LIMITED LIABILITY COMPANIES

Organisational structures -
owners’ rights and obligation

1
What are limited liability companies and their
nature? (Article 46 and 74, the law on enterprises 2020)
A limited liability company is an enterprise having
legal person status and in which:
 Its members can be individuals or organisations;
 The number of members must not exceed 50;
 Its members will be liable for debts and other
property obligations of the companies within the
amount of capital contributed to the companies;
 Shares are not allowed to be issued;
 Bonds can be issued in compliance with law. 2
What are limited liability companies and their
nature? (Article 46 and 74, the law on enterprises 2020)
Owned by
individuals or/and
organisations

Can issue Not exceeding

bonds 50 members
Limited liability
companies
=
Enterprises

Not allowed to Legal person

issue shares
Owners having
Limited liability
3
Summary: What are limited liability companies
and their nature?

Members = individuals
Legal person or organisations
(not more than 50 members)
Limited liability
companies
=
Enterprise
Limited liability
Can issue bonds but (liable within the amount of
not shares capital contributed to the
company)

4
 Limited liability
companies

Single member – limited Limited liability companies

liability companies with two or more members
(Owned by one individual or (Owned by two or more individuals
organisation) and/or organisations)

Owned by an Owned by an
individual organisation

5
 Contents

• Organisational structure
I

• Members’ rights and obligations

II

6
Structure of single member limited
liability companies of individual
owners
(Article 85, the law on enterprises 2020)

7
 Company president
(owner)
Representative
in law

Director/general director
Note:

 The president may work concurrently as a director/general director.

 Director/general director can be hired.

 The representative(s) in law can be the president or/and the director/general

director  defined by the charter.
8
Who can be a director or general director?

 Individuals who are

not forbidden to
manage an enterprise
by article 17.2, the law
on enterprises 2020.

9
What are the duties and rights of a director/general director?

Where will my rights

and duties be stated?
Company’s
charter

Duties and rights of a director/general

director shall be regulated in the
company’s charter and the
employment contract.

10
Summary:
The structure of single member limited liability companies with
individual owners

Structure
The company Representative in law:
president - Represent the company before courts,
(owner) /an
d arbitrations, or enter into and perform
Or
the company’s transactions.
Can
concurrently be - At least one resides in Vietnam.
- The only representative must authorise
Director/general another to perform their duty when
director absent from Vietnam.

Director/general director:
- Must be individuals who are not forbidden to manage enterprises by Article 17.2,
the law on enterprises 2020.
- His duties and rights will be regulated in the charter and employment contract. 11
 Limited liability
companies

Single member – limited Limited liability companies

liability companies with two or more members
(Owned by one individual or (Owned by two or more individuals
organisation) and/or organisations)

Owned by an Owned by an
individual organisation

12
 Structure of single member limited
liability companies of organisational
owners
(Article 79, the law on enterprises 2020)

13
How are single member limited liability
companies of organisational owners structured?
1st structure 2nd structure
The company president Member’s council
(One representative of the (More than one
owner) representative of the owner)

Board of controllers Board of controllers

(Compulsory for state owned (Compulsory for state owned
enterprises) enterprises)

Director/general Director/general
director director

Note:
 Representative in law: - the chairman of member’s council, or
- the company president, or director/GD
 The representative’s duties and requirements which the
representative must meet: art 13 and 14, law on enterprises 2020 14
Who can be a company president?
(Article 17.2, the law on enterprises 2020)

Individuals who are not

forbidden to manage an
enterprises by article 17.2, the
law on enterprises 2020.

15
Who can appoint a company president?
(Article 81, the law on enterprises 2020)

The owner

 The company president will be appointed by the owner

16
What are the rights and duties of a company president?
(Article 81, the law on enterprises 2020)

• Exercise the owner’s rights and obligations on

his/her behalf.
• The president’s decisions relating to performance
of the rights and obligations of the owner will only
take effect on the date of approval by the owner.

• Exercise the company’s rights and obligations on its

behalf except in cases where the director/general
director is in charge.

• Be responsible before the owner and law for the

performance of the rights and obligations

17
How are single member limited liability
companies of organisational owners structured?
1st structure 2nd structure

The company president Member’s council

(One representative of the (More than one
owner) representative of the owner)

Board of controllers Board of controllers

(Compulsory for state owned (Compulsory for state owned
enterprises) enterprises)

Director/general Director/general
director director

18
How is a member’s council structured? (Article 80, the law on
enterprises 2020)

The chairman of member’s

council Number of members:
from 3 to 7

Term: not exceeding 5

years

Member Member Member

• The members will be appointed or relieved by the

owner
• The chairman will be appointed by the owner, or
elected by the members based upon the principle of
majority
19
Who can be appointed as a member of the
member’s council? (Article 17.2, the law on enterprises 2020)

 Individuals who are not

forbidden to manage an
enterprise by article 17.2, the
law on enterprises 2020.

20
What do members of the member’s council do?
(Article 80, the law on enterprises 2020)

• Exercise the owner’s rights and obligations on

his/her behalf.

• Exercise the company’s rights and obligations on its

behalf except in cases where the director/general
director is in charge.

• Be responsible before the owner and law for the

performance of the rights and obligations

21
What does the chairman of member’s council do?
(Article 79.3 and 57, the law on enterprises 2014)

• Prepare working programs and plans of the member’s council

• Prepare the agenda, contents and materials for meetings of the

Members' Council or the members' comments

• Convene and preside meetings of the Members' Council or

organize the gathering of the members' comments

• Supervise, or organize the supervisions of, the implementation

of resolutions made by the Members' Council

• Sign on behalf of the Members' Council its resolutions

22
Who can convene a meeting of the member’s council?
(Article 80, 57 and 49, the law on enterprises 2020)

The chairman of the

member’s council

Or -
Members or group of members representing
10% and above of the charter capital, or a
smaller percentage as allowed by the charter.
Or
- Members or group of members representing
lower than 10% of the charter capital if there is
one member representing more than 90% of
the charter capital, and the charter doesn’t allow
a smaller percentage.
If the chairman doesn’t convene the meeting within
15 days from the date of receiving their request.
23
When will a meeting of the member’s council be conducted?
(Article 80, the law on enterprises 2020)

At least 2/3 of total members attend the meeting

24
How will a resolution of the member’s council be passed?
(Article 80, the law on enterprises 2020)

 Resolutions relating to amendment,

supplementation to the charter,
reorganisation of the company, transfer
of charter capital
• At least 75% of the attending
members approve, or
• The attending members who
holds at least 75% of total
votes, approve
 Resolutions relating to other matters
• At least more than 50% of the
attending members approve, or Each member has one vote
• The attending members who Unless otherwise provided by the charter

holds at least more than 50%

of total votes, approve
25
How are single member limited liability
companies of organisational owners structured?
1st structure 2nd structure

The company president Member’s council

(One representative of the (More than one
owner) representative of the owner)

Board of controllers Board of controllers

(Compulsory for state owned (Compulsory for state owned
enterprises) enterprises)

Director/general Director/general
director director

26
What is the position of a director/general director in the
company? (Article 82, the law on enterprises 2020)

A person managing day to day, the

company’s business operation

27
Who can be a director/general director?
(Article 82, the law on enterprises 2020)

Individuals must meet all The chairman, the president or

the following or other member of the
requirements: member’s council

1 Not being person specified

in Article 17.2, the law on
enterprises 2020

Having professional
qualifications and
2 experience in business
administration unless
otherwise provided by the
charter
28
Who can appoint or hire a director/general director?
(Article 82, the law on enterprises 2020)

The company The member’s

president council
(1st structure) (2nd structure)

29
How long is the term/duration of a director/general
director? (Article 82, the law on enterprises 2020)

Duration

A director/general director’s duration is not exceeding 5 years

30
What are the rights and obligations of a director/general director
(Article 82, the law on enterprises 2020)

1. Organise the performance of resolutions of the member’s

council or the company president.

2. Decide on all matters related to day to day business operations.

3. Issue the company’s rules and regulations.

4. Recruit employees.

5. Sign contracts on behalf of the company except in cases where

the chairman, or the president is in charge

6. Other rights and obligations.

31
How are single member limited liability
companies of organisational owners structured?
1st structure 2nd structure

The company president Member’s council

(One representative of the (More than one
owner) representative of the owner)

Board of controllers Board of controllers

(Compulsory for state owned (Compulsory for state owned
enterprises) enterprises)

Director/general Director/general
director director

32
How many controllers in a board of
controllers are there? (Article 65, law on enterprises 2020)

01 to 05 controllers

33
Who can be a controller? (Article 169, the law on enterprises 2020)
Individuals must meet all the following
requirements:
• Not being person specified in Article 17.2, the
law on enterprises 2020

• Not being relatives of the member’s council, the

company president, the director/general
director, or other managers
(Article 4.22 the law on enterprises 2020)

• Having a qualification in economics, finance,

law, business administration accounting and
auditing, or a major relevant to business lines of
the company (the chief must have a bachelor
degree – art 168, law on enterprises 2020)
• Not hold any management positions in the
enterprise (art 4.24, law on enterprises 2020)
34
Who can appoint a controller?
(Article 76, the law on enterprises 2020)

The owner
inspectors

 Controllers will be appointed by the owner

35
How long is the term/duration of a controller?
(Article 65, the law on enterprises 2020)

Duration

A controller’s duration is not exceeding 5 years

36
What does a controller do?
(Article 105, the law on enterprises 2020)

Observe, check, supervise the member’s council, members of the members’

council, the company president and the director/general director in
performing the owner’s rights, managing and conducting the business.

37
Summary:
The structure of single member limited liability company with organisational owners

Appoint
Board of poi
nt The owner
Ap
controllers Appoint

Elect Chairman of
The company president Or Member’s council
(one representative) (two or more representatives)
the member’s
council

Appoint
Work Work
concurrently concurrently
Director/general director
 Representative in law: The president or the chairman, or director unless otherwise provided
 The managers: - Conditions to be appointed: Not being persons listed in the article17.2,
and having appropriate qualifications and work experience.
- Duration: not exceeding 5 years
 Member’s council: - Conditions for conducting the meeting: at least 2/3 members attending.
- Convening the meetings: the chairman or members representing ≥ 10% the capital
- Passing the resolutions: (usually) ≥ 50 percent of the attendants approve 38
 Contents

• Organisational structure
I

• Members’ rights and obligations

II

39
Members’ rights and obligations of single
member limited liability companies

40
 Rights Obligations
(Article 76, the law on (Article 77, the law on
enterprises 2020) enterprises 2020)

• Change the charter • Contribute the charter

capital capital sufficiently as
committed
• Transfer or donate the
contributed charter to • ………….
others

41
Changing the capital (Article 87, the law on enterprises 2020)
Decrease the capital
Return part of the
contributed capital
Conditions: The capital has not been
- 2 years operation paid in full and on time
- Ensure all debts and property
obligations are paid in full after
returning

Increase the capital

The owner makes
additional investment
Other persons contribute
additionally
Consequences: change the company type
to
- Limited liability company with two or
more members, or
- Joint stock company 42
Transfer or donate the contributed capital
to others (article 78, the law on enterprises 2020)

Transfer or donate part of the contributed capital

• Consequences: change the company type to

- Limited liability company with two or more member

or
- Joint stock company

43
Contribute the charter capital sufficiently as committed (article 75,
the law on enterprises 2020)

Must contribute sufficiently the amount and the

right property as committed within 90 days after
being granting an enterprise registration certificate
• Consequences of the failure to perform the obligation:

- Register for adjustment of the charter capital within 30

days from the last due date.

- Be liable for all financial obligations arising before the

registration for the adjustment within the amount
committed to contribute.

- Be liable for all damages caused from the failure with

44
 Exercise the owner’s rights in some special
cases (article 78, the law on enterprises 2020)
The owner is detained, serving an imprisonment penalty,
1 sent to a detoxification centre or a compulsory educational
centre

• Through authorised persons

2 The owner who is an individual dies

• Their heirs will automatically be an owner of, or a member of the
company.

3 The owner is banned by the court to do certain jobs

• Suspend or stop doing business

45
 Limited liability
companies

Single member – limited Limited liability companies

liability companies with two or more members
(Owned by one individual or (Owned by two or more individuals
organisation) and/or organisations)

Owned by an Owned by an
individual organisation

46
 Contents

• Organisational structure
I

• Members’ rights and obligations

II

47
 Structure of limited liability
companies with two or more
members
(Article 54 - 65, the law on enterprises 2020)

48
(Article 54, the law on enterprise 2020)

Chairman
Member’s
of the member’s council
council

Director/general Board of
director controllers

Can concurrently be
Compulsory for state-owned
enterprises and subsidiary companies
of state- owned enterprises

Note: Representatives in law

- Representatives in law will be defined in the company’s charter.
49
Features of the member’s council
(Article 55, the law on enterprises 2020)

- Its position in the company: The highest decision making body.

- Its members: Individuals and organisations contributing capital into the
company.
- When the members will meet: frequent meetings will be regulated by the
charter but at least they will meet once a year.

50
Who can convene a meeting of the member’s council?
(Article 57, the law on enterprises 2020)

Chairman of the member’s

council

Or -
Members or group of members holding 10%
and above of the charter capital, or a smaller
percentage as allowed by the charter.
Or
- Members or group of members holding lower
than 10% of the charter capital if there is one
member holding more than 90% of the charter
capital, and the charter doesn’t allow a smaller
percentage.
If the chairman doesn’t convene the meeting within
15 days from the date of receiving their request.
51
When will a meeting of the member’s council be conducted?
(Article 58, the law on enterprises 2020)

1st • Attending members must own at

convening least 65% of the charter capital.

• Attending members must own at

least 50% of the charter capital
2nd
• Convening within 15 days after
convening
the intended date of the first
meeting

• Irrespective of the number of

attending members and the
amount of charter capital
3rd represented by the attending
convening members.
• Convening within 10 days after
the intended date of the second
meeting 52
Who can join meetings of the member’s council?
(Article 58, the law on enterprises 2020)

Organisations contributing Individuals contributing

capital into the company capital into the company

Authorised
representatives th e
Note: of cil
gs cou n
in
Organisations owning at least 35 % eet er’s
of the capital can have maximum 3 M b
m
authorised representatives me
53
(Article 14.2, the law on enterprises 2020)
How many forms are there to approve resolutions of the
member’s council? (Article 59, the law on enterprises 2020)

Vote at the meetings Collect written Other forms

opinions provided by the
Apply in the following cases charter
unless otherwise provided by
the charter
• Amend, supplement the charter
• Decide the company’s orientation
development
• Elect, appoint, dismiss the chairman,
the director/general director
• Adopt annual financial statements
• Reorganise, dissolute the company 54
 How are resolutions of the member’s council passed?
(Article 59, the law on enterprises 2020)

Vote at meeting Collect written opinion

Gain votes representing at Gain votes representing at

least 75% of the total least 65% of the total Gain votes representing at
contributed capital of the contributed capital of the least 65% of the total capital
attending members attending members

- Decide to sell assets valued at

50% or more of the total assets
recorded in the latest financial
statement (unless the charter
allows a smaller percentage)

Other cases All cases

- Amend, supplement the charter

- Reorganise or dissolve of the

company
55
What are the rights and obligations of the member’s
council? (Article 55.2, the law on enterprises 2020)

Approve loan agreements, contracts for sale of assets valued at 50

or more percent of the total value of assets recorded in the most
recently published financial statements unless the charter allows a
smaller percentage

Approve contracts between the company and individuals listed in

the article 67 the law on enterprises 2020

Elect, appoint, dismiss the chairman, the director/general

director, the chief accountant and other managers as provided by
the charter

…………….
56
(Article 54 the law on enterprise 2020)

Chairman
Member’s
of the member’s council
council

Director/general Board of
director controllers

Can concurrently be
Compulsory for state-owned
enterprises and subsidiary companies
of state- owned enterprises

Note: Representatives in law

- Representatives in law will be defined in the company’s charter.
57
Chairman of the member’s council
(Article 56, the law on enterprises 2020)

- How is the chairman selected: members of the member’s council will elect
one member to work as the chairman of the member’s council.
- Term: not exceeding 5 years.
The chairman can be re-elected an unlimited number of times
- Resolutions in the case that the chairman is absent or incapable to exercise
his duties:
+ The chairman must authorise another member to perform the duties in
writing based upon principles provided by the charter.
+ If there is no authorisation, the member’s council will elect another
person to temporarily exercise the duties based upon the principle of
majority. 58
What does the chairman do?
• Prepare working programs and plans of the member’s council

• Prepare the agenda, contents and materials for meetings of the

Members' Council or the members' comments

• Convene and preside meetings of the Members' Council or

organize the gathering of the members' comments

• Supervise, or organize the supervisions of, the

implementation of resolutions made by the Members' Council

• Sign on behalf of the Members' Council its resolutions

59
(Article 54 the law on enterprise 2020)

Chairman
Member’s
of the member’s council
council

Director/general Board of
director controllers

Can concurrently be
Compulsory for state-owned
enterprises and subsidiary companies
of state- owned enterprises

Note: Representatives in law

- Representatives in law will be defined in the company’s charter.
60
Features of Director/general director
(Article 63, the law on enterprises 2020)

• A person managing day to day

the company’s business
operation

• Appointed or hired by the

member’s council

• Be responsible to the
member’s council for
exercising his duties

61
Who can be hired or appointed as a director/general directo
(Article 64, the law on enterprises 2020)

 Individuals who meet all the following requirements can be

hired or appointed as a director/general director of limited
liability companies with two or more members:

Not forbidden to manage an enterprise by article

17.2, the law on enterprises 2020.

Must not a relative of the parent company

and representatives for the state capital
(If the company is a subsidiary company
of state-owned enterprises or a state –
owned enterprises)
Hold professional qualifications
and experience in business
administration unless otherwise
provided by the charter

62
What are the rights and obligations of a director/general director
(Article 63, the law on enterprises 2020)

1. Organise the performance of resolutions of the member’s

council or the company president.

2. Decide on all matters related to day to day business

operations.

3. Recruit employees.

4. Sign contracts on behalf of the company except in cases

where the chairman is in charge

5. Other rights and obligations.

63
(Article 54 the law on enterprise 2020)

Chairman
Member’s
of the member’s council
council

Director/general Board of
director controllers

Can concurrently be
Compulsory for state-owned
enterprises and subsidiary companies
of state- owned enterprises

Note: Representatives in law

- Representatives in law will be defined in the company’s charter.
64
Board of controllers

Who can be a controller?

In article 168, 168,
Regulate 106,170 - 174

What are the rights and

obligations of the board of
controller?

65
Summary:
The structure of limited liability companies

Member’s council:
- Position: the highest decision
making body
- Meetings of the members: at least
once a year
- Meetings convened by: the
Chairman chairman or groups of members
Member’s provided in the article 50
of the member’s council
- Resolutions usually passed: if
gaining votes representing at least
council 65 % of the total capital of
attending members
The chairman:
- Elected from a member of
the member’s council
- Term: not exceeding 5
years
- Duties:
+ Convene meetings of the
Director/general Board of
member’s council
+ Sign resolutions of the
director controllers
member’s council on its
behalf.
Can concurrently be
+ Others
Director/general director: Compulsory for state-owned
- Position: managing day to day business operations
- Who can be a director/general director: Individuals who
enterprises and subsidiary companies
meet requirements stated in the article 64 of state- owned enterprises
- A director/general director can be appointed or hired by the
member’s council. Supervisory board: Article 168, 169,
106, 170 - 174 66
- Duties: see the article 63
 Contents

• Organisational structure
I

• Members’ rights and obligations

II

67
Members’ rights and obligations of limited
liability companies with two or more members

68
 Rights Obligations
(Article 49, the law on (Article 50, the law on
enterprises 2020) enterprises 2020)
• Decide on changing the charter
capital • Contribute the charter capital
• Transfer or donate the sufficiently as committed
contributed charter to others
• Sue the chairman, director or • ………….
general director, and other
managers
• Distribute profits
• …………

69
Changing the company capital
(Article 68, the law on enterprises 2020)

Decrease the capital

Return part of the contributed capital to
members in proportion respective to their
capital contribution ratios The capital Buy back the
has not been contributed
Conditions:
paid in full capital of its
- 2 years operation and on time members
- Ensure all debts and property obligations are
paid in full after returning

Increase the capital

Increase the contributed capital of Raising contributed capital from new

members members

70
Transfer the contributed capital
(Article 51 and 52, the law on enterprises 2020)

Transfer the contributed

capital to the company Transfer the contributed
through requests for buy capital to others
back

In case:
Vote against resolutions relating In case:
to No remaining members
- Amendment, supplementation buy or buy in full within
of member’s rights and 30 days from offering
obligations in the charter. date
- Reorganisation of the company

71
Donate the contributed capital
(Article 53, the law on enterprises 2020)
Spouse, parent, child or a
relative up to the third rank
of inheritance
Naturally
become

Company’s members

If the member’s
council approve

Others

Members can donate a part or whole of

their contributed capital to others
72
Rights to sue the company’s managers
(Article 72, the law on enterprises 2020)

The company’s members can sue the chairman of the member’s council,
director or general director, the company’s representative in law, or
other managers in case:
1. They fail to perform article 71
2. They fail to comply with or fully and punctually perform their rights and obligations
as prescribed by law, the company's charter, resolution or decision of the member’s
council
73
3. Other cases
Contribute the charter capital sufficiently as committed (Article 47,
the law on enterprises 2020)

Must contribute sufficiently the amount and the

right property as committed within 90 days after
being granted an enterprise registration certificate
• Consequences of failure to perform the obligation:
- Cease to be a member of the company if failing to contribute the capital as
committed.

- Having rights and obligations respective to the contributed amount if failing

to contribute the capital in full.

- Register for adjustment of the charter capital within 30 days from the last due
date if the capital is not contributed or contributed in full as committed.

- Be liable for all financial obligations arising before the registration for the
adjustment within the amount committed to contribute.

- The unpaid capital can be offered for sales under a decision of the member’s 74
 Exercise the member’s rights in some
special cases (article 53, the law on enterprises 2020)
A member is detained, serving an imprisonment penalty,
1 sent to a detoxification centre or a compulsory educational
centre

• Through authorised persons

2 A member dies
• Their heirs will automatically be a member of the company.
• Their heirs can sell or request the company to buy back the contributed
capital if they do not want to be come a member of the company

3 A member is banned by the court to do certain jobs

• Suspend or stop doing business

75
The end

76