Vietnam: How to handle when the owner of a sole proprietorship is banned by the Court from doing certain jobs in the enterprise’s business lines?
What is a sole proprietorship in Vietnam?
According to the provisions of Clause 1, Article 188 of the 2020 Law on Enterprises in Vietnam:
Sole proprietorships
1. A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.
Thus, a sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.
Vietnam: How to handle when the owner of a sole proprietorship is banned by the Court from doing certain jobs in the enterprise’s business lines?
Are there any restrictions on establishing a sole proprietorship in Vietnam?
According to the provisions of Clause 3, Article 188 of the 2020 Law on Enterprises in Vietnam on sole proprietorships as follows:
Sole proprietorships
1. A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.
2. A sole proprietorship must not issue any kind of securities.
3. An individual may only establish one sole proprietorship. The owner of a sole proprietorship must not concurrently own a household business or hold the position of general partner of a partnership.
4. A sole proprietorship must not contribute capital upon establishment or purchase shares or stakes of partnerships, limited liability companies or joint stock companies.
Thus, a sole proprietorship is owned by a single individual and that individual is only entitled to establish one sole proprietorship. The owner of a sole proprietorship must not concurrently own a household business or hold the position of general partner of a partnership.
When is the sole proprietorship’s owner banned from doing certain jobs in the enterprise’s business lines?
Pursuant to Clause 5, Article 193 of the 2020 Law on Enterprises in Vietnam stipulating as follows:
Exercising the owner’s rights in special cases
1. In case the sole proprietorship’s owner is detained, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, he/she shall authorize another person to perform his/her rights and obligations.
2. In case the owner dies, this/her heir or one of the legal heirs or designated heirs shall be the owner under an agreement among the heirs. In case such an agreement cannot be reached, the sole proprietorship shall be converted into a company or dissolved.
3. In case the owner dies without an heir or the heir refuses the inheritance or is disinherited, the owner’s assets shall be handled in accordance with civil laws.
4. In case the owner is incapacitated, has limited legal capacity or has difficulty controlling his/her behaviors, his/her rights and obligations shall be performed through his/her representative.
5. In case the sole proprietorship’s owner is banned by the court from doing certain jobs in the enterprise’s business lines, the owner shall suspend or stop doing business in the relevant business lines under the court's decision or transfer the sole proprietorship to another individual or organization.
Thus, in case the sole proprietorship’s owner is banned by the court from doing certain jobs in the enterprise’s business lines, the owner shall suspend or stop doing business in the relevant business lines under the court's decision or transfer the sole proprietorship to another individual or organization.
How is the capital of sole proprietorships registered?
According to the provisions of Article 189 of the 2020 Law on Enterprises in Vietnam on the capital of sole proprietorships as follows:
- The capital of a sole proprietorship shall be registered by its owner. The sole proprietorship’s owner shall register the accurate amounts of capital in VND, convertible currencies, gold and other assets, types and quantities of assets.
- All the capital, including loans and leased assets serving the sole proprietorship’s operation, shall be fully recorded in its accounting books and financial statements as prescribed by law.
- During its operation, the sole proprietorship’s owner is entitled to increase or decrease its capital. The increases and decreases in capital shall be fully recorded in accounting books. In case the capital is decreased below the registered capital, the decrease may only be made after it has been registered with the business registration authority.
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