To distinguish between 1-member and 2-member limited liability companies in Vietnam

Criteria

Single-member limited liability company

Multi-member limited liability companies

No. of members

A single-member limited liability company is an enterprise owned by a single organization or individual (Article 74 Law on Enterprises 2020)

A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals (Article 46 Law on Enterprises 2020)

Procedure for increasing, decreasing charter capital

According to Article 87 Law on Enterprises 2020, A single-member limited liability company may increase its charter capital when its owner contributes capital or raises capital from other persons. The owner shall decide on the specific increase and the method.

- In case of raising capital from other persons, the company shall be converted into a multiple-member limited liability company or joint stock company.

- A single-member limited liability company may decrease its charter capital in the following cases:

+ Part of the contributed capital is returned to the company’s owner after the company has operated for at least 02 consecutive years from the enterprise registration date and the company is able to fully pay its debts and other liabilities after the return of capital;

+ Charter capital is not fully and punctually contributed by the owner as prescribed in Article 75 of this Law.

According to Article 68 Law on Enterprises 2020,  a company may increase its charter capital in the following cases:

= Increase in the members’ capital contribution;

= Receipt of capital contribution from new members.

- In case of increase in the members’ capital contribution, the increase will be distributed among the members in proportion to their holdings in the company. 

- A company may decrease its charter capital in the following cases:

= The company returns part of the contributed capital to the members in proportion to their holdings in the company after the company has operated for at least 02 consecutive years from the enterprise registration date and the company is able to fully pay its debts and other liabilities after the return of capital;

= The company repurchases the members’ stakes;

= Charter capital is not fully and punctually contributed by the members.

Transfer of stakes

The company owner has the full right to transfer and dispose of all or part of the charter capital of the company (Article 76 Law on Enterprises 2020)

- If a member of the company wishes to transfer his/her contributed capital to another person, he/she must offer to sell that portion of the capital to the remaining members.

- The rest of the members have priority to buy within 30 days from the date of offering and if the remaining members do not buy, that member has the right to transfer to a third party with the same terms and conditions as offered to the remaining members. (Article 52 Law on Enterprises 2020)

Organization structure

- It is not required to have a Board of Members

- A single-member limited liability company owned by an organization shall apply one of the two models below:

- A company with a President and the Director/General Director;

- A company with a Board of Members and the Director/General Director.

(Article 79 Law on Enterprises 2020)

- There is Board of Members, a Chairman of the Board of Members, Director/General Director.(Article 54 Law on Enterprises 2020)

Responsibility regarding stakes

The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital. (Article 74 Law on Enterprises 2020)

A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise. (Article 46 Law on Enterprises 2020)