What is a legal entity? Legal status of enterprises

Enterprises means an organization with its own name, assets, and transaction office, established or registered for establishment in accordance with the law for business purposes. Although they are organizations, not all types of businesses have legal status. So, how is a legal entity defined? What types of businesses are recognized as legal entities according to current legal regulations?

CSPL:  Clause 10 Article 4, 46, 74, 111, 177, 188 Law on Enterprises 2020

             Article 74 of the 2015 Civil Code

1. What is a legal entity?

Pursuant to the provisions of Article 74 of the 2015 Civil Code, an organization is recognized as a legal entity when it meets the following conditions:

– Established in accordance with the provisions of this Code and other relevant laws.

– Has the following organizational structure following:

+ Legal entities must have an executive agency. The organization, duties and powers of the executive agency of a legal entity are specified in the charter of the legal entity or in the decision to establish the legal entity.

+ The legal entity has other agencies according to the decision of the legal entity or according to the provisions of law.

– Has assets independent of other individuals and legal entities and is responsible for its own assets.

 – Independently participate in legal relations on your own behalf.

2. Does a two-member limited liability company have legal status?

According to the provisions of Article 46 of the Law on Enterprises 2020, a two-member limited liability company has the following characteristics:

Article 46. Limited liability company with two or more members

1. A limited liability company with two or more members is an enterprise with from 02 to 50 members who are organizations and individuals. Members are responsible for debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except for the cases specified in Clause 4, Article 47 of this Law. Members’ capital contributions can only be transferred according to the provisions of Articles 51, 52 and 53 of this Law.

2. A limited liability company with two or more members has legal status from the date of issuance of the Business Registration Certificate.

3. A limited liability company with two or more members is not allowed to issue shares, except to convert into a joint stock company.

4. Limited liability companies with two or more members may issue bonds according to the provisions of this Law and other relevant laws; The issuance of individual bonds must comply with the provisions of Article 128 and Article 129 of this Law.

Conclusion: A limited liability company with two or more members has legal status from the date of issuance of the Business Registration Certificate.

3. Does a single-member limited liability company have legal status?

According to the provisions of Article 74 of the Law on Enterprises 2020, a single-member limited liability company has the following characteristics:

Article 74. Single-member limited liability company

1. A single-member limited liability company is an enterprise owned by an organization or individual (hereinafter referred to as the company owner). The company owner is responsible for the company’s debts and other property obligations within the company’s charter capital.

2. A one-member limited liability company has legal status from the date of issuance of the Business Registration Certificate.

3. A one-member limited liability company is not allowed to issue shares, except to convert into a joint stock company.

4. A one-member limited liability company may issue bonds according to the provisions of this Law and other relevant laws; issuance of private bonds according to the provisions of Article 128 and Article 129 of this Law.

Conclusion: A one-member limited liability company has legal status from the date of issuance of the Business Registration Certificate.

4. Does a joint stock company have legal status?

According to the provisions of Article 111 of the Law on Enterprises 2020, a joint stock company has the following characteristics:

Article 111. Joint stock company

1. A joint stock company is an enterprise in which:

a) charter capital is divided into equal parts called shares;

b) Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number;

c) Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

d) Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.

2. A joint stock company has legal status from the date of issuance of the Business Registration Certificate.

3. A joint stock company has the right to issue shares, bonds and other securities of the company.

Conclude:A joint stock company has legal status from the date of issuance of the Business Registration Certificate.

5. Does a partnership company have legal status?

According to the provisions of Article 177 of the Law on Enterprises 2020, a partnership company has the following characteristics:

Article 177. Partnership company

1. A partnership is an enterprise in which:

a) There must be at least 02 members who are joint owners of the company, doing business together under a common name (hereinafter referred to as general partners). In addition to general partners, the company may have additional capital contributing members;

b) General partners must be individuals, responsible with all their assets for the company’s obligations;

c) Capital contributing members are organizations and individuals and are only responsible for the company’s debts within the amount of capital committed to contribute to the company.

2. A partnership company has legal status from the date of issuance of the Business Registration Certificate.

3. Partnership companies are not allowed to issue any type of securities.

Conclude:A partnership company has legal status from the date of issuance of the Business Registration Certificate.

6. Does a private enterprise have legal status?

According to the provisions of Article 188 of the Law on Enterprises 2020, private enterprises have the following characteristics:

Article 188. Private enterprises

1. A private enterprise is an enterprise owned by an individual who is responsible with all of his or her assets for all activities of the enterprise.

2. Private enterprises are not allowed to issue any type of securities.

3. Each individual is only entitled to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a business household or a general partner of a partnership.

4. 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.

Conclusion: Because the assets of the business owner and the private enterprise are not independent, the private enterprise does not satisfy the conditions to be recognized as a legal entity according to the law.