In the modern market economy, businesses play a backbone role in economic development. However, not all organizations or individuals are entitled to establish and manage enterprises in Vietnam. This is clearly regulated in the 2020 Law on Enterprises to ensure transparency and legal responsibility for entities participating in business activities.

According to the 2020 Law on Enterprises, organizations and individuals not having the right to establish and manage enterprises in Vietnam is one of the important contents clearly stated. These regulations help control and limit organizations and individuals who lack legal capacity or who have violated the law from participating in business activities, ensuring a healthy and legal business environment.

I. Legal basis for the prohibition of the right to establish and manage enterprises in Vietnam

The 2020 Law on Enterprises in Vietnam is the basic legal document regulating the establishment and management of enterprises. Accordingly, organizations and individuals not having the right to establish and manage enterprises are regulated in Article 17 of this law. Specifically, these subjects include:

• Government officials, civil servants, and public employees: According to Article 17 of the 2020 Law on Enterprises, government officials, civil servants, and public employees are not permitted to establish or manage enterprises, except where authorized by competent authorities. This is to avoid conflicts of interest and ensure openness and transparency in the performance of their public duties and responsibilities.
• Officers, non-commissioned officers, professional soldiers, workers, and defense employees in agencies and units of the Vietnam People’s Army: Those in the military or police are not allowed to participate in managing or establishing enterprises to maintain independence and responsibility in performing national security and defense duties.
• Minors: According to civil law, individuals under 18 years of age are considered minors and therefore do not have the civil capacity to establish or manage enterprises in Vietnam.
• Individuals with restricted or lost civil capacity: Individuals with restricted or lost civil capacity, or those serving prison sentences, subject to a professional ban, or business ban under the law, are not permitted to participate in the establishment and management of enterprises.

II. Regulations limiting the right to participate in managing enterprises for individuals with legal violations

The 2020 Law on Enterprises also specifies that individuals who have been criminally prosecuted related to business, finance, or other legal violations are not entitled to establish and manage enterprises. This regulation aims to reduce risks for businesses and protect the legal rights of investors, customers, and the community.

Specifically, Article 17 of the 2020 Law on Enterprises stipulates that individuals who have been convicted and whose criminal records have not been expunged for economic or financial crimes or crimes violating national security are not entitled to establish or manage enterprises. This regulation ensures that individuals who have committed serious legal violations cannot exploit the establishment and management of businesses to continue unlawful activities.

III. Organizations and individuals not entitled to establish and manage enterprises

• State agencies, and people’s armed forces units using state assets to establish enterprises for private profit.
• Government officials, civil servants, and public employees.
• Officers, non-commissioned officers, professional soldiers, workers, and defense employees in agencies and units of the Vietnam People’s Army; professional officers, non-commissioned officers, and workers in agencies and units of the People’s Public Security, except those appointed as representatives by the State to manage the state’s capital contribution in enterprises or manage state-owned enterprises.
• Leaders and managers in enterprises where the State holds 100% charter capital, except for those appointed as representatives to manage the State’s capital contribution in other enterprises.
• Minors; individuals with restricted or lost civil capacity; individuals with difficulty in perception or behavior control; organizations without legal status.
• Individuals under criminal investigation, in detention, serving prison sentences, subject to administrative handling at compulsory detoxification centers or education centers, or prohibited by the court from holding certain positions, practicing certain professions, or performing certain jobs.
• Organizations that are legal entities prohibited from doing business or operating in certain fields.

IV. The impact of the restriction on the right to establish and manage enterprises

The prohibition of certain organizations and individuals from establishing and managing enterprises in Vietnam has a profound impact on the business environment. It not only protects the legal rights of investors and workers but also helps to build a system of enterprises that operate in compliance with legal regulations. Thanks to these provisions, businesses not only follow the law but also ensure transparency and fairness in competition.

For individuals not allowed to establish and manage enterprises, this helps maintain stability in their respective sectors, such as civil servants in the public sector or the military. This is an important measure to prevent conflicts of interest and ensure that their work is not influenced by personal business interests.

V. Solutions for violations of the right to establish and manage enterprises

In cases where organizations or individuals violate the regulations on the establishment and management of enterprises, the 2020 Law on Enterprises provides for strict sanctions. Specifically, such violations may result in the suspension or dissolution of the enterprise as ordered by a court or competent authority.

In addition, individuals who violate these regulations may face further penalties, such as being prohibited from holding management positions in enterprises for an extended period or facing administrative fines, depending on the severity of the violation. This helps deter and prevent unlawful behavior in the establishment and management of enterprises in Vietnam.

VI. Procedures for enterprise registration

The person establishing the enterprise or their authorized representative shall carry out enterprise registration through the following methods: Direct enterprise registration at the business registration office; enterprise registration through postal services; enterprise registration via electronic information systems.

Within 3 working days from the date of receipt of the application, the business registration office is responsible for examining the validity of the enterprise registration dossier and issuing the enterprise registration certificate. If the application is not valid, the business registration office must notify in writing the contents that need to be amended or supplemented to the person establishing the enterprise. If the enterprise registration is denied, a written notice must be provided to the person establishing the enterprise, clearly stating the reasons.

VII. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm:

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