Is it possible for an officer to contribute capital to a limited liability company with 2 or more members?

Who has the right to contribute capital to establish a limited liability company with 2 or more members?

According to the provisions of Article 17 of the Law on Enterprises 2020 on the right to contribute capital to establish an enterprise as follows:

“Article 17. Right to establish, contribute capital, buy shares, purchase capital contributions and manage enterprises

1. Organizations and individuals have the right to establish and manage enterprises in Vietnam according to the provisions of this Law, except for the cases specified in Clause 2 of this Article.

2. The following organizations and individuals do not have the right to establish and manage businesses in Vietnam:

a) State agencies and units of the people’s armed forces use state assets to establish business enterprises to make private profits for their agencies and units;

b) Cadres, civil servants and public employees according to the provisions of the Law on Cadres and Civil Servants and the Law on Public Employees;

c) Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, and police workers in agencies and units of the Vietnam People’s Police, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises or manage state-owned enterprises;

d) Leading and professional managers in state-owned enterprises as prescribed in Point a, Clause 1, Article 88 of this Law, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;

d) Minors; people with limited civil act capacity; people who have lost their civil act capacity; people with difficulty in cognition and behavior control; organizations without legal status;

e) People who are being prosecuted for criminal liability, detained, are serving prison sentences, are serving administrative measures at compulsory drug treatment facilities, compulsory education establishments or are banned by the Court from holding certain positions, practicing professions or doing certain jobs; Other cases according to the provisions of the Bankruptcy Law and the Law on Prevention and Combat of Corruption.

If the Business Registration Authority requests, the person registering to establish a business must submit a criminal record card to the Business Registration Authority;

g) Organizations are commercial legal entities banned from doing business and operating in certain fields according to the provisions of the Penal Code.

3. Organizations and individuals have the right to contribute capital, buy shares, and purchase capital contributions to joint stock companies, limited liability companies, and partnerships according to the provisions of this Law, except for the following cases:

a) State agencies, units of the people’s armed forces using state assets to contribute capital to enterprises to gain private profits for their agencies and units;

b) Subjects not allowed to contribute capital into enterprises according to the provisions of the Law on Cadres and Civil Servants, the Law on Public Employees, and the Law on Prevention and Combat of Corruption.

4. Gaining private profits for your agency or unit as prescribed in Point a, Clause 2 and Point a, Clause 3 of this Article is the use of income in any form derived from business activities, from capital contribution, share purchase, purchase of capital contributions for one of the following purposes:

a) Divide in any form to some or all of the people specified in Point b and Point c Clause 2 this;

b) Adding to the operating budget of an agency or unit contrary to the provisions of law on state budget;

c) Establishing a fund or adding to a fund to serve the private interests of the agency or unit.”

Do public officials have the right to conduct business?

Article 14 of the Law on Public Employees 2010 regulates the rights of officials regarding business activities as follows:

– To carry out professional activities outside the working hours specified in the working contract, unless otherwise prescribed by law.

– To sign service contracts with other agencies, organizations or units that are not prohibited by law but must complete assigned tasks and have the consent of the head of the public service unit.

– Contribute capital but do not participate in the management and operation of limited liability companies, joint stock companies, partnerships, cooperatives, private hospitals, private schools and private scientific research organizations, unless otherwise prescribed by specialized laws.

What are the things that public employees are not allowed to do?

According to the provisions of Article 19 of the Law on Public Employees 2010 as follows:

“Article 19. Things that public employees are not allowed to do

1. Avoiding responsibility, abdicating assigned work or tasks; causing factions and disunity; voluntarily quit your job; participate in strike.

2. Using property of agencies, organizations, units and people contrary to the provisions of law.

3. Discrimination against ethnicity, gender, social class, belief, religion in any form.

4. Taking advantage of professional activities to propagate against the Party’s guidelines and policies, the State’s laws or cause harm to customs, fine traditions, cultural and spiritual life of the people and society.

5. Insulting the honor, dignity, and reputation of others while performing professional activities.

6. Other things officials are not allowed to do according to the provisions of the Law on Prevention and Combat of Corruption, the Law on Thrift Practices and Anti-Waste and other relevant provisions of law.”

Can officials contribute capital to establish a limited liability company with 2 or more members?

According to the legal provisions mentioned above, the law does not prohibit public employees from contributing capital to companies, however public employees are not allowed to establish or manage or operate businesses.

In addition, when contributing capital to a Limited Liability Company with 2 or more members, an officer will become a Member of the Board of Members, and a Member of the Board of Members is in the case of an enterprise manager as prescribed in Clause 24, Article 4 of the Law on Enterprises 2020 as follows:

“Article 4. Interpretation of terms

…

24. Enterprise managers are private enterprise managers and company managers, including private enterprise owners, partners, Chairman of the Board of Members, members of the Board of Members, Company President, Chairman of the Board of Directors, members of the Board of Directors, Director or General Director and individuals holding other management positions as prescribed in the company’s Charter.”

Thus, regarding the overall relevant legal regulations, you are an official and cannot contribute capital to establish a limited liability company with 2 or more members.