Regulations on single-member limited liability companies in Vietnam

Regulations on single-member limited liability companies in Vietnam (Source: internet)

What is a single member limited liability company?

According to the Law on Enterprise 2020, a “limited liability company” can be a single-member limited liability company or multiple-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 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 Article 128 and Article 129 of the Law on Enterprise.

Charter capital of a single-member limited liability company in Vietnam

The initially registered charter capital of a single-member limited liability company is the total assets promised by the owner and shall be written in company's charter.

The owner shall contribute adequate and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. 

During this period, the owner shall have rights and obligations that are proportional to the promised capital.

In the charter capital is not fully contributed by the deadline, the owner shall register the contributed capital as charter capital within 30 days from the deadline, in which case the owner shall be responsible for the financial obligations incurred by the company during the period before the change in charter capital is registered in proportion to the promised capital.

The owner’s liability for the company’s financial obligations and the damage caused by the failure to contribute or to fully and punctually contribute charter capital prescribed by this Article shall be equal to all of the owner’s assets.

The Director/General Director of a single-member limited liability company in Vietnam

The Board of Members or the company’s President shall designate or hire the Director/General Director within a term of office not exceeding 05 years to manage the company’s everyday business. The Director/General Director shall be responsible for the law and the Board of Members or the company’s President for his/her performance. The President of the Board of Members, another member of the Board of Members or the company’s President may concurrently hold the position of Director/General Director unless otherwise prescribed by law or the company's charter.

The Director/General Director has the following rights and obligations:

- Organize the implementation of resolutions and decisions of the Board of Members or the company’s President;

- Decide everyday operating issues of the company;

- Organize implementation of the company’s busines plans and investment plans;

- Issue the company’s rules and regulations;

- Designate, dismiss the company’s executives, except those within jurisdiction of the Board of Members;

- Enter into contracts in the company’s name, except those within jurisdiction of the President of the Board of Members or the company’s President;

- Propose the company’s organizational structure;

- Submit annual financial statements to the Board of Members or the company’s President;

- Propose plans for use of profits or settlement of business losses;

- Recruit employees;

- Other rights and obligations specified in the company's charter and the employment contract.

To hold the position of Director/General Director, a person shall satisfy the following requirements:

- He/she is not one of the persons specified in Clause 2 Article 17 of Law on Enterprise;

- He/she has professional qualifications and experience of busines administration and satisfies other conditions specified in the company's charter.

Chau Thanh

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