Types of businesses in Vietnam

1. Limited liability company

Limited liability companies include one-member limited liability companies and

limited liability companies with two or more members (Clause 7, Article 4 of
the Enterprise Law 2020 ).

1.1. One-member limited liability company

- A one-member limited liability company is an enterprise owned by an organization

or an individual (hereinafter referred to as the company owner). The company owner
is responsible for the company's debts and other property obligations within the
company's charter capital.

- A one-member limited liability company has legal status from the date of issuance
of the Business Registration Certificate.

- A one-member limited liability company is not allowed to issue shares, except in the
case of converting into a joint stock company.

- One-member limited liability companies may issue bonds according to the

provisions of this Law and other relevant laws; The issuance of private bonds
according to the provisions of Article 128 and Article 129 of the Enterprise Law
2020 .

- Regarding management organization structure:

+ A single-member limited liability company owned by an organization is organized

and managed and operates according to one of two models: Company President,
Director or General Director or Board of Members, Director Director or General
Director.

For companies whose owner is a state-owned enterprise according to the provisions

of Clause 1, Article 88 of the Enterprise Law 2020 , a Control Board must be
established; Other cases are decided by the company. The organizational structure,

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working regime, standards, conditions, dismissal, dismissal, rights, obligations and
responsibilities of the Supervisory Board and Controllers are implemented
accordingly as prescribed in Article 65 of the Law on Enterprises . career 2020 .

+ A single-member limited liability company owned by an individual has a company

President, Director or General Director.

A limited liability company has the following advantages:

- Owned by an organization or individual, the owner will have full authority to

decide on all issues related to the company's operations and does not need to ask
for opinions or suggestions from other entities. Company management is also
simpler.

- Having legal status, the enterprise is recognized as a legal entity and can
independently participate in relationships on its behalf. This gives businesses
stability in their legal life, the legal entity does not encounter unexpected changes
like a natural person, the legal entity's operations last long and is not affected by
events that happen to its members.

- The owner only has limited liability within the scope of the company's charter
capital (Clause 1, Article 74 of the Law on Enterprises 2020 ) , so the owner's risks
are limited when conducting production and business activities. .

Disadvantages of a limited liability company

- The legal system regulating LLCs is more stringent than that of private
enterprises.

- Restricted in raising capital because the limited liability company is not allowed to
issue shares.

- If there is a need to mobilize additional capital from other individuals or

organizations, procedures for converting the business type to a limited liability
company with two or more members or a joint stock company will have to be
carried out.

1.2. Limited liability company with two or more members

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- A limited liability company with two or more members is an enterprise with from 02
to 50 members who are organizations and individuals. Members are responsible for
debts and other property obligations of the enterprise within the amount of capital
contributed to the enterprise, except for the case specified in Clause 4, Article 47 of
the Enterprise Law 2020 . Members' capital contributions can only be transferred
according to the provisions of Articles 51, 52 and 53 of the Enterprise Law 2020 .

- A limited liability company with two or more members has legal status from the date
of issuance of the Business Registration Certificate.

- Limited liability companies with two or more members are not allowed to issue
shares, except to convert into a joint stock company.

- Limited liability companies with two or more members may issue bonds according
to the provisions of this Law and other relevant laws; The issuance of individual
bonds must comply with the provisions of Article 128 and Article 129 of the
Enterprise Law 2020 .

- Regarding management organization structure:

+ A limited liability company with two or more members has a Board of Members,
Chairman of the Board of Members, Director or General Director.

+ A limited liability company with two or more members is a state-owned enterprise

according to the provisions of Point b, Clause 1, Article 88 of the Enterprise Law
2020 and a subsidiary of a state-owned enterprise according to the provisions of
Clause 1, Article 88 of the Law on Enterprises. The Enterprise Law 2020 must
establish a Supervisory Board; Other cases are decided by the company.

A limited liability company with 2 members or more has the following

advantages:

- Having legal status (Clause 2, Article 46 of the Law on Enterprises 2020 ), the
enterprise is recognized as a legal subject and can independently participate in
relationships on its behalf.

- Charter capital can be increased by increasing member capital

contributions; Receive additional capital contributions from new members (Clause

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1, Article 68 of the Enterprise Law 2020 ) or issue bonds (Clause 4, Article 46 of
the Enterprise Law 2020 ).

- The transfer regime (Article 52 of the Enterprise Law 2020 ) and redemption of
capital contributions (Article 51 of the Enterprise Law 2020 ) are strictly regulated
so investors can easily control the change of members. So members can avoid
situations where strangers or competitors want to infiltrate the company.

Disadvantages of a LLC with 2 members or more

- The number of members is limited from 02 to 50 members (Clause 1, Article 46 of

the Enterprise Law 2020 );

- The organizational structure and operations of a limited liability company with 2

members or more are more strictly controlled by law than private enterprises and
partnerships.

- The fact that a limited liability company with 2 or more members is not allowed to
issue shares (Clause 3, Article 46 of the Enterprise Law 2020 ) is also a restriction
for mobilizing business capital of enterprises.

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2. Joint stock company

- A joint stock company is an enterprise in which:

+ Charter capital is divided into equal parts called shares;

+ Shareholders can be organizations or individuals; The minimum number of

shareholders is 03 and there is no limit to the maximum number;

+ Shareholders are only responsible for the debts and other property obligations of
the enterprise within the amount of capital contributed to the enterprise;

+ Shareholders have the right to freely transfer their shares to others, except for the
cases specified in Clause 3, Article 120 and Clause 1, Article 127 of the 2020
Enterprise Law .

- A joint stock company has legal status from the date of issuance of the Business
Registration Certificate.

- A joint stock company has the right to issue shares, bonds and other securities of
the company.

- Regarding management organization structure:

Unless otherwise prescribed by securities law, a joint stock company has the right to
choose a management organization and operate according to one of the following
two models:

+ General Meeting of Shareholders, Board of Directors, Supervisory Board and

Director or General Director. In cases where a joint stock company has less than 11
shareholders and institutional shareholders own less than 50% of the company's
total shares, a Supervisory Board is not required;

+ General Meeting of Shareholders, Board of Directors and Director or General

Director. In this case, at least 20% of the members of the Board of Directors must be
independent members and there must be an Audit Committee under the Board of
Directors. The organizational structure, functions, and tasks of the Audit Committee

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are specified in the Company Charter or the operating regulations of the Audit
Committee issued by the Board of Directors.

Advantages:
- Shareholders only have limited liability for debt and other property obligations of
the company within the scope of their capital contribution, so the risk level is not
high ;
- Very high ability to mobilize capital through issuing shares to the public. This is a
unique characteristic that only joint stock companies have ;
- The company does not limit the number of shareholders and can mobilize capital
easily. Therefore, joint stock companies have the most extensive ability to mobilize
capital ;
- Shareholders can easily and freely transfer, buy, sell, and inherit shares through
selling shares on the stock market ;

Disadvantages:

- The management and operation of a joint stock company is very complicated

because the number of shareholders can be very large, many people do not know
each other and there can even be division into opposing shareholder groups. about
benefits ;

- Business and financial security is limited because the company must disclose and
report to shareholders;

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3. Partnership

- A partnership is an enterprise in which:

+ There must be at least 02 members who are joint owners of the company, doing
business together under a common name (hereinafter referred to as partnership
members). In addition to general partners, the company may have additional capital
contributing members;

+ A general partner must be an individual, responsible with all of his or her assets for
the company's obligations;

+ Capital contributing members (limited members) are organizations and individuals

and are only responsible for the company's debts within the amount of capital
committed to contributing to the company.

- A partnership has legal status from the date of issuance of the Business
Registration Certificate.

- Partnerships are not allowed to issue any type of securities.

A partnership company has the following advantages:

- A partnership company combines the personal reputation of many people. Due to

the partnership regime, the partnership members have unlimited
liability. Partnership companies easily create the trust of customers and business
partners.

- Managing the company is not too complicated. Due to the small number of
members. And they are reputable people who absolutely trust each other.

- Partnership members are usually individuals with high professional qualifications

and reputation. Create trust for partners.

- Compact and easy-to-manage organizational structure. Suitable for small and

medium businesses.

- Having legal status (Clause 2, Article 177 of the Law on Enterprises 2020 ) , the
partnership company is recognized as a legal entity and can independently
participate in relationships on its behalf.

Disadvantages of a partnership company

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- Due to the joint liability regime with unlimited liability (point dd, Clause 2, Article
181 of the Enterprise Law 2020 ), the risk level of partnership members is very
high.

- The general partners are the legal representatives of the company and jointly
organize the company's daily business operations (Clause 1, Article 184 of
the Enterprise Law 2020 ), so if they cannot agree on their opinions, will cause
difficulties for business operations.

- Partnership companies are not allowed to issue any type of securities (Clause 3,
Article 177 of the Enterprise Law 2020 ). Therefore, the company's capital
mobilization will be limited. Members will add their own assets or accept new
members.

- Partnership members are not allowed to own private enterprises; Not allowed to
be a general partner of another partnership unless agreed by the remaining
partners (Clause 1, Article 180 of the Law on Enterprises 2020 ).

- A general partner who withdraws from the company is still responsible for the
partnership's debts arising before the date of termination of membership within 02
years (Clause 5, Article 185 of the Law on Enterprises 2020 ).

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4. Private enterprise

- A private enterprise is an enterprise owned by an individual who is responsible for

all of the enterprise's assets with all his or her own assets.

- Private enterprises are not allowed to issue any type of securities.

- Each individual is only entitled to establish one private enterprise. The owner of a
private enterprise cannot simultaneously be the owner of a business household or a
general partner of a partnership.

- Private enterprises are not allowed to contribute capital to establish or purchase

shares or capital contributions in partnerships, limited liability companies or joint
stock companies.

- Regarding private enterprise management:

+ The owner of a private enterprise has full authority to decide on all business
activities of the private enterprise, the use of profits after paying taxes and
performing other financial obligations according to the provisions of law.

+ Private business owners can directly or hire others to act as Director or General
Director to manage and operate business activities; In this case, the private
enterprise owner is still responsible for all business activities of the private
enterprise.

+ The owner of a private enterprise is the legal representative, representing the

private enterprise as a requester to resolve a civil matter, a plaintiff, a defendant, or a
person with related rights and obligations before the Court, and representatives of
private enterprises to exercise other rights and obligations according to the
provisions of law.

Advantages of private enterprises

A private enterprise (private enterprise) as prescribed in Clause 1, Article 188

of the Law on Enterprises 2020 is an enterprise owned by an individual who is
responsible with all of his or her assets for all activities of the enterprise.

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Private enterprises have the following advantages:

- Because a private enterprise is owned by only one individual, the owner has full
authority to decide on all business activities within the enterprise;

- The capital of the enterprise can be registered by the owner himself and there is
no need to carry out procedures to transfer ownership to the enterprise (Article 189
of the Enterprise Law 2020 ).

- Because the liability regime of private enterprises is unlimited, it is easier to gain

trust from customers and partners (customers can minimize risks when
cooperating.

- Private enterprises are less strictly bound by law and can control risks because
there is only one person as the legal representative of the enterprise.

Disadvantages of private enterprises

- Because a private enterprise is owned by only one individual, there is no capital

contribution; It is difficult to immediately meet the need for large capital for
business. And because there is only one person, one-sided decisions can easily
happen; lack of objectivity.

- The fact that private enterprises are not allowed to issue any type of securities
(Clause 2, Article 188 of the Law on Enterprises 2020 ) is also a restriction for
mobilizing business capital of enterprises.

- The owner of a private enterprise cannot simultaneously be the owner of a

business household, a member of a partnership, or the owner of another private
enterprise (Article 188 of the Enterprise Law 2020 )

- Private enterprises do not have legal status, so they are not allowed to carry out
some transactions themselves as prescribed by law.

- Business owners must be responsible before the law for all business activities of
private enterprises.

- The owner has unlimited liability with all his assets. This means that if the
company's assets are not enough to pay debts and other financial obligations, the
owner will have to use his or her own assets to settle these debts even if the
company has been declared bankrupt.

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This is a sample of a short comparative essay on one-member limited liability
companies and private enterprises.

One-member limited liability companies (LLCs) and private enterprises are two
distinct business structures, each characterized by unique features and regulatory
constraints.

A one-member LLC is an entity owned either by an individual or an organization, with

the issuance of the Business Registration Certificate endowing it with legal status.
The pivotal aspect of a one-member LLC is that the company owner assumes
responsibility for the company's debts and property obligations within the confines of
the charter capital. An interesting limitation is that a one-member LLC is generally
not permitted to issue shares, unless undergoing a transformative process into a
joint stock company. Despite this restriction, it does have the authority to issue bonds
in accordance with relevant laws.

Conversely, a private enterprise is singularly owned by an individual who bears sole

responsibility for all assets, intertwining personal wealth with business assets. Unlike
one-member LLCs, private enterprises are precluded from issuing any form of
securities. There is an individual constraint wherein each person is entitled to
establish only one private enterprise, and the owner is prohibited from
simultaneously holding ownership in a business household or acting as a general
partner in a partnership. Additionally, private enterprises are barred from contributing
capital to initiate or acquire shares in partnerships, limited liability companies, or joint
stock companies.

These distinctions underscore the disparate legal frameworks and operational

boundaries delineating one-member LLCs and private enterprises.
(229 words)

Another sample (more simple):

One-member limited liability companies (LLCs) and private enterprises are two types
of businesses with some key differences.
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A one-member LLC can be owned by an individual or a company, and it gets legal
recognition when a Business Registration Certificate is issued. The person or
organization owning it is responsible for the company's debts within the agreed
capital. One important thing to note is that a one-member LLC usually can't sell
shares unless it transforms into a joint stock company. However, it does have the
option to issue bonds according to the law.

On the other hand, a private enterprise is owned by one individual, and this person is
responsible for all the assets of the business. Unlike one-member LLCs, private
enterprises cannot sell any kind of financial securities. One person is allowed to have
only one private enterprise, and they can't simultaneously own a business household
or be a general partner in a partnership. Moreover, private enterprises can't invest in
or buy shares of other types of companies.

In summary, while both business types have a single owner, one-member LLCs have
more flexibility in financial matters, like issuing bonds, compared to private
enterprises.
(193 words)

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