Can private business owners contribute capital to establish a joint stock company? How is the investment capital of a private enterprise owner regulated?

What is a private enterprise?

According to Article 188 of the Law on Enterprises 2020, regulations on private enterprises are as follows:

“Article 188. Private enterprises private enterprise
1. A private enterprise is an enterprise owned by an individual who is solely responsible for all activities of the enterprise.
2. A private enterprise is not allowed to issue any type of securities.
3. Each individual is only allowed to establish one private enterprise joint venture or general partner of a partnership.
4. Private enterprises are not entitled to 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 an individual who is responsible with all of his or her assets for all activities of the enterprise.

How is the investment capital of private business owners regulated?

According to Article 189 of the Law on Enterprises 2020, the regulations on capital of private business owners are as follows:

“Article 189. Investment capital of private business owners
1. Investment capital of business owners The owner of a private enterprise is obliged to accurately register the total investment capital, clearly stating the amount of capital in Vietnamese Dong, freely convertible foreign currency, gold and other assets; for capital in other assets, the type of asset, quantity and remaining value of each type of asset must be clearly stated.
2 must be fully recorded in the accounting books and financial reports of the enterprise according to the provisions of law.
3. During operation, the owner of a private enterprise has the right to increase or decrease his or her investment capital in the enterprise’s business activities. The increase or decrease in investment capital of a private enterprise owner must be fully recorded in accounting books. In case the investment capital is reduced to less than the registered investment capital, the private enterprise owner may only reduce the capital after registering with the Business Registration Authority.”

Accordingly, the investment capital of a private business owner is registered by the business owner himself. Private enterprise owners are obliged to accurately register the total investment capital, clearly stating the capital amount in Vietnam Dong, freely convertible foreign currencies, gold and other assets; For capital in other assets, the type of asset, quantity and remaining value of each type of asset must also be clearly stated.

Can private business owners contribute capital to establish a joint stock company?

According to Clause 4, Article 188 of the Law on Enterprises 2020, it is stipulated as follows:

“Article 188. Private enterprises
1. A private enterprise is an enterprise owned by an individual who is responsible with all of his or her assets for all activities of the enterprise.
2. Private enterprises are not allowed to issue any type of securities.
3. Each individual is only entitled to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a business household or a general partner of a partnership.
4. Private enterprises are not entitled to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies or joint stock companies.”

Accordingly, private enterprises are not entitled to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies or joint stock companies. Thus, the law only limits these rights for private enterprises and does not have restrictions on private business owners. Therefore, private business owners can absolutely contribute capital, establish or buy shares or capital contributions in limited liability companies or joint stock companies.

How is private enterprise management carried out?

According to Article 190 of the Law on Enterprises 2020, the regulations on private enterprise management are as follows:

“Article 190. Private enterprise management
1. The owner of a private enterprise has full authority to decide on all business activities of the private enterprise, the use of profits after paying taxes and performing other financial obligations according to the provisions of law.
2. Private business owners can directly or hire others to act as Director or General Director to manage and operate business activities; In this case, the private enterprise owner is still responsible for all business activities of the private enterprise.
3. The owner of a private enterprise is the legal representative, representing the private enterprise as a requester to resolve a civil matter, plaintiff, defendant, person with related rights and obligations before the Arbitrator or Court, representing the private enterprise to exercise other rights and obligations according to the provisions of law.”

Accordingly, the owner of a private enterprise has full authority to decide on all business activities of the private enterprise, the use of profits after paying taxes and performing other financial obligations according to the provisions of law.