Cases where the rights of partnership members are limited

What are the rights and obligations of general partners? What circumstances limit the rights of general partners?

1. What are the regulations on business operations of a partnership company?

According to Article 184 of the Law on Enterprises 2020, the regulations on business operations of a partnership company are as follows:

– Partnership members are the legal representatives of the company and organize the daily business operations of the company. Any restriction on a general partner in carrying out the company’s daily business is only effective against a third party when that person is aware of that restriction.

– In operating the company’s business activities, general partners assign each other to take on the positions of management and control of the company.

When some or all general partners jointly carry out some business tasks, the decision shall be made. Decisions are approved according to the principle of majority approval.

Activities carried out by partners outside the scope of the company’s business activities are not the responsibility of the company, unless such activities have been approved by the remaining members.

– The company can open one or several accounts at the bank. The Board of Members appoints members authorized to deposit and withdraw money from those accounts.

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

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

+ Convene and organize meetings of the Board of Members; Sign resolutions and decisions of the Board of Members;

+ Assign and coordinate business tasks among partnership members;

+ Organize, fully and honestly maintain accounting books, invoices, vouchers and other documents of the company according to the provisions of law;

+ Represent the company as a requester to resolve a civil matter, plaintiff, defendant, and person with related rights and obligations before the Arbitrator or Court; Represent the company to exercise other rights and obligations according to the provisions of law;

+ Other obligations prescribed by the company charter.

Thus, the legal representatives of a partnership company are the partnership members. Together, they organize and operate, assign positions to manage and control the company, and organize the business operations of the partnership.

2. What rights and obligations do general partners have?

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

– 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;

+ Require the company to compensate for damages from business activities within the scope of assigned tasks if such damages are not caused by that member’s personal mistakes;

+ 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 assets at the company 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.

In addition to the above rights and obligations, general partners are also limited to a number of rights specified in Article 180 of the Law on Enterprises 2020 as follows:

“Article 180. Limitation of rights of general partners

1. Partnership members are not allowed to own private enterprises; cannot be a general partner of partnership company otherwise unless otherwise agreed by the remaining partners.

2. Partnership members 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.

3. A general partner is not allowed to transfer part or all of his or her capital contribution in the company to another organization or individual without the approval of the remaining general partners.”

Thus, in case you are a capital contributing member, you are not allowed to own a private enterprise, this is one of the limited rights for general partners in Clause 1 Article 180 of the Law on Enterprises 2020.

3. In what cases is the status of a partnership member terminated?

Pursuant to Article 185 of the Law on Enterprises 2020, which stipulates the termination of partnership membership status as follows:

– A partnership member’s status is terminated in the following cases:

+ Voluntary withdrawal of capital from the company;

+ Death, missing, limited or loss of civil act capacity, difficulty in cognition and behavior control;

+ Expelled from the company;

+ Serving a prison sentence or being banned by the Court from practicing certain professions or doing certain jobs according to the provisions of law law;

+ Other cases prescribed by the company’s Charter.

– General partners have the right to withdraw capital from the company if approved by the Board of Members. In this case, the member who wants to withdraw capital from the company must notify in writing the request to withdraw capital at least 06 months before the date of capital withdrawal; capital can only be withdrawn at the end of the fiscal year and the financial report of that fiscal year has been approved via.

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

+ Inability to contribute capital or fails to contribute capital as committed after the company has made a second request;

+ Violating the provisions of Article 180 of this Law;

+ Conducting business without integrity dishonesty, carelessness or other inappropriate behavior causing serious damage to the interests of the company and other members;

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

– In case of termination of the membership status of a member who is limited or has lost civil act capacity, has difficulty in cognition and behavior control, the capital contribution of that member will be refunded fairly and satisfactorily.

– Within 02 years from the date of termination of partnership member status as prescribed in Points a, c, d and dd, Clause 1 of this Article, that person must still be jointly responsible with all of his or her assets for the company’s debts incurred before the date of termination of membership status.

– After termination of partnership membership status, if the name of that member has been is used as part or all of the company name, then that person or their heirs or legal representatives have the right to request the company to stop using that name.

Thus, if you want to open a private business and be the owner yourself, you must terminate your partnership membership status by withdrawing capital from the company.