How many contracts can a single-member limited liability company in Vietnam sign when it has a capital of 2 billion VND?

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Question date: 02/12/2023

How many contracts can a single-member limited liability company in Vietnam sign when it has a capital of 2 billion VND? What is the probationary period when hiring the Director of the single-member limited liability company in Vietnam? Will a multi-member limited liability company in Vietnam, which has two members sentenced to prison, be terminated its operation?

    • How many contracts can a single-member limited liability company in Vietnam sign when it has a capital of 2 billion VND?

      I work for a single-member limited liability company that provides advertising services. The company's charter capital is 2 billion VND. How many contracts can the company sign each year?

      Answer:

      Pursuant to Article 7 of the Law on Enterprises in 2020 stipulating rights of enterprises as follows:

      Every enterprise has the right to:

      - Freely engage in any business line that is not banned by law.

      - Freely run the business and choose a type of business organization; choose business lines, area of operation and type of operation; change the scale of business and business lines.

      - Choose the method of mobilizing, distributing and using capital.

      - Freely find markets, customers and enter into contracts.

      - Export and import.

      - Hire employees in accordance with employment laws.

      ...

      As regulations above, businesses have the right to seek customers and sign contracts. There is no limit on the number of contracts that can be signed.

      Pursuant to Clause 34 Article 4 of the Law on Enterprises in 2020, charter capital means the total value of assets that have been contributed or promised by the members/partners/owners when the limited liability company or partnership is established; or the total of nominal values of the sold or subscribed shares when a joint stock company is established.

      The charter capital determines the amount of assets contributed by the members, which is the basis for determining the rights for the members of the company, not the basis for determining the number of contracts that the company can enter into with other companies and partners. The charter capital can be the basis for the parties to consider financial capacity before entering into a contract.

      Therefore, a single-member limited liability company with a capital of 2 billion VND is not limited in the number of contracts that can be signed.

      How many contracts can a single-member limited liability company in Vietnam sign when it has a capital of 2 billion VND? - Source: Internet

      What is the probationary period when hiring the Director of the single-member limited liability company in Vietnam?

      Pursuant to the Law on Enterprises in 2020, the Director of the single-member limited liability company is the manager of the enterprise.

      Pursuant to Clause 1 Article 25 of the Labor Code in 2019 stipulating as follows:

      The probationary period shall be negotiated by the parties on the basis of the nature and complexity of the job. Only one probationary period is allowed for a job and the probation shall not exceed:

      1. 180 days for the position of enterprise executive prescribed by the Law on Enterprises, the Law on management and use of state investment in enterprises;

      ...

      According to the Law on Enterprises, the maximum probation period for the position of a company manager is no more than 180 days. Therefore, in the case you mentioned, your company can hire a company director (a company manager) with a probation period of 180 days.

      Will a multi-member limited liability company in Vietnam, which has two members sentenced to prison, be terminated its operation?

      My company has two members who are individuals. One person has a capital contribution of 70% (as chairman of the Members' Council), and the other person has a capital contribution of 30% (as director of the company). So if one member of the company who is also the legal representative is sentenced to prison, will the company be terminated?

      Answer:

      Pursuant to Clause 6 Article 12 of the Law on Enterprises in 2020 stipulating as follows:

      In a two-member limited liability company, if the member who is the company’s legal representative is dead, missing, facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, making getaway; has limited legal capacity or is incapacitated, has difficulty controlling his/her own behaviors, is banned by the court from holding certain positions or doing certain works, the other member shall obviously assume the position of the company’s legal representative until the Board of Members issues a new decision on the company’s legal representative.

      In addition, the regulations on the cases of termination of business activities of enterprises in Chapter IX of this Law also do not have any mandatory cases when a member of a multi-member limited liability company is sentenced to prison, the company must terminate its activities.

      According to this regulation, in the case of your company, which is a multi-member limited liability company, in which one member is the legal representative of the company who is sentenced to prison, the remaining member will automatically become the legal representative of the company. At that time, the company will continue to operate normally, without having to terminate its activities.

      Best regards!

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    "This English translation is for reference purposes only and not a definitive translation of the original Vietnamese texts"

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