What are the responsibilities of a private business owner when leasing a private business?

1. What are the responsibilities of a private business owner when leasing a private business?

Pursuant to Article 191 of the Law on Enterprises 2020, it is stipulated as follows:

“Article 191. Leasing of private enterprises

The owner of a private enterprise has the right to lease his entire private enterprise but must notify in writing with a notarized copy of the lease contract to the Business Registration Office and the tax authority within 03 working days from the effective date of the lease contract. During the lease term, the owner of a private enterprise shall still be legally responsible as the owner of the private enterprise. The rights, obligations and responsibilities of the owner and the lessee for the business activities of the private enterprise are stipulated in the lease contract.”

Thus, when leasing their business, private business owners must be responsible for:

- Written notice with a notarized copy of the lease contract to the Business Registration Office and tax authority within 03 working days from the effective date of the lease contract;

- During the lease term, the private enterprise owner is still legally responsible as the owner of the private enterprise;

- Responsibilities for business operations are specified in the lease agreement between the private business owner and the tenant.

Accordingly, even though you have leased your private enterprise, if an incident occurs that gives rise to legal liability for the private enterprise, you are still responsible as the owner of the private enterprise.

2. What is the penalty for not notifying when leasing a private enterprise?

Pursuant to Article 50 of Decree 122/2021/ND-CP, it is stipulated as follows:

“Article 50. Violation of other notification obligations

1. A fine of from VND 10,000,000 to VND 15,000,000 shall be imposed for one of the following acts:

a) Failure to notify or late notification to the business registration authority and tax authority about the lease of an enterprise to a private enterprise.

In case of violation of tax law, it shall be handled according to regulations on administrative sanctions for violations in the field of tax;

b) Failure to notify or late notification to the business registration authority where the enterprise has its head office when there is a change in information about the authorized representative of the owner or member of a limited liability company that is an organization or company;

c) Failure to notify or late notification to the business registration authority of the time and duration of business suspension or resumption.

2. Remedial measures:

a) Compulsory notification of the leasing of private enterprises to the business registration authority and tax authority in case of failure to notify for violations specified in Point a, Clause 1 of this Article;

b) Compulsory notification of changes in information about the authorized representative of the owner or member of a limited liability company that is an organization or company to the business registration authority in case of failure to notify for violations specified in Point b, Clause 1 of this Article;

c) Compulsory notification of the time and duration of business suspension or resumption to the business registration authority in case of failure to notify for violations specified in Point c, Clause 1 of this Article.”

SoFailure to notify the Business Registration Authority when leasing a private enterprise may result in a fine of 10 to 15 million VND.

At the same time, the remedial measure is to force the notification of the leasing of private enterprises to the business registration authority.

3. The right of the business owner to sell the private enterprise?

According to Article 192 of the 2020 Enterprise Law, the business owner's right to sell a private enterprise is stipulated as follows:

- Private business owners have the right to sell their private businesses to other individuals or organizations.

- After selling a private enterprise, the owner of the private enterprise shall still be responsible for the debts and other financial obligations of the private enterprise arising during the period before the date of enterprise transfer, unless otherwise agreed by the owner of the private enterprise, the buyer and the creditors of the private enterprise.

- Private business owners and private business buyers must comply with the provisions of labor law.

- The buyer of a private enterprise must register the change of private enterprise owner according to the provisions of the Enterprise Law 2020.