When Must Parties Transfer Rights and Obligations Under a Contract Prior to Business Registration?
Article 18 of the Law on Enterprises 2020 (effective from January 1, 2021) stipulates the following prohibited acts:
The enterprise founder is allowed to sign contracts serving the establishment and operation of the enterprise before and during the enterprise registration process.
In case a Certificate of Enterprise Registration is granted, the enterprise must continue to perform the rights and obligations arising from the signed contracts stipulated in Clause 1 of this Article, and the parties must carry out the transfer of rights and obligations under the contract in accordance with the Civil Code, except where there is a different agreement in the contract.
In case the enterprise is not granted the Certificate of Enterprise Registration, the person who signed the contract as stipulated in Clause 1 of this Article is responsible for its implementation; in case there are other persons participating in the establishment of the enterprise, they shall be jointly responsible for the implementation of that contract.
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Thus, according to the above stipulation, unless otherwise agreed in the contract, if a Certificate of Enterprise Registration is granted, the enterprise must continue to perform the rights and obligations arising from the signed contract and the parties must transfer the rights and obligations under the contract in accordance with the Civil Code.
Regarding the issue of parties transferring rights and obligations under the contract in accordance with the Civil Code, this content is clearly stipulated in the new Law. The Law on Enterprises 2014 did not clearly specify this issue.
Respectfully!
