Profile
Vietnamese
Partnership Formation: Characteristics, Documents & Procedures
Partnership, a popular form of enterprise, especially in the small and medium-sized business sector. This is a type of business chosen by many entrepreneurs, thanks to the flexibility and advantages it offers. Let’s find out the details of establishing a partnership with Siglaw Law Firm, from basic characteristics to the benefits that businesses can achieve through this model.
What is a partnership?
A partnership is a type of enterprise in which at least two people jointly contribute capital and nominal capital to conduct business under a common name. The members of the partnership jointly bear unlimited liability for debts and property obligations arising from the company’s business activities.
Partnership formation
Features of Partnerships
Making capital contribution and issuing certificates of capital contribution
General partners and capital contributors must contribute in full and on time the committed capital. General partners who fail to contribute in full and on time the committed capital causing damage to the company shall be liable to compensate for damage to the company.
In case a capital-contributing member fails to pay in full and on time the committed capital, such insufficiently contributed capital may be considered as a debt of that member to the company. In this case, the partnership may expel such capital-contributing general partners according to the decision of the Members’ Council.
General partners and capital contributors 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. However, this transfer is quite difficult due to the close association nature of the members in the partnership.
Partnership members
A partnership must have a minimum of 2 members who are joint owners of the company called general partners. In addition, there may be capital contributors.
Property liability regime of partnership members
General partners must jointly bear unlimited liability for all debts incurred in the business activities of the enterprise. Namely: when the company has a debt to pay, it must pay with the company’s assets. If the company’s assets are insufficient to pay its debts, the company must dissolve or go bankrupt to pay its debts with all remaining assets; In case the remaining assets of the company are not easy to repay, the new general partner must pay the debt on behalf of the company with his/her own assets.
However, capital contributors are responsible to the extent of capital contributed to the company. This means that capital contributors can limit risks when investing in a partnership. This is an advantage of capital contributors that many investors choose when they do not want to bear many risks arising in business activities.
Advantages of partnerships
– Organizational management model is simple, compact, very easy to manage. Suitable for small and medium enterprises
– The management and administration are not too complicated due to the small number of members
– Easy loan. Banks will have trust, ease of lending capital and forbearance with this type of business due to the nature of the unlimited liability of joint venture members
– Easy to create trust for partners: Due to the nature of solidarity with unlimited liability with all their assets, it will be extremely high responsibility, easy to create trust with business partners
Disadvantages of the partnership type
– Due to the infinite liability of the general partners, the risk of general partners is quite high
– The raising of partnership capital will be limited. Although it has legal status, it is not allowed to issue securities. The fundraising only comes from old or new members
– General partners when withdrawing from the company are still responsible for the company’s debts that have arisen from previous commitments
Does not clearly distinguish between corporate and personal assets
Dossier of registration for establishment of a partnership
To form a partnership, you need to prepare the following documents:
(1) An application for enterprise registration.
(2) The company’s charter.
(3) List of members.
(4) Copies of the individual’s legal documents for members.
(5) A copy of the Investment Registration Certificate for foreign investors in accordance with the Law on Investment
Procedures for establishing a partnership
To establish a partnership, the procedure is followed by the following steps:
Step 1. Prepare documents as mentioned above
Step 2: Submit the application at the Business Registration Office where the Enterprise is located
Step 3. Within 03 – 05 working days from the date of submission. The Business Registration Office shall issue the Certificate of Business Registration
Step 4. Enterprises Publish business registration information on the national registration portal. Contents of announcement include the contents of the Certificate of Business Registration and business lines
Step 5: Notify the seal sample to the Business Registration Office – Department of Planning and Investment
Above is some basic information Partnership. If you have any questions about the Partnership Formation Service, you can contact Siglaw Law Firm directly for assistance!
Phone: (+84) 961 366 238
Email:
Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.
Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.
Central branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City
Facebook: https://www.facebook.com/hangluatSiglaw
