Violations of business operation conditions include failure to meet requirements relating to licenses, safety, technical standards, or sectoral regulations. Enterprises must fully understand the applicable legal framework, liability for damages, and penalties in order to ensure lawful operation. At the same time, they may seek legal consultancy services for effective support.
I. Current situation of violations of business operation conditions
At present, violations of business operation conditions occur quite frequently, particularly among newly established enterprises or those rapidly expanding their business activities without fully complying with statutory requirements. Such violations often involve licensing, technical standards, capital requirements, human resources, or product safety.
Consequences include administrative penalties, suspension of operations, or revocation of licenses. This situation directly affects the reputation of enterprises, customers’ interests, and market order, while also creating challenges for regulatory authorities.
II. Legal provisions governing violations of business operation conditions
1. Definition of violations of business operation conditions
Violations of business operation conditions refer to acts committed by organizations or individuals failing to comply with mandatory statutory requirements when conducting investment or business activities, particularly in conditional business sectors. Pursuant to Article 16 of Decree No. 122/2021/ND-CP, such acts may include:
- Contributing capital, purchasing shares, or acquiring capital contributions of an entity that fails to meet statutory conditions.
- Transferring or acquiring an investment project that fails to satisfy statutory requirements.
- Conducting investment or business activities in sectors prohibited by law.
These violations may be subject to administrative fines ranging from 80,000,000 VND to 300,000,000 VND, depending on their nature and severity. In addition, violators may also be subject to remedial measures, such as termination of business activities or disgorgement of illicit gains obtained from prohibited business activities.
2. Acts constituting violations of business operation conditions
Under Article 6 of Decree No. 98/2020/ND-CP, the following acts are deemed violations of business operation conditions:
- Conducting business in conditional sectors without the required business license;
- Continuing business activities when the license has expired;
- Conducting business in conditional sectors without maintaining the statutory conditions throughout operation;
- Using another trader’s business license for commercial purposes.
Such acts are subject to administrative sanctions in accordance with law.
3. Sanctions for violations of business operation conditions
According to Decree No. 98/2020/ND-CP, as amended by Decree No. 24/2025/ND-CP, sanctions include:
- Fine of 3,000,000 VND – 5,000,000 VND: For altering, erasing, leasing, lending, pledging, selling, or acquiring a business license.
- Fine of 5,000,000 VND – 10,000,000 VND: For conducting business outside the scope, scale, location, duration, subject matter, or goods specified in the license.
- Fine of 10,000,000 VND – 15,000,000 VND: For operating without a license, with an expired license, without meeting required conditions, or using another entity’s license.
- Fine of 15,000,000 VND – 20,000,000 VND: For continuing business activities while under suspension or after license revocation.
- Double penalties apply to certain sectors such as alcohol and tobacco.
Remedial measures include surrendering the invalid license and disgorgement of illicit gains. For organizations, the fine is doubled compared to individuals.
III. Questions regarding violations of business operation conditions
1. Do such violations result in loss of legal entity status?
Violations of business operation conditions do not directly lead to loss of legal entity status. However, if the violations are serious and subject to criminal liability, the commercial legal entity may be banned from business or permanently dissolved, thereby affecting its status as a legal entity.
2. Which authorities have jurisdiction over violations of business operation conditions?
Depending on the nature and sector, jurisdiction lies with various authorities, including People’s Committees, specialized regulatory bodies (e.g., Ministry of Industry and Trade, Department of Planning and Investment), tax authorities, Market Surveillance, and specialized inspectors.
3. Who is liable for compensation if customers suffer damages?
Where customers incur damages due to such violations, the business entity must fully and promptly compensate in accordance with Article 585 of the Civil Code 2015. If damages result from employees’ actions in the course of their duties, the enterprise remains liable, though it may seek recourse against the employees as permitted by law.
4. Can violations lead to license revocation?
Under the Law on Enterprise 2020, enterprises must maintain statutory business conditions throughout their operation.
Serious violations, including falsifying registration information or prolonged inactivity without notification, may lead to revocation of the business registration certificate under Article 212 of the Law. Any subsequent business activities after revocation may also result in administrative fines ranging from 50,000,000 VND to 100,000,000 VND, and related transactions may be invalidated.
IV. Legal advisory services on violations of business operation conditions
NPLaw’s legal advisory services assist enterprises in identifying, preventing, and addressing violations of business operation conditions. We provide consultancy on legal requirements, licensing procedures, amendments, handling violations, and mitigating legal risks, thereby ensuring lawful business operations and avoiding penalties or revocation of licenses.
