May a Sole Proprietorship Owner Contribute Capital to Establish a Joint-Stock Company?

What is a sole proprietorship?

Under Article 188 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025), a sole proprietorship is regulated as follows:

“Article 188. Sole proprietorships
1. A sole proprietorship is an enterprise owned by one individual who is liable for all of the enterprise’s activities with all of his/her assets.
2. A sole proprietorship may not issue any type of securities.
3. Each individual may establish only one sole proprietorship. The owner of a sole proprietorship may not concurrently be the owner of a household business or a general partner of a partnership.
4. A sole proprietorship may not contribute capital to establish, or purchase shares or capital contributions in, a partnership, a limited liability company or a joint-stock company.”

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Accordingly, a sole proprietorship is an enterprise owned by one individual who is liable for all of the enterprise’s activities with all of his/her assets.

How is the investment capital of a sole proprietorship owner regulated?

Under Article 189 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025), the capital of a sole proprietorship owner is regulated as follows:

“Article 189. Investment capital of a sole proprietorship owner
1. The investment capital of a sole proprietorship owner is registered by the owner himself/herself. The sole proprietorship owner must accurately register the total investment capital, specifying the amount in Vietnamese dong, freely convertible foreign currency, gold and other assets; for capital in other assets, the type, quantity and residual value of each type of asset must also be stated.
2. All capital and assets, including borrowed capital and leased assets, used in the enterprise’s business activities must be fully recorded in the enterprise’s accounting books and financial statements as prescribed by law.
3. During operation, the sole proprietorship owner may increase or decrease his/her investment capital in the enterprise’s business activities. The increase or decrease of the sole proprietorship owner’s investment capital must be fully recorded in the accounting books. Where the investment capital is reduced below the registered investment capital, the sole proprietorship owner may only reduce capital after registering with the Business Registration Authority.”
Accordingly, the investment capital of a sole proprietorship owner is registered by the owner himself/herself. The sole proprietorship owner must accurately register the total investment capital, specifying the amount in Vietnamese dong, freely convertible foreign currency, gold and other assets; for capital in other assets, the type, quantity and residual value of each type of asset must also be stated.

May a sole proprietorship owner contribute capital to establish a joint-stock company?
Under Clause 4, Article 188 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025):

“Article 188. Sole proprietorships
1. A sole proprietorship is an enterprise owned by one individual who is liable for all of the enterprise’s activities with all of his/her assets.
2. A sole proprietorship may not issue any type of securities.
3. Each individual may establish only one sole proprietorship. The owner of a sole proprietorship may not concurrently be the owner of a household business or a general partner of a partnership.
4. A sole proprietorship may not contribute capital to establish, or purchase shares or capital contributions in, a partnership, a limited liability company or a joint-stock company.”
Accordingly, a sole proprietorship may not contribute capital to establish, or purchase shares or capital contributions in, a partnership, a limited liability company or a joint-stock company. Thus the law only restricts these rights with respect to the sole proprietorship itself, and has no restrictions on the sole proprietorship owner. Therefore, a sole proprietorship owner may fully contribute capital, establish, or purchase shares or capital contributions in a limited liability company or a joint-stock company.

How is the management of a sole proprietorship conducted?
Under Article 190 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025), the management of a sole proprietorship is regulated as follows:

“Article 190. Management of a sole proprietorship
1. The sole proprietorship owner has full authority to decide on all business activities of the sole proprietorship and the use of profits after tax payment and fulfillment of other financial obligations as prescribed by law.
2. The sole proprietorship owner may directly manage or hire another person as Director or General Director to manage and operate business activities; in this case, the sole proprietorship owner remains liable for all business activities of the sole proprietorship.
3. The sole proprietorship owner is the legal representative, representing the sole proprietorship as the petitioner for civil matter settlement, plaintiff, defendant, person with related rights and obligations before Arbitration and Courts, and representing the sole proprietorship in exercising other rights and obligations as prescribed by law.”
Accordingly, the sole proprietorship owner has full authority to decide on all business activities of the sole proprietorship and the use of profits after tax payment and fulfillment of other financial obligations as prescribed by law.