Can sole proprietorships be converted into joint stock companies in Vietnam?
Can sole proprietorships be converted into joint stock companies in Vietnam? How many legal representatives does a sole proprietorship have in Vietnam?
Hi, I have a problem that needs to be answered. Currently I am the owner of a sole proprietorship E. I am planning to change the type of business to a company, I wonder if a sole proprietorship can convert into a joint stock company or is it limited?
Please advise the above issues. Thankyou.
1. Can sole proprietorships be converted into joint stock companies in Vietnam?
In Clause 1, Article 205 of the Enterprise Law 2020, conversion of a sole proprietorship into a limited liability company, joint stock company or partnership is as follows:
1. The owner of a sole proprietorship may convert it into a limited liability company, joint stock company or partnership if the following conditions are fully satisfied:
a) The sole proprietorship satisfies the conditions specified in Clause 1 Article 27 of this Law;
b) The owner makes a written commitment to take personal responsibility for all unpaid debts and pay them when they are due with all of his/her assets;
c) The owner has a written agreement with the parties of ongoing contracts that the new company will take over and continue executing these contracts.
d) The owner shas a written commitment or agreement with other limited partners to continue hiring the existing employees of the sole proprietorship.
Thus, your sole proprietorship can be converted into a joint stock company if it fully meets the conditions prescribed by the law mentioned above in Vietnam.
2. How many legal representatives does a sole proprietorship have in Vietnam?
According to Article 188 of the Enterprise Law 2020, sole proprietorships are 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.
Therefore, according to regulations, a sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets in Vietnam. That individual is both the owner and the legal representative of the enterprise, the sole proprietorship has only one representative.
Best Regards!
