Decree 01: Specifying rights and obligations of household businesses owners in Vietnam from 2021

A household business is established by an individual or family household members that shall take responsibility for business operations of the household business with all of their property.

Members of household businesses include:

- Owner of a household business (individual applies for household business registration, or the person authorized by the family household members to act as the representative of the household business);

- Other members.

Requirements for household business registration:

Any individual or family household member that is a Vietnamese citizen and has full legal capacity as prescribed in the Civil Code of Vietnam shall have the right to establish household businesses, except the following cases:

- Minors; people with limited legal capacity; incapacitated people; people having difficulties in controlling their behaviors;

- 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, or is prohibited by the court from holding certain positions or doing certain works;

- Other cases prescribed by relevant laws.

Note: Each individual or family household member may register only one household business nationwide, and is entitled to contribute capital to and buy shares/stakes of other enterprises as an individual. Individuals and family household members that apply for household business registration must not concurrently hold the position of sole proprietor, general partner of a partnership, unless otherwise agreed by the other general partners.

Rights and obligations of owners of household businesses:

Previously, provisions on household business registration at Chapter VII of the Decree No. 78/2015/NĐ-CP of the Government of Vietnam mentioned a lot of rights to establish household businesses and obligations to apply for household business registration, application and procedures for household business registration, business location of a household business, etc. but did not specify the rights and obligations of owners of household businesses and family household members applying for household business registration. Therefore, in order to improve the regulation on household business, the Government of Vietnam issued the Decree No. 01/2021/NĐ-CP defining the rights and obligations of business owners and household members, thereby helping to ensure business rights and obligations of business households. Specifically, the rights and obligations of owners of household businesses and family household members applying for household business registration specified at Article 81 of the Decree No. 01/2021/NĐ-CP are as follows:

- The owner of a household business shall fulfill tax and other financial liabilities, and perform business operations of the household business in accordance with regulations of law.

- The owner of a household business shall represent the household business in civil proceedings, as the plaintiff, defendant, person with relevant interests and duties in front of the court or arbitral tribunal, and perform other rights and obligations as prescribed by law.

- The owner of a household business may hire another person to manage and direct business operations of the household business. In this case, the owner and other family household members applying for household business registration remain liable for debts and other asset-related liabilities arising from business operations.

- The owner and other family household members applying for household business registration shall be liable for all business operations of the household business.

The separation of rights and obligations of owners of household businesses and family household members applying for household business registration is a remarkable new point of the Decree No. 01/2021/NĐ-CP of the Vietnam’s Government.

Le Thanh

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