Business establishment consultancy is a service that assists individuals and organizations in implementing business registration procedures in compliance with the law. Such consultancy ensures a smooth establishment process, prevents legal mistakes, and provides a sound legal foundation for the business. The following article by NPLaw outlines main legal issues relating to business establishment consultancy.

I. The need for business establishment consultancy

The demand for business establishment consultancy has become increasingly essential in today’s complex and diverse business environment. Individuals and organizations seeking to start a new venture or expand their business operations often require professional assistance to fully understand the relevant legal regulations, thereby enabling them to complete registration procedures accurately and efficiently.

Business establishment consultancy helps clients avoid legal risks, save time and costs, and build a strong foundation for long-term business development. Therefore, such a service is gaining greater attention and preference among entrepreneurs to safeguard their interests and enhance business performance.

II. Legal provisions on business establishment consultancy

1. Who is entitled to provide business establishment consultancy?

Pursuant to Article 4 of the Law on Lawyers 2006, legal services of lawyers include:

  • Participation in litigation;
  • Legal consultancy;
  • Representation outside litigation for clients;
  • Other legal services.

In addition, under Clause 1, Article 30 of the Law on Lawyers 2006, lawyers are authorized to provide other legal services, such as:

  • Assisting in administrative procedures;
  • Assisting clients with translation, certification of documents, and other services as prescribed by law.

Accordingly, lawyers have the right and competence to provide business establishment consultancy services in accordance with the law.

2. Legal liability when providing business establishment consultancy

When providing business establishment consultancy, lawyers or legal service providers must strictly comply with professional ethics and confidentiality obligations.

Specifically:

  • Under Article 24 of the Law on Lawyers 2006, a lawyer must respect the client’s choice, only accept cases within their capacity and the client’s requirements, and must not transfer the case to others without the client’s consent or unless due to force majeure. Lawyers must also clearly inform clients of their rights, obligations, and professional responsibilities.
  • Under Article 25 of the Law on Lawyers 2006, lawyers are obliged to maintain absolute confidentiality regarding all information concerning clients and cases obtained during practice, unless written consent is given by the client or otherwise provided by law. Such information must not be misused to infringe upon State interests, public interests, or lawful rights and interests of relevant parties. Law firms also take responsibility for ensuring that their staff strictly maintain client confidentiality.

Thus, the legal responsibility of lawyers in business establishment consultancy not only involves providing accurate advice but also requires honesty, transparency, and confidentiality, avoiding acts that may result in legal or disciplinary liability.

3. How are violations in business establishment consultancy handled?

If a lawyer or a law-practicing organization provides consultancy on business establishment in contravention of the law, depending on the nature and seriousness of the violation, disciplinary actions under Article 85 of the Law on Lawyers 2006 may be applied, including:

  • Reprimand;
  • Warning;
  • Suspension of Bar Association membership from 06 to 24 months; or
  • Removal from the roll of lawyers.

Disciplinary review and decision fall under the authority of the Bar Association’s Executive Committee upon recommendation of the Reward and Disciplinary Council.

In cases of removal from the roll of lawyers, the Bar Association will notify the Department of Justice and request the Ministry of Justice to revoke the practicing certificate and the national lawyers’ organization to revoke the lawyer’s card.

Additionally, consultants may also be liable for compensation for damages caused to clients pursuant to applicable laws.

III. Questions on business establishment consultancy

1. What issues typically require business establishment consultancy?

Common matters requiring consultancy include:

  • Choosing the type of enterprise: Founders may need advice on whether to establish a single-member limited liability company, multi-member limited liability company, joint stock company, or private enterprise. Each form has its own organizational structure, liability regime, and capital mobilization method.
  • Naming the enterprise: Enterprise names must comply with legal provisions, avoiding duplication or confusion with existing registered entities. Consultants assist with checking name availability and suggesting appropriate options.
  • Business lines: Enterprises must register business lines consistent with their objectives. Determining correct industry codes and checking conditional business lines is crucial.
  • Charter capital and capital contribution: Founders must determine an appropriate initial charter capital. Certain sectors require minimum capital by law. Proper timing, proportion, and form of contribution must also be ensured to prevent legal risks.
  • Head office address: The enterprise must have a clear, lawful registered address, which serves as the management and official contact location with authorities.
  • Drafting and submitting registration documents: Properly prepared dossiers are necessary to obtain a business license swiftly. Documents usually include: application for enterprise registration, company charter, list of members/shareholders, and copies of personal identification documents of the legal representative.

2. What should be noted when receiving or providing business establishment consultancy?

Key considerations include:

  • Confidentiality: Both parties must agree on protecting personal data and corporate information, particularly identity documents, financial information, and company charter contents.
  • Clarity on costs and timeline: Clients should request detailed quotations to avoid hidden charges. Consultants should also provide a clear timeline for dossier completion, submission to the Department of Planning and Investment, and issuance of the business license.
  • Explanation of legal process and post-registration compliance: Consultants should clearly explain each step, from dossier preparation and submission to tax code issuance and lawful business operation.
  • Accurate and lawful drafting of the charter and other documents: Consultants must apply sound expertise to ensure documents comply with the law, avoiding rejections or future disputes. The charter must clearly stipulate rights, obligations, and internal governance.

3. Is hiring a lawyer mandatory for business establishment consultancy?

Under current law, individuals and organizations are entitled to establish enterprises if they meet statutory conditions. They may file business registration themselves through the National Business Registration Portal or directly at the Business Registration Office. The law does not require lawyer involvement.

Thus, while hiring a lawyer is not mandatory, it may be advisable where founders lack knowledge of legal procedures, in order to avoid mistakes or legal risks during registration and subsequent business operation.

4. Does business establishment consultancy include advice on charter, business lines, and capital contribution?

Most business establishment consultancy services currently cover:

  • Charter consultancy: Drafting and adjusting company charters in line with enterprise type and legal requirements.
  • Business lines consultancy: Selecting and registering appropriate codes, ensuring compliance with conditional business line regulations.
  • Capital contribution consultancy: Advising on charter capital levels, contribution methods (cash, assets), and contribution deadlines.

5. Can clients claim compensation if incorrect consultancy causes damage?

If incorrect business establishment consultancy causes damages, clients have the right to claim compensation under Articles 40, 52, and 73 of the Law on Lawyers 2006. These provisions stipulate that law-practicing organizations, individual lawyers, and branches or foreign law firms must compensate for damages arising from their fault in providing legal advice or other services.

IV. Legal advisory services on business establishment consultancy

The above article by NPLaw provides guidance on business establishment consultancy. With a team of experienced lawyers and legal specialists, NPLaw is always ready to accompany, advise, and assist clients on legal matters related to business establishment. For legal assistance, please contact NPLaw.