The social Enterprises in Vietnam

The social Enterprises in Vietnam

1. Definition of the social enterprises in Vietnam

The social enterprises in Vietnam are  enterprises that meets the following three criteria: a) It is an enterprise registered for incorporation in accordance with the Law on Enterprises; b). Operate for the purposes of resolving social and environmental issues for public interests; c) Use at least 51% of the annual post-tax profit for re-investment to achieved registered targets.

2. The social enterprise incentives in Vietnam

According to the provisions of Clause 4, Article 10 of Vietnam”s Enterprise Law 2020, the State has policies to encourage, support and promote the development of the social enterprises. However, the current laws have not provided specific incentives and support for the social enterprises. The social enterprises in Vietnam currently enjoy the preferential policies as an ordinary enterprise incorporated in accordance with Vietnamese law.

3. Rights and obligations of the social enterprises in Vietnam

In addition to the rights and obligations of ordinary enterprises in accordance with the Law on Enterprises, the social enterprises in Vietnam have the following rights and obligations:
a) The owner or executive of the social enterprise shall be enabled to obtain relevant licenses and certificates prescribed by law;
b) The social enterprise may 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 specified in Point b and Point c Clause 1 above throughout its course of operation;
b) 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;
dd) When receiving donations and aids, submit annual reports on the enterprise’s operation to a competent authority;

4. Sources of funding for the social enterprises in Vietnam

a. Domestic funding:

i. The social enterprises receive funding from individuals, domestic agencies and organizations, and foreign organizations operating in Vietnam.
ii. The social enterprise shall sign the agreement to receive the funds and notify the Department of Planning and Investment or the funding management agency under the People”s Committee of the province where the enterprise”s head office is located within 5 days from the receiving date.

b. Sources of foreign funding:

i. The social enterprises receive foreign funding for the purposes of resolving social and environmental issues for public interests.

ii. Procedures for receiving foreign funding comply with Decree No.80/2020/ND-CP dated July 8, 2020 of the Government of Vietnam on Management and use of non-refundable aid not under support official development of foreign agencies, organizations and individuals for Vietnam.

iii. The governing body that approves the social enterprise”s funding is the People”s Committee of the province where the enterprise registers its business.

5. The social enterprises must notify competent authorities when they terminate the implementation of social and environmental goals or do not use profits for reinvestment as prescribed at Points b and c, Clause 1 above.

Lawyer Vietnam Law Firm – Vietnamese Lawyers

Related texts:

- Setting up a foreign own capital social enterprise in Vietnam, Click here