From January 01, 2021, the Law on Enterprises 2020 of Vietnam will officially take effect. So, when will the general partner status be terminated in accordance with regulations?
Article table of contents
According to Article 185 of the Law on Enterprises 2020 of Vietnam, a general partner status will be terminated in the following cases:
First: He/she voluntarily withdraws capital from the partnership
A general partner is entitled to withdraw capital from the partnership if it is accepted by the Board of Partners. In this case, the withdrawing partner shall make a written notification at least 06 months before the withdrawal date and may only withdraw capital at the end of the fiscal year after the financial statement of the same year has been ratified.
Second: He/she is dead, missing or incapacitated; has limited legal capacity; has difficulty controlling his/her own behaviors
In case of termination due to a partner’s being incapacitated or having limited legal capacity or having difficulty controlling his/her behaviors, his/her stake shall be fairly returned.
According to the Civil Code 2015 of Vietnam, person who is incapacitated; has limited legal capacity; has difficulty controlling his/her own behaviors is as follows:
- A court shall, based on the opinion of forensic-psychiatric examination by any authorized organization and at the request of a person with related rights or interests or a relevant agency or organization, issue a decision to declare a legally incapacitated person who as a result of his/her mental or other illnesses cannot realize or conduct his/her actions;
- A court shall, based on the opinion of forensic-psychiatric examination by any authorized organization and at the request of a person with related rights or interests or a relevant agency or organization, issue a decision to declare an adult with limited cognition or behavior control due to his/her physical or spiritual condition, and appoint a legal guardian and define rights and obligations of such guardian;
- A court shall, at the request of a person with related rights or interests or a relevant agency or organization, issue a decision to declare a person with limited legal capacity after excessive drug consumption or other psychotropic substances, worsening material situation of the family.
Third: He/she is excluded from the partnership
A general partner will be excluded from the partnership if he/she:
- Is not able to contribute capital or fails to contribute capital as promised after a second notice is made by the company;
- Violates the regulations on limitations of general partners, specifically as follows:
+ A general partner must not be the owner of a sole proprietorship; must not be a general partner of another partnership unless it is accepted by the other general partners;
+ A general partner must not, in their own names or others’ names, do business in the same business lines as those of the partnership for personal gain or to serve the interests of another organization or individual;
+ A general partner must not transfer part or all of his/her stake in the company to another organization or individual unless it is accepted by the other general partners.
- Fails to do business in an honest and prudent manner or has inappropriate actions causing serious damage to the interest of the partnership and other partners; or
- Fails to fulfill a general partner’s obligations.
Fourth: He/she is serving an imprisonment sentence or banned by the court from doing certain jobs
Fifth: In other cases specified in the charter.
Thus, according to the above provisions, from January 01, 2021, there are 05 cases that a general partner status shall be terminated. It can be seen that, in comparison with current regulations, the Law on Enterprises 2020 of Vietnam has supplemented the case that a general partner status shall be terminated if he/she is serving an imprisonment sentence or banned by the court from doing certain jobs.
Concurrently, it should be noted that for 02 years from the date of termination in the cases that the partner voluntarily withdraws capital from the partnership or is is excluded from the partnership, he/she still jointly has a liability for the company’s debts that occur before the termination date which is equal to his/her total assets. After termination of a general partner whose name is used as part of or the whole partnership’s name, that general partner or his/her hair or legal representative is entitled to request the partnership to stop using that name.
Ty Na
- Key word:
- Law on Enterprises 2020 of Vietnam
