04 conditions for converting a sole proprietorship into an LLC, JSC, or partnership in Vietnam

04 conditions for converting a sole proprietorship into an LLC, JSC, or partnership in Vietnam - Illustrative image.

To be specific: in Clause 1, Article 205 of the Enterprise Law 2020, it stipulates that a sole proprietorship can be converted into a limited liability company, joint-stock company, or partnership according to the decision of the owner of the sole proprietorship if the following conditions are met:

- The enterprise to be converted must meet the conditions for being granted an Enterprise Registration Certificate;

- The owner of the sole proprietorship makes a written commitment to take personal responsibility with all of his/her assets for all unpaid debts and commits to pay off the debts when due;

- The owner of the sole proprietorship has a written agreement with the parties to the unliquidated contracts about the company being converted to take over and continue performing those contracts;

- The owner of the sole proprietorship makes a written commitment or has a written agreement with other capital-contributing members about accepting and using the current labor force of the sole proprietorship.

Notably, in Clause 3, Article 205 of the Enterprise Law 2020, the company to be converted naturally inherits the rights and obligations of the sole proprietorship from the date it is granted the Enterprise Registration Certificate. The owner of the sole proprietorship takes personal responsibility with all of his/her assets for all debts arising before the converted company is granted the Enterprise Registration Certificate.

For detailed content, see Enterprise Law 2020, effective from January 01, 2021.

Le Vy

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