Organizational Structure of Partnership Companies in 2024

Organizational Structure of Partnership Companies has unique characteristics in terms of management and the division of responsibilities among members. Management positions in a partnership company are established to comply with legal regulations and operate efficiently. Understanding this structure helps entrepreneurs choose a suitable business model. The following article by Long Phan will provide a detailed analysis of the organizational structure of partnership companies according to the latest regulations in 2024.

Organizational Structure of Partnership Companies

What is a Partnership Company?

A partnership company is a business with a specific structure as stipulated by the Vietnamese Enterprise Law. The basic feature of a partnership company is the combination of at least two partners who share unlimited liability for the company’s debts.

According to Clause 1, Article 177 of the Law on Enterprises 2020, a partnership company has the following characteristics:

• Must have at least two partners who are joint owners of the company, jointly conducting business under a common name, called partners.
• A partnership company may have additional capital-contributing members.
• Partners must be individuals, responsible with all their assets for the company’s obligations.
• Capital-contributing members can be organizations or individuals and are only responsible for the company’s debts within the scope of their committed capital contribution.
• A partnership company is a legal entity from the date of issuance of the Certificate of enterprise registration.
• A partnership company is not allowed to issue securities.

Choosing the Organizational Structure of Partnership Companies has many significant advantages to consider. One of these factors is the flexible management structure, which facilitates efficient management and operation. The following sections provide a detailed analysis of the organizational structure of a partnership company.

The Latest Model of Partnership Company Organizational Structure

The latest model of partnership company organizational structure aims to optimize management efficiency. Specifically, this model includes the following components and positions:

• The Members’ Council is the highest authority in the partnership company.
• The Chairman of the Members’ Council is the head of the Members’ Council.
• Director or General Director. If the company’s charter does not specify otherwise, the Chairman of the Members’ Council concurrently serves as the Director/General Director.
• The Members’ Council includes all members of the company, including both partners and capital-contributing members.

It can be seen that the core of the management structure in a partnership company is the Members’ Council. Additionally, the Chairman of the Members’ Council plays a central coordinating role. The Director/General Director is responsible for general management and operation. The management apparatus operates in close, strict coordination to create the business efficiency of the partnership company.

Organizational Structure of Partnership Companies

The Members’ Council

According to Article 182 of the Law on Enterprises 2020, the Members’ Council is regulated as follows:

• The Members’ Council includes all members of the partnership company.
• The Members’ Council elects one partner to be the Chairman of the Members’ Council, who also concurrently serves as the Director or General Director of the company if the company’s charter does not specify otherwise.

The Members’ Council has the authority to decide on all business activities of the company, such as:

• Determining the company’s development direction and strategy.
• Amending and supplementing the company charter.
• Admitting new members.
• Approving the withdrawal or expulsion of partners.
• Deciding on investment projects.
• Deciding on borrowing and raising funds in other forms, lending with a value of 50% or more of the company’s charter capital, unless a higher rate is specified in the company’s charter.
• Deciding on the purchase and sale of assets with a value equal to or greater than the company’s charter capital, unless a higher rate is specified in the company’s charter.
• Approving annual financial reports, the total amount of profit to be distributed, and the amount of profit to be distributed to each member.
• Deciding on dissolution; requesting the company’s bankruptcy.

If the company’s charter does not specify otherwise, decisions on these issues must be approved by at least three-quarters of the total number of partners.

Building the management structure of a partnership company

The Chairman of the Members’ Council

According to Clauses 1 and 2, Article 82 of Law on Enterprises 2020, the Chairman of the Members’ Council is:

• A partner in the company;
• Elected by the Members’ Council;
• The Chairman of the Members’ Council may concurrently serve as the Director or General Director of the company;
• The Chairman of the Members’ Council can convene meetings of the Members’ Council when deemed necessary or at the request of the partners in the company.

The obligations of the Chairman of the Members’ Council are stipulated in Clause 4, Article 184 of the Law on Enterprises 2020 as follows:

• Manage and operate the company’s daily business activities as a partner;
• Convene and organize meetings of the Members’ Council; sign resolutions and decisions of the Members’ Council;
• Allocate and coordinate business activities among the partners in the company;
• Organize, arrange, and fully and truthfully keep accounting books, invoices, documents, and other materials of the company as prescribed by law;
• Represent and act on behalf of the company in civil matters, as a plaintiff, defendant, or related party before Arbitration or Court; represent the company to perform other rights and obligations as prescribed by law;
• Other obligations as stipulated in the company’s charter.

Director or General Director of the Company

According to Article 182 of the Law on Enterprises 2020:

• The Director or General Director of the company may be concurrently held by the Chairman of the Members’ Council;
• Additionally, in a partnership company, all partners have the right to manage the company’s daily business activities aside from the Chairman of the Members’ Council, Director, or General Director.
• Thus, partners, even if they do not hold any positions in the company, have the legal right to represent and manage the company’s business activities. The Chairman of the Members’ Council, Director, or General Director of a partnership company may also manage and operate the company as partners.

Partners

The Law on Enterprises 2020 stipulates the following about partners:

• In a partnership company, partners are individuals who bear unlimited liability with all their assets for the company’s debts;
• Partners are the legal representatives of the company and organize the company’s daily business activities;
• Partners are not allowed to own private enterprises; they cannot be partners of other partnership companies unless agreed upon by the remaining partners;
• Partners are not allowed to conduct business in their name or on behalf of others in the same industry as the company for personal gain or to serve the interests of other organizations or individuals;
• Partners cannot transfer part or all of their capital contribution in the company to other organizations or individuals without the consent of the remaining partners.

The obligations of partners are specifically stipulated in Clause 2, Article 181 of Law on Enterprises 2020 as follows:

• Manage and conduct business activities honestly, carefully, and to the best of their ability to ensure the maximum legitimate interests for the company;
• Manage and conduct business activities in accordance with the law, the company’s charter, and the resolutions and decisions of the Members’ Council. If they violate this provision and cause damage to the company, they must compensate for the damage;
• Do not use the company’s assets for personal gain or to serve the interests of other organizations or individuals;
• Return to the company any money or assets received and compensate for damages caused to the company in case they, in the name of the company, in their name, or in the name of others, receive money or other assets from the company’s business activities without submitting them to the company;
• Jointly bear responsibility for paying off the company’s remaining debts if the company’s assets are not enough to cover its debts;
• Bear losses corresponding to their capital contribution in the company or according to the agreement stipulated in the company’s charter in case the company suffers losses;
• Regularly report truthfully and accurately in writing the situation and results of their business activities to the company; provide information on their business situation and results to members upon request;
• Other obligations as prescribed by this Law and the company’s charter.

Capital-Contributing Members in the Organizational Structure of a Partnership Company

According to Law on Enterprises 2020, capital-contributing members are stipulated as follows:

• A partnership company is not required to have capital-contributing members;
• Capital-contributing members can be individuals or organizations;
• Capital-contributing members are only responsible for the company’s debts within the scope of their committed capital contribution;
• Capital-contributing members are not allowed to participate in the management of the company, nor conduct business activities in the name of the company;
• Capital-contributing members are free to transfer their capital contribution to others;
• Capital-contributing members are entitled to annual profit distribution corresponding to their capital contribution in the company’s charter capital;
• Capital-contributing members have the right to dispose of their capital contribution by inheritance, gifting, pledging, mortgaging, and other forms as prescribed by law and the company’s charter. In case of death, their heirs will replace them as capital-contributing members of the company;
• Capital-contributing members have the right to attend, discuss, and vote at the Members’ Council meetings on amendments to the company’s charter, amendments to the rights and obligations of capital-contributing members, reorganization, dissolution of the company, and other content of the company’s charter directly related to their rights and obligations.

Member in the management structure of a partnership

Business Consulting Services, Partnership Company Management Structure

To assist in building the management Organizational Structure of Partnership Companies, Long Phan’s team of experts will provide the following services to our customers:

• Consulting on legal regulations regarding the Organizational Structure of Partnership Companies;
• Advising on the rights and obligations of positions within the enterprise;
• Assisting customers with procedures for establishing a partnership company;
• Consulting on building, evaluating, and proposing optimal management models for enterprises;
• Advising on legal issues related to management, operations, Organizational Structure of Partnership Companies;
• Consulting on building and developing human resource management systems;
• Advising on the building and implementation of risk prevention measures.

In summary, the Organizational Structure of Partnership Companies is a crucial factor in ensuring efficient operations and sustainable development. Understanding the regulations and having clear delegation and management will create a solid foundation for the success of the business. If you need business consulting services, please contact us at Hotline 0906.735.386 to be assisted by Long Phan’s experts.