Points to keep in mind before starting a business
Are you an entrepreneur who wants to start a business but doesn't know how? In this article, TASCO will specifically inform entrepreneurs about the points to note before setting up a business.
1. Type of company:
🔰 According to the provisions of the Enterprise Law 2020, there are the following types of companies: Private enterprise, partnership, 1-member limited liability company, 2-member limited liability company, and joint-stock company. Each type of business has different legal characteristics, so depending on the purpose and conditions of each investor, choosing the type of business is appropriate.
▪️ For a private enterprise, will be owned by 1 individual and is responsible for all his assets for all activities of the business.
▪️ For a partnership company, there must be at least 02 members who are common owners of the company, doing business together under a common name, the general partners are responsible with their entire assets for all business activities. In addition to general partners, the company may have additional capital contributors. Capital contributors are only liable for the debts of the company up to the amount of capital contributed to the company.
▪️ For a one-member limited liability company, which is owned by an individual or an organization and is only responsible for the company's debts within the amount of capital contributed to the company.
▪️ For a 2-member limited liability company, there are at least 2 to 50 members contributing capital to the company and are only responsible for the company's debts within the amount of capital contributed to the company. Company members can be individuals or organizations as prescribed by law.
▪️ For a joint stock company, there must be at least 3 shareholders or more and there is no limit to the maximum number of participants. Company shareholders can be individuals or organizations as prescribed by law and are only responsible for the company's debts within the amount of capital contributed to the company.
🔰 According to the current business trend, the most chosen type of company is 1-member limited liability company, 2-member limited liability company, and joint-stock company because of their superiority compared to other types of companies.
✔ Regency of the legal representative of the enterprise, which can be the regency of Director (General Director) or President of the company (one-member limited liability company); Chairman of the Members' Council (for limited liability companies with two or more members); Chairman of the Board of Directors (for joint stock companies). In fact, an individual can concurrently hold the above two positions, but the charter only states 1 of the 2.
✔ The director (General Director) of a joint-stock company, a limited liability company with two or more members must meet the following criteria and conditions: ....Shareholder being an individual holding at least 5% number of ordinary shares (for joint stock companies), individual members owning at least 10% of charter capital (for limited liability companies) or others must have professional qualifications or practical experience in business administration or in the company's main business lines.... (Article 13 Decree 139/2007/ND-CP dated September 5 /2007 of the Government detailing the implementation of a number of articles of the Enterprise Law).
3. Company name:
️⛳ After choosing the right type of business, the investor can choose the company name. Because according to the provisions of Article 37 of the Law on Enterprises 2020, an enterprise name consists of two elements: "Type of enterprise" and "Proper name". The type of enterprise can be a limited company or a joint stock company, while the proper name of the business is the name written in the Vietnamese alphabet, including numbers and symbols. When naming an enterprise, entrepreneurs should be aware of the prohibited cases when naming the business and the cases of naming the same or confusing names with other businesses specified in Articles 38 and 41 of the Law on Enterprises 2020.
4. Business address:
️⛳ Pursuant to Article 35 of the Law on Enterprises is the contact and transaction place of the enterprise; must be located in the territory of Vietnam, and have an identified address including house number, street name, or name of the hamlet, ward, town, district, township, provincial city, province or city centrally; phone number, fax number, and email (if any).
️⛳ If the place where the head office is located does not have a house number or a street name, there must be a local certification that the address does not have a house number and street name attached to the business registration dossier
.5. Line of business:
️⚡ Business lines are the field in which enterprises want to operate and must register with the State management agency. Enterprises are allowed to do business in all lines of business that are not prohibited by the law, however, depending on the field of operation, enterprises must meet the conditions before registration and/or after business registration, for example: For business lines requiring legal capital, enterprises must prove the amount of legal capital before business registration.
6. Charter capital:
️⚡ Charter capital of an enterprise is understood as the amount of capital contributed or committed to contributing by members or shareholders within a certain period and recorded in the company's charter. The law does not stipulate the level of charter capital for each type of company, so depending on the needs, purposes, or business lines, enterprises choose for themselves an appropriate level of capital. However, businesses need to pay attention to some regulations on the deadline for a capital contribution of shareholders/members and regulations on the increase and decrease of charter capital for each type of company in order to comply with the provisions of the law.
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