Can an owner of a sole proprietorship be an owner of a household business in Vietnam?

Can an owner of a sole proprietorship be an owner of a household business in Vietnam?

Can an owner of a sole proprietorship be an owner of a household business in Vietnam? I am currently in the cosmetics business, a sole proprietorship. I want to open a product to sell in my hometown and set up a household business, and at the same time, I am the owner. So, is it possible according to the new Enterprise Law?

Reply:

Pursuant to Clause 3, Article 188 of the Enterprise Law 2020 stipulates as follows:

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, comparing with the above regulations in Vietnam, we can see that the owner of a sole proprietorship cannot also be the owner of a household business. Therefore, you cannot be both a sole proprietorship owner and a household business owner at the same time.

Can an owner of a sole proprietorship be an owner of a household business in Vietnam? (Image from the Internet)

Does an owner of sole proprietorship have to be responsible for its debts after selling the sole proprietorship in Vietnam?

Does an owner of sole proprietorship have to be responsible for its debts after selling the sole proprietorship in Vietnam? The sole proprietorship owes the bank 4 billion, and wants to sell the sole proprietorship to someone else. When transferring, does the transferee have to pay the above amount to the bank? What is the new law regulation?

Reply:

Pursuant to Clause 2, Article 192 of the Enterprise Law 2020, regulations on selling a sole proprietorship are as follows:

2. After selling the sole proprietorship, the owner is still responsible for its debts and liabilities that occur before the date of transfer, unless otherwise agreed upon by the owner, the buyer and the creditors.

Thus, even though the sole proprietorship has been sold to another individual or organization, the debt repayment obligation still belongs to the previous business owner according to the law in Vietnam. However, if the sole proprietorship owner, the business buyer and the bank have another agreement, they will comply with that agreement in Vietnam.

Does a sole proprietorship’s owner have right to lease out or sell it in Vietnam? 

Does a sole proprietorship’s owner have right to lease out or sell it in Vietnam? According to the new law, does a sole proprietorship’s owner have the right to lease out or sell it?

Reply:

Pursuant to Article 191 and Article 192 of the Enterprise Law 2020 stipulates:

- The sole proprietorship’s owner is entitled to lease out the entire sole proprietorship, provided a written notification and certified true copies of the lease contract are submitted to the business registration authority and tax authority within 03 working days from the effective date of the contract. During the lease term, the sole proprietorship’s owner is still legally responsible as its owner. The rights and obligations of the owner and the lessee to the sole proprietorship’s business operation shall be specified in the lease contract.

- The sole proprietorship’s owner is entitled to sell it to another organization or individual.

- After selling the sole proprietorship, the owner is still responsible for its debts and liabilities that occur before the date of transfer, unless otherwise agreed upon by the owner, the buyer and the creditors.

Thus, for sole proprietorships, they have full rights over their sole proprietorship to lease out or sell it. In the case of sole proprietorship leasing, there must be a written notification to the Business Registration Authority and tax authority 3 days in advance for tax purposes in Vietnam.

Best regards!