Law on

business organization
Fundamental of Law in business
Bui Bao Tram
Documents

1. Glaw – Introduction to Vietnamese law – University of Economics and

Finance
Table of content
1. Introduction
2. Brief history and development
3. Household business
4. Private enterprise
5. Limited liability company with two or more members
6. Single - member limited liability company
7. Shareholding company
8. Partnership
1. Introduction
Definition
- Business organizations in Vietnam are governed by a system of
legislation including laws enacted by the National Assembly and subordinate
legislation.
- The legal system that regulates business entities in Vietnam includes the
Enterprise Law 2014 and a number of relevant laws which govern the
establishment and operation of business organizations in specific areas
2. Brief history and development
2.1. Prior to Doi Moi
2.2. Since Doi Moi
3. Household business
- Household business is owned by either a Vietnamese citizen, a family
(household), or a group of Vietnamese citizens
- A foreigner or foreign family appears not to have a right to register a
household business in Vietnam
- Household business can only register a business at one location, and cannot
hire more than 10 employees
- The owners of this business entity are exposed to an unlimited liability for the
debts of the business
- A household business is not a separate legal entity
4. Private enterprise
- Owner:
+ Vietnamese individual from 18-year-olds and above
+ An individual can only register one private enterprise but establishes many
branches in Vietnam
+ Must be liable for all debts of the enterprise with his/her own property
+ Has full powers to manage and direct the enterprise
+ Can also be the CEO of enterprise
- A private enterprise is not recognized as a legal person
- The private enterprise has no right to issue any kind of shares or bonds to
the public
5. Limited liability company with two or more members
- Under the Enterprise law, a multiple member LLC is:
+ A separate legal entity
+ Has no more than 50 members whose liability is limited to the amount they
undertake to contribute to the company's charter capital
+ Has no right to issue shares to the public
+ A member shall be liable for the debts and other property obligations of the
LLC within the amount of capital that he/she has undertaken to contribute to
the company chatter capital
5. Limited liability company with two or more members
- A member of an LLC has the right to assign shares of capital contribution to
other persons:
+ The member must offer to sell it to all other members in proportion to their
shares of capital contribution in the company on the same conditions first
+ Assignment to non­ members shall be under the regulation of Enterprise
law
5. Limited liability company with two or more members
- The organizational and management structure of LLC with two or more
members:
+ Member’s Council
+ Chairperson of the Member’s Council
+ Director/general director (similar to CEO)
+ Board of Supervisors: must have if the LLC has more than 11 members
+ Legal representative: may have one or more legal representative as long
as at least one legal representative of the company must have a permanent
residence in Vietnam
6. Single - member limited liability company
- Under the Enterprise law, a one member LLC is:
+ A separate legal entity
+ Owned by one organization or individual
+ The company owner shall be liable for all debts and other obligations of
the company up to the amount of the charter capital of the company
+ The property of the company is separate from its owner
+ Has no right to issue shares
6. Single - member limited liability company
- The organizational am/ management structure of one member LLC:
+ Owner being an organization: Members' Council, CEO and Supervisors
+ Owner being an individual: the company's President, CEO and
Supervisors
7. Shareholding company
- Under the Enterprise law, a shareholding company is:
+ A separate legal entity
+ The share capital is divided into equal parts as shares
+ Must have at least three shareholders whose liability is limited to the
amount contributed to the company's share capital
+ Has a right to issue securities to the public for fundraising capital
7. Shareholding company
- A shareholder:
+ Either a legal person or an individual who holds one or more shares of the
company
+ Either Vietnamese or a foreign individual and organization
+ Be liable for debts and other liabilities of the company within the amount of
capital that they contributed
+ Be free to transfer their shares (unless otherwise stipulated in the
Enterprise Law)
7. Shareholding company
- The organizational and management structure of a shareholding company:
Shareholding companies may select either of two models prescribed by the
Law:
+ The first model: Shareholders' Meeting (SM), the Board of Management
(BOM), and the director/general director (the CEO), and Board of Supervisors
(BOS) if it has more than eleven shareholders or has institutional shareholders
holding more than 50% of the shares
+ The second model: Shareholders' Meeting (SM), the Board of
Management (BOM), and the director/general director (the CEO)
8. Partnership
- Under the Enterprise law, a shareholding company is:
+ A legal person
+ No less than two general partners who are joint owners of the company
and carry out business under one common name
+ In addition to general partners, there may also be one or more limited
partners
+ General partner must be an individual and liable to all obligations and
debts of the partnership with his/her entire property
+ Limited partners are liable for the debts of the partnership only to the
extent of their capital contributed to the partnership
8. Partnership
- Restriction on general partner:
+ Cannot be a sole proprietor or a general partner of another partnership
+ Not entitled to transfer a part or whole of his capital contribution to others
+ Other restriction under the Enterprise Law
- Structure of partnership: Members' Council, Chairperson of the Council, and
the CEO