Can outsiders be members of the Board of Members of a limited liability company in Vietnam?

Can outsiders be members of the Board of Members of a limited liability company in Vietnam?

Our limited liability company consists of 2 members who are currently operating organizations, but now we want to add 1 more member to the Board of Members and this person is not currently a member of the company, is that possible? Are there any regulations about this?

Answer: Pursuant to the provisions in Clause 1, Article 55 of the Law on Enterprises 2020:

1. The Board of Members is the supreme governing body of the company, consists of all members that are individuals and authorized representatives of members that are organizations. The company's charter shall specify the frequency of meetings of the Board of Members but at least one meeting shall be held per year.

According to this regulation in Vietnam, an individual who is not a member of a multiple-member limited liability company is not allowed to be a member of the Board of Members.

Comparing to your case, two members of the company are two organizations that cannot bring an individual who is not a member of the company to join the Board of Members.

If he wants to become a member of the Board of Members, this individual must first be established as a member of the company, possibly by the following methods:

- Receive transfer of part or all of the capital contribution of company members (Article 52 of the Enterprise Law 2020);

- The company carries out procedures to increase charter capital by receiving additional capital contributed by this individual to the company's charter capital (Article 68 of the Enterprise Law 2020).

Can outsiders be members of the Board of Members of a limited liability company in Vietnam? (Image from the Internet)

What must a single-member limited liability company do when the owner dies in Vietnam?

According to the new regulations, if an individual who is the owner of a single-member limited liability company dies, how will it affect the internal affairs and business operations of the company? What must a single-member limited liability company do when the company owner dies?

Answer: Clause 1, Article 74 of the Law on Enterprises 2020 stipulates:

1. A single-member limited liability company is an enterprise owned by a single organization or individual ((hereinafter referred to as “owner”). The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital.

And according to Clause 3, Article 78 of the Law on Enterprises 2020:

3. In case the owner dies, his/her legal heir or designated heir shall be the owner or member of the company. The company shall be converted accordingly and register the change of enterprise registration information within 10 days from the day on which the inheritance is settled. In case there is no heir or the heir rejects the inheritance or is disinherited, the owner’s stake shall be handled in accordance with civil laws.

In case the company owner is an individual who dies without an heir, or the heir refuses to inherit or is disqualified from inheritance, the owner's capital contribution will be resolved in accordance with the law on Civil.

Thus, in the above case in Vietnam, the owner of a single-member limited liability company is the sole capital contributor, manages operations and decides on important issues in the company. In case the company owner who is an individual dies, this person's capital contributions need to be handled.

If an individual dies, the heir according to will or law is the company owner or company member. The company must organize management according to the corresponding type of business and register to change the business registration content within 10 days from the date of completion of the inheritance settlement in Vietnam.

In what cases does a single-member limited liability company reduce its charter capital in Vietnam?

Question: In what cases does a single-member limited liability company reduce its charter capital in Vietnam? Thanks for consulting according to the latest regulations.

Answer: Pursuant to Clause 3, Article 87 of the Law on Enterprises 2020, there are regulations on increasing, decreasing charter capital as follows:

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

a) 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;

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

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