Owners of a single-member limited liability company and their legal responsibilities

1. Company members

The owner of a single-member LLC can be a domestic investor or a foreign investor who must fully comply with the provisions of law regarding legal capacity, civil conduct capacity and business conduct capacity. The owner has the rights to manage, operate or control the activities of the company. This brings great rights and responsibilities in deciding and operating aspects of business activities.

The characteristics of members in a company are also the legal basis for distinguishing between a single-member LLC and a private enterprise (the owner is an individual). The owner of a single-member LLC exercises the rights and obligations according to the provisions of law and the company's Charter.

In case a single-member LLC has an owner that is an organization, it will be managed and operated according to one of the following two models:

• Model 1: Company Chairman, General Director or Director, Controller.
• Model 2: Board of members, General Director or Director, Controller.

In the case of a single-member LLC with an individual owner, there will be the following positions: Chairman of the company, General Director or Director. The Chairman of the company can concurrently hold the position of General Director/Director or hire someone else to take on this position.

The rights and obligations of the General Director/Director of a one-member LLC are clearly stated in the Company Charter and the labor contract signed with the Company Chairman.

Note: If the Charter of a single-member limited liability company does not stipulate, the Chairman of the company or the Chairman of the Board of Members will be the legal representative of the company as prescribed in Articles 81 to 84, Law on Enterprises 2020.

2. Owner's responsibility for property

The owner of a single-member LLC is responsible for the company's debts and financial obligations, and for damages caused by not contributing, not contributing in full, or not contributing on time the charter capital within the scope of the company's charter capital. This is the difference between a single-member LLC and the liability regime of a private enterprise owner (unlimited liability). In addition, a single-member LLC implements the principle of separation of assets between the assets of the company owner and the assets of the company. This principle applies to all property relations, debt obligations, and legal responsibilities of the company during its operations (committed capital or capital contributed to the company).

In addition, the owner of a single-member LLC has the right to withdraw capital only by transferring part or all of the charter capital to another organization or individual. In case of withdrawing part or all of the contributed charter capital from a single-member LLC through other means, the owner of the company and related individuals and organizations will be jointly liable for all debts and other property obligations of the company.

3. Legal status of the company

According to Clause 2, Article 74 of the Enterprise Law 2020, a single-member limited liability company has legal status from the time it is granted a Certificate of Enterprise Registration. After that, the company will have its own seal, independent assets, its own headquarters and can participate in legal relations in its own name without being dependent on the status of the owner. Therefore, a single-member limited liability company is considered a legal entity.

4. Charter capital

According to Article 75 of the Enterprise Law 2020, Charter capital will be the total value of assets that the owner has committed to contribute at the time the owner registers the business: This capital will be recorded in the Charter of the 1-member LLC, the deadline for capital contribution in accordance with the owner's commitment is 90 days, starting from the effective date of the Business Registration Certificate. The owner must change the charter capital according to the procedure if he/she fails to contribute enough within the above time.

Based on Article 34 of the Law on Enterprises 2020, the charter capital of a single-member LLC can be contributed by the following assets:

• Assets contributed to a single-member LLC can be Vietnamese Dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technology, technical know-how and other assets that can be valued in Vietnamese Dong.
• Only individuals or organizations that are legal owners or have legal rights to use the assets specified in Clause 1 of this Article have the right to use such assets to contribute capital to a single-member LLC in accordance with the provisions of law.