Vietnam: What are the limitations for general partners? Who is the legal representative of the partnership?
Who is the legal representative of the partnership in Vietnam?
According to the provisions of Clause 1, Article 184 of the Law on Enterprises 2020, the legal representative of the partnership is:
Business administration of partnerships
1. General partners are the partnership’s legal representative and shall administer its everyday business. A limitation to general partners is only applied to a third party when it is known by the third party.
Accordingly, general partners are the legal representatives of partnerships and shall administer their everyday business.
What are the rights and obligations of general partners in Vietnam?
Pursuant to Article 181 of the Law on Enterprises 2020, the rights and obligations of general partners in Vietnam are:
Rights of general partners are specified in Clause 1, Article 181 of the Law on Enterprises 2020:
- 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.
The obligations of general partners are specified in Clause 2, Article 181 of the Law on Enterprises 2020 as follows:
- Manage and do business in an honest and prudent manner to ensure the partnership’s lawful and best interests;
- Manage and do business in accordance with law, the charter, resolutions and decisions of the Board of Partners; pay compensation for the damage caused by his/her violations of these;
- Do not use the partnership’s assets for personal gain or to serve the interests of any other organization or individual;
- Return to the partnership the money or assets that he/she received when doing business in his/her own name, in the partnership’s or another person’s name and has not returned to the partnership and pay for any damage caused by this action;
- Jointly pay the partnership’s remaining debts (if any) after all of the partnership’s assets are used to pay them;
- Incur the loss that is proportional to his/her stake or as agreed in the charter in case the partnership makes a loss;
- Submit monthly written reports on his/her performance to the partnership; provide information on his/her performance for other partners on request;
- Other obligations prescribed by Law and the charter.
What are the limitations for general partners in Vietnam?
Pursuant to Article 180 of the Law on Enterprises 2020 on limitations for general partners in Vietnam 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 names or others’ names, do business in the same busines 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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