LLC with 1 member and LLC with 2 members or more

There are 4 main types of businesses in Vietnam which included: limited liability company, joint stock company, partnership company, and private enterprise. When establishing a business, you need to choose one of these four types. With each model, there will be requirements and features that owners need to keep in mind.

Limited liability companies (LLCs) can be divided into two small types, each type will have a different organizational structure:

1. LLC with 2 or more members: Enterprises with from 02 to 50 members who are organizations and individuals. Members are responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise. Members’ capital contributions can only be transferred according to the provisions of law.
2. One-member LLC: A business owned by an organization/individual. The company owner is responsible for the company’s debts and other property obligations within the company’s charter capital.

Related legal documents:

Enterprise Law 2020

LLC with 2 or more members:

1. Regarding company members: Members can be organizations or individuals and must have 2 or more members (not exceeding 50 members).
2. Regulations on capital contributions: The company’s charter capital upon business registration is the total value of the capital contributions committed by members to the company. In case there are members who have not contributed/have not contributed the full amount of committed capital, the Company must register for adjustment, the charter capital, and the proportion of capital contributions of members equal to the amount of capital contributed according to regulations. Members who have not contributed capital/have not contributed the full amount of capital as committed must be responsible in proportion to the committed capital contribution for the company’s financial obligations arising during the period before the date the company registers for replacement. The company must issue a certificate of capital contribution to members corresponding to the value they contribute.
3. Regarding the company’s legal representative: There may be one or more representatives according to the provisions of the company’s charter.
4. The organization and management of the company includes: Board of members, Chairman of the Board of members, Director (or General Director).
   In addition, if the Company has 11 or more members, it is required to establish a Board of Supervisors.
5. Authority of The Board of Members:
   • In case the company charter does not stipulate/no other provisions, the Chairman of the Board of Members will:
     • Decide to collect opinions from Council members through the written to make decisions which is in authority.
     • Organize the drafting and sending of reports and presentations on the content that needs to be decided, draft resolutions and opinion forms of members.
     • Organize the vote counting, report and notify the results of the vote counting. The approved decision has to announce to members within 07 working days from the end of the last day that members submitted their vote.
   • The opinion form must have the thorough content and signature of the company members. Then it shall be sent to the company within the regulated time.
   • The report on vote counting results has the same value as the minutes of the meeting of the Board of Members and must contain the contents prescribed by law.

For one-member limited liability company:

1. Regarding company members: There is only 1 owner, who can be an organization owner / an individual owner.
2. Regulations on capital contribution: The company’s charter capital at the time of business registration is the total value of assets committed to contribute by the owner and recorded in the company’s Charter. In case of failure to fully contribute charter capital within the prescribed time limit, within 30 days from the last day to fully contribute charter capital, the company owner must register to adjust charter capital equal to the actual capital value and must be responsible in proportion to the committed capital contribution for the company’s financial obligations arising during the period before the company registers to change its charter capital.
   The owners are responsible with all of their assets and the company’s financial obligations and damages caused by not contributing fully, or on time to the charter capital.
3. Regarding the legal representative of the company: If the company charter does not stipulate, the Chairman of the Board of Members/Chairman of the company is the legal representative of the company.
4. Company management organizational structure – there are 2 cases:
   • For organizations as owners, they can choose one of two models:
     a) Company President and Director (or General Director);
     b) Board of members, Director (or General Director);
   • For individual owners, the organizational model will include: Company President, Director/General Director. In particular, the Chairman of the company can concurrently/hire another person to be the Director/General Director.
5. Regarding decisions of the company owner: The owner has the right to decide on contents such as: Content of the Charter, amend and add to the Charter; Development strategy and annual business plan of the company; Company management organizational structure, appointment, dismissal managers of company; Development investment projects; Market development, marketing and technology solutions; Other decisions according to the provisions of law and the charter.
6. The rights making decision of the Board of Members:
   • The Board of members passes resolutions within its authority by voting at meetings, soliciting opinions in writing/other forms prescribed by the Charter.
   • If the company charter has no other provisions:
     • Decisions on the following issues must be approved by voting at a meeting of the Board of Members: Amend the content of the Charter specified according to Article 25 of this Law; Decide the company’s development direction; Elect, and dismiss the Chairman of the Board of Members; appoint, dismiss the Director/General Director; Approve annual financial reports; Reorganize/dissolve the company.
     • Resolution of the Board of Members is passed at the meeting in the following cases: Approved by at least 65% of the total capital contribution of the members attending the meeting
     • Obtain the approval of at least 75% of the total capital contributions of the attending members for the decision to sell assets with a value equal to/greater than 50% of the total asset value recorded in the financial statements.
   • Members are considered to attend and vote at the meeting of the Board of Members in the following cases: Attending and voting directly; Authorize another person to attend and vote at the meeting; Participate and vote through online conferences, electronic voting/other electronic forms; Send voting ballots to the meeting via mail, fax, or email.
   • Resolution of the Board of Members is passed in the form of: Written opinions when approved by members owning at least 65% of charter capital.

Notes:

1. For limited liability companies with two or more members: shares will not be issued, except for conversion into a joint stock company.
2. For a single-member LLC owned by an individual: Salary and income of the company owner will not be recorded as reasonable expenses when calculating corporate income tax.

If you still have questions, or desire for assistance, please do not hesitate to contact An Luat Vietnam for advice and support.