Individuals not having the right to establish and manage an enterprise

Question about individuals who do not have the right to establish an enterprise

Mr. A is a lecturer who teaches information technology major at the Post and Telecommunications Academy School. Mr. A has planned to establish a company dealing in software and technology products. Mr. A askes: Is he prohibited to establish such company in accordance with Vietnam law?


Thank you for trusting and sending questions to Bizlawyer & Partners Law Limited Company (“Bizlawyer”). We would like to answer the above questions about your company:

Under Point b, Clause 2, Article 18 of the 2014 Enterprise Law, organizations and individuals without the right to establish and manage enterprises in Vietnam include the following subjects

a) State agencies and units of people’s armed forces using State assets to establish business enterprises to make a private profit for their own agencies or units;

b) Cadres [senior employees], State officials and State employees in accordance with the law on cadres, State officials and State employees;

(c) Officers, non-commissioned officers, career servicemen and national defense workers and employees in agencies and units of the people’s army; officers and career non-commissioned officers in agencies and units of the People’s Public Security of Vietnam, except for persons appointed to be authorized representatives to manage the State share of capital contribution in enterprises;

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(d) Management personnel and professional management personnel in State-owned enterprises, except for those appointed to be authorized representatives to manage the State share of capital contribution in other enterprises;

(dd) Minors; persons whose capacity for civil acts is restricted or lost; organizations without legal entity status;

(e) Persons who are prosecuted for criminal liability, serving prison sentences or administrative decisions at compulsory drug rehabilitation establishments or compulsory educational establishments or being prohibited from conducting business, assuming certain positions or doing certain work relating to business pursuant to a decision of a court; other cases as stipulated by the law on bankruptcy and anti-corruption; Where the business registration office so requests, any person registering establishment of an enterprise must submit a legal record to the business registration office

According to Clause 3, Article 14 of the 2010 Law on Public Employee, which stipulates the right of Public Employee to conduct business activities and work outside of the prescribed time: “Public Employee has right to contribute capital, but they are not entitled to participate in management and administration in Limited Liability Company, Joint-Stock Company, Partnership, Cooperative, Private Hospital, Private School, and Scientific Research Organization, except otherwise that regulated by specialized laws”.

At the same time, Clause 18, Article 4 of the 2014 Law on Enterprises stipulates: “Enterprise manager means a manager of a company or a manager of a private enterprise,
comprising the owner of a private enterprise, an unlimited liability partner, the chairman of the Board of members, a member of the Board of members, the President of a company, the chairman of a board of directors, a member of a board of directors, a director or general director, and an individual holding another managerial position, who is authorized to enter into transactions of the company in the name of the company as stipulated in the charter of the company

Under current law, Public employees can only contribute to capital without taking part in management and administration. In this case, Mr. A is a lecturer at the Post and Telecommunications Academy, as a Public Employee of a Public Non-Business Unit, therefore Mr. A is not entitled to participate in the establishment of an enterprise with managerial positions.

However, Mr. A may participate in the enterprise as a capital contributing member to purchase shares, purchase capital contributions of a joint stock company, a partnership, or a limited liability company in accordance with law.

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