Penalties for Public Employees Establishing Enterprises

Pursuant to Clause 2, Article 17 of the Law on Enterprises 2020, it is stipulated as follows:

The following organizations and individuals do not have the right to establish and manage enterprises in Vietnam:

- State agencies, units of the people's armed forces using state assets to establish enterprises for private profit for their respective agencies or units;

- Officer, official, public employee as prescribed by the Law on Cadres, official and the Law on Public Employees;

- Officers, non-commissioned officers, professional soldiers, workers, and public employees in national defense in agencies and units under the Vietnam People's Army; officers, non-commissioned professional officers, and workers in police in agencies and units under the Vietnam People's Public Security, except for individuals authorized to represent capital contribution of the State in enterprises or manage State-owned enterprises;

- Leaders, business managers in state-owned enterprises as prescribed in Point a, Clause 1, Article 88 of this Law, except for individuals authorized to represent the State's capital contribution in other enterprises;

…….

According to Article 29 of Decree 50/2016/ND-CP on violations of registration for enterprise founders, specifically:

- Fines ranging from 5,000,000 VND to 10,000,000 VND for one of the following acts:

+ Registering to establish an enterprise without the legal right to do so;

+ Contribution of capital, purchasing shares, or capital contribution without the legal right to do so, but still proceeding with the action.

- Remedies:

+ Mandatory change of member or shareholder registration for single-member limited liability companies owned by an organization, joint-stock companies, and partnerships with violations specified in Point a, Clause 1 of this Article.

+ Mandatory change of member for organizations or individuals contributing capital, purchasing shares, or making capital contributions as prescribed for violations in Point b, Clause 1 of this Article.

Thus, according to regulations, public employees do not have the right to establish and manage enterprises. If these individuals deliberately violate, they will be fined from 5,000,000 VND to 10,000,000 VND and required to implement the remedies mentioned above.

Sincerely!