Currently, the establishment of a single-member limited liability company in Vietnam is becoming a trend because of its compactness in organizational structure and quite simple establishment procedures, not as complicated as a multi-member limited liability company or a joint-stock company.
Single-member limited liability company is a type of business that can limit risks for individuals conducting business activities and ensure financial safety for business owners. In the eyes of partners, limited liability companies also have better trust and branding than private enterprises.
With many years of experience in the field of business consulting, Warren B would like to give customers information about single-member limited liability company in Vietnam.
Single-member limited liability companies in Vietnam
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.
2. 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.
3. A single-member limited liability company must not issue shares except for equitization.
4. 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 Law no. 59/2020/QH14.
Contributing capital to establish the company
1. 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 the company’s charter.
2. 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.
3. In the charter capital is not fully contributed by the deadline specified in Clause 2 of this Article, 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.
4. 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.
Rights of the company’s owner
1. The owner that is an organization has the rights to:
a) Draw up and revise the company’s charter;
b) Decide the company’s annual business plan and development strategy;
c) Decide the company’s organizational structure; designate, dismiss the company’s executives and controllers;
d) Decide the company’s investment projects?
dd) Decide solutions for market development, marketing and technology;
e) Approve contracts for borrowing, lending, sale of assets and other contracts prescribed by the company’s charter whose value are at least 50% of the total assets written in the latest financial statement (or a smaller ratio or value specified in the company’s charter);
g) Ratify the company’s annual financial statements;
h) Decide increase or decrease in the company’s charter capital, transfer part or all of the company’s charter capital to another organization or individual; decide issuance of bonds;
i) Decide establishment of subsidiary companies and contribution of capital to other companies;
k) Organize the supervision and assessment of the company’s performance;
l) Decide the use of profits after the company’s tax liabilities and other financial obligations have been fulfilled;
m) Decide the company’s reorganization, dissolution or file bankruptcy;
n) Recover all assets of the company after the dissolution or bankruptcy process is complete;
o) Other rights prescribed by this Law and the company’s charter.
2. The owner that is an individual has the rights specified in Points a, h, l, m, n and o Clause 1 of this Article; the right to decide investment, business operation and the company’s administration, unless otherwise prescribed by the company’s charter.
Obligations of the owner
1. Contribute charter capital fully and punctually.
2. Comply with the company’s charter.
3. Separate the company’s assets and the owner’s assets. The owner that is an individual shall separate expenses of himself/herself and his/her family and those of the company’s President, or General Director.
4. Comply with regulations of law on contracts and relevant laws while making purchases, sales, borrowing, lending, leasing, entering into contracts and conducting other transactions between the company and the company’s owner.
5. The company’s owner may only withdraw capital by transfer part or all of the charter capital to another organization or individual. If the capital is withdrawn otherwise, the owner and relevant organizations and individuals shall be jointly responsible for the company’s debts and other liabilities.
6. The owner must not withdraw profit when the company is unable to fully pay its debts and liabilities when they are due.
7. Other obligations prescribed by Law and the company’s charter.
Exercising the owner’s rights in special cases
1. In case the owner transfers or gives away part of the charter capital to one or some organizations and individuals or the company admits a new member, the company shall be converted accordingly and register the change in enterprise registration information within 10 days from the date of completion of the transfer or giveaway or admission of the new member.
2. In case the owner that is an individual is being kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, he/she shall authorize another person to perform some or all of the owner’s rights and obligations.
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.
4. In case the owner is missing, his/her stake shall be handled in accordance with civil laws.
5. In case owner is incapacitated, has limited legal capacity or has difficulty controlling his/her behaviors, his/her rights and obligations shall be performed through his/her representative.
6. In case the owner is an organization and is dissolved or goes bankrupt, the person that receives the owner’s stake shall become the owner or member of the company. The company shall be converted accordingly and apply for change in enterprise registration information within 10 days from the day on which the transfer is complete.
7. In case the owner is an individual and is banned by the court to do certain jobs, or the owner is a commercial juridical person and is banned by the court to do business in the same business lines as those of the enterprise, the owner must stop doing the job or suspend business in these business lines under the court decision.
That is the information about a single-member limited liability company in Vietnam Warren B sent to customers. If customers have any question, please contact Warren B for consultancy. We hope that the information we provide is useful to customers to start a business in Vietnam.
Warren B – One-stop shop for business in Vietnam.