Can a general partner be a Director of a Joint Stock Company? What rights and obligations do general partners have in a partnership company?

What is a partnership company?

According to Article 177 of the Law on Enterprises 2020, the regulations on partnerships are as follows:

“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.”

Accordingly, a partnership is an enterprise in which:

– 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 partnership members). In addition to general partners, the company may have additional capital contributing members;

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

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

What rights and obligations do general partners have in a partnership company?

According to Article 181 of the Law on Enterprises 2020, the rights and obligations of general partners are stipulated as follows:

Partnership members have the following rights:

– Participate in meetings, discuss and vote on company issues; Each general partner has one vote or another number of votes specified in the company’s charter;

– On behalf of the company doing business in the company’s business lines; negotiate and sign contracts, transactions or covenants with conditions that the partner considers most beneficial to the company;

– Using company assets to conduct business in the company’s business lines; In case you advance your money to do business for the company, you have the right to request the company to return both principal and interest at the market interest rate on the principal amount advanced;

– Request the company to compensate for damage from business activities within the scope of assigned tasks if such damage is not caused by that member’s personal mistake;

– Request the company and other partners to provide information about the company’s business situation; Check the company’s assets, accounting books and other documents when necessary;

– Receive profits divided in proportion to the capital contribution ratio or according to the agreement stipulated in the company charter;

– When the company dissolves or goes bankrupt, the remaining asset value will be divided in proportion to the capital contribution to the company if the company charter does not stipulate a different ratio;

– In case a general partner dies, the member’s heirs will enjoy the value of the company’s assets after deducting the debts and other property obligations under that member’s responsibility. Heirs can become partners if approved by the Board of Members;

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

Partnership members have the following obligations:

– Conduct management and conduct business activities honestly, carefully and in the best way to ensure maximum legal benefits for the company;

– Manage and carry out business activities in accordance with the provisions of law, the Company’s Charter and resolutions and decisions of the Board of Members; If you violate the regulations at this point and cause damage to the company, you must be responsible for compensating for the damage;

– Do not use company assets for personal gain or to serve the interests of other organizations or individuals;- Refund to the company the money and assets received and compensate for damage caused to the company in the case of receiving money or other assets from the company’s business activities on behalf of the company, on behalf of an individual or on behalf of another person without paying it to the company;

– Jointly responsible for paying all remaining debts of the company if the company’s assets are not enough to cover the company’s debts;

– Bear the loss corresponding to the capital contribution to the company or according to the agreement stipulated in the company’s Charter in case the business company suffers a loss;

– Regularly report honestly and accurately in writing on a monthly basis on your business situation and results to the company; provide information about its business situation and results to members who request;

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

Can a partner be a Director of a Joint Stock Company?

According to Article 180 of the Law on Enterprises 2020 regulations on restricting rights for general partners are as follows:

“Article 180. Restrictions on rights of general partners

1. General partners are not allowed to own private enterprises; are not allowed to be general partners of other partnerships unless agreed by the remaining partners.

2. General partners are not allowed to do business on their own behalf or on behalf of others. the company’s business lines for personal gain or to serve the interests of other organizations and individuals.

3. A partner may not transfer part or all of his/her capital contribution in the company to another organization or individual without the consent of the remaining partners.”

Accordingly, partners are not allowed to act on their own behalf or on behalf of others doing business in the same industry or line of business as the company for personal gain or to serve the interests of other organizations or individuals. Thus, because your company and your brother’s are in the clothing business, the general partner cannot be the Director of the joint stock company.