Things that are “not allowed” when setting up a company

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Things that are “not allowed” when setting up a company

In order to establish a successful company/enterprise, regardless of the type of business, it is necessary to pay attention to complying with the general and mandatory conditions and to avoid the “must not” as set forth by the law.

On the subject of company establishment

All organizations and individuals have the right to establish a company in Vietnam. However, there are exceptions where there is no right to establish and manage a company/enterprise specified in article 17 of the Enterprise Law 2020:

The following organizations and individuals do not have the right to establish and manage enterprises in Vietnam:

a) State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their own interests;

b) Officials and public employees defined by the Law on Officials and the Law on Public Employees;

c) Commissioned officers, non-commissioned officers, career military personnel, military workers and public employees in agencies and units of Vietnam People’s Army; commissioned officers, non-commissioned officers and police workers in police authorities and units, except for those designated and authorized representatives to manage state-owned stakes in enterprises or to manage state-owned enterprises;

d) Executive officers and managers of state-owned enterprises prescribed in Point a Clause 1 Article 88 of this Law, except those who are designated as authorized representatives to manage state-owned stakes in other enterprises;

đ) Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons;

e) People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law.

If requested by the business registration authority, the applicant shall submit the judicial records;

g) Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code.

On choosing business lines

According to the latest Law on Enterprises 2020, Clause 1, Article 17 stipulates that all businesses are allowed to “freely conduct business in lines and professions that are not prohibited by law”.

The Clause 1, Article 6 (Banned business lines), Investment Law 2020 stipulates that enterprises are not allowed to conduct business and investment activities in the following fields:

1. The business investment activities below are banned:

a) Trade in the narcotic substances specified in Appendix I hereof;

b) Trade in the chemicals and minerals specified in Appendix II hereof;

c) Trade in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III hereof;

d) Prostitution;

đ) Human trafficking; trade in human tissues, corpses, human organs and human fetuses;

e) Business activities pertaining to asexual human reproduction;

g) Trade in firecrackers.

h) Provision of debt collection services.

All businesses are allowed to “freely conduct business in lines and professions that are not prohibited by law”.

About the business name

Business/companies owners need to be aware of the prohibitions on naming businesses.

– Avoid naming the same or confusingly with the name of a registered enterprise specified in Article 42 of the Enterprise Law 2020.

– Do not use the names of state agencies, units of the people’s armed forces, or names of political organizations, socio-political organizations, socio-political-professional organizations, social organizations, or social organizations. to perform all or part of the business’s proper name

Unless otherwise approved by that agency, unit, or organization.

– Do not use words and signs that violate the historical, cultural, ethical, and fine traditions of the nation.

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