Full report-blaw-1

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BUSINESS LAW PARTNERSHIP 1 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 ThHoa 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

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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17

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)

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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)