In what cases can I not be the Director of a single-member limited liability company?

Is a person simultaneously acting as Director of two single-member limited liability companies prohibited by law?

1. Who is the Director of a single-member limited liability company?

Pursuant to Clause 1, Article 82 of the Law on Enterprises 2020, regulations on the Director or General Director of a 1-member limited liability company are as follows:

“Article 82. Director, General Director

1. The Board of Members or the President of the company appoints or hires a Director or General Director for a term of not more than 5 years to manage the company’s daily business activities. The Director or General Director is responsible before the law and the Board of Members or the President of the company for exercising their rights and obligations. The Chairman of the Board of Members, other members of the Board of Members or the President of the company may concurrently be the Director or General Director, unless otherwise prescribed by law or the company’s charter.”

According to the above regulations, it can be understood that a 1-member limited liability company is a position appointed or hired by the Board of Members or the President of the company for a term of not more than 5 years to manage the company’s daily business activities. In addition, the Chairman of the Board of Members, other members of the Board of Members or the President of the company may concurrently be the Director, unless otherwise prescribed by law or the company’s charter.

The Director is responsible before the law and the Board of Members or the Company President for exercising his or her rights and obligations.

2. In what cases are you not allowed to be Director of a single-member limited liability company?

Accordingly, in Clause 2, Article 17 of the Law on Enterprises 2020, individuals in the following cases are not entitled to manage a single-member limited liability company:

– Cadres, civil servants and public employees according to the provisions of the Law on Cadres and Civil Servants and the Law on Public Employees;

– Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, and police workers in agencies and units of the Vietnam People’s Police, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises or manage state-owned enterprises;

– Leading and professional managers in state-owned enterprises as prescribed in Point a, Clause 1, Article 88 of this Law, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;

– Minors; people with limited civil act capacity; people who have lost their civil act capacity; people with difficulty in cognition and behavior control; organizations without legal status;

– People who are being prosecuted for criminal liability, detained, are serving prison sentences, are serving administrative measures at compulsory drug treatment facilities, compulsory education establishments or are banned by the Court from holding certain positions, practicing professions or doing certain jobs; Other cases according to the provisions of the Bankruptcy Law and the Law on Prevention and Combat of Corruption. Thus, based on the above regulations, an individual can still be the director of two limited liability companies with two or more members.

3. Standards and conditions to become a single-member limited liability company

The Director of a single-member limited liability company must meet the standards and conditions as prescribed in Clause 3, Article 82 of the Law on Enterprises 2020, specifically:

“Article 82. Director, General Director

…

3. The Director or General Director must have the following standards and conditions:

a) Not subject to provisions in Clause 2, Article 17 of this Law;

b) Have professional qualifications and experience in business administration of the company and other conditions prescribed by the company’s Charter.”

Thus, an individual who is not prohibited from managing a business according to the provisions of the Enterprise Law and has professional qualifications and experience in business administration of the company and other conditions prescribed by the company’s Charter, then that individual is qualified to be the Director of a 1-member limited liability company. At the same time, the law does not stipulate how many single-member LLCs an individual can manage, so a person can still be the Director of two single-member LLCs at the same time.