Full report-blaw-1
Transcript of Full report-blaw-1
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HANOI UNIVERSITY
FACULTY OF MANAGEMENT AND TOURISM
Business Law Report
Partnership Company
Lecture + Tutor: LLM Ho Thuy Hang
Tutorial class: Tut 2AC13
Group members:
Nguyen Thị Hoa ID: 1104000040
Hoang Tay Phuong ID: 1104000093
Doan Hoang Yen ID: 1104000128
Vuong Thi Trang ID: 1104000120
Pham Kim Khanh Ngan ID: 124AUT0005
Ha Thi Kieu Ngan ID: 1204000077
Ngo Thi Thanh Tra ID: 1104000112
Nguyen Van Tung ID: 1104000122
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Table of content
1. Introduction ........................................................................................................................ 4
2. History of partnerships and partnerships in some countries .............................................. 4
2.1.History............................................................................................................................. 4
2.2.Partnerships in some countries ....................................................................................... 5
3. Comparison partnerships under Vietnamese and Chinese legislation ............................... 7
3.1.Definition ........................................................................................................................ 7
3.2.Establishment of a partnership ....................................................................................... 8
3.3.Members in the partnership ............................................................................................ 9
3.4.Establishment and change partner status .................................................................... 12
3.4.1. Admission of new partners .............................................................................. 12
3.4.2. Termination of general partner status ............................................................. 13
3.5.Capital........................................................................................................................... 13
3.5.1. Capital contribution ........................................................................................ 13
3.5.2. Transfer and withdraw capital ........................................................................ 15
3.6.Management .................................................................................................................. 15
3.7.Dissolution and bankruptcy .......................................................................................... 17
4. Conclusion ....................................................................................................................... 18
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Abstract
There are many types of business entities defined in the legal systems of various countries. The
partnership is one of the simplest business structures available, but there are still some legal
complexities associated with forming and running a partnership. By investigating the
Partnership, our group has discovered that each country has different legislations about
partnership companies. Through our report, we are going to show you the difference between
partnerships in Vietnam and other countries, especially in China. This report is divided into
three main parts: History of partnerships and partnership in some countries, Comparison of
partnerships under legislation of Vietnam and China, and conclusion.
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1. Introduction
Nowadays, Vietnam is participating in integration of the economic world, thus the business
activities become bigger in both the scale and scope. Therefore, perfecting legislation also
becomes a critical task. To adapting with changes in economy, Vietnamese government
conducted amendment and supplementation of Enterprise Law, and replaced Enterprise Law
2005 by Enterprise Law 2014.
Based on the survey data of director general of central statistical organization, China is first
top of countries which have a lot of investment plans in Vietnam. Before making investment in
Vietnam, Chinese investors should understand more about Vietnamese‟s law. Also,
Vietnamese‟s investors should needs to learn rules and procedure of Chinese‟s law to conduct an
effective investment and safe. However, in fact, there are a lot of investors are in difficult to
invest in the country that they want because of limited knowledge. As a result, the comparison of
enterprise law in Vietnam and China will be helpful for better understand the laws of two
countries in order to minimize the risks in the business. Not only that but also this will helpful in
taking advantages of two countries to make good regulations. After general introducing history
of partnership in the world, our report concentrated on partnerships under Vietnamese and
Chinese legislation. A partnership is one of the oldest corporate form in company establishment
history. However, partnerships have just appeared in Vietnam in short times. It is clearly realized
that there was only fours articles about partnerships in Enterprise law 19991, and increasing to
eleven articles in Enterprise law 20142. In contract, China specified carefully about partnerships
in Partnership Enterprise Law of People‟s Republic of China.
2. History of partnerships and partnerships in some countries
2.1.History
A partnership is one of the oldest corporate form in company establishment history. The
concept of "partnership" started to appear and exist since human beings started working together.
This concept appears from the Babylon, Greek and Roman. Hammurabi Act 2300 before Christ
(BC) also has prepared the form of partnerships. The concept of partnership under the Justinian
Act of the Roman Empire in the sixth century, in essence, had no different particularly in the
1 Law of Enterprises, Vietnam Law and Legal, 1999
2 Law of Enterprises, Vietnam Law and Legal, 2005
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current law. Then, from the period of the Middle Ages to the end of the seventeenth century, and
in Sweden, concept of partnership was gradually formed more clearly. In 1776, American was
independentt and appleied system of English law. Since, Partnership Act was started to be
applied in America. By the early nineteenth century, partnership became the most important type
of business in the US.Medicis Company in Florence, Rome, is one of the first trade company in
the world that was organized under a partnership model3.
Today, the partnership was formed and developed from the principles of representative
institutions (agency) that comes from the demands of market economy on business linkages;
concentration and accumulation of capital in the different degrees and different formats.
Forms4
The three forms of partnership are a general partnership, the limited partnership (LP), and
limited liability partnership (LLP). The basic type is general partnerships, in which all partners
conduct the company and are liable for the obligations of the partnerships with all of their debts.
In limited partnership, certain limited partners only are liable for the partnership‟s debts within
the limit of the capital amount they have contributed to the partnership while in limited liability
partnership, all partner have some degree of limited liability.
Members5
There are two types of partners, common partners and limited partners. General partners have
obligations to all their debt, and involve in managing the business while limited partners have
limited liability to their investment in the partnership.
2.2. Partnerships in some countries
The United Kingdom
Under legislation of the UK, there are two types of partnerships, limited partnerships and
limited liability partnerships. A limited partnerships shall not consist, in the case of a partnership
carrying on the business of banking, of more than ten persons, and, in the case of any other
partnership, of more than twenty persons, and must consist of one or more persons called general
3 “Partnership”, Wikipedia
4 “Partnership”, Wikipedia
5 “Partnership”, Wikipedia
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partners, who shall be liable for all debts and obligations of the firm, and one or more persons to
be called limited partners, who shall at the time of entering into such partnership contribute
thereto a sum or sums as capital or property valued at a stated amount, and who shall not be
liable for the debts or obligations of the firm beyond the amount so contributed6. Besides, a
limited liability partnership is said that it is a body corporate (with legal personality separate
from that of its members), has unlimited capacity. The members of a LLP have such liability to
contribute to its assets in the event of its being wound up as is provided for by virtue7.
Australia
Each state in Australia has enacted legislation regarding partnerships, Partnership Act 1963
in Australian Capital Territory, Partnership Act 1892 in New South Wales, Partnership Act 1997
in Northern Territory, Partnership Act 1891 in Queensland, Partnership Act 1891 in South
Australia and Tasmania, Partnership Act 1958 in Victoria, and Partnership Act 1895 in Western
Australia8. However, the definition of a partnership does not change across jurisdictions. In the
oldest partnership act, partnership is the relation which subsists between persons carrying on a
business in common with a view of profit and includes an incorporated limited partnership9
India
According Indian legislation, partnership is the relation between persons who have agreed to
share the profits of a business carried on by all or any of them acting for all10
. A partnership firm
a not a legal entity and a concurrent subject11
Thailand
Thailand has two types of partnerships, ordinary partnerships and limited partnerships12
.
While the ordinary partnership is defined that it is that kind of partnership on which all the
partners are jointly and unlimitedly liable for all obligations of the partnership13
, a limited
6 Chapter 24.4, Limited partnerships Act, 1907
7 Chapter 12.1, Limited liability partnerships Act 2000
8 “Partnership (Australia)”, Wikipedia
9 Section5, Partnership Act 1958 (VIC)
10 Section 4, Partnership Act 1932 (India)
11 Section 5, Partnership Act 1932 (India)
12 Title XXII, Chapter I, section 1013, Thai Partnership and company law
13 Title XXII, Chapter II, section 1025 Thai Partnership and Company Law
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partnership is that kind of partnership in which there are one or more parties whose liability is
limited to such amount as they may respectively undertake to contribute to the partnership, and
one or more partners who are jointly and unlimitedly liable for all the obligations of the
partnership14
Singapore
Like the UK, Singapore has two types of partnerships, limited partnerships and limited
liability partnerships. It stated that a limited liability partnership is a body corporate, shall have
perpetual succession15
when a limited partnership two types of partnerships, limited partnerships
and limited liability partnerships must consist of one or more general partners and one or more
limited partners16
3. Comparison partnerships under Vietnamese and Chinese legislation
3.1.Definition
In Vietnam, a partnership is an enterprise in which must be at least 2 members being co-
owners of the partnership who jointly conduct business under one common name (below referred
to as general partners). Apart from general partners, the company may have limited partners.
Moreover, general partners must be individuals who are liable for the obligations of the
partnership with all of their assets. Limited partners must only be liable for the debts of the
partnership within the limit of the capital amount they have contributed to the partnership. A
partnership has the legal entity status from the date it is granted an enterprise registration
certificate.17
According to Chines legislation, there are two types of partnership, common partnership and
limited partnership18
. In which, a common partnership comprises of common partners who bear
unlimited and joint liabilities for debts of partnership while a limited partnership comprises of
common and limited partners. The common partners shall bear unlimited and joint liabilities for
debts of partnership and the limited partners shall bear the liabilities for its debts to the extent of
their capital partnership.
14
Title XXII, Chapter III, section 1077, Thai Partnership and Company Law 15
Part II-4, Limited Liability Partnership Act 2005 (Singapore) 16
Part II-3, Limited Partnership Act (Singapore) 17
Article 172, Law of Enterprises, Vietnam Law and Legal, 2014 18
Article 2, Chapter I, Partnership Enterprise Law of the people „s Republic of China (Amended 2006)
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3.2.Establishment of a partnership
In Viet Nam, an enterprise shall be granted an enterprise registration certificate when fully
meeting the following conditions: its business line to be registered is not banned, it has valid
enterprise registration dossier and paid in full the enterprise registration fee in accordance with
the law on charges and fees. In case its enterprise registration certificate is lost, damaged or
otherwise destroyed, an enterprise shall be re-granted the enterprise registration certificate and
shall pay a fee therefor in accordance with the law on charges and fees.19
The name in Vietnamese of an enterprise must include two components in the following
order: Firstly, as “cong ty hop danh” (partnership) or “cong ty HD” for a partnership. Secondly,
the proper name must be written in letters Vietnamese alphabet, the letters F, J, Z, W, numerals
and symbols. The name of an enterprise shall be attaches at the head office branches,
representative offices and business locations of the enterprise. The name of enterprise shall be
printed or written on transaction papers, documents, materials and printed matters issued by the
enterprise. Besides, the business registration agency may reject the proposed names for
registration of enterprises.20
In China, to establish a partnership enterprise both common and limited partnership, the
following conditions shall be met: Having two or more partners and if the partners are natural
persons, they shall have complete civil capacity. Having a written partnership agreement, having
capital contributions subscribed to or actually paid by the partners and having a name and a
production and a business operation place for the partnership enterprise and others conditions as
prescribed by law administrative regulations.21
However, partnership agreement between common and limited partnerships is different. In
common partnership, the partnership agreement shall clearly state the following matters: The
name and address of the main business operation place of the partnership enterprise; the purpose
and business scope of the partnership; the name and domicile of each partner; the ways and
amounts of capital contribution by partners and the time limits for payment; the ways for profit
distribution and loss sharing; the execution of the partnership affairs; the admission to and
19
Article 28, Law of Enterprises, Vietnam Law and Legal, 2014 20
Article 38, Law of Enterprises, Vietnam Law and Legal, 2014 21
Article 14, Section 1, Partnership Enterprise Law of the people „s Republic of China (Amended 2006)
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withdrawal from the partnership; the settlement of disputes; the dissolution and liquidation of the
partnership enterprise; and the liabilities for breach of contract 22
. In limited partnership, the
partnership agreement23
shall clearly state the following matters: The names and addresses of the
common partners and limited partners; the conditions which the partners to execute the
partnership affairs shall meet, and the procedures for selecting such partners; the limits on the
power of the partners to execute the partnership affairs, and the measures for disposing of their
breach of contract; the conditions for removing partners to execute the partnership affairs, and
the procedures for replacing them by new ones; the conditions and procedures for the admission
and withdrawal of limited partners, and other relevant liabilities; and, the procedures for the
mutual conversion of limited partners and common partners.
The partnership agreement shall become effective after all partners affix their signatures or
seals to it. The partners shall, in light of the partnership agreement, enjoy their rights and
perform their duties. The modification or supplement of a partnership agreement shall be subject
to the unanimous consent of all partners, unless it is otherwise stipulated in the partnership
agreement. The matters that are not stipulated or not clearly stipulated in the partnership
agreement shall be decided by the partners through negotiation. In the case of failure of
negotiation, they may be handled according to the present Law, other laws and administrative
regulations.24
3.3.Members in the partnership
In Vietnam, there must be at least 2 members being co-owners of the partnership, including
two types: general partner25
and limited partner26
. In which, general partners must be individuals
who are liable for the obligations of the partnership with all of their assets; and limited partners
must only be liable for the debts of the partnership within the limit of the capital amount they
have contributed to the partnership.
In China, there are two type of partnership, it consist of: common partnership only have
common partner and limited partnership have common partner and limited partner. In which, a
22
Article 18, Section 1, Partnership Enterprise Law of the people „s Republic of China (Amended 2006) 23
Article 63, Chapter III, Partnership Enterprise Law of the people „s Republic of China (Amended 2006) 24
Article 19, Section 1, Partnership Enterprise Law of the people „s Republic of China (Amended 2006) 25
Article 172.1.b, Law of Enterprises, Vietnam Law and Legal, 2014 26
Article 172.1.c, Law of Enterprises, Vietnam Law and Legal, 2014
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limited27
partnership enterprise be established by not less than 2 but not more than 50 partners,
unless it is otherwise prescribed by law.
General (common) partners
Vietnam specifies clearly rights and obligations of general partners while it does not happen
in Chinese legislation. In Vietnam, general partner has the following rights28
: the first, to attend
meetings, discuss and vote on matters of the partnership; each general partner has one vote or
another number of votes as provided in the partnership‟s charter. Secondly, to conduct in the
name of the partnership its business lines; to negotiate and sign contracts or agreements with
terms that he/she considers the most favorable for the partnership. Thirdly, to use the seal and
assets of the partnership for conducting its business line; if he/she advances his/her own money
in order to conduct business operations of the partnership, he/she may request the partnership to
refund the principal and interest rate on the advanced amount. Fourthly, to claim compensation
from the partnership for damage arising from business operations within its competence if such
damage is not caused by his/her personal mistake. Fifthly, to request the partnership and other
general partners, it will provide information on the business situation of the partnership; to
inspect assets accounting books and other documents of the partnership when necessary. The
sixth, to be distributed with profits in proportion to his/her capital contribution or as agreed in the
partnership‟s charter. The seventh, upon dissolution or bankruptcy of the partnership, to be
distributed with part of the residual value of the partnership‟s assets in proportion to his/her
capital contribution in the partnership, unless another ratio is provided in the partnership‟s
charter. The eighth, if a general partner dies, his/her heir is entitled to the value of the assets in
the partnership after deduction of debts for which such partner is responsible. The heir may
become a general partner if the Member‟s Council of the partnership so approves. And the
finally, other rights will provide in this Law and the partnership‟s charter.
Beside rights that a general partner must follow, they must have following obligations29
: the
first, to manage and conduct business operation in an honest, prudent and best manner in order to
ensure the best lawful interests of the partnership. The second, to manage and conduct business
operation of the partnership in accordance with law, the partnership‟s charter and resolutions of
27
Article 61 Chapter III, Partnership enterprise law of the People‟s Republic of China (amended 2006) 28
Article 176.1, Law of Enterprises, Vietnam Law and Legal, 2014 29
Article 176.2, Law of Enterprises, Vietnam Law and Legal, 2014
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the Member‟s Council; to pay compensation for any damage caused to the partnership by his/her
violation of this Point. The third, they refrain from using the partnership‟s assets for his/her
personal benefits or for the benefits of another organization or individual. The fourth to return to
the company any amount of money or assets received and compensate for any damage caused to
the partnership in case he/she receives such money or assets from the business operation of the
partnership in the name of the company or in his/her name of another person, but fail to pay such
money or assets to the company. The fifth, to be jointly liable to pay in full outstanding debts of
the partnership in case the partnership‟s assets are insufficient for the payment of its debts. The
sixth, to bear losses in proportion to his/her capital contribution in the partnership or as agreed in
the partnership‟s charter in case the partnership suffers losses in its business. The seventh, to
submit truthful and accurate monthly reports on his/her business activities and results to the
partnership; to provide information on his/her business activities and results to any partner upon
request. And the last, other obligations provided in this Law and the partnership‟s charter.
In China, common general in both common partnerships and limited partnerships have same
rights and obligations. Even though, China does not assign what are rights, what are obligations
of common partnerships as carefully as Vietnam; in general, rights and obligations are not
difference. For instant, they must contribute full committed capital. Besides, they also must be
liable for all their debt. All common partners have equal rights to execution of partnership
affairs30
. They shall make a resolution on the relevant matters of partnership enterprise.
Limited partners
Under Vietnam legislation, a long with general partners, limited partners also comply enough
to rights and obligations31
. China‟s law does not specify the rights and obligations of partners;
however, overall, Chinese legislation still assigns fairly same terms for limited partners. In
which, rights of limited partners include: they may trade with the limited partnerships to which
he belongs or may, solely jointly with others, operate a business which is competing with the
limited partnership, unless it is otherwise prescribed in the partnership agreement32
. They also
may put them share of properties of partnership in pledge, transfer them to a non-partner and use
30
Article 26, Section 3, Partnership enterprise law of the People‟s Republic of China (amended 2006) 31
Article 182, Law of Enterprises, Vietnam Law and Legal, 2014 32
Article 71, Chapter III, Partnership enterprise law of the People‟s Republic of China (amended 2006)
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them to pay debts33
. In case he/she dies, his/her heir shall replace him or her as a limited partner
of the partnership34
.Besides, Vietnam legislation assigns additional rights for limited partners35
:
to attend meetings, discuss and vote at the Member‟s Council on amendment and
supplementation of the partnership‟s charter; change and supplement of the rights and
obligations of limited partners, reorganization and dissolution of the partnership. The second is
to be annually distributed with profits in the proportion to them capital contribution. The third, to
be provided with the partnership‟s annual financial statement; to request the chairperson of the
Member‟s Council and general partners to provide adequate and accurate information on the
business situation and result of the partnership; to look up accounting books, minutes, contracts,
transactions, files and other documents of the partnership.
In addition, limited partner has the following obligations: the first, to be liable for the debts
and other property obligations of the partnership within the limit of his/her committed capital
contribution36
. The second, obligations will refrain from managing the partnership and
conducting business activities in the name of the partnership37
. Thirdly, they must make full
capital contribution in limit time38
.
3.4.Establishment and change partner status
3.4.1. Admission of new partners
Both in Vietnam and China have some the similar parts in admission of new partners that is
the new partners admitted to a partnership enterprise shall enjoy the same rights and obligations.
Besides, it bears the same liabilities as the original partners. If it is otherwise prescribed in the
partnership agreement, the prescriptions shall prevail.
However, it also has difference parts in admission of new partners. In Vietnam, admission of
new partners39
must follow: the first, a partnership may admit new general partners or limited
partners; admission of new partners shall be approved by the Member‟s Council of the
partnership. The second, general partner or limited partner shall contribute capital in full as
33
Article 72,73,74, Chapter III, Partnership enterprise law of the People‟s Republic of China (amended 2006) 34
Article 80, Chapter III, Partnership enterprise law of the People‟s Republic of China (amended 2006) 35
Article 182.1, Law of Enterprises, Vietnam Law and Legal, 2014 36
Article 2, Chapter I, Partnership enterprise law of the People‟s Republic of China (amended 2006) 37
Article 68, Chapter III, Partnership enterprise law of the People‟s Republic of China (amended 2006) 38
Article 65, Chapter III, Partnership enterprise law of the People‟s Republic of China (amended 2006) 39
Article 181, Law of Enterprises, Vietnam Law and Legal, 2014
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committed to the partnership within 15 days after being approved to do so, unless another time
limit is decided by the Member‟s Council. While, admission of new partners40
in China shall be
subject to the unanimous consent of all partner, and a written agreement shall be concluded,
unless it is otherwise prescribed in the partnership agreement. When concluding an agreement on
the admission to the partnership, the original partners shall faithfully inform the new partners of
the business operation and financial status of the original partnership enterprise.
3.4.2. Termination of general partner status
In general, it is not different between Vietnam and Chinese legislation, general partner status
shall be terminated if a general partner voluntarily withdraws capital from partnership; dies, is
declared by court as missing, has his/her civil act capacity restricted or has lost his/her civil act
capacity; and has been excluded from the partnership4142
.
About the situation after withdrawal, both Vietnamese law and Chinese law state that partner
who already has withdrawn from the partnership shall bear for the debts that have been incurred
to the partnership enterprise before his withdrawal43
44
3.5.Capital
3.5.1. Capital contribution
In Vietnam, general partners and limited partners shall contribute capital in full and on time
as committed. A general partner, who fails to contribute capital in full and on time as committed,
causing damage to the partnership, shall compensate the partnership for the damage. If a limited
partner fails to contribute capital in full and on time as committed, the unpaid amount shall be
regarded as a debt owed by that partner to the partnership. In this case, the limited partner
concerned may be excluded from the partnership under decision of the Members‟ Council. Upon
payment of capital distribution in full as committed, the partner shall be granted a capital
contribution certificate, which must contain the following principle details: Name, identification
number and head office address of the partnership; Chapter capital of the partnership; Name
40
Article 43,44, Section 5, Partnership enterprise law of the People‟s Republic of China (amended 2006) 41
Article 45, Section 5, Partnership enterprise law of the People‟s Republic of China (amended 2006) 42
Article 180.1, Law of Enterprises, Vietnam Law and Legal, 2014 43
Article 180, Clause 5, Law of Enterprises, Vietnam Law and Legal, 2014 44
Article 53, Partnership Enterprise Law of People‟s Republic of China, Amended 2006
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permanent residence address, citizenship and serial number of citizen‟s identity card, passport or
another valid personal identification paper of the partner; Value of capital contribution and types
of assets contributed as capital by the partner; Serial number and date of grand of the capital
contribution certificate; Rights and obligations of the holder of the capital contribution
certificate; Full names and signatures of the holder of the capital contribution certificate and of
the general partners of the partnership. If a capital contribution certificate is lost, damaged,
broken or otherwise destroyed, the partnership shall re-grant a new capital contribution
certificate to the partner.45
In China, a common partner may make capital contributions by currency, in kind, or by
intellectual property right, land use right or other properties, or labor services. When a partner
intends to make capital contributions in kind, by intellectual property right, land use right or
other properties, if the prices thereof need to be assessed, the price may be determined by all
partners through negotiation or may be assessed by a statutory assessment institution entrusted
by all partners. Where a partner makes capital contributions by labor services, the assessment
method shall be determined by all partners through negotiation, and shall be stated in the
partnership agreement.46
In additional, a limited partner makes similar capital contribution as a
common partner, except labor service47
. A partner shall fulfill the capital contribution obligation
in light of the way and amount of capital contribution and the time limit for payment as
stipulated in the partnership agreement. As for the capital contributions in non-monetary
properties for which the formalities for the transfer of property right shall be gone through
according to laws or administrative regulations, the partner shall go through the said
formalities48
.
It seems that the property right of China and Vietnamese law is the same when both state that
any capital or asset contributions made by partners, the proceeds and other properties acquied in
the name of the partnership shall be transferred to the partnership property 49
50
.
45
Article 173, Law of Enterprise, Vietnam Law and Legal 46
Article 16, Section 1, Partnership Enterprise Law of the people ‘s Republic of China (Amended 2006) 47
Article 64, Chapter III, Partnership Enterprise Law of the people ‘s Republic of China (Amended 2006) 48
Article 17, Section 1, Partnership Enterprise Law of the people ‘s Republic of China (Amended 2006) 49
Article 174, Clause 1, Law of Enterprises, Vietnam Law and Legal, 2014 50
Article 20, Partnership Enterprise Law of People’s Republic of China, Amended 2006
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3.5.2. Transfer and withdraw capital
Both Vietnamese and China legislation stipulate seriously for transfer capital of general
(common) partners. When a partner wants to transfer entire or partial share of his/her properties,
he/she shall acquire the unanimous consent of all other partners5152
. In which, China‟s law
specifies that Where a non-partner accepts a partner's share of properties in a partnership
enterprise according to law, he becomes a partner of the partnership enterprise as soon as the
partnership agreement is modified, and shall enjoy the rights and perform the obligations
according to the present Law and the post-modification partnership agreement53
.
While Chinese legislation does not mention the right of withdraw capital from the
partnership of common partner, Vietnam prescribes that a general partner has the right to
withdraw capital from the partnership if Members‟ Council so agrees. In this case, the partner
shall give a written notice of the capital withdrawal request no later than six months prior the
date of capital withdrawal. He/she may only withdraw at the end of a fiscal year and after the
financial statement of such fical year has been approved54
.
On the other hand, limited partners are free to transfer or withdraw their capital to others unless
chater of campany does not limit.
3.6. Management
Enterprise law in Vietnam assigns general partners may act as at-law representatives and
shall organize management of day-to-day business of the partnership. All restrictions on general
partners in conducting day-to-day business of the partnership shall only be effective to a third
party if such party is aware of such restrictions55
. In contrast to China‟s enterprise law of
common partnership, it is clear that relationship between a partnership enterprise and a third
person in common partnership enterprise, it is stated that the restrictions of a partnership
enterprise on the partner‟s execution of partnership affairs as well as on their rights to represent
51
Article 175.3, Law of Enterprises, Vietnam Law and Legal, 2014 52
Article 22, Section 2, Chapter II , Partnership Enterprise Law of the people „s Republic of China (Amended 2006) 53
Article 24, Section 2, Chapter II, Partnership Enterprise Law of People‟s Republic of China, amended 2006 54
Article 180.2, Law of Enterprises, Vietnam Law and Legal, 2014 55
Article 179.1, Law of Enterprises, Vietnam Law and Legal, 2014
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the partnership enterprise in the face of outsiders shall not challenge any bona fide third party56
.
And in limited partnership, the partnership‟s affairs shall be executed by the common partner57
.
Also, the where it is reasonable for a third person to believe a limited partner to be a common
partner and trade with him, the limited partner shall bear the same liabilities for the trade as a
common partner shall do58
.
Both Vietnam and China have the same law about assigning the tasks of management, the
enterprise law stipulates that general partners shall assign among them the task of management
and control of the partnership; and mentioning about the decision of partnership, in Vietnam it is
defined by a majority of general partners. And in Chinese‟s law59
, the common partners shall
enjoy equal rights to the execution of partnership affair60
for both common partnership and
limited partnership. As for common partnership in approved decisions, it is used the voting
method which means three provisions shall prevail61
. Nevertheless, limited partnerships do not
have the right to make decision on the admission or withdrawn of a common partner62
.
There are the differences between Chinese‟s law and Vietnamese‟s law about numbers of
bank accounts and who are authorized to withdrawn money. In Vietnam, it is clear that the
partnership may open one or a number of bank accounts. The Member‟s Council shall appoint a
partner who is authorized to deposit and withdraw money from such accounts63
, but in China it
has to have some conditions. For example, in common partnership states that any partner is
under any of the circumstances like a natural person partner is decrease or declare decreased
according to law; he is insolvent of repayment capacity, etc. who shall be deemed to have
withdrawn naturally from the partnership64
. As for limited partnership, they are just only
withdrawn naturally if they are under circumstances which are a natural person partner is
decreased or declare decreased according to law, where the partner as a legal person or any other
organization is suspended of his business license, or is ordered to close up for revocation, or
56
Article 37, Partnership Enterprise Law of People‟s Republic of China, amended 2006 57
Article 67, Partnership Enterprise Law of People‟s Republic of China, amended 2006 58
Article 76, Partnership Enterprise Law of People‟s Republic of China, amended 2006 59
Article 179, clause 2, Law of Enterprises, Vietnam Law and Legal, 2014 60
Article 26 and 60, Partnership Enterprise Law of People‟s Republic of China, amended 2006 61
Article 30, , Partnership Enterprise Law of People‟s Republic of China, amended 2006
62 Article 68, Partnership Enterprise Law of People‟s Republic of China, amended 2006
63 Article 179, clause 3, Law of Enterprises, Vietnam Law and Legal, 2014
64 Article 48, Partnership Enterprise Law of People‟s Republic of China, amended 2006
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declared bankrupt; where a partner‟s entire property share in the partnership business have been
executed by the people‟s court65
.
Finally, chairperson of the Member‟s Council, director or general director has some main
tasks. Typically, managing and administer day-to-day business activities of the partnership in the
capacity as a general partner, in arranging and storing fully and truthfully accounting books,
invoices and other documents of the partnership in accordance with law, and some others task
which are stipulated in Enterprise Law of Vietnam66
. In China, it is referred to common
partnership, like where one or several partners execute the partnership affairs, they shall
regularly report to the other partners the conditions on the execution of relevant affairs, the
business operations and financial status of the partnership enterprise67
. About the limited
partnership, it is clearly in the law. The partnership affairs shall be executed by common
partners. Also, it stated the limitation of limited partner in executing partnership affairs like
consulting the account books of the limited partnership enterprise and other financial materials
which concern the limited partner‟s own interest, etc.68
3.7. Dissolution and bankruptcy
Partnerships in both Vietnam and China have familiar conditions for dissolution69
. Because
partnership is established by agreements among partners, thus company shall be dissolved when
the operation duration stated in the company charter expires and the partners decide not to extend
it. Evenly partnership can be dissolved when it has not expired yet, if all partners make a
decision to dissolve. This case happens because company‟s operation is not effective or partners
are non-cooperation each other or because of any reasons when existence of company is not
necessary. Additionally, if the number of partners fails to reach the quorum, or partnerships have
business license is revoked, a company shall be dissolved.
When the company is dissolved, it shall be liquidated by liquidators which China legislation
is more details than that of Vietnam. In Vietnam, the Member‟s Council or the Board of
Directors shall directly organize the liquidation of assets of the enterprise, unless the 65
Article 78, Partnership Enterprise Law of People‟s Republic of China, amended 2006 66
Article 179.4, Law of Enterprises, Vietnam Law and Legal, 2014 67
Article 28, Partnership Enterprise Law of People‟s Republic of China, amended 2006 68
Article 67 and 68, Partnership Enterprise Law of People‟s Republic of China, amended 2006 69
Article 201, section 1,Law on Enterprise, Viet Nam Law and Legal,2014; Article 85, Partnership Enterprise law
of the People‟s Republic of China (Amended 2006)
BUSINESS LAW PARTNERSHIP
18
establishment of a separate liquidation organization is provided by the company charter70
. Under
law in China, the liquidators shall be assumed by all partners. Upon the consent of more than
haft of all partners, one or several partners or third persons may affect the occurrence of the
cause for dissolution of the partnership enterprise, be designed or entrusted to act as liquidators.
Where the liquidators are still not confirmed within 15 days as the occurrence of the cause for
dissolution of the partnership, the partners or other interested parties may apply to the people‟s
court to designate liquidators71
.
The corporate debts are paid in following order in two countries: wages, expenses, social
insurance premium, outstanding tax and other debts. After the company pays all debts and costs,
the residual properties may be distributed according the ratio.
Vietnamese and Chinese legislation assign quite similar conditions for bankruptcy of
partnership is that if company failed to meet debts. Then, the creditors may apply to the people‟s
court for bankruptcy liquidation, or may request the common partners to make payments72
.
4. Conclusion
A partnership is one of the oldest business form in history. All around the world, there are three
form of partnership being general partnership, limited partnership, and limited liability
partnership. In which, a general partnership will comprise only common partners while a limited
liability partnership comprises only limited partners, and a limited partnership includes both
common partners and limited partners. Vietnam has only a type of partnership which is limited
partnership which just operates in short period and is not popular when China has two types of
partnership being the common partnership and the limited partnership.
70
Article 202, section 2, Law on Enterprise, Viet Nam Law and Legal,2014 71
Article 86 Partnership enterprise law of the People‟s Republic of China (Amended 2006) 72
Article 5 ,Law on Bankruptcy, Vietnam Law and Legal, 2014; Article 92 Partnership enterprise law of the
People‟s Republic of China (Amended 2006)