SOCIAL ENTERPRISES IN VIETNAM
Social enterprises is a new legal term in Vietnam and recently they are drawing considerable attention from the policy makers and legal researchers. Currently, the legal status of social enterprises is defined in Article 10 of the Law on Enterprises in 2014 and Decree No. 96/2015/NĐ-CP
1. Legal grounds
2. Definition
Law on Enterprises 2014 does not provide the definition of social enterprises ("DNXH") but it has criteria to identify social enterprises in Article 10 of law on Enterprises. From this regulation, we can understand that social enterprises are enterprises established under law on Enterprises, the enterprise's objective is to resolve social, environmental problems, or to serve public interests and at least 51% of annual profit is used for reinvestment in order to serve the social, environmental purposes as registered.
3. Characteristic, rights and obligations
Every social enterprise must satisfy the following criteria:
a) The enterprise is registered in accordance with this Law;
b) The enterprise's objective is to resolve social, environmental problems, or to serve public interests;
c) At least 51% of annual profit is used for reinvestment in order to serve the social, environmental purposes as registered.
Social enterprises have the following rights and obligations:
a) Maintain the objectives and conditions prescribed in Point b and Point c Clause 1 of this Article throughout the operation; any operating enterprise that wishes to convert into a social enterprise, and any social enterprise that wishes to stop operating as a social enterprise shall notify the competent authority to complete necessary procedures;
b) Owners and managers of social enterprises shall be enabled to obtain licenses and relevant certificates as prescribed by law.
c) Seek and receive sponsorships from other individuals, enterprises, non-governmental organizations, other Vietnamese and foreign organizations to cover administrative expense and operating costs of the enterprise;
d) Do not use the sponsorships for purposes other than covering administrative expense and operating costs or resolving social, environmental issues registered by the enterprise;
dd) Submit annual reports on the enterprise’s operation to the competent authority when receiving incentives or support.
4. Established Procedure
Social enterprises shall register enterprises according to the order, procedures and dossiers corresponding to each type of enterprise prescribed in law on Enterprise. The form of documents used in social enterprise registration is guided by Circular 04.
The procedure for establishing social enterprises is regulated by the law on Enterprises and Decree No.96. Social enterprises also have their own names. Based on the standards of business names prescribed by law, the head of social enterprises will actively decide to name of social enterprises. According to the provisions of Article 38 to Article 42 of the law on Enterprises, there is no separate provision in the name of social enterprises. In addition, under Clause 2, Article 4 of Decree No. 96, it is possible to add the phrase "social" to the name of social enterprises.
Regulations may add the phrase "social" in the name of social enterprises is a discretionary norm, it is decided by the head of social enterprises. However, both law on Enterprise and its guiding documents do not prohibit or restrict investors from using the term "social enterprise" in the name of an enterprise.
