GENERAL ISSUES OF COMPANIES

AND PARTNERSHIPS

Assoc. Prof. Dr. Dư Ngọc Bích

OVERVIEW OF COMPANIES AND
PARTNERSHIPS
 Partnerships
▪ Based on a partnership agreement or actual
cooperation
▪ By two or more partners

▪ For their mutual interests

▪ All partners manage the business

▪ Partners have unlimited liability for debts of the

partnership
▪ Originally, partnership did not have a judicial person
status
Types of partnerships

▪ General partnership

▪ Limited partnership

▪ Limited liability partnership

 Separate legal personality
▪ An artificial entity, separated from its members and

managers

▪ Have certain rights and obligations as a person:

ownership, enter into transactions, sue or be sued,

responsible for its liabilities by its own assets (no
marriage right or voting right)

▪ The members are not responsible for the debts of the

entity.

▪ Continue to operate beyond the lifetime of its members

 Limited liability
▪ An individual or an legal entity has liability within

her/his/its capital contribution.

▪ Stipulated by the law

▪ Started in the 15th century, became popular in the

19th century (recognized by the laws of many

countries).
 Joint stock company
▪ The company capital is divided into equal shares (share

certificates called stocks)

▪ The shares can be bought by public

▪ Share buyers become the company’s members called

shareholders

▪ Shareholders have limited liability to the debts of the

company

▪ Shareholders can transfer their shares to others without any

effects to the continued existence of the company.

 Limited liability company
▪ A hybrid legal entity of joint stock company and a

partnership or sole proprietorship.

▪ Members have limited liability (such as a JSC)

▪ Close relation between members (such as a

partnership)
 Articles of organization or Corporate charter

Articles of organization or Articles of association (for

Ltd.) or Articles of incorporation or Corporate Charter
(for JSC)
✓ Containing the information required by law
✓ Establishing the existence of a company
✓ Filed with a state’s body.
GENERAL ISSUES OF COMPANIES
AND PARTNERSHIPS IN VIETNAM
 TYPES OF PARTNERSHIP AND COMPANY IN
VIETNAM

▪ Partnership
▪ Joint stock companies
▪ Limited liability company
- Limited liability company with two or more
members
- Limited liability with one member
▪ They are all legal persons
 Articles of association/Charters (article 24 of the LOE)
• An agreement of the members
• Information on the characteristics of the enterprise
(name, address, capital, sectors and trades, rights and
obligations of the members, organisation structure…)
• New: Number and title of managers and rights and
obligations of the at-law representative of the company;
division of rights and obligations of at-law
representatives, in case the company has more than one
at-law representative;
• Compliance with the law (mandatory/optional)
• Priority in application
• Must be registered at the Department of Business
registration
 Contracts prior to enterprise registration (article 18 of
the LOE)
• Founders of an enterprise may sign contracts to serve
the establishment and operation of the enterprise prior to
and during the course of enterprise registration.
• If an enterprise registration certificate is granted, the
enterprise shall continue exercising the rights and
performing the obligations arising from the signed
contracts, unless otherwise agreed upon in the contracts.
• If not, the person who signed the contract must be liable
for or if more than one person jointly found an enterprise,
they shall take joint responsibility for performing the
contract.
 At-law representatives (article 12 of the LOE)
• At-law representative: an individual representing an enterprise to
enter into transactions, as plaintiff, defendant or person with related
interests or obligations before arbitration or court, and has other
rights and obligations as prescribed by law.
• A Ltd.Com, or JSC may have more than one at-law representative.
• The company charter must:
➢ specify the number and managerial titles, and rights and obligations of
at-law representatives.
➢ specify the rights and obligations of every at-law representative. If not,
every at-law representative may act as a fully competent representative
of the company before a third party; all at-law representatives shall bear
joint responsibility for damage caused to the company in accordance
with the civil law and other relevant laws.
 Responsibilities of at-law representatives (Article 13)
• The at-law representative has the following responsibilities:
➢ a/ To exercise and perform the assigned rights and obligations in an
honest, prudent and best manner in order to guarantee the lawful
interests of the enterprise;
➢ b/ To be loyal to the interests of the enterprise; neither to abuse the title
or position nor to use business information, know-hows or opportunities
or other assets of the enterprise for personal gain or for the interests of
other organizations or individuals;
➢ c/ To notify the enterprise in a timely, complete and accurate manner of
other enterprises which he/she or his/her related party owns or in which
he/she or his/her related party has shares or contributed capital
amounts in accordance with this Law.
▪ The at-law representative shall bear personal liability for damage
caused to the enterprise due to his/her breach of the responsibilities
specified above
 Finance of companies
Share capital
▪ Representingthe owner’s equity in a
company/membership
▪ Membership rights: decision making; provided with
information; received dividend if making profit and
declared
▪ Be the company’s permanent capital
▪ The holders’ claim when the company cease to exist
subordinate to the claim of creditors or redeemed by
the company according to the company charter and
the law
Loan capital
• Representing the debtor-creditor relationship/non-
membership
• Based on the terms and conditions stated in the
loan contract
• Creditors’ claim the repayment of the principal
capital and interests irrespective of the profitability
of the company – priority of repayment
• May be provided with information- but no right to
making decision
 Capital contribution
Assets contributed as capital (article 34 LOE)
• in the form of Vietnam dong, freely convertible foreign
currencies, gold, value of land use rights, value of
intellectual property rights, technologies, technical know-
how and other assets that can be valued in Vietnam
dong.
• Only organizations and individuals that are lawful owners
of or have the lawful right to use these assets may use
such assets for capital contribution in accordance with
law.
 Transfer of ownership of assets contributed as capital
(Article 35 of LOE)
Members of a Ltd, partnership, shareholders of a JSC shall transfer
ownership of assets contributed as capital to the company
▪ For assets with registered ownership or value of land use rights, the
capital contributor shall carry out the procedures for transfer of
ownership over such assets or for transfer of such land use rights to
the company.
The transfer of ownership of assets contributed as capital is not
subject to registration fee;
▪ For assets the ownership of which is not subject to registration,
capital contribution shall be made by handing over assets
contributed as capital, certified with a minutes, unless it is made via
bank account.
▪ A capital contribution may be regarded as completed only when the
lawful ownership over assets contributed as capital has been
transferred to the company.
 Valuation of assets contributed as capital (Article 36 of LOE)
• Assets not Vietnam dong, a freely convertible currency or gold:
valued by the members, founding shareholders or a valuation
organization and denominated in Vietnam dong.
• Assets contributed to an enterprise upon its establishment:
➢ valued by its members or founding shareholders on the principle of
consensus;
➢ or by a valuation organization and that value of the assets shall be
approved by more than 50% of members or founding
shareholders.
• If assets overvalued compared to their actual value at the time of
capital contribution:
➢ members or founding shareholders jointly contribute an additional
capital amount equal to the difference between the assessed value and
the actual value at the time of completion of the valuation;
➢ they are also jointly responsible for the damage caused by the
intentional overvaluation of assets.
• Assets contributed as capital in the course of operation:
➢ be valued on the basis of agreement between the owner or Members’
Council, for Ltd.Com and partnerships, the Board of Directors, for JSC,
and the capital contributor;
➢ or by a valuation organization and that value of the assets shall be
agreed by the capital contributor and the owner or Members’ Council or
Board of Directors.
• If assets overvalued compared to their actual value at the time of
capital contribution:
➢ the capital contributor and the owner or member of the Members’
Council (for a Ltd.Com or partnership), or member of the Board
of Directors (for a JSC) jointly contribute an additional capital
amount equal to the difference between the assessed value and
the actual value at the time of completion of the valuation;
➢ they are also jointly responsible for the damage caused by the
intentional overvaluation of assets.