Regulations on the type of partnership under Vietnamese law

What is the type of Partnership Company? What are the rights and obligations of capital contributing members of a partnership?

1. Regulations on Partnership Companies?

According to Article 177 of the Law on Enterprises 2020 regulations on Partnerships as follows:

“Article 177. Partnership company

1. A partnership company 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 contributing members capital;

b) A general partner must be an individual, responsible with all of his or her assets for the company’s obligations;

c) A capital contributing member is an organization or individual and is only responsible for the company’s debts within the amount of capital committed to contribute to the company.

2. The partnership company has legal status from the date be granted a Business Registration Certificate.

3. The partnership company is not allowed to issue any type of securities.”

Thus, the partnership company must have at least 02 members as owners. In a partnership company, there are general partners and capital contributing members. Partnership members must be individuals, while capital contributing members can be individuals or organizations. General partners must be responsible for all assets, while capital contributing members are only responsible for the company’s debts within the amount of capital committed to contribute to the company.

2. Implementing the right to contribute capital and issue a certificate of capital contribution at a Partnership Company?

Implementing capital contribution and issuance of a certificate of capital contribution at a Partnership Company is regulated in Article 178 of the Law on Enterprises 2020, specifically:

“Article 178. Implementing capital contribution and issuance of capital contribution certificate

1. General partners and capital contributing members must contribute the committed capital amount in full and on time.

2. A general partner who fails to contribute the committed capital in full and on time, causing damage to the company, must be responsible for compensating the company for the damage.

3. In case a capital contributing member fails to contribute the committed capital amount in full and on time, the not yet fully contributed capital is considered that member’s debt to the company; In this case, the relevant capital contributing member may be expelled from the company according to the decision of the Board of Members.

4. At the time of contributing the full amount of committed capital, members will be issued a certificate of capital contribution. The capital contribution certificate must include the following main contents:

a) Name, business code, and head office address of the company;

b) charter capital of the company;

c) Name, contact address, nationality, legal document number of individual for individual members; name, business code or legal document number of the organization, head office address for organizational members; membership type;

d) Value of capital contribution and type of capital contribution assets of members;

d) Number and date of issuance of capital contribution certificate;

e) Rights and obligations of the owner of the capital contribution certificate;

g) Full name and signature of the owner of the capital contribution certificate and of the general partners of the company.

5. In case the capital contribution certificate is lost, damaged or destroyed in another form, the member will be re-issued the capital contribution certificate by the company.”

Thus, when contributing capital to a partnership, you must comply with the above regulations. At the time of contributing the full amount of capital as committed, you will be issued a certificate of capital contribution. In case the certificate is lost or damaged, the company will re-issue a certificate of capital contribution.

3. Rights and obligations of capital contributing members at a Partnership Company?

The rights and obligations of capital contributing members in a partnership company are stipulated in Article 187 of the Law on Enterprises 2020, specifically:

“Article 187. Rights and obligations of capital contributing members

1. Capital contributing members have the following rights:

a) Participate in meetings, discuss and vote at the Board of Members on amending and supplementing the company’s Charter, amending and supplementing the rights and obligations of capital contributing members, reorganizing and dissolving the company and other contents of the company’s Charter directly related to their rights and obligations;

b) Receive annual profit shares corresponding to the capital contribution ratio in the company’s charter capital;

c) Be provided with the company’s annual financial report; has the right to request the Chairman of the Board of Members and general partners to provide complete and honest information about the company’s business situation and results; review accounting books, minutes, contracts, transactions, records and other documents of the company;

d) Transfer your capital contribution in the company to another person;

d) Conducting business on behalf of an individual or on behalf of another person in the company’s line of business;

e) Dispose of your capital contribution by inheritance, gift, mortgage, pledge and other forms according to the provisions of law and the company’s Charter; In case of death, the heir will replace the deceased member and become a capital contributing member of the company;

g) Receive a portion of the company’s remaining asset value corresponding to the proportion of capital contribution in the company’s charter capital when the company is dissolved or goes bankrupt;

h) Other rights according to the provisions of this Law and the company’s Charter.

2. Capital contributing members have the following obligations:

a) Be responsible for the debts and other property obligations of the company within the amount of capital committed to contribute;

b) Not allowed to participate in company management, not allowed to conduct business on behalf of the company;

c) Comply with the Company Charter, resolutions and decisions of the Board of Members;

d) Other obligations according to the provisions of this Law and the company’s Charter.”

From the above regulations, when contributing capital to a partnership company you will enjoy the following rights:

– Participate in meetings, discuss and vote at the Board of Members on amending and supplementing the company’s Charter, amending and supplementing the rights and obligations of capital contributing members, reorganizing and dissolving the company and other contents of the company’s Charter directly related to their rights and obligations;

– Receive annual profit shares corresponding to the capital contribution ratio in the company’s charter capital;

– Be provided with the company’s annual financial report; has the right to request the Chairman of the Board of Members and general partners to provide complete and honest information about the company’s business situation and results; review accounting books, minutes, contracts, transactions, records and other documents of the company;

– Transfer your capital contribution in the company to another person;

– Conducting business on behalf of an individual or on behalf of another person in the company’s line of business;

– Dispose of your capital contribution by inheritance, gift, mortgage, mortgage and other forms according to the provisions of law and the company’s Charter; In case of death, the heir will replace the deceased member and become a capital contributing member of the company;

– Receive a portion of the company’s remaining asset value corresponding to the capital contribution ratio in the company’s charter capital when the company dissolves or goes bankrupt;

– Other rights according to the provisions of this Law and the company’s Charter.

At the same time, perform the following obligations:

– Responsible for the debts and other property obligations of the company within the amount of capital committed to contribute;

– Not allowed to participate in company management, not allowed to conduct business on behalf of the company;

– Comply with the Company Charter, resolutions and decisions of the Board of Members;

– Other obligations according to the provisions of this Law and the company’s Charter.