Are general partners liable with all their assets in Vietnam?

1. Are general partners liable with all their assets in Vietnam?

According to Article 177 of the Enterprise Law 2020, a partnership is regulated as follows:

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, according to the above provisions, if a general partner is an individual whose liability for the company’s obligations is equal to all of his/her assets in Vietnam. Therefore, you will be liable with all your assets for the debts of the partnership when you become a general partner.

2. What are rights and obligations of general partners in Vietnam? 

Pursuant to Article 181 of the Enterprise Law 2020, rights and obligations of general partners are as follows:

1. A general partner has the rights to:

a) 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;

b) 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;

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 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;

i) Other rights prescribed by this Law and the company's charter.

2. A general partner has the following obligations:

a) Manage and do business in an honest and prudent manner to ensure the partnership’s lawful and best interests;

b) 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;

c) Do not use the partnership’s assets for personal gain or to serve the interests of any other organization or individual;

d) 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;  

dd) Jointly pay the partnership’s remaining debts (if any) after all of the partnership’s assets are used to pay them;

e) Incur the loss that is proportional to his/her stake or as agreed in the charter in case the partnership makes a loss;

g) Submit monthly written reports on his/her performance to the partnership; provide information on his/her performance for other partners on request;

h) Other obligations prescribed by Law and the charter.

According to this Article, general partners in Vietnam will have the rights and obligations as prescribed above.

Best Regards!