The rights and obligations of the owner and
the lessee to the sole proprietorship’s business operation shall be
specified in the lease contract.
 Example
- Ms. H is the owner of CH chain store, Mr. R is the person who rents Ms. H chain store. Less
than a month after re-leasing, the chain stores had poor sales and heavy capital losses, and had to
borrow up to 500 million VND in debt.

- In this case, as the owner of the sole proprietorship, H has financial responsibility to the
creditor. And the story of who is at fault and who must pay more compensation: (between the
private sole proprietorship owner and the private lessee) is a civil issue: it is specified in the lease
agreement signed by both parties. If there is no provision in the contract, the joint and several
liability stipulated in Articles 275 and 288 of the Civil Code of 2015 shall apply.
 Article 192. Selling a sole proprietorship
1. The sole proprietorship’s owner is entitled to sell it to
another organization or individual.

2. After selling the sole proprietorship, 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.
Article 192. Selling a sole proprietorship
3. The sole proprietorship’s owner and the buyer shall
comply with labor laws.

4. The buyer of the sole proprietorship shall register the

change of owner in accordance with this Law.
 04

Legal entity of a sole

proprietorship
• - A sole proprietorship don’t have the legal entity.

• - Article 190.3, Enterprise Law 2020 stipulates: The sole

proprietorship’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. 

=> So, when there is a dispute, it is not a sole proprietorship but the owner of a sole
proprietorship is the subject of the proceedings.
 EXAMPLE

• Mr. A establishes a sole proprietorship X and hires Mr. B to be the general director. In
December 2022, the sole proprietorship X signed a contract with Company S, but because the
two sides could not resolve the conflict, sole proprietorship X wanted to sue S to court.

• => In this case, Mr. A is the subject of the proceedings

 05
Rights and Obligations of
Capital and Assets:
 According to Article 90 of the Enterprise Law 2020
about sole proprietorship management
• 1. The capital of a sole proprietorship is registered by its owner. The sole proprietorship’s owner
is obliged to register the accurate amounts of capital in VND, convertible currencies, gold and
other assets, types and quantities of assets.
 According to Article 90 of the Enterprise Law 2020
about sole proprietorship management
• 2. All the capital, including loans and leased assets serving the sole proprietorship’s operation,
must be fully recorded in its accounting books and financial statements as prescribed by law.
According to Article 90 of the Enterprise Law 2020
about sole proprietorship management
• 3. During operation, the sole proprietorship’s owner
have the right to increase or decrease capital. The
increases and decreases in capital must 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
 06
Exercising the owner’s rights
in special cases:
1. He sole proprietorship’s owner is detained,
serving an imprisonment sentence, serving an
administrative penalty in a correctional institution
or rehabilitation center, authorize another person
to perform his/her rights and obligations. 

2. 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 sole proprietorship shall be converted into a
company or dissolved. 
3. 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. 

4. 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. 

5. The sole proprietorship’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 shall be
suspended or stopped or transfer the sole proprietorship to another organization or individual.
 07
Limitations of sole
proprietorships:
- This type of enterprise has no legal status.

- High risk when the owner of a sole proprietorship has unlimited

liability.

- A sole proprietorship must not issue any kind of securities on the market at all.

- A sole proprietorship must not contribute captial upon establishment or purchase shares
or stakes of partnerships, limited liability companies or joint stock companies.

- An individual is only allowed to establish one sole proprietorship.

MINIGAME
Thanks for your attention!