The Characteristics of Partnership

Partnership is one of the most popular types of enterprise in Vietnam. A partnership is an unincorporated association of two or more individuals to carry on a business for profit. Many small businesses including retail, service, and professional practitioners, are organized as partnerships. Like the other types, partnership contains its own features and characteristics which help to differentiate itself from the others. First of all, in terms of the number of partners, there are no less than two partners who are joint owners of the company and carry out business. In addition to general partner, there may also be limited partners. General partner is required to be individual and will be liable to all obligations of the partnership with his entire property, while limited partner will be liable to debts of the partnership only to the extent of their capital contributed to the partnership. It should be pointed out that there are restrictions on the rights of general partners. General partner cannot be sole proprietor or general partner of another partnership, unless otherwise agreed by remaining general partners. Besides, general partner is not allowed to act on his own behalf or on behalf of other persons in implementing the same business activities of the partnership for the benefit of himself or other. Also, general partner is not permitted to transfer a part or whole of his capital contribution to others. It is necessary to mention that a partnership will be given legal status from the issuing date of the certificate of business registration and that partnership is not entitled to issue any type of securities. The next characteristic of partnership is limited life. The life of a partnership may be established as a certain number of years by the agreement. If no such agreement is made, the death, inability to carry out specific responsibilities, bankruptcy, or the desire of a partner to withdraw automatically terminates the partnership. Every time a partner