Current types of enterprises in Vietnam

Current types of enterprises in Vietnam (Internet image)

1. What is an enterprise?

According to Clause 10, Article 4 of the Law on Enterprises 2020), an enterprise is an organization with its own name, property, transaction office, established or registered for establishment under the provisions of law for business purposes.

2. Types of enterprises currently in Vietnam

According to the provisions of the Law on Enterprises 2020), in Vietnam, there are currently 5 types of enterprises, including:

(1) Multi-member limited liability companies in Vietnam

- A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals.

A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise, except for the cases specified in Clause 4 Article 47 of the Law on Enterprises 2020.

The member’s stake (contributed capital) may only be transferred in accordance with Articles 51, 52 and 53 of the Law on Enterprises 2020.

- A multiple-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.

- Multiple-member limited liability companies must not issue shares except for equitization.

- Multiple-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds shall comply with Article 128 and Article 129 of the Law on Enterprises 2020.

(Article 46 of the Law on Enterprises 2020)

(2) Single-member limited liability company in Vietnam

- A single-member limited liability company is an enterprise owned by a single organization or individual ((hereinafter referred to as “owner”). The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital.

- A single-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.

- A single-member limited liability company must not issue shares except for equitization.

- Single-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds shall comply with Article 128 and Article 129 of the Law on Enterprises 2020.

(Article 74 of the Law on Enterprises 2020)

(3) Joint stock companies in Vietnam

- A joint stock company is an enterprise in which:

+ The charter capital is divided into units of equal value called shares;

+ Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders;

+ A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the shareholder;

+ Shareholders may transfer their shares to other persons except for the cases specified in Clause 3 Article 120 and Clause 1 Article 127 of this Law.

- A joint stock company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.

- A joint stock company may issue shares, bonds and other kinds of securities.

(Article 111 of the Law on Enterprises 2020)

(4) Partnerships in Vietnam

- A partnership is an enterprise in which:

+ There are least 02 partners that are joint owners of the company and do business under the same name ((hereinafter referred to as “general partner”). There can be limited partners in addition to general partners;

+ A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets;

+ A limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital contribution.

- A partnership has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.

- A partnership must not issue any kind of securities.

(Article 177 of the Law on Enterprises 2020)

(5) Sole proprietorships in Vietnam

- A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.

- A sole proprietorship must not issue any kind of securities.

- An individual may only establish one sole proprietorship. The owner of a sole proprietorship must not concurrently own a household business or hold the position of general partner of a partnership.

- A sole proprietorship must not contribute capital upon establishment  or purchase shares or stakes of partnerships, limited liability companies or joint stock companies.

(Article 188 of the Law on Enterprises 2020)

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