Before deciding to choose to establish any type of business, investors need to understand the provisions of the law governing that type of business. Here are some important notes when establishing a single-member limited liability company from 2021 in Vietnam.
Article table of contents
1. Overview of single-member limited liability company
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.
A single-member limited liability company has the following characteristics:
- A single-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
- A single-member limited liability company must not issue shares except for equitization.
- Single-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds shall comply with this Law.
(According to Clause 1 Article 74 of the Law on Enterprises 2020 of Vietnam)
2. Entities have the right to establish a single-member limited liability company
According to Clause 1 Article 17 of the Law on Enterprises 2020 of Vietnam, organizations and individuals have the right to establish and manage enterprises in Vietnam in accordance with this Law, except for the following cases:
- State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their own interests;
- Officials and public employees defined by the Law on Officials and the Law on Public Employees;
- Commissioned officers, non-commissioned officers, career military personnel, military workers and public employees in agencies and units of Vietnam People’s Army; commissioned officers, non-commissioned officers and police workers in police authorities and units, except for those designated and authorized representatives to manage state-owned stakes in enterprises or to manage state-owned enterprises;
- Executive officers and managers of state-owned enterprises prescribed in Point a Clause 1 Article 88 of this Law, except those who are designated as authorized representatives to manage state-owned stakes in other enterprises;
- Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons;
- People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law.
If requested by the business registration authority, the applicant shall submit the judicial records;
- Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code of Vietnam.
3. Application for registration of a single-member limited liability company
According to Article 21 of the Law on Enterprises 2020 of Vietnam guided by Article 24 of the Decree No. 01/2021/NĐ-CP, application for registration of a single-member limited liability company includes:
- Application form for enterprise registration.
- The company’s charter.
- Copies of the following documents:
+ Legal documents of the enterprise’s legal representative;
+ Legal documents of the company’s owner that is an individual; Legal documents of the company’s owner that is an organization (except for the State); Legal documents of the authorized representative and letter of appointment of authorized representative.
If the company’s owner is a foreign organization, copies of legal documents of that organization must be legalized;
+ Investment registration certificate if the enterprise is founded by a foreign investor or foreign-invested business entity in accordance with the Law on Investment and its guiding documents.
4. Procedures for registration of a single-member limited liability company
Step 1: Submit application
The person responsible for application for enterprise registration shall submit the application to the Business Registration Office of the province where it is headquartered.
Note: An application for enterprise registration shall be received and updated on the National Enterprise Registration Information System when all of the following conditions are satisfied:
- It contains adequate documents as prescribed in this Decree;
- The enterprise’s name has been written on the application form for enterprise registration or changes to enterprise registration information or notification of changes to enterprise registration information;
- There is an address of the person who submits the application for enterprise registration;
- Fees and charges for enterprise registration are fully paid.
Step 2: Give a confirmation
After receiving an application for enterprise registration, the Business Registration Office shall give a confirmation slip to the person who submits the application.
Step 3: Check the legitimacy of the application
After giving the confirmation slip, the Business Registration Office shall check the legitimacy of the application, sufficiently and accurately enter information in the application for enterprise registration into the National Enterprise Registration Information System and publish digitized documents contained in the application on the same.
Note: Guidance on stopping following procedures for enterprise registration in accordance with the Decree No. 01/2021/NĐ-CP is as follows:
- The enterprise or its founder may stop following procedures for enterprise registration when the application for enterprise registration is not yet approved on the National Enterprise Registration Information System.
- In this case, the person competent to sign the application form for enterprise registration shall send a written request for termination of procedures for enterprise registration to the Business Registration Office to which the application is submitted.
- The Business Registration Office shall consider giving a notification of termination of procedures for enterprise registration and cancel the application for enterprise registration on the National Enterprise Registration Information System within 03 working days from the receipt of the enterprise’s request.
- If the enterprise’s request is refused, the Business Registration Office shall give a written notification in which reasons for such refusal are specified to the enterprise or its founder.
Step 4: Issuance of enterprise registration certificate
The Business Registration Office shall issue the enterprise registration certificate and certificate of changes to enterprise registration information, and update enterprise registration information on the National Enterprise Registration Database within 03 working days from the receipt of the satisfactory application.
If the application is not satisfactory or the enterprise’s name is not conformable with regulations, the Business Registration Office shall inform the enterprise or its founder of necessary revisions within 03 working days from the receipt of the application. The Business Registration Office must include every necessary revision to the application in a notification.
After the aforementioned deadline, if the enterprise registration certificate or certificate of changes to enterprise registration information is not issued or enterprise registration information on the National Enterprise Registration Database is not changed, or no notification of necessary revisions to the application for enterprise registration is received, the enterprise or its founder is entitled to lodge a complaint as prescribed by regulations of law on complaints and denunciation.
(According to Article 32, 33 of the Decree No. 01/2021/NĐ-CP)
