What is an economic organization? Learn: types of economic organizations in Vietnam, regulations when investing in establishing an economic organization, procedures for establishing an economic organization.
What is economic organization?
In order to help the country’s economy develop more and more, the government has set out many regulations and policies to encourage investors to establish economic organizations in Vietnam. Since then, the form of economic organization has become more and more widespread and plays a great role in the economy.
So what is an economic organization? According to Clause 21, Article 3 of the Investment Law 2020, an economic organization is an organization including enterprises, cooperatives, cooperative unions and other economic organizations as prescribed by law. An economic organization is established for the purpose of carrying out investment and business activities.
6 characteristics of economic organization
According to the above concept, we can understand that economic organization has the following characteristics:
- Economic organizations are legally registered and established in accordance with the provisions of law;
- Is an organization with legal status under the provisions of Vietnamese law;
- Have a separate name, specific address and assets to operate;
- Have clear and transparent charter and organizational structure;
- Have specific forms of production and business activities;
- Not a foreign invested enterprise (FDI company).
See also:
>> Compare enterprises and cooperatives;
>> What is a foreign invested economic organization?
3 types of economic organizations
Economic organizations are known for the following typical types:
- Business
An enterprise is an autonomous economic organization with legal status (except for private enterprises), has its own name, assets for operation and a transaction office. An enterprise is registered in accordance with the law for business purposes.
Currently in Vietnam there are 5 types of enterprises, including:
- One member LLC;
- Limited liability company with 2 or more members;
- Partnership;
- Joint Stock Company;
- Private enterprise.
>> See more: Compare business types.
- Cooperative
A cooperative is an autonomous collective economic organization, established voluntarily by at least 7 members. Co-owners support each other in the production and business process to meet the common needs of the members. Similar to a business, a cooperative is an organization with legal status.
- Cooperative Union
A cooperative union is a collective economic organization, jointly owned, established by four or more cooperatives and supporting each other in production and business activities to meet the common needs of member cooperatives. A cooperative union operates according to cooperative principles and has legal entity status.
>> See more: Distinguishing between business types (cooperatives, cooperative unions, enterprises and business households).
4 forms of economic organization
Currently in Vietnam, economic organizations operate in 4 forms including:
- State economy
State-run and wholly owned by the state, existing in the form of a joint stock company, state-owned company or limited liability company. This form plays a leading role in the national economy, is consolidated and developed, especially in key industries and fields;
- Collective economy
It is a form of operation based on the principles of voluntariness, democracy and mutual benefit, in which citizens contribute capital and labor to cooperate in production and business, organized in many forms such as cooperatives and cooperative unions;
- Individual (private) economy
Has a structure including individual economy and private capitalist economy. This is an economic component based on the form of private ownership of means of production and labor of the workers themselves;
- Other economic organizations
Other economic organizations as prescribed by civil law.
Note: Each type of economic organization will have its own regulations on organization and operation.
Regulations when investing in establishing economic organizations
Investing in establishing an economic organization is when an investor contributes capital to establish an organization with legal status, carrying out investment and business activities to generate profits. For each type of economic organization mentioned above, when establishing, there will be specific conditions and regulations. Therefore, when investing in establishing an economic organization, investors should learn and refer to the laws corresponding to each specific economic type.
Some basic regulations when establishing an economic organization:
- Regarding the subject of registration to establish an economic organization: All organizations, except for enterprises with foreign investment capital and individuals who are Vietnamese citizens, 18 years of age or older, with full civil act capacity, have the right to contribute investment capital or represent the establishment of an economic organization, except for cases of prohibition of enterprise establishment prescribed in Article 17 of the 2020 Enterprise Law;
- Regarding business lines: Economic organizations are only allowed to register to invest in business lines that are not prohibited by law and are within the Vietnamese economic sector code system;
- Regarding the name of an economic organization: The name must not be the same or confusing with other economic organizations, and the name of a state agency must not be used;
- Economic organizations must have headquarters located in Vietnam, have a specific address and telephone number;
- For projects subject to investment policy approval, it is necessary to carry out procedures to request investment policy approval from competent authorities before carrying out investment activities.
See also:
>> Conditions for business establishment;
>> Conditions for establishing cooperatives.
Investment procedures for establishing economic organizations
For domestic investors when establishing an economic organization to implement an investment project, the entity only needs to submit a dossier to establish an economic organization according to the legal provisions corresponding to the type of economic organization.
1. Procedures for establishing an economic organization in the form of an enterprise
Investors carry out business registration procedures at the Business Registration Office of the province or city where the economic organization is expected to be headquartered or submit online through the National Business Registration Information Portal.
The dossier for establishing an economic organization (establishing a business) includes:
- Company charter;
- Application for business registration;
- List of founding shareholders (if it is a joint stock company);
- List of members of the organization (for LLCs with 2 or more members);
- Authorization document (if the applicant is not the legal representative of the enterprise);
- Certified copies not older than 6 months of ID card/CCCD/passport of members, legal representative and authorized person submitting application.
>> Download free sample: Business establishment profile.
Within 3 – 5 working days from the date of receiving a complete and valid set of documents, the Business Registration Office will issue a business registration certificate to the economic organization.
Note:
In most major cities such as Ho Chi Minh, Hanoi, Da Nang, Binh Duong, etc., the direct application form is not applied, but only online application. Therefore, it is necessary to confirm the application form with the business registration agency of the province or city where the enterprise is established to avoid wasting time when registering.
>> Reference: Company establishment procedures.
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To save registration time and ensure that the business registration certificate is issued in accordance with the expected work schedule, investors can consider using the company establishment service at Online Accounting.
2. Procedures for establishing economic organizations in the form of cooperatives and cooperative unions
Investors submit applications for registration of cooperatives and cooperative unions online via the National Cooperative Registration Information System, or submit directly to the Finance and Accounting Department of the District People’s Committee for cooperatives, or to the Business Registration Department of the Department of Planning and Investment for cooperative unions.
The dossier includes:
- Application for registration to establish a cooperative/union of cooperatives;
- Resolution of the conference to establish a cooperative/union of cooperatives;
- Charter documents of cooperatives and cooperative unions;
- Production and business plan of cooperatives/cooperative unions;
- List of members, board of directors, management board and supervisory board of cooperatives/cooperative unions.
>> Download free sample: Cooperative establishment profile.
Within 3 working days from the date of application submission, the registration authority shall issue a certificate of registration of the cooperative/cooperative union if the application is complete and valid or send a written request for correction or supplementation if the application is invalid.
Note:
The registration fee for establishing a cooperative or cooperative union may vary from place to place and is determined by the local registration authority.
>> Reference: Procedures for establishing cooperatives/cooperative unions.
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You can also use the cooperative establishment service at Online Accounting to receive full support for cooperative registration procedures and receive a cooperative registration certificate quickly without spending too much effort and time.
After being granted a certificate of establishment of an economic organization, investors can carry out investment procedures according to the provisions of the Investment Law 2020. In case the investment project requires approval of the policy of the competent authority under Articles 30, 31, 32 of the Investment Law 2020, investors need to carry out procedures to request approval of the investment policy.
Related questions about economic organization
1. Who has the right to establish economic organizations?
All organizations (*) and individuals who are Vietnamese citizens, 18 years of age or older, with full civil act capacity have the right to contribute investment capital or represent the establishment of economic organizations.
(*) Except for foreign-invested enterprises and cases of prohibition of enterprise establishment as prescribed in Article 17 of the Law on Enterprises 2020.
2. What is a foreign invested economic organization?
An economic organization that has foreign investors as members or shareholders and conducts investment activities in Vietnam is called an economic organization with foreign invested capital.
Foreign investors are considered individuals with foreign nationality or organizations established under foreign law.
3. What is investment in establishing an economic organization?
Investing in establishing an economic organization is when an investor contributes capital to establish an organization with legal status such as an enterprise/cooperative/union of cooperatives, directly participating in management and carrying out business investment activities to generate profits.
4. How are investment procedures for establishing economic organizations carried out?
Investment procedures for establishing an economic organization include the following steps:
- Step 1: Establish an economic organization;
- Step 2: Request approval of investment policy (for investment projects requiring approval of policy from competent authorities under Articles 30, 31, 32 of the Investment Law 2020);
- Step 3: Implement investment project.
>> Reference: Investment procedures for establishing economic organizations.
5. In what ways are investors allowed to contribute capital to economic organizations?
The Investment Law 2020 stipulates that investors are allowed to contribute capital to economic organizations in the following forms:
- Contribute capital to a partnership;
- Contribute capital to LLC;
- Purchase of initial public offering shares or additional issued shares of a joint stock company;
- Contribute capital to other economic organizations not included in the above two cases.
>> Reference: Investment forms under the Investment Law 2020.
6. What is the purpose of economic organization?
An economic organization is an organization established to carry out business investment and marketing activities, such as corporations and joint ventures. The ultimate goal of an economic organization is profit.
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