05 notable contents on enterprises registration in Vietnam from 2021

1. 07 subjects prohibited from establishing enterprises

According to Clause 2 Article 17 of the Law on Enterprises 2020 of Vietnam, the following organizations and individuals do not have the right to establish and manage enterprises in Vietnam:

- State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their own interests;

- Officials and public employees;

- Commissioned officers, non-commissioned officers, career military personnel, military workers and public employees in agencies and units of Vietnam People’s Army; commissioned officers, non-commissioned officers and police workers in police authorities and units, except for those designated and authorized representatives to manage state-owned stakes in enterprises or to manage state-owned enterprises;

- Executive officers and managers of wholly state-owned enterprises, except those who are designated as authorized representatives to manage state-owned stakes in other enterprises;

- Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons;

- People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law.

- Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code.

Above are 07 subjects banned from establishing and managing enterprises in Vietnam from 2021. It can be seen that the Law on Enterprises 2020 has supplemented police workers, people having difficulties controlling their behaviors; organizations that are not juridical persons, juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code to the group of subjects banned from establishing enterprises in Vietnam in comparison with the Law on Enterprises 2014.

2. Name of business location must consist the enterprise’s name

According to Article 40 of the Law on Enterprises 2020 of Vietnam on names of branches, representative offices and business locations:

“Article 40. Names of branches, representative offices and business locations

1. The name of a branch, representative office or business location shall consist of letters in the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols.

2. The name of a branch, representative office or business location shall consist the enterprise’s name and the phrase “Chi nhánh”, “Văn phòng đại diện” or “Địa điểm kinh doanh” respectively.

3. The name of a branch, representative office or business location shall be displayed at the branch, representative office or business location. The name of an enterprise’s branch or representative office is smaller than the Vietnamese name of the enterprise on the transaction documents, records and printed materials issued by the branch or representative office.”

Thus, from 2021, in addition to the provision that the name of a branch, representative office or business location shall consist of letters in the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols, it is also supplemented the provision that the name of a business location shall consist the enterprise’s name and the phrase “Địa điểm kinh doanh” (the Law on Enterprises 2014 of Vietnam only stipulates branches and representative offices).

3. No need to notify the seal sample before use

According to Clause 2 Article 44 of the Law on Enterprises 2014 of Vietnam, before using the seal, the enterprise must send the seal design to the business registration authority in order for the business registration authority to post it on the National Business Registration Portal.

However, according to Article 43 of the Law on Enterprises 2020 of Vietnam on the enterprise’s seals:

- The enterprise’s seals can be physical or digital as prescribed by e-transaction laws.

- The enterprise shall decide the type, quantity, design and content of its seal and the seals of its branches, representative offices and other units.

- The management and storage of seals shall comply with the company's charter or regulations of the enterprise, branch, representative office or unit that owns the seal. Seals shall be used by enterprises in transactions as prescribed by law.

Thus, according to the Law on Enterprises 2020 of Vietnam, enterprises no longer need to notify the seal sample to the business registration authority. Therefore, the enterprise shall decide the type, quantity, design and content of its seal, concurrently, this Law also stipulates that the enterprise’s seals can be physical or digital as prescribed by e-transaction laws.

4. Application for registration of limited liability companies, joint stock companies must have copies of legal documents of legal representatives

In comparison with the Law on Enterprises 2014, the Law on Enterprises 2020 of Vietnam has supplemented that application for registration of limited liability companies, joint stock companies must have copies of legal documents of legal representatives. Specifically, according to Articles 21 and 22 of the Law on Enterprises 2020 of Vietnam, application for registration of limited liability companies and joint stock companies shall include:

- The enterprise registration application form.

- The company's charter.

- The list of founding shareholders; the list of shareholders that are foreign investors.

- Copies of:

+ For limited liability companies:

• Legal documents of members who are individuals and legal representatives;

• Legal documents of members that are organizations, documents about designation of authorized representatives and their legal documents. (Note: Legalized copies of legal documents of the members that are foreign organizations)

• The Certificate of Investment Registration of foreign investors as prescribed by the Law on Investment.

+ For joint stock companies:

• Legal documents of founding shareholders and shareholders that are foreign investors who are individuals and legal representatives;

• Legal documents of shareholders that are organizations, documents about designation of authorized representatives; legal documents of authorized representatives of founding shareholders and shareholders that are foreign organizations. (Note: Legalized copies of legal documents of the members that are foreign organizations)

• The Certificate of Investment Registration of foreign investors as prescribed by the Law on Investment.

5. Sole proprietorship may be converted into a limited liability company, joint stock company or partnership

According to Article 205 of the Law on Enterprises 2020 of Vietnam, 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:

- The sole proprietorship satisfies the conditions as prescribed by law;

- 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;

- The owner has a written agreement with the parties of ongoing contracts that the new company will take over and continue executing these contracts.

- The owner shas a written commitment or agreement with other limited partners to continue hiring the existing employees of the sole proprietorship.

According to current regulations, a sole proprietorship shall only be converted into a limited liability company. Thus, from 2021, a sole proprietorship may be converted into a limited liability company, joint stock company or partnership if the above-mentioned conditions are fully satisfied.

Ty Na

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