Comparison: Unincorporated & Legal Organization

What is a legal entity? What is an unincorporated organization? Similarities and differences between an unincorporated and an unincorporated organization.

What is legal status? What is a legal entity? 

Legal status is the legal status of an organization recognized by the state to be able to participate in activities: economic, political, social…

An organization is considered to have legal status if it meets the following four conditions: 

• Legally established organization;
• The organization has a clear governing body;
• An organization has assets independent of other individuals and organizations and is solely responsible for those assets;
• The organization has the right to participate in legal relationships independently on its own behalf. 

Specifically, limited liability companies, partnerships, and joint stock companies are types of businesses with legal status. 

>> See more: What is a legal entity? Conditions for having legal status?

What is an unincorporated organization?

As fdiinvietnam.com shares, if an organization satisfies all four of the above conditions, it is considered to have legal status. Conversely, if just one of the four conditions is missing, the organization is considered to have no legal status. 

For example:

For private enterprises, this type does not satisfy the condition of property independence between the enterprise and the individual, so it is not considered to have legal status. 

Organizations/enterprises without legal status: 

• Individual business household;
• Group of branches and representative offices; 
• Securities investment funds, executive offices of foreign investors;
• Private enterprises: law offices, bailiff offices, bankruptcy management and liquidation enterprises.

See also:

>> The difference between company branch & representative office;

>> Distinguish between types of businesses;

>> Private company establishment service;

>> What is a sole proprietorship?

Similarities between unincorporated and incorporated organizations

Basically, unincorporated and legal entities have the following 3 similarities:

1. All have strict management and executive agencies and clear operating goals;
2. Members all work on a voluntary basis or according to certain tasks;
3. All enjoy rights and obligations in business activities. 

Difference between unincorporated and incorporated organizations

1. Organizational assets

2. Responsibility 

For example: 

• In the case of legal entity status: When a joint stock company goes bankrupt, the owner and shareholders are only liable to the extent of their contributed capital, and are not related to their personal assets;
• In the case of no legal entity: When a private company goes bankrupt, the owner must bear unlimited liability for all debts of the company with all existing assets. 

3. Subjects in civil relations

(*)

Organizations authorizing representatives to participate in civil transactions must establish a written document (except in cases where there is a previous agreement). If the organization changes its representative, it must notify the parties participating in the civil relationship. 

Legal entity establishment service 

If you need to establish a legal entity, please refer to the following service of Online Accounting:

• Joint stock company establishment service;
• LLC establishment service;
• Partnership establishment service.

1. Full legal entity registration fee from 1,000,000 VND (*)

• State fee: 750,000 VND;
• Service fee at fdiinvietnam.com: 250,000 VND.

(*) Costs will vary depending on the region and specific case.

2. Fast procedure completion time

After receiving information from customers, fdiinvietnam.com will complete all procedures for registering a legal entity for you within 4 days.

• 1 day for fdiinvietnam.com to consult, prepare documents, and present to customer for signature;
• 3 days for the Department of Planning and Investment to check the documents and issue a business license.

3. Information you need to provide

• Expected business information: name, address, business lines, charter capital…;
• ID card/passport of capital contributor and legal representative.

See details: 

>> Joint stock company establishment service;

>> LLC establishment service;

>> Partnership establishment service.

Service of establishing an organization without legal status

If you need to establish an organization without legal status, please refer to the following service of Online Accounting:

• Company branch establishment service;
• Representative office establishment service;
• Business establishment services;
• Private business establishment service.

1. Cost of establishing an organization without legal status

➤ Company branch establishment service:

• Package from 700,000 VND for dependent accounting branches in the same province as the head office;
• Package from 1,100,000 VND for dependent accounting branches in different provinces from the head office and independent accounting branches.

➤ Full service of establishing representative office from 700,000 VND;

➤ Full business establishment service from 1,500,000 VND; 

➤ Full private enterprise establishment service from 1,000,000 VND.

2. Fast procedure completion time

After Online Accounting receives the information and completes the registration application, after only 3 working days from the Department of Planning and Investment, you will be granted a registration certificate.

3. Information you need to provide

Depending on each case of establishing a branch, representative office, business household or private enterprise, you need to provide different information.

➤ For company branches and representative offices

You only need to provide the following basic information:

• Tax code or scanned copy of business license;
• Expected branch/representative office address;
• ID card/passport of legal representative of branch/representative office.

➤ For business households and private enterprises

You only need to provide the following basic information:

• Proposed establishment information: name, address, charter capital, business lines…;
• ID card/passport of private business owner or business household owner, capital contributors (if any).

See details: 

>> Service of establishing company and business branches;

>> Representative office establishment service;

>> Business establishment services;

>> Private business establishment service. 

If you have any questions or need further support regarding the legal status of any organization, please contact fdiinvietnam.com immediately for free consultation.

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Common questions about unincorporated & incorporated organizations

Call us at 0978 578 866 (North) – 033 9962 333 (Central) – 033 9962 333 (South) for support.