Most business-related issues are regulated by the 2020 Enterprise Law, which officially came into effect on January 1, 2021. Here are some basic things a business owner should know.
1. What is a business?
A business is an organization with a distinct name, assets, and a registered office, established or registered in accordance with the law for the purpose of conducting business.
2. What is business?
Business is the continuous performance of one, several, or all stages of the process from investment and production to consumption of products or provision of services in the market, with the aim of seeking profit.
3. Classification of businesses
Based on the legal form of the business, the types of businesses in Vietnam include:
Limited liability company (including limited liability companies with two or more members and single-member limited liability companies) are businesses where the members of the company are liable for the company's debts and other financial obligations to the extent of the company's charter capital.
Joint Stock Company A company is one where its registered capital is divided into many equal parts called shares. Individuals or organizations owning shares of the company are called shareholders and are liable for debts and other financial obligations to the extent of the capital they have contributed to the company.
Partnerships A partnership is a business in which at least two members are the owners of the company, conducting business together under a common name (called general partners). General partners must be individuals and are liable for the company's obligations with their entire assets. In addition, a partnership also includes contributing members.
Private enterprise A sole proprietorship is a business owned and operated by a single individual who is personally liable for all business activities with their entire personal assets. Each individual is only entitled to establish one sole proprietorship.
Based on the system of accountability, they can be classified into two types:
Businesses with unlimited liability This is a type of business where the business owner is obligated to pay the business's debts with all of their assets when the business lacks sufficient assets to fulfill its financial obligations. According to Vietnamese law, there are two types of businesses with unlimited liability: sole proprietorships and partnerships.
Businesses with limited liability These are businesses where the owner is only liable for the business's debts and financial obligations to the extent of the capital contributed. This means that if the business's assets are insufficient to cover its debts, the owner is not obligated to pay the debts on behalf of the business.
- Private enterprises are subject to unlimited liability.
- Limited liability companies, joint-stock companies with limited liability
4. Essential business-related terms to know
The following terms are understood as follows:
- Copy A document is a copy made from the original register or certified from the original by a competent authority or organization, or has been compared with the original.
- Foreign individuals is a person holding documents that identify them as a foreign national.
- Shareholder An individual or organization that owns at least one share of a joint-stock company.
- Founding shareholders A shareholder is someone who owns at least one common share and signs the list of founding shareholders of a joint-stock company.
- the Company This includes limited liability companies, joint-stock companies, and partnerships.
- National portal for business registration It is an electronic portal used for online business registration, publishing business registration information, and accessing business registration information.
- National database of business registration It is a collection of data on business registrations nationwide.
- State-owned enterprises This includes businesses in which the State holds more than 50% of the charter capital.
- Vietnamese businesses A business is an enterprise established or registered in accordance with Vietnamese law and has its head office in Vietnam.
- Contact address This is the registered head office address for an organization; the permanent residence or workplace address or other address of an individual that they register with the business as a contact address.
- Business registration certificate It is a document, in paper or electronic form, recording information about business registration issued to a business by the Business Registration Authority.
- Personal legal documents This includes one of the following documents: Citizen Identity Card, National Identity Card, Passport, or other legally valid personal identification documents.
- Legal documents of the organization This includes one of the following documents: Decision on establishment, Certificate of business registration, or other equivalent documents.
- Capital contribution This refers to contributing assets to form the charter capital of a company, including contributing capital to establish a company or contributing additional capital to an already established company.
- Business manager This refers to managers of private enterprises and company managers, including private enterprise owners, partners, chairpersons of the Board of Members, members of the Board of Members, company chairpersons, chairpersons of the Board of Directors, members of the Board of Directors, directors or general managers, and individuals holding other managerial positions as stipulated in the company's charter.
- Authorized capital It is the total value of assets contributed or pledged by company members or owners when establishing a limited liability company or partnership; it is the total par value of shares sold or registered for purchase when establishing a joint-stock company.
5. Rights of enterprises (Article 7)
1. Freedom to engage in business activities in any field or profession not prohibited by law.
2. Business autonomy and the choice of business organizational structure; proactively selecting industries, occupations, locations, and business models; proactively adjusting the scale and scope of business activities.
3. Choosing the form and method of mobilizing, allocating, and utilizing capital.
4. Freedom to find markets, customers, and sign contracts.
5. Export and import business.
6. Recruit, hire, and employ workers in accordance with labor laws.
7. Proactively apply science and technology to improve business efficiency and competitiveness; and be protected by intellectual property rights in accordance with the law on intellectual property.
8. Possession, use, and disposal of the enterprise's assets.
9. Refusing requests from agencies, organizations, or individuals for the provision of resources that are not in accordance with the law.
10. Filing complaints and participating in legal proceedings as prescribed by law.
11. Other rights as prescribed by law.
6. Obligations of enterprises (Article 8)
1. Meet all investment and business conditions when operating in conditional investment and business sectors; and conditional market access sectors for foreign investors as prescribed by law, and ensure that these conditions are maintained throughout the business operation.
2. Fully and promptly fulfill obligations regarding business registration, registration of changes to business registration details, public disclosure of information on the establishment and operation of the business, reporting, and other obligations as prescribed by this Law.
3. Be responsible for the truthfulness and accuracy of the information declared in the business registration application and reports; if any inaccurate or incomplete information is found in the declared or reported information, it must be promptly amended and supplemented.
4. Organize accounting work, pay taxes, and fulfill other financial obligations as prescribed by law.
5. Ensure the legitimate rights and interests of employees in accordance with the law; do not discriminate against or insult the honor and dignity of employees in the enterprise; do not mistreat or force employees, or illegally employ minors; support and create favorable conditions for employees to participate in training to improve their skills and qualifications; implement social insurance, unemployment insurance, health insurance, and other insurance policies and schemes for employees as prescribed by law.
See more: Full text of the 2020 Enterprise Law Law on Enterprises - Law No. 59-2020_QH14