Who has the right to establish a company/business? in Vietnam

Many customers, when wishing to establish a company/business, are worried and ask us: Am I qualified to establish a company? This article by ANT Legal Law Firm aims to answer related questions so that customers can basically understand the entities that have the right to establish a company.

LEGAL BASIS
Law on Enterprises 2020;
Law on Investment 2020;
Decree 01/2021/ND-CP on business registration;
Decree 122/2021/ND-CP regulates sanctions for administrative violations in the field of planning and investment.

Enterprise establishment

Enterprise establishment is simply the creation of a new enterprise in the economy. Business establishment activities are carried out by investors on the basis of legal regulations on the legal form of the company, industry, capital contribution method, company management organization, rights and obligations of the Company. Legally, establishing a company is an administrative procedure in the name of the company’s founding members or the company’s legal representative, and business registration is carried out to legalize the establishment of a new company.

Who has the right to establish a business

The subject of establishing a business is one of the conditions for establishing a business. Subjects allowed to establish businesses in Vietnam include organizations and individuals.

Subjects to establish businesses are organizations
If the entity with the right to establish an enterprise is an organization, then this organization must have legal status, because an organization can only invest capital to establish an enterprise when it has independent assets and is capable of taking independent responsibility with those assets.

The entity establishing an enterprise is an individual
If the subject with the right to establish an enterprise is an individual, that individual must have full civil act capacity to ensure responsibility for the enterprise he or she established.

In case the individual establishing a company in Vietnam is a foreigner, he or she is required to carry out investment registration procedures according to legal documents to be granted an Investment Registration Certificate.

Subjects allowed to establish businesses

Pursuant to Article 17 of the Law on Enterprises 2020, organizations and individuals have the right to establish and manage businesses in Vietnam, except in the following cases:

• State agencies and units of the people’s armed forces use state assets to establish business enterprises to make their own profits;
• Cadres, civil servants and public employees according to the provisions of the Law on Cadres and Civil Servants and the Law on Public Employees;
  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;
• Leaders and professional managers in state-owned enterprises, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;
• 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;
• 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.
• Organizations are commercial legal entities banned from doing business and operating in certain fields according to the provisions of the Penal Code.
• Organizations and individuals whose tax codes are suspended, have not yet fulfilled their tax obligations or have not yet paid their tax codes and the company is no longer in actual operation.
  Thus, all organizations and individuals that do not fall into one of the above cases have the right to establish a business.

Cases where the right to establish a company/business is restricted
In addition to those who are not allowed to establish a business, the law also clearly stipulates cases where the right to establish a business is restricted. Specifically as follows:

Pursuant to Article 180 of the Law on Enterprises 2020 stipulates:

• A general partner is not allowed to become a business owner.
• A general partner who does not have the consent of the remaining general partners is not allowed to become a general partner of the company. other.

According to the provisions of Article 188 of the Law on Enterprises 2020:

Each individual can only establish one private enterprise. At the same time the owner of a private enterprise cannot also be the owner of a business household or a general partner of a partnership.
Conditions for establishing a business
In addition to the conditions on subjects and objects allowed to establish a business analyzed above, to establish a business in Vietnam it is necessary to meet the following conditions:

Conditions on business registration industries and professions

According to Clause 1, Article 27 of the Law on Enterprises 2020, one of the conditions for a company to be granted a Business Registration Certificate is that the business registration industry and profession is not prohibited. private business. Enterprises are only allowed to operate in industries and occupations that have been registered with a competent state authority.

Prohibited business occupations are those that pose a risk of harming national defense, security, order, cultural and social safety…
In addition, Article 6 of the Law on Investment 2020 also stipulates other prohibited business lines such as: Prohibition of prostitution business; Buying and selling people, tissues, and body parts; Business activities related to human cloning…
The industry belongs to the group of conditional business lines, the company must ensure to meet the conditions prescribed by law.

Conditions on business establishment capital

charter capital

According to Clause 34, Article 4 of the Law on Enterprises 2020, it is stipulated: charter capital is the total value of assets owned by company members or company owners. contributed or committed to contribute when establishing a limited liability company or partnership, is the total par value of shares sold or registered to buy when establishing a joint stock company.

Legal capital

Is the level of capital required to carry out activities in one or more conditional industries and occupations. If a company registers a conditional business line or industry, it must comply with the conditions of that industry such as: facilities, practice certificates, legal capital… Businesses must meet different capital requirements.

Conditions on business names
According to the Law on Enterprises 2020, the business name must meet the name requirements specified in Articles 38 to Article 42 of the Law on Enterprises 2020 and not fall into the following prohibited cases:

Giving the same name or a name that causes confusion with the name of the registered enterprise is specified in Article 42 of the Enterprise Law.
Using the name of a state agency, the name of a people’s armed unit, the name of a political organization, a socio-political organization, a socio-political-professional organization, a social organization, a socio-professional organization as all or part of the enterprise’s proper name, unless approved by that agency, unit or organization.
Using words and symbols that violate historical, cultural, ethical traditions and fine customs of the nation.
Conditions for business headquarters
Corporate headquarters is where the company’s executive office is located. The company’s registered office is not necessarily the place where the company conducts production and business activities or where the company owner’s permanent residence is registered. The headquarters cannot be a dormitory or apartment building.

A company can have many business establishments in many different locations but the headquarters can only have one. The company headquarters address must be officially registered with the business registration authority. In case it is necessary to change the address of the company’s headquarters, it must be registered with the company registration agency before making the change.

Note: According to Decree 122/2021/ND-CP stipulating penalties for administrative violations in the field of planning and investment, violations of business establishment such as capital, registration, headquarters, offices… can be fined from 10,000,000 VND to 100,000,000 VND. At the same time, businesses must also take remedial measures depending on each specific case as detailed in this Decree.

If you have any problems or need to establish a company or business, please contact ANT Legal Law Firm for the best support!