LIMITED LIABILITY COMPANIES

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
CAPITAL CONTRIBUTION
Article 74
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,

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

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 RIGHTS

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 ARTICLE 75.
Rights of LLC
with one Organization Individual
member
(Art.64)
Similarities - Make decisions on:
• contents of charter, 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 - Make decisions on: - Make decisions on:

• Development strategies/annual plans • investment,
• organizational and management structure, appointment, business &
removal or dismiss managerial positions internal
• Decide on investment projects, loan agreements/contracts, management
sale of assets
• plans of development, marketing, 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
- Organize supervision & assessment of business operation
OBLIGATIONS ARTICLE 76.

• To contribute capital in full and on time as undertaken; in the case of failure to

contribute capital in full and on time, the owner is responsible for debts and
other property obligations of the company.

• To comply with the charter of the company

• To identify and separate assets of the company owner from assets of the
company. 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.

• To comply with the law on contracts and relevant legislation with respect to any
purchase, sale, borrowing, lending, lease or rent and other transactions
between the company and the company owner's
OBLIGATIONS ARTICLE 76.
• 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?
If the company owner transfers part of the charter capital to other
organizations/individuals, 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

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COMPANY OWNER IN SPECIAL
EXCERCISE THE RIGHTS OF
Article 77
In case owner transfer or donates part of charter capital

• The company shall organizes its operation in the form of a LLC2+ or joint stock company
• Re-register within 10 days
CASE

In case owner is put in temporary detention, imprison, ect.

• 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 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; heir disclaim the inheritance, 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

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MANAGEMENT STRUCTURE ARTICLE 78.
ORGANIZATIONAL &

A LLC 1 of an institutional owner shall be organized and operate

OF LLC 1 ORG
after either 2 models:
• Company president, director or director general and
supervisor
• Members’ Council, director or director general and
supervisor

If not provided in the company charter

• The chairperson of the MC or the company president,

director or director general shall act as the at-law
representative of the company

Unless otherwise provided in the company charter, the functions, right and
obligations of the Member Council, the company President, the director or director
general and supervisors must comply with this law
 ARTICLE 79.
THE MEMBER’S
COUNCIL
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 the
members approve to pass a
company
resolution
At least ¾ of attending members
approve to amend, add company
charter, to reorganize company, or to Chairperson of MC shall be
assign company’s charter capital appointed by the company
owner or elected by the
members of the MC on
majority principle

At least 2/3 of the members

attending to conduct a All meetings must be
meeting of the Member’s recorded in minute book
Council
 ARTICLE 80
THE COMPANY
PRESIDENT

The company president shall be

appointed by the owner. Shall exercise
the rights and perform the obligations Responsible before the law
of the owner/ of the company in the and to the company owner
name of the company; except right and (legal representative)
obligation 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,
unless?
GENERAL DIRECTORS ARTICLE 81.

Appointed or employed by
Member Council or Chairman for
term not exceed 5 years Manage day to day
business

Chair of MC, MC members

Responsible before the law and MCs or company president may
or Chairman concurrently act as the
director/general director

Criteria:
A. Full civil act capacity and not being a person specified in Clause 2 Art 18
B. Possessing professional qualifications and experience in business administration
of the company, unless other wise provided in the company charter
DUTIES OF DIRECTORS OR
GENERAL DIRECTORS ARTICLE 81.2.
Recommend
plans for use of
profits or dealing
with losses,…

Implement
Recommend resolution of the
organization Members’
Council or the
al structure president

Appoint, remove Conduct

or dismiss business and
managerial investment
positions
plans

Make
Issue internal
decisions on
management
business
regulations
operation
INSPECTORS ARTICLE 82
1. Inspectors:
 Appointed by company owner
 Not more than 3-year term

2. Duties:
• Check lawfulness and honesty of the Members’ Council, chairman,… in
business management and ownership implementation;
• Evaluate financial statements, reports before submitting to company
owner or relevant State bodies;
• Recommend company owner on solutions organizational and
managerial structure; business administration,…
• Have right to sight any documents
• Attend and discuss in meetings

3.Criteria:
o Have full capacity for civil acts, not to be prohibited from management of enterprises;
o Not to be related people of a member of the Members’ Council, chairman,…;
o Have professional qualifications or work experience on accounting, auditing or in the
company’s business lines
ORGANIZATIONAL & MANAGEMENT
STRUCTURE OF ONE MEMBER LLC
BEING INDIVIDUALS ARTICLE 74.

1. Have president of company, director of general director

2. President of company may work concurrently or employs
another person as director or general director.

3. Rights, 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?

CONTRACTS & TRANSACTIONS ARTICLE 86.
OF THE COMPANY

1. One member LLC being an organization’s contracts and transactions:

With:
– Company owner, and any related people
– A member of the MC, director or director general or supervisor
– managers of company owner, the person with competence to appoint such
manager

The person who enter into a contract shall notify the MC, president, director or general
director and supervisor of the persons related to such contract or transaction,
accompanied by the draft contract or main contents of such transaction

2. Unless stated otherwise by the charter, approval of the contract/transaction shall

be decided within 10 working days
3. Contract only be approve if
_ parties to contract/transaction are independent legal entities
_ price used in the contract is the market price
4. Contract shall be invalid if violate clause 1,2,3 of this article. Person signing the
contract and the parties to the contract must be jointly liable for any damage arising …

5. One member LLC being an individual:

Contracts or transactions must be recorded and retained as separated dossier
INCREASES & REDUCTIONS
OF CHARTER CAPITAL ARTICLE 87.

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;
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
INCREASES & REDUCTIONS OF
CHARTER CAPITAL
ARTICLE 87.

INCREASE charter capital

Addi tional capita l contributed by others

Additional investment 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

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LLC WITH TWO OR MORE
MEMBERS
 CHARACTERISTICS
LLC 2 IS AN ENTERPRISE IN WHICH:

1) Owners (members) can be

individual or organization

2) Number of members: lower

than 50

3)Contributed capital of each 6) Legal entity status: from the

member may only be date of issuance of the
transferred in accordance with business registration
Art 52,53,54 certificate

4) Limited Liability

5) May not issue share

LLC WITH TWO MEMBERS

EXAMPLES
Address: 138A To Hien Thanh Street, Ward 15, District 10, Ho Chi Minh City
Tel: (84) (8) 38 68 31 10
Fax: (84) (8) 38 62 49 29
Factory: Road 3, Long Thanh Industrial Park, Long Thanh District, Dong Nai Province
Website: www.hanmisafe.com
 CONTRIBUTION
CAPITAL
Members must contribute full amount
and on time or there 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, the

unpaid amount shall be consider as debt
owned by that member. May be
contributed by others members
 CONTRIBUTION
CAPITAL
• Is the total amount of capital the members commit
Charter Capital to contribute

• Make within 90 days

Sufficient • Right types of assets
Capital • Contribution of asset other than the types of asset committed will
Contribution
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 amount as
Failing to
contribute committed has the rights in proportion to the paid in capital
capital within amount
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

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 ARTICLE 50.
1) Attend meeting of Member’s
Council, discuss, make
recommendations and vote
2) Have the number of votes
in proportion to its share of
capital contribution
3) Be distributed
with profits
4) Be distributed with the
remainder of the value of
assets of the company
5) Priority in making
additional capital
contributions to the
company
If 1 members hold > 90%,
RIGHT OF MEMBER
remaining members
naturally has the right as
provided in clause 8 of this
article
8.Members / holding
10% or more
• Request Convening
meeting of MC
• Check, examine book
of account, financial
statement; may
make copy of register
of member,
resolution of MC
• To request the court
to revoke resolution
of MC
7) To sue in its name or in
the name of the company
for civil liability of
6) Dispose of share chairman of MC, director,
general director, at law
or capital representative and other
contribution manager
 Contribute capital full and on ARTICLE 51.

OBLIGATIONS
time, be liable for debt and
other property obligation. Be personal
responsible for:
Not to withdraw - Break the law
capital. Exception? - Carry out business
transactions not
Comply the charter of benefit the company,
company cause damage
- Pay premature debts
where company is
likely to be in financial
danger in the name of
the company
Observe decision of
members’ council
Perform other obligation
stipulated in this law
 REDEMPTION OF SHARE OF
ARTICLE 52.

CAPITAL CONTRIBUTION
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.
Re-organization of the company.
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
 TRANSFER OF CONTRIBUTED
ARTICLE 53.

CAPITAL 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.

 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.

Transferring member still has the rights and obligation toward the company.
Until when?

If the transfer result in the fact that there remains only 1 member, company
must convert into LLC1
 ARTICLE 54.

SHARES OF CAPITAL
CONTRIBUTION
2.5 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.

Capacity for civil acts of a member is restricted or lost  rights and obligations
exercised by his or her guardian.
Share of capital contribution of a member shall be redeemed or assigned in
some cases:
 An heir does not wish to become a member;
 A recipient is not approved by the Member’s Council to become a
member;
 A member being an organization is dissolved or bankrupt
A member may donate a part or all of its share to other persons. Where recipient is a spouse,
parent, child or relative up to the third rank of inheritance, the recipient shall automatically
become a member of the company. On other case, need approval of member council.

In case contributed capital is used to pay a debt, payee may use it to :

a. Become Member of the company upon approval of MC
b. Offer for sale and transfer under Art 53
 MANAGEMENT STRUCTURE OF
ARTICLE 46.

ORGANIZATIONAL AND
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, he or she must authorize another person in writing in accordance.)
 ARTICLE 56.

MEMBERS’ COUNCIL
Composed of all member and is the highest decision making authority of the company

Meetings of the Members' Councils provided by charter, at least once a year

Rights and duties Members' Councils:

 Development strategy and annual business plans
 Changes of the charter capital, time and methods for mobilizing capital.
 Methods of investment projects, market development and marketing, etc.
 Approve loan and contract for sale of assets valued at 50 or ore % of the total
value asset
 Elect, relive of duty and remove from office the chairperson of MC, director,
General director and other managers
 To decide on wages, bonus and other benefits for the chairman of MC, directors…
 approve annual financial statements and plans for uses ect.
 Decide on the organizational and management structure; reorganization of the
company
 Establishment of subsidiaries, 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
 ARTICLE 57.

CHAIRMAN
CHAIRMAN OF MC
Chairman of MC

●
Elected from and by MC’s members

MC
●
May concurrently work as director/general director
●
Term: not exceed 5 years.
●
May be re-elected for an unlimited term

Chairman Rights and Obligation

●
Prepare working programs, plans of MC
●
Prepare programs, agenda and document for meeting of MC
●
Convene and preside over meetings of MC
●
Supervise, organize the supervision of, the implementation of resolution of the MC
●
To sign resolutions of MC on be half of MC, ect.

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
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 ARTICLE 59.

CONDITIONS AND PROCEDURES

TIME NEEDED FOR
ATTENDING MEMBERS
CONDITIONS CONVENING NEXT

FOR CONDUCTING MEETINGS OF THE MEMBERS’ COUNCIL

REPRESENT
MEETING

1st meeting ≥ 65% of the charter 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.
The procedures for conducting meetings of the Members’ Council and the voting
method shall be stipulated in the charter of the company.
Meeting time may be extended but must not exceed 30 Working Days
 RESOLUTIONS OF THE MEMBERS’
ARTICLE 60.

A resolution of the Members’ Council shall be passed

COUNCIL
by voting in a meeting if:

Number of votes representing ≥ 65% of the aggregate capital

of the attending members to pass:; decision on development
direction; election, discharge, removal of chairman or
director; approval of financial statement;

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, solution on amend/supplementation to
the charter of the company; reorganization or dissolution of the
company

Voting method? Collecting opinion ? When will the resolution

come in to effect?
 ARTICLE 64.

DIRECTOR
DIRECTOR OR
DIRECTOR
DIRECTOR
OR GENERAL
Director/General Director

GENERAL
●
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; business plans; investment plans of the company
●
Issue internal management regulation
●
Appoint, relieve of duty, remove from office managers in the company, except those fall within the competence of MC
●
Signs contract in the name of company, 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, ect.
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 DIRECTOR
BECOME A DIRECTOR OR GENERAL
CRITERIA AND CONDITIONS TO
ARTICLE 65.

To have full capacity for civil acts and not to be prohibited from
management of enterprises under clause 2, art 18 of this Law.

Have professional qualifications and experience in business

administration of the company, unless states otherwise by the
charter

For Subsidiry company where the state contributed capital

>50%, director or general director may not be the spouse,
father, adoptive father/mother/child, child, sibling,
brother/sister in law of either the manager f the parent
company and or person representing the state capital in such
company
 INCREASE AND REDUCTION OF
ARTICLE 68.

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 capital by

Redeeming shares of capital contribution as stipulated in Art 44 of this Law
way of
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
 CONDITIONS FOR DISTRIBUTION
ARTICLE 69

OF PROFIT
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, Director?

 RESPONSIBLE OF CHAIRMAN OF
ARTICLE 71.

MC, DIRECTOR, AT LAW

REPRESENTATIVE…
Chairman of MC, director or general director, at law
representative, supervisors, other managers

●
Exercise and perform rights, obligation in an honest, prudent, and best manner
●
Faithful to the interest of the company; abuse their positions and title, assets, ect.
●
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
 INITIATION
INITIATION OF
ARTICLE 72
Cases

MANAGERS
MANAGERS
OF LAWSUITS
• Violating the provision of Art 71

LAWSUITS AGAINST
• Failing to properly and sufficiently exercise the assigned
rights and perform the assigned obligations; act against
the law and charter of the company

AGAINST
• 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, will be

included in the company expense

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