Types of Companies According to the Law on Enterprises:

- Right to choose the form and method of capital mobilization:

In business, capital is an important factor. If a company wants to develop and expand its business scale, it must mobilize capital from many different sources. The company has the right to choose the forms of capital mobilization that are suitable to its specific conditions and according to the provisions of law. In addition to the initial capital (charter capital), the company can mobilize capital by increasing the charter capital or creating additional capital by borrowing. For joint stock companies and limited liability companies, it is possible to increase borrowed capital by issuing bonds according to the provisions of law.

- The right to proactively search for markets, customers and sign contracts:

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In a market economy, choosing customers to do business with is a particularly important issue. The law does not prohibit choosing partners to transact and sign contracts. Who to transact with depends on the company's will, the company has the right to directly transact to sign contracts according to the principles of voluntariness, equality, mutual benefit and not violating the law.

- Export and import business rights:

The recognition of the right to export and import business for enterprises is an inevitable requirement in the current market economy conditions in Vietnam, and it is also consistent with the wishes of the majority of business entities. The right to export and import business is an important legal guarantee for enterprises, as well as the company has a "playing field" wide enough and equal to develop business activities. According to the content of this right, the company has the right to directly consume its products and goods by exporting as well as importing goods from abroad to serve business activities, in accordance with the business functions identified in the company's business registration certificate. The company's export and import business activities must comply with the provisions of law.

- Right to recruit, hire and use labor according to business requirements:

Recruitment and hiring of labor is the right of the company. Based on business requirements, the company decides on the number of employees to recruit and hire, and stipulates the professional requirements of the employees. The form of labor use in the company can be according to the labor contract.

- Business autonomy, proactively applying scientific and modern management methods to

improve efficiency and competitiveness:

Within the scope of the registered business line, the company has the right to decide on its own any issues arising in its business operations. What to produce? How to produce? For whom to produce? are the company's decisions; no organization or individual has the right to interfere in the company's legal operations. Compared to state-owned enterprises, the company's autonomy in its business operations is demonstrated at a higher level.

- The right to refuse and denounce any request to provide resources not prescribed by law from any individual, agency or organization, except for contributions for humanitarian or public benefit purposes.

- In addition, the company also has a number of other rights as prescribed by law.

b. Company obligations:

Rights are always associated with obligations and constitute the authority of business entities in general and companies in particular. According to the provisions of law, companies have the following obligations:

- Business activities in accordance with registered industries and professions:

Which industry or profession to do business depends on the company's choice. Once the industry or profession has been chosen, the company must register its business. During its operation, the company is obliged to do business in accordance with the industry or profession stated in the business registration certificate. If it wants to change its industry or profession, the company must complete the procedure to change the business registration content at the business registration agency.

The law requires companies to conduct business in accordance with their registered business lines in order to ensure the common interests of society and state management. All business activities of the company may only be conducted within the scope of the registered business lines. Within the scope of the registered business lines, the company has the right to conduct business autonomously. If the business lines are not in accordance with the registered business lines, it is considered a violation of the law and depending on the severity of the violation, the company may be fined or have its business registration certificate revoked.

- Prepare accounting books, record accounting books, invoices, vouchers and prepare financial reports honestly and accurately.

Accounting and statistics are very important in the business process. Through accounting and statistics activities, the company can make accurate accounting. Accounting and statistics activities are regulated uniformly in enterprises. The company must record accounting books and make settlements according to the provisions of law.

From the preparation of books, documents, records, inventories, assessments to the preparation of financial reports, it is necessary to comply with the provisions of the law on accounting, auditing, and statistics, which not only helps the company in economic accounting but also through which the state conducts inspection, monitoring, and supervision of the company's financial activities. The state's inspection and supervision is carried out through the inspection of the company's activities by competent state agencies.

The Company is obliged to provide relevant documents for the inspection and facilitate the inspection.

- Register for tax, declare tax, pay tax and fulfill other financial obligations according to regulations.

by law

Paying taxes and fulfilling other financial obligations are the obligations of businesses in general, a company is a type of business, so the company must pay taxes according to tax laws. Any business, large or small, must pay taxes. Violating tax obligations is a violation of the law and the company must bear certain legal consequences. In addition to the most important obligation to pay taxes, the company must also fulfill other financial obligations according to the provisions of law such as contributing to the construction of infrastructure, cultural, medical and educational facilities in the locality where the company is headquartered.

- Ensure product quality according to registered standards:

Goods produced by the company must be registered for quality at the competent state agency. When registering quality standards, the goods will be protected by law. At the same time, the company must ensure that the production and circulation of goods meet the registered quality standards. If the company produces and circulates goods that do not meet the registered quality standards, it is a violation of the law and depending on the severity of the violation, the company must bear legal responsibility before the state and consumers.

- Declare and periodically report accurately and fully all information about the enterprise and its financial situation to the business registration authority:

The implementation of the obligation to provide information of enterprises in general and of companies in particular is extremely important for the state management of enterprises. With the information of the company, the business registration agency performs the task of building and managing the information system of the company, providing information to state agencies, organizations and individuals upon request according to the provisions of law.

When the company discovers that the declared or reported information is inaccurate, incomplete or falsified, it must promptly correct such information with the business registration authority.

- Prioritize the use of domestic labor, ensure the rights and interests of employees according to the provisions of labor law, respect the right to organize trade unions according to the provisions of trade union law.

Recruiting and hiring labor is the right of the company, based on the business needs of the company. In the process of using labor, the company is obliged to ensure the rights and interests of employees as stipulated by labor law. Recruitment and hiring of labor in the company is mainly carried out through the form of labor contracts. The signing and implementation of labor contracts must comply with the law on labor contracts. The company must ensure working conditions, wages... for employees. The use of labor must first give priority to domestic labor. This is shown in that if the jobs are performed by domestic labor, the company must give priority to recruitment.

Employees in the company have the right to establish trade unions, the company has the obligation to create favorable conditions for them and help them establish and operate in accordance with the law on trade unions.

- Comply with the provisions of the law on national defense, security, order, social safety, protection of environmental resources, protection of historical and cultural relics and scenic spots. This is the duty of every citizen and organization. The company has the obligation, together with the locality where it is headquartered, to properly implement the state's regulations on national defense, security, order and social safety. During its operation, the company must have measures to protect the environment such as treating industrial waste, avoiding pollution and environmental destruction.

Historical and cultural relics and scenic spots are invaluable assets of the nation. The company is responsible for protecting and preserving these assets.

- In addition, the company must also perform other obligations as prescribed by law.

3.2.2 Types of companies according to the provisions of the Enterprise Law:

a. Single-member limited liability company:

* Concept and characteristics:

In the process of development, corporate law has had new concepts about companies, which is to recognize the model of a single-member limited liability company. In our country's business practices, state-owned enterprises, enterprises of political and socio-political organizations are essentially organized and operated like a single-member limited liability company (one owner). The 1999 Enterprise Law only stipulates that a single-member limited liability company is an organization; the 2005 Enterprise Law has developed and expanded to allow individuals to establish a single-member limited liability company.

Accordingly, a single-member LLC is an enterprise owned by one organization or one individual (called the company owner). The company owner is responsible for the company's debts and other financial obligations within the scope of the charter capital.

From the above concept, a single-member LLC has the following characteristics:

- Owned by 1 member, organization or individual

- The owner of the limited liability company

- The transfer of the owner's capital contribution is carried out in accordance with the provisions of law.

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- Has legal status

- Not allowed to issue shares.

* Company management organization:

- For a single-member LLC that is an organization:

The company owner appoints 1 or more authorized representatives with an unlimited term of office.

more than 5 years to exercise its rights and obligations as prescribed by law. The company owner has the right to replace the authorized representative at any time.

In case there are at least 2 people appointed as authorized representatives, the organizational structure of the company includes: Board of members, Director or General Director and Controller. The Board of members includes all authorized representatives.

In case one person is appointed as an authorized representative, the organizational structure of the company includes: Chairman of the company, Director or General Director and Controller.

The company charter will stipulate that the Chairman of the Board of Members or the Chairman of the Company or the Director (General Director) is the legal representative of the company. The legal representative of the company must reside in Vietnam (if absent for more than 30 days, another person must be authorized to act on his/her behalf).

The functions, duties and powers of the Board of Members, Chairman of the Company, Director or General Director and Controller are stipulated by the Law on Enterprises and the company charter (Articles 68 to 71 of the Law on Enterprises).

- For LLCs with one individual member:

The organizational structure of a single-member LLC consists of: Chairman of the company, Director or General Director. The owner of the company is also the chairman of the company. The chairman of the company or Director (General Director) is the legal representative of the company as prescribed in the company charter. The chairman of the company may concurrently hold the position of Director (General Director) or hire another person to be Director (General Director). The specific rights and obligations of the Director (General Director) are stipulated in the company charter and the labor contract that the Director (General Director) has signed with the chairman of the company.

* Capital and financial regime:

- Owners must contribute capital fully and on time as registered.

- The company owner is not allowed to directly withdraw part or all of the capital contributed to the company, but is only allowed to withdraw capital by transferring part or all of the capital to another organization or individual.

- The owner is not allowed to withdraw the company's profits when the company fails to fully pay its debts and other financial obligations when due.

- The company can increase or decrease its charter capital by:

+ Increase: increase the company owner's capital contribution or adjust the charter capital corresponding to the company's asset value.

+ Decrease: only when the value of the company's assets is depreciated.

b. Limited liability company with 2 or more members:

* Concept and characteristics:

A limited liability company with 2 or more members is a type of company consisting of no more than 50 members contributing capital to establish the company and the company is only responsible for the company's debts with its own assets.

According to Article 38 of the Law on Enterprises, a limited liability company with 2 members has the following basic characteristics:

- Is a business with no more than 50 members during its operation.

- Has legal status

- Responsible for the company's debts and other financial obligations with their own assets (limited liability). Company members are responsible for the company's debts and other financial obligations within the scope of the capital they have committed to contribute to the company. Thus, in a limited liability company with 2 or more members, there is a separation of the company's assets from the assets of the members. The principle of separation of assets is applied in all relationships between assets, debts and liabilities of the company.

- Not allowed to issue shares

- Capital contributions of members can only be transferred in accordance with the provisions of law.

* Management organization:

The management structure of a limited liability company with 2 or more members is regulated by law depending on the number of members of the company. Regulations on management organization in general, and management organization of a limited liability company with 2 or more members in particular, are mostly discretionary regulations, on which the company chooses and applies.

The company's management organization includes: Board of members, Chairman of the Board of members, Director or General Director. When the company has more than 11 members, there must be a Board of Supervisors.

- Board of members: is the highest decision-making body of the company, including all company members. If the member is an organization, it must appoint its representative to the Board of members. Members can attend meetings of the Board of members in person or authorize in writing another member.

As a collective body, the board of members does not work regularly but only exists during meetings and makes decisions based on voting at meetings or obtaining members' opinions in writing.

The Board of Members meets at least once a year and may be convened at any time upon request of the Chairman of the Board of Members or of a member (group of members) owning more than 25% of the company's charter capital (or a smaller percentage as stipulated in the company's charter).

As the highest decision-making body of the company, the Board of Members has the right to consider and decide on the main and most important issues of the company such as: the company's development direction, increase or decrease in charter capital; company management structure, reorganization, dissolution of the company... The specific rights and duties of the Board of Members are stipulated in the Enterprise Law and the company's charter.

- Chairman of the Board of Members: The Board of Members elects one member as Chairman. The Chairman of the Board of Members may concurrently serve as the Director (General Director) of the company. The Chairman of the Board of Members has the rights and duties stipulated in the Enterprise Law and the company charter. The Chairman of the Board of Members may be the legal representative of the company if so stipulated in the company charter.

- Director (General Director): is the person who runs the daily business operations of the company, is appointed by the Board of Members and is responsible to the Board of Members for the implementation of his/her rights and duties. The Director (General Director) is the legal representative of the company, except in cases where the company charter stipulates that the Chairman of the Board of Members is the legal representative of the company.

The Director (General Director) has the rights and obligations prescribed in the Enterprise Law and the company charter.

- Board of Supervisors: is the body that represents the company members to control the company's activities. The rights, obligations and working regime of the Board of Supervisors and the Head of the Board of Supervisors are stipulated in the company's charter.

* Capital and financial regime:

- A limited liability company with two or more members is a type of capital company that is not allowed to issue shares to the market to publicly raise capital from the public. When establishing a company, members must commit to contributing capital to the company with a specific capital contribution value and time limit. Members must contribute capital fully and on time as committed. When contributing the full value of the capital contribution, the company's members will be issued a capital contribution certificate by the company.

In case a member fails to contribute the capital in full and on time as committed, the uncontributed capital shall be considered as the debt of that member to the company and that member shall be liable for compensation for damages arising from failure to contribute the capital in full and on time as committed. The legal representative of the company, if failing to properly perform the obligation to notify the business registration authority, shall, together with the member who has not contributed the capital in full, be jointly liable to the company for the uncontributed capital and damages arising from failure to contribute the capital in full and on time as committed.

- Company members have the right to request the company to buy back their capital contributions in certain cases (Article 43 of the Enterprise Law)

- During the company's operations, members have the right to transfer all or part of their capital contribution to others (Articles 44-45 of the Enterprise Law)

- The company can increase its charter capital according to the decision of the Board of Members in the following forms: increasing the capital contribution of members, adjusting the charter capital increase corresponding to the increased asset value of the company; receiving capital contribution of new members.

- The company may reduce its charter capital according to the decision of the Board of Members in the forms and procedures prescribed in Article 60 of the Law on Enterprises.

- The company can only distribute profits to members when the business is profitable and has fulfilled its tax obligations and other financial obligations. At the same time, it must still ensure sufficient payment of debts and other financial obligations due after distributing profits.

c. Joint stock company:

* Concept and characteristics:

A joint stock company is a typical type of capital company. The company's capital is divided into equal parts called shares. The owners of shares are called shareholders and are only responsible for the company's debts up to the value of the shares they own.

Characteristics of a joint stock company:

- Regarding company members: during the entire operation process, there must be at least 3 members participating in a joint stock company. In most countries in the world, there are regulations on the minimum number of members of a joint stock company.

- The charter capital of a company is divided into equal parts called shares. The value of each share is called the par value of the share and is reflected in the share. A share can reflect the par value of one or more shares. Capital contribution to a company is made by purchasing shares, each shareholder can purchase one or more shares. The law does not limit the maximum percentage of the charter capital that each member can purchase, but the members can agree in the charter to limit the maximum number of shares that a member can purchase to prevent any one member from taking control of the company.

- Capital contributions (shares) of members are freely transferable on the stock market, it is expressed in the form of stocks. Stocks issued by the company are a type of commodity, stockholders can freely transfer according to the provisions of law.

- Regarding liability: a joint stock company is responsible for the company's debts with its assets. Shareholders are responsible for the company's debts and other financial obligations within the scope of the capital contributed to the company (ie up to the value of the shares they own).

- During its operation, a joint stock company has the right to issue securities (stocks, bonds) to the public in accordance with the provisions of the law on securities to raise capital. This demonstrates the large capital mobilization capacity of a joint stock company.

- A joint stock company is a legal entity. A company has legal entity status from the date of being granted a business registration certificate.

* Shares, stocks:

Shares are the smallest division of a company's charter capital expressed in the form of stocks. The value of each share (par value) is determined by the company and recorded on the stock. The par value of shares may be different from the offering price of shares. The offering price of shares is determined by the company's Board of Directors but must not be lower than the market value at the time of offering, except in cases specified in Clause 1, Article 87 of the Law on Enterprises.

A company's shares can exist in two types: common shares and preferred shares. A company must have common shares, and the owners of common shares are called common shareholders.

A company may have preferred shares, and the owners of preferred shares are called preferred shareholders. Preferred shares include the following types:

- Voting preference shares: are shares with more votes than common shares. The number of votes of a voting preference share is determined by the company's charter.

Only organizations authorized by the Government and founding shareholders are entitled to hold voting preference shares. The voting preference of founding shareholders is only valid for 3 years from the date the company is granted a business registration certificate. After that period, the voting preference shares of founding shareholders are converted into common shares.

- Dividend preference shares: are shares that pay dividends at a higher rate than the annual dividend rate, including fixed dividends and bonus dividends. Fixed dividends do not depend on the company's business results. The specific fixed dividend rate and the method of determining bonus dividends are stated on the shares.

- Redeemable preference shares: are shares that will be refunded by the company at any time upon request of the owner or according to the conditions stated on the redeemable preference shares.

- Other preferred shares as prescribed by the company charter.

Common shares of a joint stock company cannot be converted into preferred shares, but preferred shares can be converted into common shares (according to the decision of the General Meeting of Shareholders).

Shares are the legal basis to prove the status of company members regardless of whether they participated in the establishment of the company or not. From shares arise the rights and obligations of members. Each share of the same type gives its owner equal rights, obligations and benefits.

A share is a certificate issued by a joint stock company or a book entry confirming ownership of one or more shares of that company. Shares may be registered or unregistered. Shares are valuable papers proving the shareholder's status as a shareholder and at the same time the shareholder's status as a company member. Shares can be purchased with Vietnamese currency, freely convertible foreign currency, land use rights value, intellectual property rights value, technology, technical know-how, other assets specified in the company's charter and must be paid in full at one time.

* Shareholders:

Members of a joint stock company are called shareholders, shareholders can buy 1 or more shares. Types of shareholders:

- Common shareholders: are owners of common shares, the type of shares that every joint stock company must have. Common shareholders have the following basic rights:

+ Attend and vote on all matters within the authority of the General Meeting of Shareholders, each common share has 1 vote.

+ Receive dividends at the rate decided by the General Meeting of Shareholders

+ Priority to buy newly offered shares corresponding to the ratio of common shares of each shareholder in the company.

+ When the company is dissolved, the remaining assets are received in proportion to the number of shares contributed to the company, after the company has paid creditors and other shareholders.

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