Doing Business in Vietnam: Types of Business
Establishing a business or a business model is the need of many people in the start-up phase. However, choosing the right type of business is something that not everyone understands. This article will help you better understand the types of doing business in Vietnam today.
State enterprises – doing business in Vietnam
This type of business is understood as an economic organization invested by the State, established and managed by the State…
State-owned enterprises are a type with full legal status. Currently, enterprises are assigned capital for the business by the state and are solely responsible for production management, are responsible for the economy, and have to compensate or enjoy profits with that level of capital.
Self-responsibility and compensation for losses or profits depending on the development ability is a new point of state enterprises compared to the previous period. Currently, the state no longer subsidizes as before, but businesses need to cover their own costs, cover all capital sources and fulfill their obligations to the social state like other businesses.
Although state-owned enterprises do not account for a large proportion in number, they have the function of directing the economy and controlling important and vital areas of the country.
This type is understood as a type of collective organization established by individuals, households, and legal entities wishing to contribute capital to construction under Article 1 of the 2003 Law on Cooperatives.
A Cooperative is an autonomous economic organization founded by workers with common needs and interests who voluntarily contribute capital and contribute their strength in accordance with the law to promote the strength of the collective and each member. help each other more effectively carry out production, doing business in Vietnam and service activities, and improve lives, further contributing to socio-economic development.
Unlike the type of enterprise regulated by the Law on Enterprises, cadres, and civil servants are allowed to join cooperatives as cooperative members according to the provisions of the cooperative’s charter but are not allowed to directly manage the cooperative practice.
An enterprise established and owned by an individual with capital investment. The business owner can directly run the production operation or hire someone else to perform the task, but still be responsible for the business operation of the business as the owner.
Partnerships – doing business in Vietnam
A partnership is a form of business without legal status, with at least 2 general partners, each member has professional qualifications, and a professional reputation and must be responsible for all assets. its obligations to the company. There may be capital contributors and capital contributors who are only liable for the debts of the company to the extent of the contributed capital.
General partners will have the right to manage the company, conduct business activities on behalf of the company as well as be jointly responsible for the obligations of the company. Capital-contributing members have the right to share profits according to the proportions specified in the company’s charter, and may not participate in company management and business activities on behalf of the company. General partners have equal rights when deciding on corporate management issues.
One-member limited liability company
One member limited liability company is an enterprise owned by an organization. This owner will be responsible for the debts and other property obligations of the business to the extent of the capital contributed to the business.
The charter capital of a one-member limited liability company at the time of business registration is the total value of assets committed by the owner to contribute and stated in the company’s charter.
The owner needs to contribute in full and the right type of assets as committed when registering for the business establishment within 90 days from the date of being granted the Certificate of Business Registration.
In case of failure to fully contribute charter capital within the time limit specified in Clause 2, Article 75 of the Law on Enterprises, the company owner must register for an adjustment of charter capital equal to the value of the actually contributed capital within 30 days. from the last day to fully contribute the charter capital.
In this case, the owner should be responsible in proportion to the committed capital contribution for the company’s financial obligations arising in the time before the company registers to change the charter capital.
A one-member limited liability company is entitled to reduce its capital if it has operated continuously for more than 2 years from the date of business registration and ensures to pay all debts and other property obligations after it has been repaid to the company. Owner.
The company has the right to increase its charter capital by making additional investments or mobilizing other people’s contributed capital. In case of increasing charter capital by mobilizing additional capital contributed by others, the company needs to convert the type of enterprise into a limited liability company with 2 or more members or a joint stock company.
Limited liability company with 2 or more members
A limited liability company with 2 or more members is an enterprise in which members can be organizations or individuals and the number of members does not exceed 50 people.
Limited liability companies with 2 or more members have legal status from the date of issuance of the Certificate of Business Registration. A limited liability company is not entitled to issue shares to raise capital.
Members are responsible for the debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise. The charter capital of a limited liability company with 2 or more members upon enterprise registration is the total value of capital contributed by members committed to contributing to the company.
Members must contribute capital contribution to the company in full and with the right type of assets as committed when registering for the business establishment within 90 days from the date of being granted the Certificate of Business Registration. Accordingly, within this time limit, members have rights and obligations in proportion to the amount of capital contributed as committed to contributing.
In case a member has not yet contributed or has not fully contributed the committed capital, the company must register for adjustment, the charter capital, and the proportion of contributed capital of the members equal to the contributed capital within 30 days from the date of registration. from the last day must fully contribute the capital contribution.
Joint Stock Company – doing business in Vietnam
A joint stock company is an enterprise with the following characteristics:
The subjects participating in contributing capital to establish a joint stock company are called shareholders. Shareholders can be individuals or organizations and must have legal status and the right to contribute capital to establish an enterprise in accordance with the enterprise law.
The minimum number of shareholders is 3 members and there is no limit to the maximum number of shareholders. Shareholders are only responsible for the debts and other property obligations of the enterprise to the extent of the contributed capital
Charter capital is divided into equal parts called shares. Shareholders are those who have the right to freely transfer their shares to others in accordance with the Enterprise Law. Having legal status from the date of issuance of the business registration certificate
Having the right to issue securities of all kinds to raise capital in accordance with the law on securities. The structure of a joint stock company must include the General Meeting of Shareholders, the Board of Directors, the Director (General Director), and more than 11 shareholders must have a Supervisory Board.
The company may change its charter capital in the following cases:
- According to the decision of the General Meeting of Shareholders, the company will return a part of the contributed capital to the shareholders in proportion to their share ownership in the company if the company has operated continuously for more than 2 years, from the date of business registration and ensuring full payment of debts and other property obligations after they have been returned to shareholders.
- The company has bought back the issued shares
- Charter capital is not paid in full and on time by shareholders
You can read the previous article here: Renting in Vietnam: Practical Office Rental Experience
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