4 Notes on Private Enterprises Effective from January 1, 2021

04 notes about private enterprises from January 1, 2021 - Illustration

According to Article 188 of the Enterprise Law 2020, four specific notes on private enterprises are prescribed as follows:

1. A private enterprise is an enterprise owned by an individual who is fully responsible with all his/her assets for all activities of the enterprise.
2. A private enterprise is not allowed to issue any kind of securities.
3. Each individual is only allowed to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a household business or a partnership member of a partnership company.
4. A private enterprise has no right to contribute capital to establish or purchase shares or capital contribution in a partnership company, limited liability company, or joint-stock company.

According to Article 19 of the Enterprise Law 2020, the documents for registration of a private enterprise include:

1. The application for enterprise registration.
2. A copy of legal documents of the individual for the owner of the private enterprise.

Additionally, Article 189 of the Enterprise Law 2020 notes that the investment capital of the owner of a private enterprise is registered by the enterprise owner himself/herself. The owner of a private enterprise is obligated to register the exact total investment capital, which specifies the amount in Vietnamese Dong, freely convertible foreign currencies, gold, and other assets; for capital in other assets, the type of assets, quantity, and remaining value of each type of asset must be clearly stated.

During the operation, the owner of a private enterprise has the right to increase or decrease his/her investment capital in the enterprise's business activities. Any increase or decrease in the investment capital of the owner of a private enterprise must be fully recorded in accounting books. In the case of reducing the investment capital to below the registered capital, the owner of a private enterprise can only reduce the capital after registration with the Business Registration Authority.

Details of the document can be found in the Enterprise Law 2020, effective January 1, 2021.

Le Vy

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