Is the act of doing business as an enterprise without applying for enterprise registration illegal in Vietnam?

Is the act of doing business as an enterprise without applying for enterprise registration illegal in Vietnam? (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. Is the act of doing business as an enterprise without applying for enterprise registration illegal in Vietnam?

According to Article 16 of the Law on Enterprise 2020, the following prohibited acts are stipulated:

- Issuing or refusing to issue the Certificate of Enterprise registration against regulations of this Law; requesting the founder to submit additional documents against regulations of this Law; delaying, obstructing, harassing enterprise founders and business operation of enterprises.

- Obstructing the enterprise’s owner, members/partners/shareholders from performing their rights and obligations prescribed in this Law and the enterprise’s charter.

- Doing business as an enterprise without applying for enterprise registration; carrying on busines operation after the Certificate of Enterprise Registration has been revoked or while the enterprise is being suspended.

- Providing dishonest or incorrect information in the enterprise registration application or application for changes to enterprise registration information.

- Declaring false charter capital; failure to contribute adequate charter capital as registered; deliberate contribution of assets with false value.

- Engaging in banned business lines or business lines from which foreign investors are banned; engaging in restricted business lines without fulfillment of conditions or failure to maintain fulfillment of conditions during operation in restricted business lines.

- Frauds, money laundering, terrorism financing.

Thus, doing business as an enterprise without applying for enterprise registration is one of the prohibited acts according to the provisions of law.

2. What are the penalties for doing business as an enterprise without applying for enterprise registration in Vietnam?

According to Clause 4 of Article 46 of Decree 122/2021/ND-CP, a fine ranging from VND 50,000,000 to VND 100,000,000 shall be imposed for any of the following violations:

- Doing business as an enterprise without applying for enterprise registration;

- Carrying on business operation after the enterprise registration certificate has been revoked or while the enterprise is requested by a competent authority to suspend or terminate its business operation.

In the case of a tax offence, fines therefor shall be imposed according to regulations on penalties for administrative tax offences.

At the same time, business registration is required for acts of doing business as an enterprise (Clause 5 of Article 46 of Decree 122/2021/ND-CP)

Thus, act of doing business as an enterprise without applying for enterprise registration can be fined from 50 million VND to 100 million VND.

In addition, organizations that commit the above acts are also subject to the remedial measure of being forced to register to establish businesses.

3. Responsibilities of the enterprise’s legal representative in Vietnam

According to Article 13 of the Law on Enterprise 2020, an enterprise’s legal representative shall:

- Exercise and perform his/her rights and obligations in an honest and prudent manner to protect the enterprise’s lawful interests;

- Be loyal to the enterprise’s interests; not abuse his/her power and position or use the enterprise’s information, secrets, business opportunities and assets for personal gain or serve any other organization’s or individual’s interests;

- Promptly and fully provide the enterprise with information about the enterprises that he/she or his/her related person owns or has shares/stakes in as prescribed in this Law.

Note: The enterprise’s representative shall be personally responsible for any damage to the enterprise within the limits of responsibilities specified above.

Nguyen Ngoc Que Anh

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