In case of registering to establish a social enterprise, what criteria must be met? What are the documents, order and business registration procedures for social enterprises? What rights and obligations do social enterprises have? These are questions surrounding the procedures for establishing a social enterprise. Through the above problem, ANT Legal Please give your opinion as follows.

Legal basis for establishing social enterprises

Law on Enterprises 2020
Law on Investment 2020
Decree 47/2021/ND-CP

What is a social enterprise?

Social enterprises are regulated in Decree 47/2021/ND-CP. First of all, social enterprises according to current law are:

• Enterprises are established and operate in accordance with the provisions of the Enterprise Law.
• Social enterprises have business activities
• Social enterprises have the goal of operating to solve social problems; environment; activities for the benefit of the community; and profits earned from business activities are used to serve social goals; environment for common benefits.

Criteria for determining social enterprises

Social enterprises need to meet the criteria prescribed by the Law on Enterprises 2020, specifically:

• Is an enterprise registered and established under the provisions of the Enterprise Law;
• Purpose to solve social and environmental problems for the benefit of the community;
• Use at least 51% of the enterprise’s total annual after-tax profit for reinvestment; to realize the registered goals.

Types of social enterprises in Vietnam

Non-profit social enterprise:

• Volunteer organizations;
• Associations, disability protection centers, lonely elderly people…

A profitable social enterprise is a business model that makes a profit though. But there is no profit distribution or financial issues. Instead, it focuses on the purpose of sharing environmental, social and community projects. Most of the business’s profits will be used to reinvest or to subsidize these activities.

About the owner: established by individuals or organizations that combine economic and social goals; Social enterprises operate in the form of limited liability companies or partnerships. Profits are often used for social development purposes.

Conditions for establishing a social enterprise

Conditions for the establishment entity

All organizations and individuals establishing social enterprises must meet the following conditions:

1/ For an organization, does that organization have legal status? (according to the provisions of the 2015 Civil Code)

2/ Individuals from 18 years old; have full civil act capacity;

3/ Established organizations and individuals do not fall into the cases in Clause 2, Article 17 of the Law on Enterprises 2020.

charter capital conditions

Social enterprises with financial capacity register charter capital. This depends on the industry and business scale.

Enterprises commit to contribute sufficient capital and the right type of assets when registering to establish a business; within 90 days from the date of issuance of the Business Registration Certificate. This does not include shipping time; import assets for capital contribution; and carry out administrative procedures to transfer property ownership.

After 90 days from the time of commitment to contribute capital but do not contribute enough capital. Social enterprises must carry out procedures to reduce charter capital.

Conditions on business lines

Enterprises conduct business registration in industries and professions that are not prohibited by law; and that business line must be in the Vietnamese economic industry code system.

In case of a conditional industry or profession, the enterprise must ensure that it meets the conditions of each industry. According to the provisions of law.

Conditions for the name of a social enterprise

The name of a social enterprise must ensure two elements: type of business and proper name;

– The phrase “society” can be added to the business name. However this is not required.

– The business name must be attached to the head office; branch; representative office; business location of the enterprise. Currently, the law does not specifically regulate name tags. Therefore, Social Enterprises only need to print their names. According to the business registration certificate. And attach it to the location of that social enterprise’s operations. Any material is fine and no other additional information is needed.

– The business name must be printed or written on transaction papers, documents and publications issued by the business.

– The business name must not fall into the prohibited cases as prescribed in Article 38 of the Law on Enterprises 2020.

Head office conditions

– Regarding territory: The enterprise’s headquarters is located in the territory of Vietnam; is the contact address of the business and is determined according to the administrative unit boundaries; include phone number, fax number and email (if any).

– Note: the business headquarters cannot be located at an apartment address (except for apartments with commercial functions) or a dormitory house.

Documents for establishing a social enterprise

• Application for social enterprise registration;
• Social enterprise charter (with full signature of the person participating in establishing the enterprise);
• List of members or shareholders;
• Implementation commitment social and environmental goals;
• Decision of the enterprise on approving the content of the signed commitment to implement social and environmental goals;
• Valid copy of the meeting minutes of the general meeting of shareholders for joint stock companies, of the board of members for limited liability companies with 2 or more members, of the company owner/president of the company for 1 member limited liability companies, of partners to the partnership company through the content of the commitment to implement social and environmental goals;
• Power of attorney for the person submitting the application (if not the legal representative of the submitting company);
• Valid copy of ID card/CCCD/passport of the owner, capital contributing members, founding shareholders, legal representative of the enterprise and the person Authorized representative submits documents (if any).

Procedures for establishing a social enterprise

After completing the application, businesses can submit it directly to Business Registration Office – Department of Planning & Investment where the business is headquartered or register online at https://dangkylanhdoanh.gov.vn/vn/
Resolving time: Within 5-7 working days from the date of application submission.
Received results: If the application is valid, the business registration office posts the commitment to implement social and environmental goals on the National Business Registration Portal and issues a business registration certificate to the business.
In case the documents are not valid; The business registration office will issue a written notice; which clearly states the reasons and requirements for amending and supplementing documents and resubmitting from the beginning.

Frequently asked legal questions about social enterprises

What should you keep in mind after establishing a social enterprise?

To avoid future legal risks, after establishing a business, customers should complete the following procedures:

• Engrave the seal and announce the seal sample
• Register a bank account
• Buy invoices
• Pay fees and license fees according to regulations

What are the advantages of establishing a social enterprise?

Social enterprises mobilize and receive funding in different forms from individuals, businesses, non-governmental organizations and other Vietnamese and foreign organizations to offset management and operating costs of the business;

Business owners and social enterprise managers are considered, facilitated and supported in the issuance of relevant licenses, certificates and permits according to the provisions of law;

Social enterprises receive sponsorship in the form of assets, finance or technical support from domestic and foreign individuals, agencies and organizations registered to operate in Vietnam to achieve the goal of solving social and environmental problems;

Social enterprises receive many preferential tax policies. However, each industry, profession, and social enterprise field has different preferential policies.

ANT Legal’s social enterprise establishment consulting service

Customers need to provide:

• Application for social enterprise registration;
• Social enterprise charter (with full signature of the person participating in establishing the business);
• List of members or shareholders;
• Commitment to implementing social and environmental goals;
• Decision of the enterprise on approving the content of the commitment to implement social and environmental goals has been signed;
• Valid copy of the meeting minutes of the general meeting of shareholders for a joint stock company, of the board of members for a limited liability company with 2 or more members, of the company owner/chairman of the company for a 1-member limited liability company, of the general partners for a partnership company through the content of the commitment to implement social and environmental goals;
• Valid copy ID card/CCCD/passport of the owner, capital contributing members, founding shareholders, legal representative of the enterprise and authorized representative to submit the application (if any).

Scope of work:

• Legal advice on establishing a social enterprise
• Implementing the application for social enterprise registration association;
• Implement a commitment to implement social and environmental goals;
• Execute a power of attorney for the applicant (if not the legal representative of the submitting company);
• Instructions and preparation of documents for establishing a business;
• Consulting on choosing the optimal form of business most;
• Consulting and implementing other sub-licenses for business operations.

Above is the entire consulting opinion of ANT Legal on Procedures for establishing social enterprises. The advice or legal documents cited above may have changed or expired at the present time. Customers please contact us for accurate advice and support.