Management Structure of a Single-Member LLC Owned by an Organization under Vietnamese Law

Can charter capital be increased from a company’s profits? Under which model does a single-member limited liability company owned by an organization operate?

1. What is a single-member limited liability company?

Article 74 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective 01/7/2025) provides on single-member limited liability companies as follows:

“Article 74. Single-member limited liability companies

1. A single-member limited liability company is an enterprise owned by one organization or one individual (hereinafter referred to as the company owner). The company owner is liable for the debts and other property obligations of the company to the extent of the company’s charter capital.

2. A single-member limited liability company has legal personality from the date of issuance of the Enterprise Registration Certificate.

3. A single-member limited liability company may not issue shares, except for conversion into a joint-stock company.

4. A single-member limited liability company may issue bonds in accordance with this Law and other relevant laws; private placement of bonds shall comply with Articles 128 and 129 of this Law.”

Accordingly, a single-member limited liability company is an enterprise owned by one organization or one individual (hereinafter the company owner). The company owner is liable for the debts and other property obligations of the company to the extent of the company’s charter capital.

2. Under which model does a single-member LLC owned by an organization operate?

Article 79 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective 01/7/2025) provides on the management structure of a single-member limited liability company owned by an organization as follows:

“Article 79. Management structure of a single-member limited liability company owned by an organization

1. A single-member limited liability company owned by an organization shall be organized, managed, and operated under one of the following two models:

a) Company President, Director or General Director;

b) Members’ Council, Director or General Director.

2. For a company whose owner is a state-owned enterprise as prescribed in clause 1, Article 88 of this Law, a Supervisory Board must be established; in other cases, the company decides. The organizational structure, working regime, standards, conditions, dismissal, removal, rights, obligations, and responsibilities of the Supervisory Board and Supervisors shall comply respectively with Article 65 of this Law.

3. The company must have at least one legal representative who holds one of the titles of President of the Members’ Council, Company President, or Director or General Director. Where the company charter does not provide otherwise, the President of the Members’ Council or the Company President is the legal representative of the company.

4. Unless the company charter provides otherwise, the organizational structure, operation, functions, rights, and obligations of the Members’ Council, Company President, Director or General Director shall comply with this Law.”

Accordingly, a single-member limited liability company owned by an organization is organized, managed, and operated under one of the following two models:

– Company President, Director or General Director;

– Members’ Council, Director or General Director.

3. May a single-member LLC increase its charter capital from profits?

Article 87 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective 01/7/2025) provides on increase and decrease of charter capital as follows:

“Article 87. Increase and decrease of charter capital

1. A single-member limited liability company increases its charter capital through additional contributions by the company owner or by raising additional capital contributions from others. The company owner decides the form and level of the charter capital increase.

2. Where the charter capital is increased by raising additional capital contributions from others, the company must be organized and managed as a multi-member limited liability company or a joint-stock company. The company’s management shall be organized as follows:

a) Where organized as a multi-member limited liability company, the company must notify the change of enterprise registration contents within 10 days from the date of completion of the charter capital change;

b) Where converted into a joint-stock company, the company shall comply with Article 202 of this Law.

3. A single-member limited liability company decreases its charter capital in the following cases:

a) Returning part of the capital contribution to the company owner if the company has operated continuously for 02 years or more from the date of enterprise registration and ensures payment of all debts and other property obligations after returning the capital contribution to the company owner;

b) The charter capital is not fully and timely paid by the company owner as prescribed in Article 75 of this Law.”

Accordingly, a single-member limited liability company increases its charter capital through additional contributions by the company owner or by raising additional capital contributions from others. The company owner decides the form and level of the charter capital increase. Thus, the owner may use profits to increase the company’s charter capital following the normal capital contribution procedure.