Regulations on private enterprise management according to Vietnamese law

How are private enterprise management regulated? Responsibilities of the owner in leasing or selling a private enterprise?

1. Regulations on private enterprises?

According to 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 private enterprises.

2. Private enterprises are not allowed to issue any type of securities.

3. Each individual is only allowed to establish one private enterprise. The owner of a private enterprise cannot also be the business owner or partner of a partnership.

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

At the same time, the investment capital contribution of private enterprise owners is regulated in Article 189 of the Law on Enterprises 2020, specifically:

“Article 189. Investment capital of private enterprise owners

1. Investment capital of private enterprise owners Business owners must register themselves. Private business owners are 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 Fully record in accounting books and financial reports of the enterprise according to the provisions of law.

3. During the operation process, 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.

Thus, the owner of a private business is an individual and each individual can only own one private business. The business owner will register himself and be responsible for all of his assets for all activities of the business.

2. What are the regulations for private enterprise management?

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

“Article 190. Management of private enterprises

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 enterprise 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.”

From the above regulations, the business owner is the legal representative of the company and has full decision-making authority over the company’s operations. Can directly or hire others to act as Director or General Director to manage and operate the company’s business activities.

3. Is it possible to lease or sell a private enterprise?

Private business owners have the right to lease or sell their businesses according to the provisions of Article 191 of the Law on Enterprises 2020 and Article 192 of the Law on Enterprises 2020, specifically:

“Article 191. Leasing to private enterprises

Private business owners have the right to lease their entire private enterprise but must notify in writing with a notarized copy of the lease contract to the Business Registration Authority and tax authority within 03 working days from the effective date of the lease contract. During the lease term, the private business owner is still responsible before the law as the owner of the private business. The rights, obligations and responsibilities of the owner and tenant for the business activities of a private enterprise are specified in the lease contract.

Article 192. Sale of a private enterprise

1. Owners of private enterprises have the right to sell their private enterprises to other individuals and organizations.

2. After selling a private enterprise, the private enterprise owner is still responsible for the debts and other property obligations of the private enterprise arising during the period before the date of enterprise transfer, unless otherwise agreed by the private enterprise owner, buyer and creditors of the private enterprise.

3. Owners of private enterprises and buyers of private enterprises must comply with the provisions of labor law.

4. The buyer of a private enterprise must register to change the owner of a private enterprise in accordance with the provisions of this Law.”

From the above provisions, the business owner has the right to lease or sell his business to another individual or organization.

– For leasing, it must be notified in writing with a notarized copy of the lease contract to the business registration authority and tax agency within 03 working days. from the effective date of the lease contract.

– For sale, the private enterprise owner is still responsible for the debts and other property obligations of the private enterprise arising during the period before the date of enterprise transfer.

– In case you lease and the tenant wants you to take part of the responsibility for the company’s operations, the Law does not have specific provisions on this issue regulation “During the lease term, the private business owner is still responsible before the law as the owner of the private business. The rights, obligations and responsibilities of the owner and tenant for the business activities of a private enterprise are specified in the lease contract. according to Article 191 of the Law on Enterprises 2020.