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Chapter 2 Sole Proprietorship and Partnership

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33 views25 pages

Chapter 2 Sole Proprietorship and Partnership

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2.1.

Characteristics

2.2. Management structure


CONTENT
2.3. Strength and weakness
• Definition: <Clause 1, Article 188 EL
2020>
2.1. An enterprise owned by an individual
and responsible with all its assets for all
Characteristics activities of the enterprise.
2.1.1. SOLE
=>>> Is a type of enterprise = > with
PROPRIETORSHIP common characteristics of the
enterprise; have the rights and
obligations of the enterprise.
• Amount of owners
Read article 188 and answer questions:
In the following case, in which cases can a sole
proprietorship be established?
• Li => SP
• Li+Ki => SP
• LLC Mi => SP
• Li+ LLC Mi => SP
• LLC Mi + LLC Nhi => SP
Self-invests capital to
create the enterprise
- Owned by 1 Decides to manage, do
individual business by her/himself

Decides how to share


profits
Legal status
SP has no legal status
Liability
• The owner of the SP must be
responsible with all his assets for
all activities of the enterprise.
Issuing securities

SP is not allowed to issue any securities


including shares and bonds

Limitation

Article 180 of EL 2020


Who has the right to establish the sole proprietorship?

• A. Mimi Joint Stock Company opens a SP

• B. The owner of a one-member limited liability company opens a SP

• C. General partners open a SP

Which of the following statements is correct?

• The owner of a SP must be responsible for debts and obligations of the SP with assets he/she
contribute to the SP

• The owner of a SP cannot simultaneously be the member of partnerships

• A SP may not issue securities to raise capital


2.1. Characteristics
2.1.2. PARTNERSHIP
• Art. 177 EL 2020
• A partnership is an enterprise with legal status; in which at least 2 individuals are joint
owners of the company, doing business together under a common name, jointly
responsible with all their assets for the obligations of the company and called general
partners.
• In addition, the company may also have limited liability partners who are individuals or
organizations, only responsible for the company’s debts to the extent of the amount of
capital contributed to the company.
Question: Who could
form a partnership?
(1) Individual A => P’ship
(2) Sole proprietorship B=> P’ship
(3) A+SP B => P’ship
(4) A+LLC C => P’ship
(5) SP A+ LLC C => P’ship
(6) A+B+ SP C => P’ship
(7) A+B+ LLC C => P’ship
• Be an enterprise
• Have legal status from the date of issuance of the enterprise registration
certificate.
• Do business under a common name
• Characteristics of company members:
+ General partners: must be individual; directly carry out business activities; have
joint and several unlimited liability
+ Limited partners: can be individuals, organizations; limited liability
• The Company is responsible with all its assets for the company's operations
• Securities are not allowed to be issued
2.1. Management structure
2.1.1. SOLE PROPRIETORSHIP
The owner of a sole proprietorship has complete control
Rights of the owner

a. Right to invest capital


b. Right to manage and operate the business
d. Right to dispose of business
e. Right to profits/losses
Leasing a sole proprietorship

• Responsibilities of the parties:


+ The owner of the SP is still responsible as the owner of the SP;
+ The tenant must be responsible with the owner based on the lease
agreement
Sale of SP

- Is the transfer of -Procedure:


ownership of SP + Notify in writing to the business
from the owner to registration authorities;
buyers + Sign a notarized sale contract;
+ Buyer re-registers the SP
-Responsibilities of the owner of SP:
+ Before selling, the owner of the enterprise
must:
 Pay off all debts;
 Settlement for employees
 Liquidation of commercial contracts...

+ After selling: still be responsible for debts


and other obligations of the SP unless
otherwise agreed by buyers, sellers and
creditors.
2.1. Management structure
2.1.2. PARTNERSHIP

• Rights of partners:
Distinguish general partners and limited partners
General partners Limited partners
Right to -Manage the P’ship - Don’t have this right
manage - Vote on anything - Vote on some issues: amending
and supplementing the charter,
amending and supplementing
their rights and obligations,
reorganizing and dissolving the
company
Right to Right to inspect the books and Right to inspect the books and
information records, contracts… records
- Do business on behalf of the - No right to do
company, legal representative; business on behalf of
Right to use the company's seals and the company
do assets to do business; right to be
business repaid …
- To be entitled to share profits - To be entitled to share
in the proportion to their profits in proportion to their
Right to contributed capital or contributed capital;
profits according to the partnership
and agreement (the charter);
losses
Duties of partners
General partners Limited partners
Obligation to - Contributing correctly, - Contributing correctly, fully and on time
contribute fully and on time as as committed => the uncontributed capital
capital committed => violations, is considered a debt to the company;
causing damage to the Failure to do so may result in expulsion
company, must compensate;
Liability for Joint and several liability Limited liability
company debts

Other duties Duty of loyalty None


Duty of care
Duty of obedience
Duty to inform
Management model in a partnership

Hội đồng thành viên: Member's Council

Chủ tịch HĐTV: Chairman of the Member's Council (General partner)

GĐ, TGĐ: Director (General partner)


1. Member’s Council
Includes all members in the company

* About the organization Headed by Chairman of the Member's


Council, elected by the MC.

Chaiman of the MC must be GP,

*Competence Central nervous system

Working mechanism Collecting opinions through meetings


* Meeting of MC
- The right to convene: The Chairman of the Members' Council stands to
convene a meeting; All GPs have the right to request a meeting
-Vote: Not based on contributed capital, 1 vote/1 GP unless
otherwise provided by the charter
Decision of the MC:
+ at least 2/3 GP approved, specific rate specified by
charter (Cl.4 art.182 LDN)
+ at least 3/4 GP approved for: <Cl.3 art182 EL2020>
 Company development direction;
 Amending and supplementing the charter;
 Receiving new GP;
 Accepting GP to leave the company, expelling GP
 Decide on borrowing, raising capital, lending with a
value equal to or greater than 50% of the charter capital
Decide to buy or sell assets with a value equal to or
greater than the charter capital,…
Representation in P’ships

• Each general partner is the legal representative of the company to


carry out the company's business activities;
• Chairman of the Member's Council or General Director/CEO is the
representative of the company in relation to state authorities, in
lawsuits and disputes before courts and arbitrators.

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