Can a single-member limited liability company partially divide into a multiple-members limited liability company in Vietnam?

Can a single-member limited liability company partially divide into a multiple-members limited liability company in Vietnam?

Clause 1, Article 199 of the Law on Enterprises 2020 provides for separation of companies as follows:

1. A limited liability company or joint stock company may be partially divided by transfer part of the divided company’s assets, rights, obligations, members/shareholders to one or some new limited liability companies or joint stock companies without ceasing the existence of the divided company.

2. The divided company shall register the change in charter capital, quantity of members/shareholders in proportion to the decrease in the stakes/shares and quantity of members/shareholders and apply for registration of the new companies.

3. Partial division procedures:

a) The Board of Members, the owner or General Meeting of Shareholders of the divided company shall ratify the resolution or decision on partial division of the company in accordance with this Law and the company's charter. The resolution or decision on partial division of the company shall contain the name and headquarters address of the divided company; name of each new company; employment plan; method for division; values of assets, rights and obligations transferred from the divided company to the new company/companies; division time. This resolution or decision shall be sent to all creditors and employees within 15 days from its issuance date or ratification date;

b) The members, owner or shareholders of each new company shall ratify its charter, elect or designate the President of the Board of Members, President of the company, Board of Directors, the Director/General Director and apply for enterprise registration in accordance with this Law.

4. After applying for registration, the divided company and the new company/companies shall be jointly responsible for unpaid debts, employment contracts and other obligations of the divided company or unless otherwise agreed upon by the divided company, the new company/companies, the divided company’s creditors, clients and employees. The new company/companies obviously inherit all rights, obligations and lawful interests that are transferred under the partial division resolution/decision.

Here, a limited liability company can be partially divided by transfer part of the divided company’s assets, rights, obligations, members/shareholders to one or some new limited liability companies or joint stock companies without ceasing the existence of the divided company in Vietnam.

For a limited liability company, either the divided company or the dividing company, regardless of whether it is a single-member company or multiple-members. Therefore, a single member limited company can completely separate a new multiple-members limited company in Vietnam.

Best Regards!