Types of enterprise in Vietnam [Updated in 2022]

LuatVietnam would like to introduce the types of enterprise in Vietnam in 2022

1. Type of enterprise in Vietnam

1.1. Liability Limited Company (LLC) 

Liability Limited Company is prescribed in Chapter III of the Enterprise Law 2020 This type includes:

1.1.1 Limited liability companies with two or more members  

In accordance with the Article 46 of the Enterprise Law 2020, limited liability companies with two or more members have the characteristics as follows:

- An enterprise that has between 2 and 50 institutional and individual members. 

- Members shall be held responsible for debts and other property obligations of the enterprise within the capital amounts they have contributed to the enterprise:

Except for the case, the member fails to contribute or fails to fully contribute the capital amount as committed prescribed at the Clause4, Article 47 of this Law.

Members are only allowed to transfer contributed capital amounts in the cases as follows: request the company to redeem his/her/its contributed capital amount prescribed by Article 51; transfer, as prescribed in Article 52 or member, dies...as prescribed by Article 53 of the Law.

- Has the legal person status from the date it is granted an enterprise registration certificate 

- May not issue its shares, unless it issues shares for being transformed into a joint-stock company

In accordance with the Article 74 of the Enterprise Law 2020, single -member limited liability company has the characteristics as follows:

- A single-member limited liability company is an enterprise owned by one organization or individual. The company owner is liable for all debts and other property obligations of the company within the charter capital of the company.

Have legal entity status from the date of grant of the enterprise registration certificate.

- May not issue its shares, unless it issues shares for being transformed into a joint-stock company

- May issue its bonds, including the private placement of bonds. 

1.2. Joint stock companies 

One of the types of enterprise is the joint-stock company, this is also a popular form in these days. Common characteristics of joint-stock company are prescribed in the Article 111 of the Enterprise Law 2020:

- The charter capital is divided into equal portions called shares;

- Shareholders may be organizations or individuals; the minimum number of shareholders is 3 and there is no restriction on the maximum number of shareholders;

- Shareholders are liable for debts and other property obligations of the enterprise only within the amounts of capital contributed to the enterprise;

Shareholders can freely transfer their shares except for the cases: 

Within 3 years after the enterprise registration certificate is granted to the company, ordinary shares of founding shareholders may be freely transferred to other founding shareholders or entities other than founding shareholders if so approved by the General Meeting of Shareholders. (Clause 3, Article 120 of the Enterprise Law 2020);

The company charter contains provisions on share transfer restrictions (Clause 1, Article 127, Enterprise Law 2020)

Have legal entity status from the date of grant of the enterprise registration certificate.

May issue shares, bonds, and other types of securities.

1.3 Partnerships 

All the regulations of partnership are prescribed in the Article 11 of the Enterprise Law 2020, in particular:

 - There are at least 2 members being co-owners who jointly conduct business under one common name. Besides, have more members of contributed capital:

- General partners must be individuals who are liable for the obligations of the partnership with all of their assets;

Limited partners may be organizations or individuals who are only liable for the debts of the partnership within the limit of the capital amounts they have committed to contribute to the partnership;

A partnership has the legal entity status from the date it is granted an enterprise registration certificate.

Partnerships may not issue securities of any type.

1.4 A sole proprietorship 

In types of enterprises, a sole proprietorship takes the most care for any organization or individual choosing the small scale. All the regulations of a sole proprietorship are prescribed in the Article 188 of the Enterprise Law 2020, in particular:

A sole proprietorship is an enterprise owned by an individual who is liable for all activities of the enterprise with all his/her assets

Sole proprietorships may not issue securities of any type.

Each individual may establish only one sole proprietorship.  The owner of a sole proprietorship must not concurrently be a business household owner or a general partner in a partnership.

Private enterprises may not contribute capital for the establishment of, or purchase shares or capital contributions in, a partnership, limited liability company, or joint stock company.

2. What are the popular types of enterprise?

Liability and joint stock company are the popular forms for the reasons as follows:

- These are the types of enterprises that shareholders (for joint-stock companies) and owners (for liability limited companies) who are responsible for their contributed capital on the company’s regulations; have no responsibility for all their assets as the member of partnership or the owner of a sole proprietorship;

- Allow to issue bonds or both bonds and shares (if joint stock companies) and easily in mobilizing capital sources in production and business...

Here is the primary information on types of enterprise in Vietnam. Please contact LuatVietnam via 1900.6192 for further support if having demands on enterprise establishment as well as operations.