The right to establish and manage enterprises is a legalized right from the human right to freedom of enterprise which is noted in the Constitution 2013. In this post, we will analyze the regulations related to the entities that have the right to establish and manage enterprises.
Pursuant to the provisions of Clauses 1 and 2, Article 17 of the Law on Enterprises 2020, organizations and individuals have the right to establish and manage enterprises in Vietnam, except for the hereinafter entities:
1. State agencies, and people’s armed forces units using state assets to establish and manage enterprises of enterprises to make profits for their own agencies or units
Pursuant to Clause 4, Article 17 of the Law on Enterprises 2020, making profits for their own agencies or units is understood as using income from business activities, capital contribution, shares purchase, or purchase of capital contribution to one of the following purposes:
- Dividing in any kind to some or all of the following individuals:
- i) Cadres, civil servants and public employees; ii) Officers, non-commissioned officers, career army men, and national defense workers and public employees in agencies and units of the Vietnam People’s Army; iii) Officers, career non-commissioned officers and public security workers in agencies and units of the Vietnam People’s Public Security Forces, except persons who are appointed as authorized representatives to manage the State’s contributed capital amounts in enterprises or to act as managers in state enterprises;
- Adding to the operational budgets of the agencies or units in contravention of the law on the state budget;
- Setting up a fund or adding to an existing fund to serve the own interests of the agencies or units.
The law’s stipulating that these entities are not allowed to establish and manage enterprises to ensure publicity and transparency in the mobilization and use of the state budget, and in the prevention of illegal acts, corruption causes damage to the state budget.
2. Entities does not have the right to establish and manage enterprises are the persons holding positions and authority in state agencies and state enterprises
The entities holding positions and authorities in state agencies and state enterprises who are not allowed to establish and manage enterprises include:
- Cadres, civil servants and public employees;
- Officers, non-commissioned officers, career army men, and national defense workers and public employees in agencies and units of the Vietnam People’s Army; and officers, career non-commissioned officers and public security workers in agencies and units of the Vietnam People’s Public Security Forces, except persons who are appointed as authorized representatives to manage the State’s contributed capital amounts in enterprises or to act as managers in state enterprises;
- Leaders and professional managers in enterprises in which the State holds 100% of charter capital, except persons appointed as authorized representatives to manage the State’s contributed capital amounts in other enterprises.
The law stipulates these entities are the persons who are in charge of public mission, performing the tasks assigned by the state and the people, and are obliged to wholeheartedly serve the society and serve the people. The restriction of the above rights is to avoid embezzlement, corruption and taking advantage of one’s position for unjust gain.
3. Minors; persons who have their civil act capacity restricted; persons who have lost their civil act capacity; persons who have difficulty in perceiving or controlling their acts; and organizations without legal person status
Regarding the individual, the above cases all belong to those who do not have or have inadequate civil act capacity. These subjects will be limited in their ability to perform their obligations, therefore, the law restricts their right to establish and manage businesses.
Regarding the organization, according to the Civil Code 2015, an organization without legal person status does not fully meet the following conditions: Legally established, inextricably organizational structure, possessing property independent and bearing its liability with its own property, independently entering into legal relations in its own name.
4. Entities are suffering adverse legal consequences due to their illegal acts
These entities are specified at Points e, g, Clause 2, Article 17 of the Law on Enterprise 2020, including:
- Persons being examined for penal liability, put in temporary detention, serving imprisonment sentences or executing administrative sanctions at compulsory drug rehabilitation establishments or compulsory education institutions, or being banned by the court from holding certain positions, practicing certain professions, or performing certain jobs; and other cases specified by the Law on Bankruptcy and the Anti-Corruption Law.
- Juridical persons that are banned from the business operation or banned from certain fields as prescribed by the Criminal Code.
5. Cases in which the establishment and management of enterprises are not specified in in the Law on Bankruptcy 2014
Except in case the enterprise goes bankrupt due to force majeure, then:
- Holders of the posts of president, director, general director and member of the Board of Directors in enterprises with 100% state capital that are declared bankrupt shall be prohibited from holding such posts in any state enterprises from the date their enterprises are declared bankrupt.
- Those who act as representatives of state capital at state-invested enterprises which are declared bankrupt shall be prohibited from holding managerial posts in any state-invested enterprises.
- If holders of managerial posts in enterprises or cooperatives which are declared bankrupt intentionally violate the provisions of Clause 1, Article 18; Clause 5, Article 28; and Clause 1, Article 48 of this Law, judges shall consider and decide to deprive them of the right to establish, or act as managers of, enterprises and cooperatives within 3 years from the date bankruptcy declaration decisions are issued.
This is the post “Entities have the right to establish and manage enterprises”. We hope this post was useful to you.
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