Changing the head of business household: Is it feasible or not?

Throughout the process of business activities, many times business household owners have the desire to change the head of the business household, stemming from many reasons: transferring the business household so that other individuals can take over the business of the household, the new head of the household takes over the business household through inheritance since the former head of the household passed away,  donate to business household to others,… According to the latest data of the General Statistics Office – Ministry of Planning and Investment, the country currently has more than 5.5 million business households – accounting for about 30% of the gross domestic product (GDP) structure – an extremely impressive number. However, business administrative procedures related to business households are still quite unfamiliar to the majority of business households, especially the procedures for changing business households, when the Law on Enterprises 2020 still does not have separate regulations for business households. The question is, at the present time, is it feasible to change the head of the business household? And if feasible, how will this change be implemented? This article by Apolat Legal will clarify the problem, as well as delve deeper into the notes when changing the head of the business household.

See more: Changing conditions for businesses to get a loan to pay salaries for work stoppage and restoring production

1. Feasibility 

The Law on Enterprises 2014 previously did not allow the head of a business household to change the head of the household, however, this has been possible since the Law on Enterprises 2020 came into effect. Specifically, in Decree 01/2021/ND-CP on business registration (a document guiding the Law on Enterprises 2020), business household owners are allowed to register to change the head of the household. 

2. Procedures for changing the head of a business household

The dossier of change of the head of the business household is as follows: 

• A notice of change of the business household owner, signed by the old and new business household owners or signed by the new business household owner in case of change of the business household owner due to inheritance (According to the latest form of Circular 02/2023/TT-BKHDT).

• The purchase and sale contract or papers proving the completion of purchase and sale in case of sale of the business household; donation contract in case of donation of the business household; or a copy of the written certification of the heir’s lawful right to inheritance in case of change of the business household owner due to inheritance. 

• A copy of the minutes of the household members’ meeting on change of the business household owner in case of business household registration by household members.

• A copy of the power of attorney stating that the household members authorize one of them to act as the business household owner in case of business household registration by household members. 

Note: In case the business household is owned by only 01 individual, the dossier does not need documents No. 3 and 4 above. 

The state agency in charge of processing the application: Finance and Planning Division of the district-level People’s Committee. 

As of 2024, the registration of changing the head of the business household must still be carried out through direct submission at the Finance and Planning Division. However, as noted by Apolat Legal, there are currently a number of provinces and cities that have piloted online registration for the procedure for changing business households, such as: Ha Noi, Hung Yen, Nam Dinh, Bac Giang, Quang Ninh, Thanh Hoa, Thua Thien Hue, Binh Dinh, Khanh Hoa, Ho Chi Minh, Dong Nai, Vinh Long, Kien Giang, Ca Mau.  

Upon receiving a dossier, the Finance and Planning Division shall hand over a receipt and grant a business household registration certificate to the business household within 3 working days after receiving a valid dossier. If the dossier is invalid, within 3 working days after receiving it, the Finance and Planning Division shall notify in writing the business household of contents that need modification or supplementation. 

3. Notes on changing the head of a business household

The owner of a new business household must also meet the conditions applicable to the subjects permitted to establish a business household, such as: must be individuals/members of a household (it means that enterprises and organizations are not allowed to receive transfers/donations,  inheritance of business households); not being Minors, persons with limited civil act capacity, persons who have lost civil act capacity, persons with difficulty in perceiving and controlling their acts; not being Persons being examined for penal liability, being held in temporary detention, serving imprisonment sentences or executing administrative handling measures at compulsory drug rehabilitation centers or compulsory education institutions or being prohibited by the court from holding certain positions or practicing certain professions or performing certain jobs; must not concurrently act as the owner of a sole proprietorship, or general partner of a partnership, unless otherwise agreed by the other general partners. 

Pursuant to Decree 01/2021/ND-CP, after the sale, donation or inheritance of a business household, the business household shall still be held responsible for its debts and other property liabilities arising before the date of transfer of the business household, except otherwise agreed by the business household and purchaser, donee or heir and creditor of the business household. Therefore, before receiving the transfer or donation to the business household, the new business household owner should pay attention to the debts and other property obligations that have arisen previously in the process of business administration of the old business household, in order to avoid financial risks in the process of taking over the operation of the business household in the future, or they must negotiate and record agreements with the owners of old business households by methods of high legal value such as notarized contracts, in case they agree to receive transfers or donate to them for business even though they are well aware of the debts and other property obligations of the business households. 

The issuance of a new business household registration certificate after the application for change of business household head has been approved also requires the new business household owner to return the old Business Household Registration Certificate. Therefore, the new business household owner must be sure of holding the old business household registration certificate to be able to return it to the state agency. 

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