SETTING UP SOCIAL ENTERPRISE IN VIETNAM

Legal basis: Law on Enterprises 2020 and Decree No.47/2021 ND-CP guiding some articles of the Law on Enterprises 2020.

Scope of social enterprises

Items

Not-for-profit Enterprise

Profitable Enterprise

Form

Usually operates in the form of Limited Liability Company or Joint Stock Company

Usually operates in the form of: Limited Liability Company, Cooperative, etc.

Funds

- Receiving foreign non-governmental aids to pursue their social and environmental objectives in accordance with regulations of law on receiving foreign non-governmental aids.

- Receiving sponsorships in the form of property, finance or technical assistance to pursue their social and environmental objectives from domestic organizations and individuals and foreign organizations that have registered their operation in Vietnam

- Receiving foreign non-governmental aids to pursue their social and environmental objectives in accordance with regulations of law on receiving foreign non-governmental aids.

Purpose

Resolving social and environmental issues for public interests

Conditions for establish a Social Enterprise (Article 10.1 of Law on Enterprise)

Be registered in accordance with Law on Enterprise 2020;

Operate for the purposes of resolving social and environmental issues for public interests;

Use at least 51% of the annual after-tax profit for re-investment to achieved registered targets.

Please be further noted that, social enterprises shall maintain pursue of social and environmental objectives, retained earnings for re-investment and other contents in the commitment to pursue social and environmental objectives throughout their operation. Unless the social and environmental objectives are terminated ahead of schedule, the social enterprise shall return all incentives, aids and sponsorships it received to pursue social and environmental objectives if it fails to fulfill the commitment to pursue social and environmental objectives and maintain retained earnings for re-investment.

Accordingly, owners of private enterprises, partners of partnerships, members of limited liability companies and related entities that are shareholders of joint stock companies, members of the Board of Management, the Director/General Director holding office or within a specific period of time shall be jointly responsible for the damage caused by the social enterprise’s violations in case the social enterprises breached the commitment to pursue social and environmental objectives.

Rights and obligations of Social Enterprises (Article 10.2 of Law on Enterprises 2020)

In addition to the rights and obligations of an enterprise prescribed in Law on Enterprises, a social enterprise also has the following rights and obligations

a) The owner or executive of a social enterprise shall be enabled to obtain relevant licenses and certificates prescribed by law;

b) To raise and receive donations from individuals, enterprises, non-governmental organizations and other Vietnamese and foreign organizations to cover its administrative expenses and operating costs;

c) Adhere to the objectives and fulfill the conditions as committed throughout its course of operation;

d) Do not use donations for purposes other than covering administrative expenses and operating costs and resolving the social and environmental issues registered by the enterprise;

e) When receiving donations and aids, submit annual reports on the enterprise’s operation to the competent authority on the operational situation.

4. Social Enterprise establishment procedure

Social Enterprise establishment is basically the same as a normal enterprise, including the following documents:

– The social enterprise registration application form.

– The social enterprise 's charter.

– The list of members or founding shareholders of social enterprise.

Furthermore, Social Enterprise must have documents to notify the Statement of commitment to fulfill social and environmental objectives as prescribed in Article 10 of the Law on Enterprises 2020. When establishing a social enterprise, the enterprise must make a written statement of commitment to fulfill social and environmental objectives and submit it to the Business Registration Office of the place where it intends to locate its head office according to the following list:

– The statement of commitment to fulfill social and environmental objectives.

– The decision of enterprise to approve contents in the Statement of commitment to fulfill social and environmental objectives.

– The valid copy of Minutes of meetings of the Board of Members of the Multi-member limited liability company, the Company’s owner or Members’ Council or Chairman of Single-member limited liability company, General Meeting of Shareholders of Joint stock company, general partner of Partnership when approving the contents in the statement of commitment to fulfill social and environmental objectives.

– The power of attorney for the applicant (if he or she is not the legal representative of the company).

– The valid copy of ID card/passport of the owner, limited partner, shareholder, founding shareholders, representative of enterprise and authorized representative to submit the dossier (if any).

5. Regulations on the order and procedures receiving aids and sponsorships of Social Enterprise

Pursuant to Clause 2 Article 4 of Decree No. 47/2021/ND-CP guiding some articles of the Law on Enterprises 2020:

Step 1: Prepare a document about receipt of sponsorship

A document about receipt of sponsorship which specifies:

– Information about the sponsors.

– Types of property, value of property or money.

– Time of sponsorship.

– Requirements to be satisfied by the recipient.

– Full name and signature of the sponsor’s representative

Step 2: Send a notification about receipt of aid/sponsorship

Within 10 working days from the receipt of the sponsorship, the enterprise shall send a notification to the authority in charge of management of aids and sponsorships affiliated to the People’s Committee of the province/city where the enterprise is headquartered. The notification shall be enclosed with a copy of the document about receipt of sponsorship.

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