When the owner of a sole proprietorship dies, what will be the legal consequences for that business? The article below will clearly analyze this issue.
Article table of contents
1. What is a sole proprietorship?
According to the current Law on Enterprise of Vietnam, a sole proprietorship is a enterprise owned by an individual who is responsible for its operation with all of his/her property. The owner of the sole proprietorship has the absolute discretion as to the company’s business operation, the use of post-tax profit, and shall fulfill other financial obligations as prescribed by law.
2. Legal consequences when the owner of a sole proprietorship dies
Originating from the cyclical unlimited liability of the owner of a sole proprietorship, when the owner of the sole proprietorship dies, its legal status will end. In this case, you cannot inherit the sole proprietorship, but only the assets of the sole proprietorship. Therefore, sole proprietorships are considered as an asset in the inheritance block.
It is necessary to determine the heirs of this business owner according to the provisions of the Civil Code 2015 of Vietnam. Legal heirs of sole proprietorships have the right to decide on the following issues:
- Terminate the operations of sole proprietorships and resolve the rights and obligations of previously established enterprises and declare and divide assets according to the provisions of the Civil Code 2015 of Vietnam.
- In case the heir wants to continue maintaining the operation of that sole proprietorship, he must register to change the owner of the sole proprietorship according to regulations to establish a sole proprietorship with the new owner. Notably, there is only 01 (one) owner, so in case of co-inheritance, there needs to be an agreement on who will be the new owner of the sole proprietorship.
- In cases where there is no heir, the person with the right to inherit refuses to enjoy the inheritance or the heir is not qualified to become a sole proprietorship owner, at the request of the person with related rights and interests, the competent state agency will declare that this sole proprietorship will terminate its operations.
3. Procedures for change of the owner of a sole proprietorship
Step 1: The application includes:
- A notification of change of enterprise registration information bearing the signature of the inheritor;
- A legitimate of ID paper of the inheritor:
+ Vietnamese citizen: ID card/passport/citizen ID card;
- Foreigner: unexpired foreign passport or an equivalent document;
- A legitimate copy of the certification of the inheritor’s right to inheritance.
Quantity: 01 set.
Step 2: Submit the application
Applicants shall submit the application to the Business Registration Office - Department of Planning and Investment where the sole proprietorship’s headquarters is situated.
Step 3: The Business Registration Office receives and processes
- When receiving the notification, the Business Registration Office shall give a confirmation slip, examine the validity of documents, and issue the certificate of enterprise registration.
- Processing duration: Within 03 working days from the receipt of the satisfactory application.
Legal basis:
Long Binh
