In Vietnam, is the scope of liability for debts of a partnership of its general partners and limited partners of partnerships different?
- In Vietnam, is the scope of liability for debts of a partnership of its general partners and limited partners of partnerships different?
- If a general partner dies and the Board of Partners fails to accept his/her heir as a general partner, shall the heir receive assets?
- What are the limitations of general partners in Vietnam?
In Vietnam, is the scope of liability for debts of a partnership of its general partners and limited partners of partnerships different?
Under Article 177 of the Law on Enterprises 2020:
Partnerships
1. A partnership is an enterprise in which:
a) There are least 02 partners that are joint owners of the company and do business under the same name ((hereinafter referred to as “general partner”). There can be limited partners in addition to general partners;
b) A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets;
c) A limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital contribution.
2. A partnership has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
3. A partnership must not issue any kind of securities.
Thus, the scope of liability for debts of a partnership of its general partners and limited partners of partnerships is different.
The scope of liability is as follows:
- A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets;
- A limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital contribution.
If a general partner dies and the Board of Partners fails to accept his/her heir as a general partner, shall the heir receive assets?
Under Point h, Clause 1, Article 181 of the Law on Enterprises 2020:
Rights and obligations of general partners
1. A general partner has the rights to:
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c) Use the partnership’s assets to do business in its business lines. In case a general partner advances money to do business on behalf of the partnership, he/she is entitled to request the partnership to reimburse the principal and interest thereon at market rate;
d) Request the partnership to pay compensation for damage that is not on account of that partner.
dd) Request the partnership and other general partners to provide information about the partnership’s business performance; inspect the partnership’s assets, account records and other documents where necessary;
e) Receive distributed profits in proportion to his/her stake or as agreed;
g) Receive the remaining assets in proportion to his/her stake upon the partnership’s dissolution or bankruptcy unless another ratio is specified in the charter;
h) When a general partner dies, his/her heir shall receive a value of assets minus the partner’s debts and other liabilities. The heir may become a general partner if accepted by the Board of Partners;
i) Other rights prescribed by this Law and the company's charter.
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Under the above regulations, when a general partner dies, his/her heir shall receive a value of assets minus the partner’s debts and other liabilities. The heir may become a general partner if accepted by the Board of Partners.
Thus, if a general partner dies and the Board of Partners fails to accept his/her heir to be a general partner, the heir at heir shall receive a value of assets minus the partner’s debts and other liabilities under the liability of that member.
What are the limitations of general partners in Vietnam?
Under Article 180 of the Law on Enterprises 2020:
Limitations of general partners
1. A general partner must not be the owner of a sole proprietorship; must not be a general partner of another partnership unless it is accepted by the other general partners.
2. A general partner must not, in their own name or others’ names, do business in the same business lines as those of the partnership for personal gain or to serve the interests of another organization or individual.
3. A general partner must not transfer part or all of his/her stake in the company to another organization or individual unless it is accepted by the other general partners.
Thus, according to regulations, the limitations of general partners are specified as follows:
- A general partner must not be the owner of a sole proprietorship; must not be a general partner of another partnership unless it is accepted by the other general partners.
- A general partner must not, in their own name or others’ names, do business in the same business lines as those of the partnership for personal gain or to serve the interests of another organization or individual.
- A general partner must not transfer part or all of his/her stake in the company to another organization or individual unless it is accepted by the other general partners.
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