Setting up a partnership in Vietnam

Setting up a partnership in Vietnam

DMS Law firm in Vietnam! Lawyers in Vietnam advise on setting up a partnership in Vietnam in according to Law on Enterprises in Vietnam No 68/2014/QH13 dated 26/11/2014, with the following contents:

Partnership

1. A partnership means an enterprise of which:

a) At least 02 partners are co-owner of the company who run business together in a common name (hereinafter referred to as general partner). Apart from general partners, the company may have contributing partners;

b) General partners are individuals who are responsible for the company’s obligations with all of their property;

c) Contributing partners are only liable for the company’s debts up to the value of capital contributed to the company.

2. A partnership has its own legal status from the issuance date of the Certificate of Business registration.

3. Partnerships must not issue any kind of shares.

Contributing capital and issuing certificate of capital contribution

1. General partners and contributing partners shall fully and punctually contribute capital as committed.

2. The general partner who fails to fully and punctually contribute capital as committed shall pay compensation for any damage to the company.

3. If a contributing partner fails to fully and punctually contribute capital as committed, the deficit of capital is considered that partner’s debt to the company; in this case such contributing partner may be removed from the company under a decision of the Board of partners.

4. As soon as capital is fully contributed, the partner shall be issued with the certificate of capital contribution. The certificate of capital contribution must contain the following information:

a) The enterprise’s name, enterprise identification number, address of the headquarter;

b) The company’s charter capital;

c) Full name, permanent residence, nationality, ID/passport number of every partner; types of partners;

d) Value of stake and type of assets contributed as capital by partners;

dd) Numbers and dates of issue of certificates of capital contribution;

e) Rights and obligations of holders of certificates of capital contribution;

g) Full names, signatures of holders of certificates of capital contribution and general partners.

5. If the certificate of capital contribution is lost or damaged or otherwise destroyed, the partner shall have it reissued by the company.

Assets of a partnership

Assets of a partnership include:

1. Contributed assets the ownership of which have been transferred to the company by members;

2. Created assets bearing the company’s name;

3. Assets derived from business activities carried out by general partners on behalf of the company and from the business activities single-handedly carried out by general partners;

4. Other assets prescribed by law.

Restrictions on general partners

1. A general partner must not own a sole proprietorship or hold the position of general partner of another partnership, unless otherwise agreed by other general partners.

2. General partners must not do the same business lines of the company, whether single-handedly or on behalf of another person, for self-seeking purposes or serving the interest of other entities;

3. A general partner must not transfer part of or all of his/her stake to another person, unless otherwise agreed by other general partners.

Rights and obligations of general partners

1. Every general partner is entitled to:

a) Attend meetings, discuss, and vote on the company’s issues; each general partner has a vote (or a number of vote prescribed by the company’s charter);

b) Do the business lines of the company in the name of the company; negotiate, conclude contracts and agreements with the terms and conditions that are considered by the general partner most beneficial to the company;

c) Use the company’s seal and assets to do the company’s business lines. Any general partner who advances his/her own money to do the company’s business is entitled to request the company to return the money, including both principal and interest at the market rate;

d) Request the company to compensate for the damage caused by the business operation if such damage is not at the partner’s fault;

dd) Request the company or other general partner to provide information about the company’s performance; inspect the assets, accounting books, and other documents where necessary;

e) Receive distributed profits in proportion to the capital contribution or under agreement according to the company’s charter;

g) Receive part of remaining assets in proportion to their stake holding in case the company is dissolved or bankrupt, unless a specific ration is prescribed by the company’s charter;

h) If a general partner dies, his/her inheritor shall receive the value of the company’s assets minus (-) the debts owed by such partner. The inheritor may become a general partner if accepted by the Board of partners;

i) Perform other rights prescribed in this Law and the company’s charter.

2. General partners have responsibilities to:

a) Manage and run the business in a truthful, careful manner to ensure the company’s legitimate interests;

b) Manage and run the company’s business in accordance with law, the company’s charter, Resolutions of the Board of Partners; pay compensation for damage caused by failure to comply with regulations in this Point;

c) not use the company’s assets for self-seeking purposes or serving the interest of other entities;

d) Return the money, assets received, and pay compensation for damage to the company caused by receipt of money or assets from the company’s business operation instead of giving it to the company, whether single-handedly, on behalf of the company, or on behalf of other persons;

dd) Take joint responsibility for paying the remaining debts of the company if the company’s assets are not sufficient to pay all its debts;

e) Bear a loss in proportion to their stakes in the company or under an agreement according to the company’s charter in case the company suffers a loss;

g) Submit truthful and accurate monthly reports on his/her own performance; provide information about his/her owner performance to other partners at their request;

h) Perform other duties prescribed by this Law and the company’s charter.

The Board of Partners

1. The Board of partners consists of all partners The Board of partners shall elect a general partner as the Chairperson of the Board of partner, who concurrently holds the position of Director/General Director of the company, unless otherwise prescribed by the company’s charter.

2. General partners are entitled to request a meeting of the Board of partners to discuss and decide the company’s business. The requesting partner shall prepare the meeting agenda and documents.

3. The Board of partners are entitled to decide every company’s business. Unless otherwise prescribed by the company’s charter, the following issues must be approved by at least three fourths (3/4) of general partners:

a) The company’s development orientation;

b) Amendments to the company’s charter;

c) Admission of a new general partner;

d) Approval for a withdrawal or removal of general partner from the company;

dd) Decision on a project of investment;

e) Decision to take loans and raise capital in other manners; give a loan with a value of ≥ 50% charter capital of the company, unless a higher rate is prescribed by the company’s charter;

g) Decision to buy, sell assets with a value of ≥ the company’s charter capital, unless a higher rate is prescribed by the company’s charter;

h) Decision to ratify annual financial statement, total profit, distributable profit, and amount of profit distributed to each;

i) Decision to dissolve the company.

4. Decide any issue that is not mentioned in Clause 3 of this Article if the decision is approved by at least two thirds of general partners; the specific ration shall be prescribed by the company’s charter.

5. The right to vote of contributing partners shall comply with this Law and the company’s charter.

Convening meetings of Board of partners

1. The Chairperson of the Board of partners may convene a meeting of the Board of partners whenever it is deemed necessary or at the request of general partners. If the Chairperson of the Board of partners fails to convene a meeting at the request of a general partner, such partner shall convene the meeting.

2. The invitation to the meeting may be made in writing, by phone, fax, or another electronic medium. The invitation must specify the purposes, requirements, contents, agenda, location of the meeting, and name of the partner that request the meeting.

Documents serving discussion of the issues mentioned in Clause 3 Article 177 of this Law must be sent in advance to all partners by the deadline prescribed by the company’s charter.

3. The Chairperson of the Board of convening partner shall chair the meeting. Every meeting of the Board of partners must be recorded into the minutes. The minutes must contain:

a) The enterprise’s name, enterprise identification number, address of the headquarter;

b) Purposes, agenda, and contents of the meeting;

c) Time and location of the meeting;

d) Full names of the chair and attending partners;

dd) Opinions of attending partners;

e) The Resolutions ratified, number of partners that cast affirmative votes, and basic contents of such Resolutions;

g) Full names and signatures of attending partners.

Running a partnership’s business

1. General partners are entitled to act as the company’s legal representatives and run the company’s everyday business. All restrictions on general partners’ running the company’s everyday business are only effective to a third party if such person knows such restrictions.

2. While running the company’s business, general partners shall hold various positions of managers and controllers.

When some or all general partners doe certain business works, decisions shall be ratified under the majority rule.

The company is not responsible for any work done by a general partner beyond the company’s scope of business, unless such work is accepted by other partners.

3. The company may open one or some bank accounts. The Board of partners shall authorize a partner to deposit and withdraw money from such accounts.

4. The Chairperson of the Board of partners, the Director/General Director has the duties:

a) Run the company’s everyday business as general partners;

b) Convene and organize meetings of the Board of partners; sign Resolutions of the Board of partners;

c) Give tasks and cooperate with other general partners in doing business;

d) Arrange and keep accounting books, invoices, and other documents of the company in accordance with law;

dd) Represent the company in the relationship with regulatory bodies; represent the company as defendant or plaintiff in lawsuits, commercial disputes, or other disputes;

e) Perform other duties prescribed by the company’s charter.

Termination of general partner’s status

1. The general partner’s status shall be terminated if the general partner:

a) Voluntarily withdraws capital from the company;

b) Dies, is declared missing, or legally incompetent by the court;

c) Is removed from the company;

d) Other cases prescribed by the company’s charter.

2. A general partner is entitled to withdraw capital from the company if the withdrawal is accepted by the Board of partners. In this case, the partner that wishes to withdraw capital shall submit a notification at least 06 months before the withdrawal date and may only withdraw capital at the end of the fiscal year and after the financial statement of such fiscal year is ratified.

3. A general partner shall be removed from the company if such partner:

a) is not able to contribute capital or fails to contribute capital as committed after the company has made the second request;

b) commit violations against Article 175 of this Law;

c) fails to run the business in a truthful and prudent manner; commit inappropriate acts that cause serious damage to the interests of the company and other partners;

d) fails to fulfill duties of a general partner.

4. When the partner’s status of a general partner who is legally incompetent is terminated, such partner’s stake shall be returned fairly and reasonably.

5. Within 02 years from the date of status termination prescribed in Point a and Point c Clause 1 of this Article, that person is still jointly responsible for the company's debts incurred before the date of status termination with all of his/her property.

6. After the general partner’s status is terminated, if the name of such partner is used as part of or all of the company’s name, the partner or his/her inheritor or legal representative is entitled to request the company to stop using such name.

Admission of new general partners

1. The company may admit new general partners or contributing partners; the admission of a new partner is subject to approval by the Board of partners.

2. General partners or contributing partners shall fully contribute capital to the company as promised within 15 days from the approval date, unless another time limit is decided by the Board of partners.

3. The new general partner shall take joint responsibility for the companies’ debts and liabilities with all of his/her property, unless otherwise agreed between such partner and other partners.

Rights and obligations of contributing partners

1. Contributing partners are entitled to:

a) Attend meetings, discuss and vote at the Board of partners on amendments to the company’s charter, adjustments to rights and obligations of contributing partner, restructuring or dissolution of the company, and other contents of the company’s charter that directly affect their rights and obligations;

b) Receive annual distributed profits in proportion to the ratio of capital contribution to the company’s charter capital;

c) Be provided with the company’s annual financial statements; request the Chairperson of the Board of partners and general partners to provide sufficient and accurate information about the company’s performance; examine accounting books, records, contracts, transactions and other documents of the company;

d) Transfer their stakes to other persons;

dd) Do the company’s business lines, whether single-handedly or on behalf of other persons;

e) Settle their stakes by bequeathing, giving, mortgaging, pawning or in other manners in accordance with law and the company’s charter; in case a contributing partner dies, his/her inheritor shall become the company’s contributing partner;

g) Receive part of remaining assets according to the proportion of their stakes to the company’s charter capital in case the company is dissolved or bankrupt;

h) Exercise other rights prescribed in this Law and the company’s charter.

2. Contributing partners are obliged to:

a) Take liability for the company’s debts and other liabilities up to the value of promised capital contribution;

b) Not participate in business administration, not do business on behalf of the company;

c) Comply with the company’s charter, rules and regulations, and decisions of the Board of partners;

d) Perform other duties prescribed by this Law and the company’s charter./.

Lawyers in Vietnam advise on setting up a partnership

  DMS Law firm in Vietnam
Director
(Signed)
Lawyer Do Minh Son

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