Tiếng Việt
Table of contents:
1. What is a private enterprise?
2. What does the law stipulate about the capital of private enterprises
3. Can a private enterprise contribute capital to establish another enterprise?
4. How is private enterprise management carried out?
1. What is a private enterprise?
Pursuant to Clauses 1 and 2, Article 188 of the 2020 Enterprise Law, regulations on private enterprises stipulate:
“1. A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.
2. A sole proprietorship must not issue any kind of securities.”
2. Law on capital of private enterprises
Pursuant to Article 189 of the 2020 Enterprise Law, which stipulates the investment capital of private enterprise owners:
“1. The capital of a sole proprietorship shall be registered by its owner. The sole proprietorship’s owner shall register the accurate amounts of capital in VND, convertible currencies, gold and other assets, types and quantities of assets.
2. All the capital, including loans and leased assets serving the sole proprietorship’s operation, shall be fully recorded in its accounting books and financial statements as prescribed by law.
3. During its operation, the sole proprietorship’s owner is entitled to increase or decrease its capital. The increases and decreases in capital shall be fully recorded in accounting books. In case the capital is decreased below the registered capital, the decrease may only be made after it has been registered with the business registration authority.”
3. Can a private enterprise contribute capital to establish another enterprise?
According to Clauses 3 and 4, Article 188 of the 2020 Law on Enterprises, it is stipulated that:
“3. 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.
4. A sole proprietorship must not contribute capital upon establishment or purchase shares or stakes of partnerships, limited liability companies or joint stock companies.”
According to the above provisions, private enterprises are solely responsible for all activities of the enterprise with all of their assets, so they do not have separate legal status to contribute assets to LLCs, joint stock companies, and partnerships. Thus, private enterprises are not allowed to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies, or joint stock companies.
However, the owner of a private enterprise still has the right to contribute capital to another company. The 2020 Enterprise Law only limits the right for private enterprises, while the head of the private enterprise himself still has the right to contribute capital, purchase shares or capital contributions in limited liability companies, joint stock companies, and partnerships.
4. How is private enterprise management carried out?
Pursuant to Article 190 of the 2020 Enterprise Law, which stipulates the management of private enterprises:
“1. The sole proprietorship’s owner has total authority to decide all of its business activities, use of post-tax profit and fulfillment of other financial obligations as prescribed by law.
2. The owner may directly or hire another person to hold the position of Director/General Director. In case of an hired Director/General Director, the owner is still responsible for every business activity of the enterprise.
3. The sole proprietorship’s owner is its legal representative who will represent it during civil proceedings, as the plaintiff, defendant or person with relevant interests and duties before the court and arbitral tribunals, and in performance of other rights and obligations prescribed by law.”
According to the above provisions, the owner of a private enterprise has full authority to decide on all business activities of the private enterprise, the use of profits after paying taxes and fulfilling other financial obligations as prescribed by law.