Do businesses have the right to sign business contracts before registering their business?

Do businesses have the right to sign business contracts before registering their business?

1. What is the concept of an Enterprise?

Pursuant to Clause 10, Article 4 of the Law on Enterprises 2020, “An enterprise is an organization with its own name, assets, transaction office, established or registered to be established in accordance with the law for business purposes. business.”

2. What is the concept of contract?

According to the provisions of Article 385 of the 2015 Civil Code as follows:

“Article 385. Concept of contract

A contract is an agreement between the parties on the establishment, change or termination of civil rights and obligations event.”

Based on the above provisions, a contract is an agreement between the parties on the establishment, change or termination of civil rights and obligations.

3. Do businesses have the right to sign business contracts before business registration?

According to the provisions of Article 18 of the Law on Enterprises 2020, it is stipulated as follows:

“Article 18. Contracts before business registration

1. The business founder may sign a contract to serve the establishment and operation of the business before and during the business registration process.

2. In case of being granted a Business Registration Certificate, the enterprise must continue to exercise the rights and obligations arising from the signed contract specified in Clause 1 of this Article and the parties must carry out the transfer of contractual rights and obligations according to the provisions of the Civil Code, unless otherwise agreed in the contract.

3. In case the enterprise does not issue the Certificate of Business Registration, the person signing the contract as prescribed in Clause 1 of this Article is responsible for implementing the contract; in case another person participates in establishing the enterprise, he/she is jointly responsible for implementing that contract.”

Thus, with the above regulations, the business founder can sign a contract to serve the establishment and operation of the business before and during the business registration process. In case of being granted a Certificate of Business Registration, the enterprise must continue to exercise the rights and obligations arising from the signed contract according to regulations and the parties must carry out the transfer of rights and obligations under the contract according to the provisions of the Civil Code, unless otherwise agreed in the contract.

In case the enterprise is not granted a Certificate of Business Registration, the person signing the contract according to this regulation is responsible for implementing the contract; In case another person participates in establishing a business, they are jointly responsible for implementing that contract.

4. How are private enterprises regulated?

Article 188 of the Law on Enterprises 2020 regulates private enterprises as follows:

– A private enterprise is an enterprise owned by an individual who is responsible with all of his or her own assets for all activities of the enterprise.

– A private enterprise is not issued any type of securities.

– 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.

– Private enterprises are not allowed to contribute capital to establish or purchase shares or capital contributions in a partnership, limited liability company or joint stock company.

In addition, the investment capital of the owner of a private enterprise is stipulated in Article 189 of this Law as follows: following:

– Investment capital of private business owners 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 be clearly stated.

– All capital and assets, including loans and leased assets, used in the business activities of the enterprise must be fully recorded in the accounting books and financial reports of the enterprise according to the provisions of law.

– 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 can only reduce the capital after registering with the Business Registration Authority.