Vietnam: In what cases will general partners be excluded from partnerships? Shall partnerships admit new general partners?
In what cases will general partners in Vietnam be excluded from partnerships?
Pursuant to Clause 3, Article 185 of the Law on Enterprises 2020 as follows:
Termination of general partners
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3. A general partner will be excluded from the partnership if he/she:
a) is not able to contribute capital or fails to contribute capital as promised after a second notice is made by the company;
b) violates the regulations of Article 180 of this Law;
c) fails to do business in an honest and prudent manner or has inappropriate actions causing serious damage to the interest of the partnership and other partners; or
d) fails to fulfill a general partner’s obligations.
Accordingly, when a general partner may be excluded from the partnership in the following cases:
- He/she is not able to contribute capital or fails to contribute capital as promised after a second notice is made by the company;
- He/she violates the regulations of Article 180 of Law on Enterprises 2020;
- He/she fails to do business in an honest and prudent manner or has inappropriate actions causing serious damage to the interest of the partnership and other partners; or
- He/she fails to fulfill a general partner’s obligations.
In what cases will a general partner status be terminated in Vietnam?
Pursuant to Clause 1, Article 185 of the Law on Enterprises 2020, a general partner status will be terminated if:
- He/she voluntarily withdraws capital from the partnership;
- He/she is dead, missing or incapacitated; has limited legal capacity; has difficulty controlling his/her own behaviors;
- He/she is excluded from the partnership;
- He/she is serving an imprisonment sentence or banned by the court from doing certain jobs;
- In other cases specified in the charter.
- After termination of a general partner whose name is used as part of or the whole partnership’s name, that general partner or his/her hair or legal representative is entitled to request the partnership to stop using that name.
Shall partnerships admit new general partners in Vietnam?
Pursuant to Article 186 of the Law on Enterprises 2020 on the admission of new partners as follows:
- A partnership may admit new general partners and limited partners; the admission of a new partner is subject to approval by the Board of Partners.
- The new general partner or limited partner shall fully contribute capital as promised within 15 days from the day on which the admission is approved unless a different time limit is decided by the Board of Partners.
- The new general partner has a joint liability for the company’s debts and liabilities which is equal to his/her total assets unless otherwise agreed upon by the new partner and the other partners.
Thus, a partnership may admit new general partners and limited partners; the admission of a new partner is subject to approval by the Board of Partners.
What are the rights of general partners in Vietnam?
According to the provisions of Clause 1, Article 181 of the Law on Enterprises 2020, the rights of general partners in Vietnam are as follows:
- Participate in meetings, discuss and vote on the partnership’s issues; each general partner shall have one vote or a specific number of votes specified in the partnership’s charter;
- Do business in the partnership’s business lines on its behalf; negotiate and enter into contracts, transactions or agreements under conditions that the partner believes to be most beneficial to the partnership;
- 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;
- Request the partnership to pay compensation for damage that is not on account of that partner.
- 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;
- Receive distributed profits in proportion to his/her stake or as agreed;
- 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;
- When a general partner dies, his/her hair 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;
- Other rights prescribed by this Law and the company's charter.
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