Should business households become enterprises?

Should business households become enterprises? Source: quochoi.vn

More accurate positioning of business households

At the meeting with the National Assembly’s Economic Committee about amendments to the Law on Enterprises, Deputy Minister of Planning and Investment Vu Dai Thang argued that it will position business households more accurately.

To prove his point, the deputy minister pointed out some shortcomings in the current regulations on business households, such as their unclear legal status and civil responsibilities, and supervision reaching no farther than district level. He also thought it an undue restriction that households are only allowed to have a maximum of 10 employees and that they cannot open branches or representative offices.

Deputy Minister of Planning and Investment Vu Dai Thang

It is these legal restrictions that prevent business households from taking full advantage of business opportunities and stopping them from fully utilising their resources.

Accordingly, the amendment would add "business households" as a legitimate form of business to the Law on Enterprise, whereas it has only been recognised in decrees and lower-level legislation. The amendment would add it to the list of private enterprises, partnerships, limited liability companies, and joint stock companies.

The amendment also stipulates the legal status and civil responsibilities of business households to ensure compliance with the Civil Code. A business household will be registered under the name of an individual or family members. The above-mentioned restrictions of the prevailing regulations will be abolished.

Thang said that the Ministry of Planning and Investment evaluated the impacts of the draft law on business households and believes it will not have negative impacts on their operations, nor will it add administrative proceduresas operating business households will not need to re-register or change their operation registration certificate.

Evolving the state-owned enterprise concept

Also at the meeting, Deputy Minister Vu Dai Thang said that the amendment will abolish two procedures, including the procedure for registration of seal samples and procedures for reporting changes in management.

The amendment would also enable online business registration with electronic documents (without the need to submit additional paper files as currently).

Regarding the management of limited liability companies and joint stock companies, the draft amends regulations on the time limit for charter capital contribution to better fit reality in case the contribution is done in the form of machinery, equipment, or property. Accordingly, the time required to import andimplement administrative procedures for machinery, equipment, and assets contributed as capital shall not be included in the time limit (90 days) for the full contribution of the enterprise's charter capital.

The amendment would also broaden the extent and scope of corporate shareholders' rights in order to protect their interests and prevent large shareholders from abusing their position and authorities from causing damage to the company and its shareholders.

Regulations on state-owned enterprises would also be amended. Specifically, the concept of a state-owned enterprise has been revised to include two types of enterprises: enterprises in which the state owns 100 per cent of the charter capital and those where it owns more than 50 per cent of the charter capital or the total voting shares.

The draft also proposes new rules on limited liability companies and joint stock companies with state ownership of more than 50 per cent of the charter capital. For example, to curb nepotism, the draft would extend the scope of “family members” to include son-in-law, daughter-in-law, and brothers-in-law when it comes to the appointment of a member of the board of directors, director, or general director.