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PARTNERSHIP

I. Definition1
1. A partnership means an enterprise of which:
a) At least 02 partners are co-owner of the company who run business together in a
common name (hereinafter referred to as general partner). Apart from general
partners, the company may have limited partners;
b) General partners are individuals who are responsible for the company’s
obligations with all of their property;
c) Limited partners are only liable for the company’s debts up to the value of capital
contributed to the company.
2. A partnership has its own legal status from the issuance date of the Certificate of
Business registration.
3. Partnerships must not issue any kind of shares.
II. Legal characteristics
1. Partners
There are two types of partners:
 General partner:
- At least 02 partners are co-owner of the company who run business together in a
common name, called as general partner. There is no limit in the maximum
number of general partners
- General partners may be Vietnamese or foreigners
- General partners can not be the owner of a sole proprietorship, the owner of
household business or general partner of other partnership unless otherwise
agreed by the remaining general partners.
 Limited partners:

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Article 172 Law on Enterprises 2014
This kind of partner is optional in partnership. Limited partners can be individuals
or organizations, Vietnamese or foreigners.
2. The financial liability of partners
 General partners
General partners must jointly be responsible for all debts incurred in the course of
business operations of enterprises. Infinite liability for all debts ofgeneral partners
is: they are not only responsible for the number of assets put into business, but
they are also responsible for all the assets owned by them to all debts of the
company. This means that if the business fails, the general partners have to use
their personal assets (money, house, land, car, etc.) to pay back the debts of the
partnership. Besides, because the partnership has at least two partners, the
geeneral partners must jointly bear unlimited liability. This means that when a
general member on behalf of a partnership enters into a contract with other
enterprise, other general partners who are not directly involved in the contract
must still be responsible for the contract.
 Limited partners:
Limited partners are only liable for the company’s debts up to the value of capital
contributed to the company. In business, if partnerships face difficulties, losses,
capital contributors are only responsible for the entire contributed capital
contributed to the company.
In case the company dissolves or goes bankrupt, the remaining assets of the
company are not enough to pay debts, capital-contributing members do not have
to use their own assets to pay debts on behalf of the company.
3. Capital
The charter capital of a partnership is the total value of assets that members have
contributed or committed to contribute to the establishment of the company.
Members of partnerships may contribute capital in Vietnamese currency, freely
convertible foreign currencies, gold, the value of land use rights, the value of
intellectual property rights and other assets stated in the company's charter. Assets
contributed as capital may be fully contributed when the company is established,
which may be contributed according to the time-limit and progress of the
commitment agreed by the members. General partners and limited partners are
obliged to contribute capital fully and on time as committed.
If the general partners do not contribute fully and on time the committed capital
amount causing damage to the company, such member must be responsible for
compensating the company.
If the limited partners do not contribute fully and on time the committed capital
amounts, the unpaid capital amount shall be considered the debts of the members
to the company.
General partners and limited paartners who do not want to be members of the
company have the right to transfer their contributed capital to the remaining
members or to non-members of the company, or withdraw capital from the
company.
4. Raising capital
Partnerships must not issue any kind of shares to raise capital.
When there is a need to increase the charter capital, the company will mobilize by
admitting new members, increasing each member's capital contribution or
recording an increase in the company's asset value.
When the company needs to increase its operating capital, the company can
mobilize by borrowing from organizations, individuals or other sources to meet
the company's capital needs.
5. Legal status and financial liability of partnership
“2. A partnership has its own legal status from the issuance date of the Certificate
of Business registration.”2
Obeying Civil code 2015 “Article 74. Juridical persons
1. An organization shall be recognized as a juridical person if it meets all of the
following conditions:

a) It is legally established as prescribed in this Code and relevant laws;

b) It has an organizational structure prescribed in Article 83 of this Code;

c) It has property independent from other natural and juridical persons and bears
liability by recourse to its property;

d) It participates independently in legal relations in its own name.”

Therefore, a partnership has its own legal status when it has transactions with others,
has property which are independent from other natural and juridical persons and
bears liability by recourse to its property.

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Article 172 Law on enterprises 2014