3.

1 Sole proprietorship
3.1.1 Definition

43 44
3.1.2 Characteristics

3.1.4 Organization structure and management

3.1.3 Juristic personality (tư cách pháp nhân)

45 46
3.1.5 Pros and cons 3.2.2 Characteristics

3.2 Partnership
3.2.1 Definition
A partnership is an enterprise in which:
There must be at least 02 members being coowners of the company jointly conducting
business under one common name (general partners). In addition to unlimited liability partners,
the company may also have limited partners. (Article 177, LoE 2020).

3.2.3 Juristic personality

 At least two general partners
 Juristic personality? Yes. A partnership shall enjoy legal entity status as from the date
of issuance of the enterprise registration certificate. (Art. 177.2 LoE 2020)
 Issue any kind of securities? No (Art 177.3, LoE 2020)
47 48
3.2.4 Organization structure and management  Decision to ratify annual financial statement, total profit, distributable profit, and
amount of profit distributed to each;
 Decision to dissolve the company.
Convocation of meeting of the Partners’ Council (Art. 182, LOE 2020)
 Chairman of the Partners’ Council can convene a meeting of the Partners’ Council when
necessary or upon request of general partners.
 If the chairman fails to convene the meeting upon request of general partner, such
general partner is entitled to convene the meeting.
3.2.5 Pros and cons
a. Advantages
 A partnership is a combination of the professional qualifications and credibility of many
Partners’ Council (Art. 182, LOE 2020) people. Due to the unlimited liability of the general partners, it is easy to build up trust
 All partners make up the partners’ council. with customers and business partners.
 The partners’ council will elect one among them to be the chairman of the partners’  Banks are easier to lend capital and delay debts.
council; the chairman will be director or general director of the partnership, unless  Managing the company is not too complicated due to the small number of members and
otherwise provided in the company charter. they strongly trust each other.
 The partners’ council is entitled to decide on business operations of the partnership.  Suitable for small and medium businesses.
Unless otherwise prescribed by the charter, the following issues must be approved by at least b. Disadvantages
three fourths (3/4) of general partners:  Due to the unlimited liability, the level of risk of general partners is very high.
 The partnership’s development orientation;  Although having juridical person status, the partnership is not allowed to issue any type
 Amendments to the charter; of securities. Therefore, the company's capital mobilization will be limited. Members will
 Admission of a new general partner; add their own assets or accept new members.
 Approval for a withdrawal or removal of general partner from the company;  There is no clear distinction between corporate and personal property.
 Decision on a project of investment; 3.3 Limited Liability Company (LLCs)
Unless otherwise prescribed by the charter, the following issues must be approved by at least 3.3.1 Limited liability companies with two or more members (Multi-member LLC)
three fourths (3/4) of general partners: a. Definition (Article 46.1 LoE 2020)
 Decision to take loans and raise capital in other manners; give a loan with a value of ≥ A LLC with two or more members is an enterprise in which:
50% charter capital of the company, unless a higher rate is prescribed by the company’s  A member may be an organization or an individual; the number of members must be at
charter; least 2 and shall not exceed 50;
 Decision to buy, sell assets with a value of ≥ the company’s charter capital, unless a  A member shall be liable for the debts and other property obligations of the enterprise
higher rate is prescribed by the company’s charter; to the extent of the amount of capital contributed to the enterprise.

49 50
  The share of capital contribution of each member may only be assigned in specific
circumstances.
Legal representative (Article 12.2, 12.3 & 12.4 LoE 2020)
“A limited liability company may have one or more than one legal representative. The
enterprise’s charter shall specify the quantity, position, rights and obligations of its legal
representative(s).
In case there are more than one legal representative, the charter shall specify the rights and
obligations of each of them. Otherwise, each of the legal representatives shall fully
representative the enterprise and take joint responsibility for any damage to the enterprise as
prescribed by civil laws and relevant laws.”
An enterprise shall have at least one legal representative residing in Vietnam. Whenever this
representative leaves Vietnam, he/she has to authorize another Vietnamese resident, in
writing, to act as the legal representative, in which case the authorizing person is still
responsible for the authorized person’s performance.
In case the authorizing person has not returned to Vietnam when the letter of authorization
expires and does not have any further actions, the authorized person shall continue acting as
the enterprise’s legal representative until the authorizing person returns or until the
enterprise’s owner, Board of Members/Partners or Board of Directors designates another legal
representative.
In a two-member limited liability company, if the member who is the company’s legal
representative is dead, missing, facing criminal prosecution, kept in temporary detention,
serving an imprisonment sentence, serving an administrative penalty in a correctional
institution or rehabilitation center, making getaway; has limited legal capacity or is
incapacitated, has difficulty controlling his/her own behaviors, is banned
by the court from holding certain positions or doing certain works, the other member shall
obviously assume the position of the company’s legal representative until the Board of
Members issues a new decision on the company’s legal representative.
b. Characteristic
 The minimum number of members is two and maximum is 50.
51
 The company has juristic personality
 The members are liable for the debts of the company within the capital contribution =>
Limited liability
 The company is not allowed to issue shares, but can issue corporate bonds under certain
circumstances
c. Charter Capital (Article 47 LoE 2020)
 The initially registered charter capital of a multiple-member limited liability company is
the total capital contributed or promised by the members and shall be written in
company's charter.
 Time for sufficient & correct asset contribution: within 90 days from issuance date of
the Certificate of Enterprise Registration
o Time for asset transportation
o Members ‘s rights and obligations during this 90-day period
o Contribution of assets that are different from the promised ones
d. Member’s liability (Article 47 LoE 2020)
 A member’s liability for the enterprise’s debts and other liabilities shall be equal to the
amount of capital that member contributed to the enterprise, except for specific cases.
 Commencement of membership
o Capital contribution certificate – Reissue?
o Member registration
 The capital contributor will become the company’s member from the day on which
capital is fully contributed and information about the capital contributor has been fully
recorded
o The company shall issue the capital contribution certificate to the member –
certificate can be reissued in case lost or damaged
o The company shall make a member register upon issuance of the Certificate of
Enterprise Registration
 In case a member fails to contribute or fully contribute capital as promised by the
expiration of the period:
o The member that has not contributed capital at all
o The member that has not fully contributed capital
52
 o The right to contribute the missing capital
 The company shall register the change in charter capital and the members’ holdings
within 30 days from the deadline for contributing
 In case a member fails to contribute or fully contribute capital as promised by the
expiration of the period:
o The member that has not contributed capital at all is obviously no longer a member
of the company;
o The member that has not fully contributed capital will have the rights that are
proportional to the contributed capital;
o The right to contribute the missing capital will be sold under a resolution or decision
of the Board of Members.
 The company shall register the change in charter capital and the members’ holdings
within 30 days from the deadline for contributing capital specified
o Members who fail to contribute or fully contribute capital shall be responsible for the
financial obligations incurred by the company in proportion to their promised
contributions during the period before the company registers the change in charter
capital and the members’ holdings
e. Rights of members of the Board of Members (Article 49 LoE 2020)
 Participate in meetings; discuss, propose, vote on the issues
 Have a number of votes
 Receive profit
 Receive part of the remaining assets when the company is dissolved or goes bankrupt;
 Be given priority to contribute more capital when the company increases its charter
capital;
 Transfer, give away or otherwise dispose of the member’s own stake
 File lawsuits in their own name of in the company’s name against the President of the
Board of Members, the Director/General Director, other executives, legal
representatives
 Other rights prescribed by this Law and the company's charter.
 Participate in meetings of the Board of Members; discuss, propose, vote on the issues
within the jurisdiction of the Board of Members;
53
 Have a number of votes that are proportional to the member’s holding, except for the
cases specified in Clause 2 Article 47 of this Law;
 Receive profit in proportion to the member’s holding after the company has fully paid
taxes and fulfilled other financial obligations prescribed by law;
 Receive part of the remaining assets in proportion to the member’s holding when the
company is dissolved or goes bankrupt;
 Be given priority to contribute more capital when the company increases its charter
capital;
 Transfer, give away or otherwise dispose of the member’s own stake in accordance with
regulations of law and the company's charter;
 File lawsuits in their own name of in the company’s name against the President of the
Board of Members, the Director/General Director, other executives, legal
representatives in accordancewith Article 72 of this Law;
 Other rights prescribed by this Law and the company's charter.
 Capital contribution; liabilities
 Do not withdraw capital from the company in any shape or form; except for the cases
specified
 Comply with the company's charter.
 Implement the resolutions and decisions of the Board of Members.
 Take personal responsibility when performing specific actions in the name of the
company:
 Other obligations prescribed by law
 Fully and punctually contribute capital as promised; take on a liability for the company’s
debts and liabilities which is equal to the contributed capital, exceptfor the cases
specified in Clause 2 and Clause 4 Article 47 of this Law.2.
 Do not withdraw capital from the company in any shape or form; except for the cases
specified in Articles 51, 52, 53 and 68 of this Law.
 Comply with the company's charter.
 Implementthe resolutions and decisions of the Board of Members.
 Take personal responsibility when performing the following actions in the name of the
company:
54
 o Violations of law; 4 EXERCISE FOR FINAL TEST
o Business operations or transactions that do not serve the company’s interests and
4.1 Sole proprietorship
cause damage to others;
o Pay debts before they are due while the company is facing financial risks.
 Other obligations prescribed by law
f. Stakes (Article 51 - 53 LoE 2020)
 Repurchase
 Transference
 Settlement in special cases
g. Organizational structure
A multiple-member limited liability company shall have a Board of Members, President of the
Board of Members, Director/General Director.
 A state-owned multiple-member limited liability company prescribed in Point b Clause 1 1. False. According to Art 188 LOE “A sole proprietorship is an enterprise owned by a single
Article 88 of this Law and each subsidiary company of a state-owned enterprise individual whose liability for its entire operation is equal to his/her total assets.”
prescribed in Clause 1 Article 88 of this Law shall have a Board of Controllers. The Therefore, a business in the form of sole proprietorships are not legally distinct from
establishment of the Board of Controllers in other companies shall be decided by their owners.
themselves. 2. False. Because they can not issue any kinds of securities (Art 188.2 LoE). Both stocks
 A company shall have at least one legal representative who holds the title of President and bonds are securities so they can not issue stocks or bonds.
of the Board of Members, Director/General Director. Unless otherwise prescribed by the 3. C. a. Owner is the representive/b. Rasing capital is limited
company's charter, the President of the Board of Members shall be the company’s legal
representative. – Article 55, 56 LoE 2020
h. Profit Distribution (Article 69 LoE 2020)

4. A. Yes. No separation between the company and the owner, the owner shall be
defendant in the court proceding against the company. (Art 190.3)
B. Yes. Because owner has unlimited liability, he has to use his personal property to
fulfill the debt. (Art 188.1)
4.2 Partnership
55 56
1. A, B and C found a partnership (D) for provision of accounting services. At the time of
establishment, A contributed 2bil VND, B contributed 3 bil VND, C contributed 1bil VND.
All of them are general partners.
a. The partnership D failed to perform its obligation under the contract with E and had to
pay E the damage of 6 bil VND. At that time, D had only the total asset of 5 bil VND. Can E
request A and B to pay the remaining amount?
 Yes, E can request the other 2 members of the partnership to pay the remaining amount.
Art 181. 2 LoE 2020: A general partner has the following obligations:
dd) Jointly pay the partnership’s remaining debts (if any) after all of the partnership’s
assets are used to pay them;
General partner - Jointly liable - thành viên hợp danh cùng nhau trả nợ
Limited partner - thành viên góp vốn
b. Upon E’s request, A had to pay E the remaining amount. Can A ask B and C to reimburse
him?
 Yes, A could ask B and C to reimburse him.
Article 181.1 Rights of general partners
1. A general partner has the rights to:
d) Request the partnership to pay compensation for damage that is not on account of
that partner.
102ee) Other cases prescribed by the company's charter.
2. A partnership consists of five general partners, including Quan, Bao, Chien, Dung and
Hung with the capital contribution of respectively 10%, 25%, 10%, 15% and 10%. Cuc (a
retired officer) joined the Partnership as a limited partner and contributed 30%. The
stipulation of the company's charter is similar to current Vietnamese law on enterprises.
On March 25, 2021, Bao as Chairman of the Members’ Council and Director of the
Company called a meeting of the Members' Council to make a decision on a new
investment project of the company. The meeting was duly conducted with the
attendance of all members of the company. The decision is voted by all members except
Bao.
Question: Can the decision on investment be legally ratified? Why?
 Yes, the decision is legally ratified, because ¾ general partners agreed on this
investment proposal.
57
According to Art 182.3 LOE 2020:
The Board of Partners is entitled to decide all business activities of the partnership.
Unless otherwise prescribed by the charter, the following issues are subject to approval
by at least three fourths (3/4) of the general partners:
a) Orientation for development of the partnership;
b) Revisions to the charter;
c) Admission of new partners;
d) Permission for withdrawal or exclusion of a partner;
dd) Investment in projects;
4.3 LLC
1. It is the LLC itself, rather than the members personally, that enjoys the benefit of limited
liability.
 False. Art 46.1 LOE 2020: A member’s liability for the enterprise’s debts and other
liabilities shall be equal to the amount of capital that member contributed to the
enterprise, except for the cases specified in Clause 4 Article 47 of this Law.
2. In an multi-member LLC, members can freely transfer their stakes to another person.
 False. Art 52 LOE 2020: Subject to some certain conditions
3. An one-member limited liability companies has no existence distinct from the owner.
 False. Art 74 LOE 2020:
4. An LLC can issue bonds to the public.
 True.
58
Art 46.4 LOE 2020: Multiple-member limited liability companies may issue bonds in 5 INTERNATIONAL DISPUTE SETTLEMENT
accordance with this Law and relevant laws; private placement of bonds shall comply with
5.1 What is a dispute?
Article 128 and Article 129 of this Law.
Art 74.4 LOE 2020: Single-member limited liability companies may issue bonds in
accordance with this Law and relevant laws; private placement of bonds shall comply with
Article 128 and Article 129 of this Law.
5. It is required under the law that an LLC must have an Inspection Committee/Control
Board.
 False. Not in every cases but state owned companies (Art 54.2, 92.2 LOE)

Answer: B breaches the contract, however A and B can negotiate that A will accept the goods
and B will reduce his price => No dispute. If A does not accept the defected goods and sue B =>
There’s a dispute.
 When does a dispute arise?
o Must be a contract between the parties
o A breach of the obligations of party
o A disagreement of one party on the breach caused by the other party
5.2 Dispute resolution methods
 Negotiation
 Mediation/Concilliation
 Litigation: Kiện ra tòa
 Arbitration: Kiện ra trung tâm trọng tài
Classification
 Litigation refers to lawsuits; the process of settling disputes in court.
 Alternative Dispute Resolution is any other formal or informal process for settling
disputes without going court.
5.2.1 Negotiation
 Is the process of reaching an agreement by discussion
 Both parties directly communicate with one another
59 60
  No third party’s involvement 5.2.2 Mediation
a. Features of negotiation
 Cost and time-saving
 Ability to continue the business in the future
 High level of confidentiality
 Flexibility (time, place, no procedure)
b. Documents in a claim
 Complaint letter (Formal offer to settle dispute)
Form: In writing
Content:
o Name and address of the parties to dispute
o Objects of the claim: contract no., order no.,… 5.2.3 Conciliation

o Specific matters requested to be settled: late in delivery, making payment, poor

quality of goods
o Requests to respondent
 Evidence

Comparison Mediation vs Conciliation

Benefits of Mediation and Conciliation

61 62
 b. Arbitration procedure

Autonomy: Quyền tự quyết (Freedom of choice)

Not applicable in case:

 Arbitration clause in the contract, that clause must state specific the arbitration
Arbitration award: phán quyết của trọng tài
Court judgement: phán quyết của tòa án
 Arbitration award is final and binding
If one party does not follow, the other party can bring an award to court to request the
5.2.4 Arbitration compulsory execution.
Is the voluntary submission of disputes not to a court but to an arbitral tribunal chosen by the c. Nature of arbitration
parties
a. Types of arbitration

Final decision: can not appeal

 Ad-hoc: trọng tài vụ việc
Binding decision: 2 parties must follow
 Institutional arbitration: trọng tài quy chế
d. Fundamental rules of arbitration
VIAC: trung tâm trọng tài lớn nhất Việt Nam
63 64
  Consent of the parties to submit to arbitration
 Impartiality and independence of arbitrators
 Non-public trials
 Finality of arbitration award
e. Arbitration agreements
An agreement in writing to refer present or future disputes to arbitration
Nếu cả 2 bên muốn giải quyết tranh chấp ở trọng tài thì phải có điều khoản trọng tài. Vì một số lí
do điều khoản này không chặt chẽ - điều khoản này vô hiệu và không áp dụng phương pháp này
để giải quyết.
Defective arbitration clauses

 Invalid. Because it is a blank arbitration clause without specifying name of arbitration

 Invalid. Not exist. The China International Economic and Trade Arbitration Commission
(CIETAC)
 Invalid. Because it appoints VIAC but using another procedural rules
 Invalid. Using both court and arbitration
 Invalid. Because it just mention arbitrator should be a well-known chamber of
commerce without specifying name of arbitration it is a blank arbitration clause.
Arbitrator is a person.
 Invalid. ICC has 3 main activities: rule stating, dispute resolution, policy advocacy. Does
not mention arbitration settled by ICC.
f. Enforcement of arbitral awards
Cannot choose court and arbitration - if so, not valid
Exercise:

65 66
 a. Features of litigation

Costly and long delay: Appeal to higher court

Low confidentiality: Public
b. Enforcement
An international treaty: New York Convention
If both VN and US are member state of Convention, US shall recognize arbitral award of VN
arbitration.

Jurisdiction - quyền xét xử (thẩm quyền) - Only when parties allows to choose
Military court for army

5.2.5 Litigation
Refers to the resolution of disputes through the court system

67 68
69