May a Private Enterprise Owner Lease Out the Private Enterprise?

May a private enterprise owner lease out the private enterprise? Does the private enterprise owner remain responsible for the enterprise during the lease period?

1. What is a private enterprise?

Under Article 188 of the Law on Enterprises 2020 on private enterprises:

Private enterprises

1. A private enterprise is an enterprise owned by one individual who is liable for all activities of the enterprise with all of their assets.

2. A private enterprise may not issue any type of securities.

3. Each individual may establish only one private enterprise. A private enterprise owner may not concurrently be a household business owner or a general partner of a partnership.

4. A private enterprise may not contribute capital to establish or purchase shares or capital contributions in a partnership, limited liability company or joint-stock company.

Accordingly, a private enterprise is an enterprise owned by one individual who is liable for all activities of the enterprise with all of their assets.

A private enterprise may not issue any type of securities. A private enterprise may not contribute capital to establish or purchase shares or capital contributions in a partnership, limited liability company or joint-stock company.

In addition, each individual may establish only one private enterprise. A private enterprise owner may not concurrently be a household business owner or a general partner of a partnership.

2. How is a private enterprise managed?

Under Article 190 of the Law on Enterprises 2020 on management of private enterprises:

Management of private enterprises

1. The private enterprise owner has full decision-making power over all business activities of the private enterprise and the use of profits after tax payment and fulfillment of other financial obligations as prescribed.

2. The private enterprise owner may directly manage or hire another person as Director or General Director to manage and operate the business; in this case, the private enterprise owner remains responsible for all business activities of the private enterprise.

3. The private enterprise owner is the legal representative, representing the private enterprise as the civil matter petitioner, plaintiff, defendant, or interested party with related rights and obligations before arbitration or courts, and representing the private enterprise in exercising other rights and obligations as prescribed.

Accordingly, the private enterprise owner is the legal representative of the private enterprise and has full decision-making power over all its business activities.

The private enterprise owner may directly manage or hire another person as Director or General Director to manage and operate the business.

3. If a private enterprise owner leases out the private enterprise, does the owner remain responsible for the enterprise during the lease period?

Under Article 191 of the Law on Enterprises 2020 on leasing private enterprises:

Leasing private enterprises

The private enterprise owner has the right to lease out the entire private enterprise but must notify in writing, accompanied by a notarized copy of the lease contract, to the Business Registration Authority and the tax authority within 03 working days from the effective date of the lease contract. During the lease period, the private enterprise owner remains responsible before the law as the owner of the private enterprise. The rights, obligations and responsibilities of the owner and the lessee regarding the business activities of the private enterprise are stipulated in the lease contract.

Accordingly, the private enterprise owner has the right to lease out the entire private enterprise but must complete the notification procedure — written notice accompanied by a notarized copy of the lease contract to the Business Registration Authority and the tax authority within 03 working days from the effective date of the lease contract.

And under the law, during the lease period the private enterprise owner remains responsible before the law as the owner of the private enterprise.

The rights, obligations and responsibilities of the owner and the lessee regarding the business activities of the private enterprise are stipulated in the lease contract.

Therefore, in your case, although you have gone abroad and leased out the entire enterprise, you remain the owner of the private enterprise in fact. Hence, you remain responsible before the law as the owner of the private enterprise.

Notes on applying current legal provisions

This article belongs to the Enterprise Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Preparing incomplete dossiers, documents or evidence.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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