Restrictions on the Rights of General Partners in Vietnam

What are the rights and obligations of general partners? In which cases are the rights of general partners restricted?

1. How is business management of a partnership company regulated?

Under Article 184 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/07/2025) on business management of a partnership company as follows:

– General partners are the legal representatives of the company and organize the management of the company’s daily business activities. Any restriction on a general partner in performing the company’s daily business is effective against a third party only when that person is aware of the restriction.

– In managing the company’s business activities, general partners assign among themselves the managerial and supervisory titles of the company.

When some or all general partners jointly perform certain business tasks, decisions are adopted by majority approval.

Activities performed by a general partner outside the scope of the company’s business activities are not the company’s responsibility, except where such activities have been approved by the remaining members.

– The company may open one or more bank accounts. The Members’ Council designates the member authorized to deposit and withdraw money from such accounts.

– The Chairman of the Members’ Council, the Director or the General Director has the following obligations:

+ Manage and run the company’s daily business as a general partner;

+ Convene and organize meetings of the Members’ Council; sign resolutions and decisions of the Members’ Council;

+ Assign and coordinate business tasks among general partners;

+ Organize the complete and truthful arrangement and keeping of accounting books, invoices, vouchers and other documents of the company in accordance with law;

+ Represent the company as petitioner in civil matters, plaintiff, defendant, or person with related rights and obligations before Arbitration and Courts; represent the company in exercising other rights and obligations as provided by law;

+ Other obligations as provided in the company charter.

Accordingly, the legal representatives of a partnership company are the general partners. Together they organize management, assign managerial and supervisory titles of the company, and organize the management of the partnership company’s business.

2. What are the rights and obligations of a general partner?

The rights and obligations of general partners are provided in Article 181 of the Law on Enterprises 2020, specifically:

– A general partner has the following rights:

+ Participate in meetings, discuss and vote on company matters; each general partner has one vote or a different number of votes as provided in the company charter;

+ Conduct business in the company’s business lines and trades in the company’s name; negotiate and sign contracts, transactions or covenants on terms that the general partner considers most beneficial to the company;

+ Use the company’s assets to conduct business in the company’s business lines and trades; where advancing his/her own money for the company’s business, have the right to require the company to reimburse both the principal and interest at the market interest rate on the advanced principal;

+ Require the company to compensate for losses from business activities within the assigned tasks if such losses were not caused by the member’s personal fault;

+ Require the company and other general partners to provide information on the company’s business situation; inspect the company’s assets, accounting books and other documents when deemed necessary;

+ Receive profit distribution corresponding to the ratio of contributed capital or as agreed in the company charter;

+ Upon dissolution or bankruptcy of the company, receive the remaining asset value corresponding to the ratio of contributed capital to the company if the company charter does not provide a different ratio;

+ Upon the death of a general partner, the member’s heir is entitled to the asset value at the company after deducting debts and other property obligations of that member. The heir may become a general partner if approved by the Members’ Council;

+ Other rights as provided by this Law and the company charter.

– A general partner has the following obligations:

+ Manage and conduct business activities honestly, carefully and in the best manner to ensure the maximum lawful interests of the company;

+ Manage and conduct business activities in accordance with law, the company charter and resolutions and decisions of the Members’ Council; if violating this point and causing damage to the company, be liable to compensate for the damage;

+ Not use the company’s assets for personal gain or to serve the interests of other organizations or individuals;

+ Return to the company money and assets received and compensate for damage caused to the company where, in the company’s name, in his/her own name or in another person’s name, he/she received money or other assets from the company’s business activities without remitting them to the company;

+ Jointly be liable for payment of all remaining debts of the company if the company’s assets are insufficient to cover the company’s debts;

+ Bear losses corresponding to the contributed capital to the company or as agreed in the company charter where the company’s business incurs losses;

+ Periodically each month, truthfully and accurately report in writing on his/her business situation and results to the company; provide information on his/her business situation and results to any requesting member;

+ Other obligations as provided by this Law and the company charter.

In addition to the above rights and obligations, general partners are subject to certain restrictions on rights as provided in Article 180 of the Law on Enterprises 2020 as follows:

“Article 180. Restrictions on rights of general partners

1. A general partner may not be the owner of a private enterprise; may not be a general partner of another partnership company except with the unanimous consent of the remaining general partners.

2. A general partner may not, in his/her own name or in another person’s name, conduct business in the same business lines and trades of the company for personal gain or to serve the interests of other organizations or individuals.

3. A general partner may not transfer part or all of his/her contributed capital at the company to another organization or individual without the approval of the remaining general partners.”

Accordingly, if you are currently a capital-contributing member, you may not be the owner of a private enterprise — this is one of the restrictions on general partners in Clause 1, Article 180 of the Law on Enterprises 2020.

3. In which cases is general partner status terminated?

Under Article 185 of the Law on Enterprises 2020 on termination of general partner status as follows:

– A general partner’s status is terminated in the following cases:

+ Voluntarily withdrawing capital from the company;

+ Death, disappearance, being limited or losing civil act capacity, having difficulties in cognition and behavior control;

+ Being expelled from the company;

+ Serving a prison sentence or being prohibited by a Court from practicing a profession or performing certain jobs as provided by law;

+ Other cases as provided in the company charter.

– A general partner has the right to withdraw capital from the company if approved by the Members’ Council. In this case, the member wishing to withdraw capital must notify in writing the request to withdraw capital no later than 06 months before the withdrawal date; capital may only be withdrawn at the end of the fiscal year and after the financial statements of that fiscal year have been approved.

– A general partner is expelled from the company in the following cases:

+ Being unable to contribute capital or failing to contribute capital as committed after the company has made a second request;

+ Violating Article 180 of this Law;

+ Conducting business dishonestly, carelessly or committing other inappropriate acts causing serious damage to the interests of the company and other members;

+ Failing to properly perform the obligations of a general partner.

– Where the status of a member who is limited or has lost civil act capacity, or has difficulties in cognition and behavior control, is terminated, that member’s contributed capital is refunded fairly and satisfactorily.

– Within 02 years from the date of termination of general partner status as provided in points a, c, d and đ, Clause 1 of this Article, such person remains jointly liable with all of his/her assets for the company’s debts incurred before the date of termination of membership.

– After termination of general partner status, if the member’s name has been used as part or all of the company name, that person or his/her heir or legal representative has the right to require the company to cease using that name.

Accordingly, if you wish to open a private enterprise and be the owner yourself, you must terminate your general partner status, for example by withdrawing capital from the company.