04 Conditions for Private Enterprises to Convert to Limited Liability Companies, Joint Stock Companies, Partnerships

04 conditions for converting a private enterprise into an LLC, JSC, or partnership - Illustrative image.

To be specific: in Clause 1, Article 205 of the Enterprise Law 2020, it stipulates that a private enterprise can be converted into a limited liability company, joint-stock company, or partnership according to the decision of the owner of the private enterprise if the following conditions are met:

- The enterprise to be converted must meet the conditions for being granted an Enterprise Registration Certificate;

- The owner of the private enterprise makes a written commitment to take personal responsibility with all of his/her assets for all unpaid debts and commits to pay off the debts when due;

- The owner of the private enterprise has a written agreement with the parties to the unliquidated contracts about the company being converted to take over and continue performing those contracts;

- The owner of the private enterprise makes a written commitment or has a written agreement with other capital-contributing members about accepting and using the current labor force of the private enterprise.

Notably, in Clause 3, Article 205 of the Enterprise Law 2020, the company to be converted naturally inherits the rights and obligations of the private enterprise from the date it is granted the Enterprise Registration Certificate. The owner of the private enterprise takes personal responsibility with all of his/her assets for all debts arising before the converted company is granted the Enterprise Registration Certificate.

For detailed content, see Enterprise Law 2020, effective from January 01, 2021.

Le Vy

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