TYPES OF BUSINESS IN VIETNAM AND REASONS NEED VALUATION OF THE ENTERPRISE

According to the Enterprise Law 2020, there are 5 main types of enterprises: joint stock companies, single-member limited liability companies, limited liability companies with two or more members, partnerships, and private enterprises. Each type of business has different advantages and disadvantages that depend on the needs and capabilities of individuals and organizations to choose the appropriate establishment model.

Private enterprise

A sole proprietorship is an enterprise owned by an individual who is solely responsible for all his/her assets for all activities of the business. The sole proprietor of a sole proprietorship is an individual. A sole proprietorship has no legal status.

The owner of a private enterprise is the legal representative of the enterprise. The owner of a private business has full decision-making power over all business activities of the enterprise; has the full right to decide on the use of profits after paying taxes and performing other financial obligations as prescribed by law. The owner of a private business can directly or hire someone else to manage and operate the business. In the case of hiring another person to act as the managing director of the enterprise, the owner of the private enterprise is still responsible for all business activities of the enterprise. Advantages and disadvantages of sole proprietorship.

Partnerships

A partnership is an enterprise in which:

• There must be at least two general partners; in addition to general partners, there may be capital contributors;
• General partners must be individuals, have professional qualifications and professional reputations, and must be responsible with all their assets for the obligations of the company;
• Capital contributors are only liable for the companys debts to the extent of the amount of capital contributed to the Company.

The partnership company has legal status from the date of issuance of the Certificate of Business Registration

General partners have the right to manage the company; conduct business activities on behalf of the company; jointly responsible for the obligations of the company. Capital-contributing members have the right to share profits according to the ratio specified in the companys charter; not participate in company management and business activities on behalf of the company. General partners have equal rights when deciding on management issues of the company. Advantages and disadvantages of a partnership company.

One-member limited liability company

• A type of enterprise established by an individual or an organization as the owner and contributed capital to establish.
• Charter capital of a one-member limited liability company at the time of business registration is the total value of assets committed by the owner to contribute and stated in the companys charter.
• The owner must contribute in full and in the right type of assets as committed when registering for the business establishment within 90 days from the date of being granted the Certificate of Business Registration.
• In case of failure to fully contribute charter capital within the time limit specified in Clause 2, Article 75 of the Law on Enterprises, the company owner must register for an adjustment of charter capital equal to the value of the contributed capital within 30 days from the date of payment. the last day to fully contribute the charter capital. In this case, the owner shall be responsible in proportion to the committed capital contribution for the companys financial obligations arising in the time before the company registers to change the charter capital.
• A one-member limited liability company is entitled to reduce its capital if it has operated continuously for more than 2 years from the date of business registration and ensures to pay all debts and other property obligations after the date of business registration. refunded to the owner. The company has the right to increase its charter capital by making additional investments or mobilizing other peoples contributed capital. In case of increasing charter capital by mobilizing additional capital contributed by other people, the company must convert the type of enterprise into a limited liability company with two or more members or a joint stock company.

Limited liability company with two or more members

• A limited liability company with two or more members is an enterprise in which members can be organizations or individuals; the number of members does not exceed 50.
• A limited liability company with two or more members has legal status from the date of issuance of the Certificate of Business Registration. A limited liability company is not entitled to issue shares to raise capital.
• Members are responsible for the enterprises debts and other property obligations to the extent of the amount of capital contributed to the enterprise. The charter capital of a limited liability company with two or more members upon enterprise registration is the total value of the contributed capital that members commit to contribute to the company. Members must contribute capital to the company in full and with the right type of assets as committed when registering for the business establishment within 90 from being granted the Certificate of Business Registration. During this time limit, members have rights and obligations in proportion to the amount of capital contributed as committed to contributing. In case a member has not contributed or has not fully contributed the committed capital amount, the company must register for adjustment, the charter capital, and the proportion of contributed capital of the members equal to the contributed capital within 30 days from the date of registration. from the last day to contribute capital in full.
• A limited liability company with two or more members is not entitled to issue shares.

Joint Stock Company

A joint stock company is an enterprise in which:

• Charter capital is divided into equal parts called shares;
• Shareholders are only responsible for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise;
• Shareholders have the right to freely transfer their shares to other people, except where shareholders own voting preference shares;
• Shareholders can be organizations or individuals; The minimum number of shareholders is three and there is no limit to the maximum number.
• A joint-stock company has legal status from the date of issuance of the business registration certificate. Joint-stock companies have the right to issue securities to the public by the law on securities.
• Charter capital of a joint-stock company is the total par value of shares sold of all kinds. The charter capital of a joint-stock company at the time of enterprise establishment registration is the total par value of shares of all types which have been registered for purchase and recorded in the companys charter. Shareholders must pay in full for the number of shares registered for purchase within 90 days from the date of issuance of the Certificate of Business Registration unless otherwise provided for in the companys charter or contract for the registration of share purchase. another shorter period. The company must register to adjust the charter capital equal to the par value of the shares that have been paid in full and change the founding shareholders within 30 days from the end of the time limit for paying the full number of shares subscribed to buy.
• Within 3 years from the date the company is granted the Certificate of Business Registration, the founding shareholder has the right to freely transfer his shares to other founding shareholders and may only transfer ordinary shares. to a person who is not a founding shareholder if approved by the General Meeting of Shareholders. In this case, the shareholder intending to transfer the shares does not have the right to vote on the transfer of those shares. The restrictions on common shares of founding shareholders are removed after 03 years from the date the company is granted the Certificate of Business Registration. The limitations of this regulation do not apply to shares that founding shareholders have after registering the establishment of the enterprise and shares that founding shareholders transfer to other people who are not founding shareholders of the company. company.
• A joint stock company must have a General Meeting of Shareholders, a Board of Directors, a Supervisory Board, and a Director or General Director. In case a joint-stock company has less than 11 shareholders and the shareholders are organizations holding less than 50% of the total shares of the company, it is not required to have a Supervisory Board;

The company may change its charter capital in the following cases:

• According to the decision of the General Meeting of Shareholders, the company will return a part of the contributed capital to the shareholders in proportion to their share ownership in the company if the company has operated continuously for more than 2 years, from the date of business registration and ensuring full payment of debts and other property obligations after they have been returned to shareholders;
• The company buys back the issued shares
• Charter capital is not paid in full and on time by shareholders

WHY VALUATION OF THE ENTERPRISE?

In an era of strong economic growth and high competitiveness among businesses, business valuation plays a huge role. So what benefits does business valuation bring to the economy, as well as businesses and related departments?

Business valuation is the estimation of the value of a business, or its benefits for a given purpose, using appropriate valuation methods. This is considered the process of assessing or estimating the market value of the rights and benefits, brought from business ownership to business owners.

REASONS WHY SHOULD VALUATION OF THE ENTERPRISE

With the development of financial markets, stock markets, and other asset markets, corporate valuation and its benefits play an increasingly important role in the economy. It provides an overview of the value of an enterprise, which is an important basis for the users of valuation results to make reasonable decisions in the following main issues:

• Helping state management agencies to understand the situation of production and business activities and the value of enterprises to have specific management policies for each enterprise such as corporate income tax, financial tax, etc. property, and other taxes.
• Helping businesses have the necessary management improvement solutions to improve the efficiency of production and business activities and control the profits of the business.
• As a basis for settling and handling disputes arising between shareholders of the enterprise when distributing dividends, contributing capital, violating contracts, etc.
• As a basis for organizations, individuals, and the investment public to make decisions on buying, selling, and transferring securities issued by enterprises on the financial market; as well as the basis for merger, separation, dissolution, liquidation, joint venture, etc. of enterprises.

The business valuation brings many benefits to the owner: protecting the business; knowing the ability of enterprises to adjust to improve efficiency in business, and production... Most importantly, the enterprise value appraisal is an important basis for enterprises to attract capital from financial investors. main.

COST OF VALUATION OF THE ENTERPRISE

Enterprise valuation costs are usually determined by appraisal units based on % (percent) of total assets of the Enterprise and the type of business. The second way to calculate the business appraisal fee is a fixed rate (package) agreed between the appraiser and the customer.

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