TYPES OF ENTERPRISE IN VIETNAM

Today, we will discuss on a simple topic, but not everyone clearly acknowledge, which is the types of enterprise in Vietnam.

The mentioned topic looks like simple, but when we consider business life of an enterprise, it shall become an important content. Therefore, in the preparation period of establishing an enterprise, you have to consider carefully.

Currently, in accordance with the Law on Enterprise 2020, it stipulates that there are 4 types of enterprise as follows:

• Limited Liability Company;
• Joint Stock Company;
• Partnership;
• Private Company;

Firstly, Limited Liability Company:

A limited liability company is an enterprise whose charter capital is divided into one or more parts for its owner(s) to contribute capital.

There are 2 types of limited liability companies:

• One member limited liability company is an enterprise owned by an organization or individual.
• Limited liability company with two or more members is an enterprise having from 2 to 50 organizations or individuals members contributing capital.

The main characteristics of a limited liability company are as follows:

• A limited liability company cannot issue shares, but can issue bonds.
• Owners of a limited liability company are responsible for the debts and other property obligations of the enterprise within their scope of capital contribution. 

Secondly, Joint Stock Company :

A joint stock company is an enterprise whose charter capital is divided into equal parts called shares. The owners of shares are called shareholders.

The main characteristics of a Joint Stock Company are as follows:

• Shareholders can be organizations or individuals. The minimum quantity of shareholders is 3, and there is no limit to the maximum quantity.
• Shareholders are responsible for the debts and other property obligations of the enterprise within their scope of capital contribution.
• Shareholders have the right to freely transfer their shares to other people, except for the case in the first 3 years of establishment for ordinary shares of founding shareholders, and shares which are restricted on transfer stipulated in the Company’s charter.
• Joint stock company has the right to issue types of share.

Thirdly, Partnership:

A partnership is an enterprise with at least 2 members who are nominally joint owners of the company. Partners will operate their business together under a general name. In addition, a partnership may additionally have capital contributors.

The main characteristics of a Partnership are as follows:

• Partnerships do not have the right to issue any kinds of share.
• Partners are individuals who are responsible for debts and other property obligations in business activities by all their assets. Capital contributors are responsible for the debts and other property obligations of partnership within their scope of committed capital contribution.

Fourthly, Private Company:

A private company is an enterprise owned by an individual.

The main characteristics of a private company are as follows:

• An individual who owns a private enterprise is responsible for all activities of the enterprise with his or her own assets.
• Private companies do not have the right to issue any kinds of share.
• Each individual is only allowed to set up a private company. The owner of a private company cannot concurrently be the owner of a household business or a partner of a partnership. 
• A private company is not entitled to contribute capital to establish, or purchase capital contributions in a partnership, limited liability company or joint stock company.

We have just summarized the main contents and concerns about 4 types of enterprise in Vietnam. Each type of enterprise has its own characteristics, you need to carefully consider when establishing an enterprise in order to be consistent with your business plan.