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ENTERPRISE LAW (2005)
(First draft. Citation and quotation are not recommended)
Pursuant to the Constitution of the Socialist Republic of Vietnam in 1992 that
was amended and supplemented by the Resolution No. 51/2001/QH10 dated 25
December 2001 of the National Assembly X, meeting session 10;
This Law governs enterprises.
CHAPTER I
GENERAL PROVISIONS
Article 1. Scope of application
This Law sets forth provisions on the establishment, organizational
management and operation of limited liability company, share-holding company,
partnership and sole proprietorship (hereinafter referred to enterprises) belonging to
all economic components; corporate group.
Article 2. Subjects of application
1. Enterprises are belonged to all economic components.
2. Organizations and individuals are involved in the establishment,
organizational management and operation of enterprises.
Article 3. Application of the Enterprise Law, international treaties and
related Laws
1. Establishment, organizational management and operation of enterprises
belonging to all economic components are governed by this law and other related
laws.
2. In case where there are other laws providing regulations on establishment,
organizational management and operation of enterprises because of their distinctive
nature, those laws shall prevail.
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3. In case where there are discrepancies between international treaties in which
Vietnam is a member and this law, those international treaties shall prevail.
Article 4. Interpretation of terminology
For the purposes of this law, following terms shall be construed hereafter:
1. Enterprise means an economic organization that has its own name, assets,
stable office and is duly constituted for the purpose of conducting business.
2. Business means the consecutive implementation of one, several or all of
stages of an investment process, from the production to the sale of products or
provision of services on the market for profit purpose.
3. Valid file means a file that comprises of all documents as required by this
Law, whose contents are filled in entirely as required by laws.
4. Capital contribution means the transfer of assets into a company so as to
become an owner of the company. Assets used for capital contribution can be
Vietnamese currency; freely convertible foreign currency; gold; value of land use
rights; value of intellectual property rights, know-how, or other types of assets that
contributed to the capital of a company by its members as stated in the company
charter.
5. Capital share means the ratio of capital that are owned by a company
member.
6. Charter capital means the amount of capital that is contributed or committed
to contribute by all shareholders or members of a company respectively and is stated
in that company charter.
7. Legal capital means the minimum amount of capital that is required by laws
for an enterprise to be established.
8. Voting capital means the equity shares of which owner will have the right to
vote on matters subjected to decision by the Members’ Council or the Shareholders’
Meeting.
9. Dividend means the net profits in term of money or asset is paid to the owner
of each share from net profit of the company.
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10. Founding member means organization and/or individual that made capital
contribution, participated in, approved and signed in the original Charter of a
company.
11. Shareholder means organization and/or individual owing no less than one
share issued by a shareholding company. Founding shareholder means shareholder
who participated in, approved and signed in the original charter of a shareholding
company.
12. General partner means individual who will be responsible for all liabilities
of a partnership with his/her own entire property.
13. Enterprise manager means the owner, director of sole proprietorship,
general partners of partnership; chairman of the Members’ Council, chairman of the
company, members of the Board of Management, director or general director or other
important managers stipulated in the company charter.
14. Authorized representative means individual who is authorized in writing by
the institutional members of a limited liability or institutional shareholder of a
shareholding company, to exercise their rights in pursuant to provisions of this law.
15. A company is construed as a holding company when it is:
a) owning more than 50% of total capital or number of ordinary shares issued
by another company; or
b) having right to appoint or dismiss directly or indirectly majority or all
members of the Members’ Council, director or general director of another company;
or
c) having right to amend or supplement the charter of another company.
16. Reorganization of an enterprise means division, separation, consolidation,
merger, and conversion of an enterprise.
17. Related persons means organization and individual who have direct or
indirect relationships with an enterprise as follows:
a) Holding company, its managers and other persons who are competent to
appoint managers of its subsidiary;
b) Subsidiary in relation to holding company;
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c) Individual or group of individuals that are capable of dominating operations
of such an enterprise through management bodies in that enterprise;
d) Company managers;
e) Wife, husband, father, foster father, mother, foster mother, child, adopted
child, or sibling of a manager or a member or shareholder holding dominant capital
share or majority of shares.
f) Individual who is authorized representative of those provided from (a) to(e)
of this sub-article;
g) Enterprises is controlled by persons provided from (a) to (h) of this sub-
article hold shares to the level that they can control the decision-making process of the
management bodies of the enterprise;
h). Any group of persons who act together in an attempt to take over the capital
contribution, shares, or control the decision making process of the company
18. State-owned capital contribution means the capital contribution originated
from the state budget and other state resource and held by an authorized state agency
or economic organization on behalf of the state;
State-owned share means share paid by the state budget or other state resource
and held by an authorized agencies or economic organization on behalf of the state.
19. Market price of the capital contribution or share means the transactional
price in the security market or price defined by an independent organization.
20. Nationality of an enterprise means the nationality of a country or region
where such an enterprise is duly constituted.
21. Resident address means address of the head office of the organization,
permanent address or office address or any other address of an individual that is
registered with the enterprise as contacting address;
22. State-owned enterprise means an enterprise of which 50% of total capital
owned by the state.
Article 5. State guaranty over enterprises and their owners
1. The State recognizes the long lasting existence and development of all types
of enterprises as governed in this law; ensures equality of enterprises before laws
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regardless of ownership and economic component and recognizes the lawful
profitability of business activities.
2. The State recognizes and protects ownership rights, invested capital, income,
rights and other lawful interests of the enterprises and their owners.
3. The lawful property and invested capital of enterprises and their owners
neither can be nationalized nor expropriated by administrative measures.
In cases where assets of enterprises are compulsorily purchased or requisitioned
due to the reason of national defense, security or national interest, those enterprises
will be paid or compensated in accordance with the market price of that assets at the
time of conducting such a compulsory purchase or requisition. Payment and
compensation is required to ensure the enterprise interest and non-discrimination
between types of enterprises.
Article 6. Political and social-political organizations in enterprises
1. Operation of the political and socio-political organizations in enterprises will
comply with the Constitution, laws and charters of that organizations, which are in
accordance with the laws.
2. Enterprises are obligated to respect and facilitate establishment of and
participation of their employees in the organizations as stipulated in sub-article 1 of
this law.
Article 7. Business activities and conditions
1. Enterprises are entitled to conduct any business activity that is not prohibited
by laws.
2. Enterprises will be entitled to conduct business activities that are subjected to
certain conditions as required by the investment law and other related laws only if all
such conditions are meet by them.
Business conditions are requirements that enterprises must fulfill or satisfy in
order to conduct a specific business activity and are manifested in forms of business
license, certificate of business conditions, professional certificate, certificate of
insurance of professional liability, capital requirement or other forms.
3. Any business activities that may cause harmful impacts to national defense,
security, social order and safety, historical traditions, culture, ethics, good morals and
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good customs of Vietnam, health of the people, natural resources and environment are
strictly prohibited.
The Government will specify in detailed the list of business activities that are
prohibited.
4. The Government will review and examine periodically business conditions in
order to annul or recommend to annul any business condition that is no longer
necessary; to amend or recommend to amend any business condition that is no longer
inappropriate; to issue or recommend to issue new business condition necessary to the
requirement of state management.
5. Ministry, the People’s Council and Committee at all level are not allowed to
stipulate or decide on conditioned business activities and conditions thereof.
Article 8. Rights of enterprises
1. Conduct business; choose, by its own initiative, business activities, localities,
and form of investment; expand business in terms of size and business activities; are
encouraged, facilitated and given incentives, by the state, in producing or providing
public goods or services.
2. Choose form and way of mobilizing, distributing and utilize capital;
3. Take initiative in the search for markets, customers, and in signing contracts;
4. Import and export;
5. Hire and use labors in accordance with the business requirement;
6. Apply, by its own initiative, modern scientific and technology in order to
enhance business performance and competitiveness;
7. Decide on organizational structure and business affairs in an autonomous
manner;
8. Possess, use and dispose assets of the enterprises;
9. Deny any request of supplying resources that are not lawfully stipulated by
laws.
10. Complain and petition in pursuant to laws on complain and petition;
11. Engage in legal proceedings directly or via authorized person;
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12. Other rights as provided by the laws.
Article 9. Obligations of enterprises
1. Conduct business activities that are recorded in the Certificate of Business
Registration; ensure fulfillment of business conditions as required by laws;
2. Do accounting, make and submit financial reports faithfully, accurately and
timely in pursuant to laws on accounting.
3. Register tax code, declare and pay tax and perform other financial obligations
in pursuant to laws;
4. Ensure lawful rights and interests of employees in pursuant to laws on labor;
ensure that social insurance, health insurance and other insurance are given to
employees in pursuant to laws on insurance.
5. Ensure and be liable to quality of goods and services in accordance with
standard as registered or declared;
6. Fulfill statistical requirements in compliance with laws on statistics; submit
periodically information related to enterprises and financial status of enterprises to the
competent authority by using standardized forms; correct and adjust any submitted
information that are found incorrect and insufficient afterward;
7. Abide by laws on national defense, security, public order and safety,
protection of natural resources, environment, historical and cultural places, and
famous landscapes;
8. Other obligations as stipulated by laws.
Article 10. Rights and Obligations of enterprises that produce or provide
public goods or services.
1. Having rights and obligations as provided in articles 8, 9 and other provisions
of this law;
2. Being compensated in accordance with biding price or entitled to collect
service fees as stipulated by the competent state authority;
3. Being given adequate time for producing and providing goods and services
4. Producing and providing goods and services with adequate quality and
quantity as committed in accordance with price set forth by state agencies.
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5. Ensuring equality of every customers;
6. Being responsible to customers and laws in ensuring quality, quantity,
conditions, prices and fees of the provied goods or services;
7. Other obligations as stipulated in the laws.
Article 11. Prohibited activities
1. Grant or do not grant the Certificate of Business Registration to persons who
are not eligible or are eligible under this law respectively; cause delay, trouble,
obstacle and disturbance for persons who apply for business registration and business
operation of enterprises.
2. Do business in form of unregistered enterprises or continue to do business
after being revoked the Certificate of Business Registration.
3. Submit a business file containing dishonest and inaccurate information;
register changes in the business file with dishonest, inaccurate and ill-timed
information;
4. Fake the amount of capital; do not contribute capital in conformity with time
and amount as committed; fix a higher value of contributed assets;
5. Conduct activities in violating the law, defrauding or prohibited by laws;
6. Conduct conditioned business activities when conditions thereof are not fully
meet.
7. Prevent owners, shareholders and members of enterprises from realizing their
rights as provided by this law and company charters.
8. Other activities prohibited by laws.
Article 12. Duty of keeping documents
1. Depending on the forms of enterprises, following documents are required to
keep by enterprises:
a) The company charter and its amendment or supplement; internal working
rules; registered list of shareholders or members of enterprises.
b) The Certificate of Business Registration; certificate of intellectual property
protection; certificate of good quality; licenses or permits and other certificates;
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c) Documents recording ownership of the company properties;
d) Records of the Members’ council, Members’ Meeting, Board of Directors
and decisions of the enterprises;
e) Prospectus for offering security;
f) Reports of the Board of Supervision, conclusions of the inspection bodies and
independent auditing agencies;
g) Accounting books, receipts and annual financial statements;
h) Other documents as required by laws.
2. Enterprises are required to keep all those documents as provided in this
article at the head-office; keeping time will be that stipulated by laws.
CHAPTER II
ESTABLISHMENT AND BUSINESS
REGISTRATION
Article 13. The right to establishment, capital contribution, share buying
and management of enterprises
1. Vietnamese and foreign organizations and individuals are entitled to establish
and manage enterprises in Vietnam in pursuant to this law, except those provided in
sub-article 2 of this article.
2. Following organizations and individuals are not entitled to establish and
manage enterprises:
a) State bodies and units of the people’s armed force that use state assets to set
up enterprises for making their own profits.
b) Cadres, civil servants as stipulated by the laws on cadres and civil servants;
c) Officers, non-commissioned officers, professional army members, military
workers at bodies, units of the people’s army; officers, professional non-
commissioned officers working in the bodies, units of the people’s police;
d) Minors; persons without or with restricted capacity for civil acts;
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e) Persons who are serving an imprisoned punishment or prohibited to do
business by the Court.
g) Other organizations and individuals as stipulated by the law on bankruptcy.
3. Organizations and individuals are entitled to buy shares from shareholding
companies, make capital contribution to limited liability companies and partnerships
in pursuant to this law, except those provided in sub-article 4 of this article.
4. Following organizations and individuals are not entitled to buy shares from
shareholding companies and make capital contribution to limited liability companies
and partnerships:
a) State bodies and units of the people’s armed force that use state assets to set
up enterprises for making their own profits;
b) Persons who are not entitled to contribute capital into enterprises as
stipulated by the laws on cadres and civil servants.
Article 14. Contracts signed prior to business registration
1. Founding members and shareholders or their representatives can engage in
contracts for the purpose of enterprise establishment prior to applying for business
registration.
2. All rights and obligations resulting from contracts as stipulated in sub-article
1 of this article will be born by the enterprises that are established afterward.
3. If the enterprises fail to be established, the singing persons as stipulated in
sub-article 1 of this article will be solely or jointly liable for the performance of such
contracts.
Article 15. Procedures for registering businesses
1. Persons decided to establish an enterprise must submit a complete file to the
competent business registrar as stipulated by this law and will be responsible for
accuracy and truthfulness of information contained in the file
2. The business registrar will review the file and decide to issue the certificate
of business registration within 10 working days from the date of receiving the file; a
written notification is required to send to applicants if the certificate of business
registration is refused to issue. The notification must state explicitly reasons of refusal
or other requirements for amendment or supplement of the file if any.
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3. The business registrar will be responsible for the validity of the file when
issuing the certificate of business registration; and is prohibited from asking
applicants for any document rather than those demanded by this law.
4. Time limit for issuing the certificate of business registration in circumstance
where business registration is done together with realizing specific investment
projects will be complying with the laws on investment.
Article 16. Business registration file in relation to sole proprietorship
1. Application form as standardized by the business registrar.
2. Copy of the identification card, passport or other relevant personal
certification.
3. Certification of legal capital issued by the competent agencies in regard to
business activities required legal capital as stipulated by laws.
4. Professional certificate of a director or other individual in regard to business
activities required professional certificate as stipulated by laws.
Article 17. Business registration file in relation to partnership
1. Application form as standardized by the business registrar.
2. Draft of the partnership charter;
3. List of partners; copy the identification card, passport or other relevant
personal certification of partners.
4. Certification of legal capital issued by the competent agencies in regard to
business activities required legal capital as stipulated by laws.
5. Professional certificate of general partners or other individual in regard to
business activities required professional certificate as stipulated by laws.
Article 18. Business registration file in relation to limited liability company
1. Application form as standardized by the business registrar.
2. Draft of the company charter;
3. List of members, which is attached by following documents:
a) Copy of an identification card, passport or other relevant personal
certification of the individual members.
b) Copy of a decision of establishment, certificate of business registration or
other relevant certification of the institutional members; Copy of an identification
card, passport or other relevant personal certification of the authorized
representatives.
Copy of a decision of establishment, certificate of business registration or other
relevant certification of the foreign institutional members must be legalized, no latter
than three months, by agencies where such members are constituted.
4. Certification of legal capital issued by the competent agencies in regard to
business activities required legal capital as stipulated by laws.
5. Professional certificate of directors or general directors or other individual in
regard to business activities required professional certificate as stipulated by laws.
Article 19. Business registration file in relation to shareholding company
1. Application form as standardized by the business registrar.
