What are the rights and obligations of the owner of a single-member limited liability company in Vietnam?

The limited liability company comprises 2 types, which are single-member limited liability companies and multi-member limited liability companies. Many individuals and organizations wishing to do business independently have chosen the form of a single-member limited liability company. Then, what are the rights and obligations of the owner of a single-member limited liability company in Vietnam? Let’s find out with Lawyer X in this article!

Legal grounds

Vietnam Law on Enterprise 2020

What is a single-member limited liability company?

Enterprise means an organization that has a proper name, assets, premises, is established or registered in accordance with law for business purposes. According to Law on Enterprises 2020, there are four types of enterprises including: Private enterprises, Partnerships, Limited Liability Companies, and Shareholding Companies.

Limited liablity company comprises 2 types which are single-member limited liability company and multi-member limited liability company.

Single-member limited liability is an enterprise which has characteristics as follows:

– The owner of a single-member limited liability company is a single organization or individual

– Assets liability of the owner is limited liability, which means the owner shall be liable for all business operations of the enterprise to the extent of the charter capital of the company.

– A single-member limited liability company has the status of a juridical person.

– A single-member limited liability company must not issue shares except for equitization; but may issue bonds in accordance with laws

Rights and obligations of the owner of a single-member limited liablity company

Rights of the owner

*The owner that is an organization has the rights to:

– Draw up and revise the company’s charter;

– Decide the company’s annual business plan and development strategy;

– Decide the company’s organizational structure; designate, dismiss the company’s executives and controllers;

– Decide the company’s investment projects?

– Decide solutions for market development, marketing and technology;

– 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);

– Ratify the company’s annual financial statements;

– 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;

– Decide establishment of subsidiary companies and contribution of capital to other companies;

– Organize the supervision and assessment of the company’s performance;

– Decide the use of profits after the company’s tax liabilities and other financial obligations have been fulfilled;

– Decide the company’s reorganization, dissolution or file bankruptcy;

– Recover all assets of the company after the dissolution or bankruptcy process is complete;

– Other rights prescribed by this Law and the company’s charter.

*The owner that is an individual has the rights to:

– Draw up and revise the company’s charter

– 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;

– Decide the use of profits after the company’s tax liabilities and other financial obligations have been fulfilled;

– Decide the company’s reorganization, dissolution or file bankruptcy;

– Recover all assets of the company after the dissolution or bankruptcy process is complete;

– Decide investment, business operation and the company’s administration, unless otherwise prescribed by the company’s charter.

– Other rights prescribed by this Law and the company’s charter.

Obligations of the owner

– Contribute charter capital fully and punctually.

– Comply with the company’s charter.

– 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.

– 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.

– 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.

– The owner must not withdraw profit when the company is unable to fully pay its debts and liabilities when they are due.

– Other obligations prescribed by Law and the company’s charter.

Exercising the owner’s rights in special cases

– 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.

– 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.

– 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.

– In case the owner is missing, his/her stake shall be handled in accordance with civil laws.

– 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.

– 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.

– 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.

Related article:

• Procedures for setting up an insurance business in Vietnam
• Conditions for foreigners to establish a company in Vietnam

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