LIMITED LIABILITY COMPANIES

(most common in VN)
Business Law, 2014

ONE-MEMBER LIMITED
LIABILITY COMPANY

DEFINITION ARTICLE 73.

• Owned by one organization or individual – company
owner;

• Be liable for all debts and other property obligations of
the enterprise within the amount of capital of the
company;

• Have legal entity status from the date of issuance of the
business registration certificate;

• May not issue shares

EXAMPLES

the owner shall make sufficient capital contribution to the company with the right types of assets as committed upon enterprise establishment Owner shall be held liable with all of his/her assets for financial obligations of the company and any damage caused by failure to contribute capital on time 2/26/17 .CONTRIBUTION Article 74 CAPITAL Is the total value of assets committed to be contributed by the owner and recorded in the company charter Within 90 days after being granting registration certificate.

RIGHTS 2/26/17 .

Make decisions on: . Rights of LLC with one Organization Individual member (Art. business & appointment. technology • Approve loan agreements/contract which value at 50% or more (total assets) • Sale of assets value at 50% or more • establishment of subsidiary companies/capital contribution . • organizational and management structure.Make decisions on: • Development strategies/annual plans • investment.64) Similarities . sale of assets • plans of development.Organize supervision & assessment of business operation . marketing. amendments and additions • use of profits after tax and financial obligations • re-organization/dissolution/bankruptcy • Decide on the increase of charter capital • assignment of all or part of the charter capital -Recover all of value of assets after dissolution/ bankruptcy Differences . removal or dismiss managerial internal positions management • Decide on investment projects. ARTICLE 75. loan agreements/contracts.Make decisions on: • contents of charter.

lending. • To contribute capital in full and on time as undertaken. lease or rent and other transactions between the company and the company owner's .OBLIGATIONS ARTICLE 76. the owner is responsible for debts and other property obligations of the company. borrowing. • To comply with the charter of the company • To identify and separate assets of the company owner from assets of the company. sale. • To comply with the law on contracts and relevant legislation with respect to any purchase. in the case of failure to contribute capital in full and on time. A company owner being an individual must separate his or her personal and family expenditures from the expenditures for him or her as the chairman of the company and the director or general director of the company.

OBLIGATIONS ARTICLE 76. the company must be  transformed into a LLC with 2 or more members  registered within 15 days as from the date of transfer • Company owner may not withdraw profits of the company in case the company has not paid in full all debts and other property obligations which become due 2/26/17 . • Only withdraw capital by way of assignment of a part or all of the charter capital to other organizations and individuals (Another way: must be jointly liable for debts and other property obligations) QUESTION: Why the owner cant withdraw in a normal way? => The company may break. If the company owner transfers part of the charter capital to other organizations/individuals.

• The company shall organize its operation in the corresponding form of enterprise and register for the change within 10 days • If he/she has no heir. imprison.EXCERCISE THE RIGHTS OF COMPANY OWNER IN Article 77 In case owner transfer or donates part of charter capital SPECIAL CASE • The company shall organizes its operation in the form of a LLC2+ or joint stock company • Re-register within 10 days In case owner is put in temporary detention. • Such member shall authorize another person to exercise the rights and perform the obligation of the company owner In case the owner dies • His/her heir shall become the owner or member of the company. the contributed capital amount shall be handle in accordance with civil law Incase the institutional owner of a company is dissolve or goes bankrupt • The transferee of the contributed capital amount of the owner shall become the owner or a member of the company • Need re-register within 10 days In case the civil act capacity of the individual owner • Rights and obligations shall be exercise and performed by guardian 2/26/17 . ect. heir disclaim the inheritance.

ARTICLE 78. director or director general and supervisor • Members’ Council. STRUCTURE OF LLC 1 ORGANIZATIONAL & MANAGEMENT A LLC 1 of an institutional owner shall be organized and operate after either 2 models: ORG • Company president. the functions. right and obligations of the Member Council. director or director general shall act as the at-law representative of the company Unless otherwise provided in the company charter. the company President. director or director general and supervisor If not provided in the company charter • The chairperson of the MC or the company president. the director or director general and supervisors must comply with this law .

MC shall be appointed and relived of duty by the company owner. shall in the name of the company owner organize the implementation of rights and obligations of the company Over ½ of attending owner/company in the name of members approve to the company pass a resolution At least ¾ of attending members approve to amend. to Chairperson of MC reorganize company. add company charter. or to shall be appointed by assign company’s charter the company owner or capital elected by the members of the MC on majority principle At least 2/3 of the All meetings must be members attending to recorded in minute conduct a meeting of book the Member’s Council .THE MEMBER’S COUNCIL ARTICLE 79.

unless? . (legal except right and obligation representative) of the director or general director A decision of the company president concerning the exercise of the rights and performance of the obligation of the company owner must take effect on the date of approval by the owner.THE COMPANY PRESIDENT ARTICLE 80 The company president shall be appointed by the owner. Shall exercise the rights and Responsible before perform the obligations of the law and to the the owner/ of the company in company owner the name of the company.

Full civil act capacity and not being a person specified in Clause 2 Art 18 B. ARTICLE 81. unless other wise provided in the company charter . MC members or company president Responsible before the law may concurrently and MCs or Chairman act as the director/general director Criteria: A. Possessing professional qualifications and experience in business administration of the company. DIRECTORS GENERAL Appointed or employed by Member Council or Chairman for term not exceed 5 years Manage day to day business Chair of MC.

… investmen t plans Recommen d Make organizatio decisions nal on business structure operation Appoint.2. resolution of the nd plans OR GENERAL DIRECTORS Members’ for use of Council or profits or the Conduct dealing president business with and losses.DUTIES OF DIRECTORS Implement Recomme ARTICLE 81. remove or Issue dismiss internal managerial manageme positions nt regulations .

o Have professional qualifications or work experience on accounting. chairman.… in business management and ownership implementation.… • Have right to sight any documents • Attend and discuss in meetings 3.Criteria: o Have full capacity for civil acts. • Evaluate financial statements. o Not to be related people of a member of the Members’ Council. …. Inspectors:  Appointed by company owner  Not more than 3-year term 2. Duties: • Check lawfulness and honesty of the Members’ Council. • Recommend company owner on solutions organizational and managerial structure. chairman. reports before submitting to company owner or relevant State bodies. business administration. not to be prohibited from management of enterprises.INSPECTORS ARTICLE 82 1. auditing or in the company’s business lines .

obligations and duties of director or general director are provided in company’s charter and in the employment contract. Question: who is the legal representative of LLC1 as an individual? .OF ONE MEMBER LLC BEING MANAGEMENT STRUCTURE ARTICLE 74. ORGANIZATIONAL & INDIVIDUALS 1. director of general director 2. 3. Rights. Have president of company. President of company may work concurrently or employs another person as director or general director.

Contract only be approve if _ parties to contract/transaction are independent legal entities _ price used in the contract is the market price 4. president. TRANSACTIONS OF THE CONTRACTS & 1. One member LLC being an individual: Contracts or transactions must be recorded and retained as separated dossier . the person with competence to appoint such manager The person who enter into a contract shall notify the MC. director or general director and supervisor of the persons related to such contract or transaction. Person signing the contract and the parties to the contract must be jointly liable for any damage arising … 5. One member LLC being an organization’s contracts and COMPANY transactions: With: – Company owner. accompanied by the Unless 2. Contract shall be invalid if violate clause 1.3 of this article. and any related people – A member of the MC. draft contract or main contents stated otherwise of such approval by the charter. ARTICLE 86. transaction of the contract/transaction shall be decided within 10 working days 3. director or director general or supervisor – managers of company owner.2.

while ensuring that all debts/properties obligations may be paid in full after returning part of the contributed capital to its owner • The charter capital has not been paid in sufficiently and on time by the owner in accordance with article 74 of this law . ARTICLE 87. CHARTER CAPITAL REDUCTIONS OF INCREASES & LLC1 may changes its charter capital by: • Return part of the contributed capital in the charter capital of the company if the company’s business operation has been carried out continuously for more than 2 years from the date of enterprise registration.

CHARTER CAPITAL ARTICLE 87. REDUCTIONS OF INCREASES & INCREASE charter capital Additional Additional capital investment contributed by others by company owner Register to convert into 2 or more members LLC within 15 days started from the date that new members undertake to contribute capital 2/26/17 .

LLC WITH TWO OR MORE MEMBERS .

54 4) Limited Liability 5) May not issue share .53. CHARACTERISTIC LLC 2 IS AN ENTERPRISE IN WHICH: S 1) Owners (members) can be individual or organization 2) Number of members: lower than 50 3)Contributed capital of 6) Legal entity status: each member may only from the date of be transferred in issuance of the business accordance with Art registration certificate 52.

com . Dong Nai Province Website: www.hanmisafe. Ho Chi Minh City Tel: (84) (8) 38 68 31 10 Fax: (84) (8) 38 62 49 29 Factory: Road 3. District 10. Ward 15. Long Thanh District. Long Thanh Industrial Park.LLC WITH TWO MEMBERS EXAMPLES Address: 138A To Hien Thanh Street.

the unpaid amount shall be consider as debt owned by that member. May be contributed by others members . CONTRIBUTIO Members must contribute full CAPITAL amount and on time or there N will be a member’s debt + compensation Any changes on the assets: notifying to the Business registration body in writing within 7 days If members fail to pay the contribution.

CONTRIBUTIO CAPITAL Charter • Is the total amount of capital the members N Capital commit to contribute • Make within 90 days Sufficient • Right types of assets Capital Contribution • Contribution of asset other than the types of asset committed will only be approve by majority • Members who fails to contribute capital as committed naturally ceases to be a member of the company • The member who fails to contribute in full the capital Failing to contribute amount as committed has the rights in proportion to capital the paid in capital amount within the time limit • The unpaid capital amount of the member shall be offered for sale under a decision of MC • Company must register for the adjustment of charter capital and capital contribution ratios • Failing to contribute capital as committed must be liable 2/26/17 Art 48 .

3) Be financial distributed with statement. examine book of account. the remainder of the resolution of MC value of assets of the • To request the company court7)toTo sue in its name revoke or in the resolution name of of MC 5) Priority in the company for making additional civil liability of 6) Dispose of chairman of MC. If 1 members hold > ARTICLE 1) Attend 50. capital director. remaining Member’s Council. members naturally has the right as RIGHT OF discuss. make MEMBER 8. at law the company contribution representative and . general contributions to share or capital director. may profits make copy of register of 4) Be distributed with member.of meeting 90%.Members provided / in clause 8 recommendations and holding 10% of this article or more 2) vote Have the number of • Request votes in proportion to Convening its share of capital meeting of MC contribution • Check.

Pay premature debts where company is likely to be in financial Observe decision danger in the of members’ name of the council Perform other company obligation stipulated in this law . cause charter of damage company . business Exception? transactions not benefit the Comply the company. OBLIGATIONS and on time.Break the law obligation. Contribute capital full ARTICLE Be personal51. Not to withdraw .Carry out capital. be liable for responsible for: debt and other property .

A member can demand the company to redeem its share of capital contribution if such member vote against a decision of the Members Council on the following issues:  Amendment/ Addition of the charter relating to the rights and obligations of members and Member’s Council. REDEMPTION OF SHARE OF CAPITAL CONTRIBUTION ARTICLE 52. Other cases stipulated in charter of the company. The demand for redemption shares of capital contribution must be made in writing and sent to the company within 15 days after a resolution specified in this Clause is adopted If price cannot be agreed. redeem the share of capital contribution at market price or at the price calculated in accordance with the provision of the charter of the company within 15 days after receiving such request If the company does not redeem under clause 2. such member has the right to freely transfer its contributed capital to another member or non-member . Re-organization of the company.

Until when? If the transfer result in the fact that there remains only 1 member. Transferring member still has the rights and obligation toward the company. CONTRIBUTED CAPITAL ARTICLE 53.  transferring to non-members: only be permitted where other members do not purchase or do not purchase in full within 30 days from the offering date. TRANSFER OF AMOUNT A member of a Limited Liability Company shall have right to assign a part or all of its shares with the following provisions:  Having to offer to sell to all other members in proportion to their shares of capital contribution in the company on the same terms. company must convert into LLC1 .

In case contributed capital is used to pay a debt. SHARES OF CAPITAL CONTRIBUTION 2. Where recipient is a spouse. Share of capital contribution of a member shall be redeemed or assigned in some cases:  An heir does not wish to become a member. parent.5 DEALING WITH SHARES OF CAPITAL CONTRIBUTION IN OTHER CASES A member (individual) is dead or declared dead /declared missing by a court  his or her heir/manager of such member’s property by will or by law shall be a member of the company. ARTICLE 54. Capacity for civil acts of a member is restricted or lost  rights and obligations exercised by his or her guardian.  A recipient is not approved by the Member’s Council to become a member. Become Member of the company upon approval of MC b.  A member being an organization is dissolved or bankrupt A member may donate a part or all of its share to other persons. payee may use it to : a. child or relative up to the third rank of inheritance. the recipient shall automatically become a member of the company. need approval of member council. On other case. Offer for sale and transfer under Art 53 .

) . OF COMPANIES • A limited liability company of two or more members shall have: A Member’s Council Chairman of the Member’s Council Director or General Director • A limited liability company of more than 11 members must set up an Inspection Committee (Supervisory Board) • Chairman of the Member’s Council or Director or General Director shall be representative-at-law • The legal representative of the company must have permanent residence in Vietnam. (for over 30 days away from Vietnam. MANAGEMENT STRUCTURE ORGANIZATIONAL AND ARTICLE 46. he or she must authorize another person in writing in accordance.

 Methods of investment projects. market development and marketing. etc. directors…  approve annual financial statements and plans for uses ect. time and methods for mobilizing capital. director. branches  Amendment and supplementation of company charter  Decide on dissolution. request on bankruptcy of company member under detention… must authorize another person to joint MC . reorganization of the company  Establishment of subsidiaries. MEMBERS’ COUNCIL Composed of all member and is the highest decision making authority of the company Meetings of the Members' Councils provided by charter.  Decide on the organizational and management structure.  Approve loan and contract for sale of assets valued at 50 or ore % of the total value asset  Elect. General director and other managers  To decide on wages. ARTICLE 56. relive of duty and remove from office the chairperson of MC. bonus and other benefits for the chairman of MC. at least once a year Rights and duties Members' Councils:  Development strategy and annual business plans  Changes of the charter capital.

• May be re-elected for an unlimited term Chairman Rights and Obligation • Prepare working programs. In case of absence/ incapability to perform right and obligaion • Shall authorize in writing a member to exercise the rights and perform the obligation of the chairman of MC • Or MC’s remaining members may elect 1 member to work temporarily as the chairman of MC 2/26/17 . CHAIRMAN OF MC Chairman of MC • Elected from and by MC’s members • May concurrently work as director/general director • Term: not exceed 5 years. the implementation of resolution of the MC • To sign resolutions of MC on be half of MC. agenda and document for meeting of MC • Convene and preside over meetings of MC • Supervise. ect. organize the supervision of. ARTICLE 57. plans of MC • Prepare programs.

COUNCIL Meeting time may be extended but must not exceed 30 Working Days . CONDITIONS AND PROCEDURES TIME NEEDED FOR ATTENDING MEMBERS FOR CONDUCTING MEETINGS OF THE MEMBERS’ CONDITIONS CONVENING NEXT REPRESENT MEETING ≥ 65% of the charter 1st meeting capital 2nd meeting 15 days ≥ 50%of the charter capital 3rd meeting 10 days irrespective of the number PROCEDURES: Member/representative shall attend and vote. ARTICLE 59. The procedures for conducting meetings of the Members’ Council and the voting method shall be stipulated in the charter of the company.

decision on development direction. reorganization or dissolution of the company Voting method? Collecting opinion ? When will the resolution come in to effect? . election. Number of votes representing: ≥ 75% of the capital of the attending members if the decisions relating to the sale of assets valued ≥ 50% of the total value of assets or a < % as stipulated in the charter of the company. RESOLUTIONS OF THE MEMBERS’ COUNCIL A resolution of the Members’ Council shall be passed by voting in a meeting if: Number of votes representing ≥ 65% of the aggregate capital of the attending members to pass:. solution on amend/supplementation to the charter of the company. approval of financial statement. removal of chairman or director. ARTICLE 60. discharge.

except those falling within the competence of the chairman of MC • Make recommendation on the company’s Organizational structure • Summit annual financial statements to the MC • Make recommendation on the plan for use of profits or handling of losses in business • Recruit employees. except those fall within the competence of MC • Signs contract in the name of company. investment plans of the company • Issue internal management regulation • Appoint. DIRECTOR OR GENERAL ARTICLE 64. 2/26/17 . remove from office managers in the company. business plans. DIRECTOR Director/General Director • Person who manages day-to-day business operation • Responsible to MC for the exercise of his/her rights and performance of obligation Rights and Obligations • Organize and implementation :resolution of MC. relieve of duty. ect.

brother/sister in law of either the manager f the parent company and or person representing the state capital in such company . unless states otherwise by the charter For Subsidiry company where the state contributed capital >50%. To have full capacity for civil acts and not to be prohibited from management of enterprises under clause 2. art 18 of this Law. sibling. Have professional qualifications and experience in business administration of the company. father. director or general director may not be the spouse. adoptive father/mother/child. child. GENERAL DIRECTOR BECOME A DIRECTOR OR CRITERIA AND CONDITIONS TO ARTICLE 65.

OF CHARTER CAPITAL Increasing the contributed capital of members Increases of charter capital by way of: Raising contributed capital from new members Returning part of the contributed capital to members in proportion to their respective shares of contributed capital ( continuously >=2 years) Reductions of charter Redeeming shares of capital contribution as stipulated in Art capital by way of 44 of this Law Reducing the charter capital corresponding to the reduced value of assets of company Any changes in charter capital must be notified to the business registration office . INCREASE AND REDUCTION ARTICLE 68.

Director? . DISTRIBUTION OF PROFIT ARTICLE 69 CONDITIONS FOR Generate profit from its business Fulfill tax obligations and other financial obligations in accordance with law Ensure that the debts and other property obligations may be paid in full after distribution of profits Financial benefits for Chairman of MC.

ect. abuse their positions and title. Chairman of MC. director or general director. and best manner • Faithful to the interest of the company. supervisors. assets. prudent. • Notify the company if their affiliated person owns contributed capital • Exercise rights and perform obligation in accordance with law and the company charter Director/general director • Are not entitle to wages raise and bonuses when the company is no longer capable of fully repaying due debts . obligation in an honest. AT LAW CHAIRMAN OF MC. REPRESENTATIVE… DIRECTOR. ARTICLE 71. RESPONSIBLE OF at law representative. other managers • Exercise and perform rights.

will be included in the company expense 2/26/17 . act against the law and charter of the company • Failing to perform resolution of the MC Order and procedure: • Must comply with civil procedure code Legal cost • initiate lawsuit in the name of the company. ARTICLE 72 INITIATION OF LAWSUITS AGAINST AGAINST MANAGERS Cases • Violating the provision of Art 71 MANAGERS • Failing to properly and sufficiently exercise the assigned rights and perform the assigned obligations.