Regulations on the organizational and management structure of a single-member limited liability company owned by an organization

Is it possible to increase charter capital based on the company’s profits? What model is the organizational and management structure of a single-member limited liability company owned by the organization?

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

According to Article 74 of the Law on Enterprises 2020, the regulations on single-member limited liability companies are as follows:

“Article 74. One-member limited liability company

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

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

3. A single-member limited liability company is not allowed to issue shares, except in the case of suitable for conversion into a joint stock company.

4. A single-member limited liability company is entitled to issue bonds in accordance with the provisions of this Law and other relevant laws; the issuance of individual bonds according to the provisions of Article 128 and Article 129 of this Law.”

Accordingly, a single-member limited liability company is an enterprise owned by an organization or an individual. be the owner (hereinafter referred to as the company owner). The company owner is responsible for the company’s debts and other property obligations within the company’s charter capital.

2. What model does the organizational and management structure of a single-member limited liability company owned by an organization operate under?

According to Article 79 of the Law on Enterprises 2020, the regulations on the organizational and management structure of a single-member limited liability company owned by an organization are as follows:

“Article 79. Organizational and management structure of a limited liability company one member owned by the organization

1. A one-member limited liability company owned by the organization is managed and operated according to one of the following two models:

a) Company President, Director or General Director;

b) Board of members, Director or General Director.

2. For companies whose owners are state-owned enterprises as prescribed in Clause 1, Article 88 of this Law, a Supervisory Board must be established; in other cases, the organizational structure, working regime, standards, conditions, dismissal, dismissal, rights, obligations and responsibilities of the Supervisory Board and Controllers shall be implemented accordingly according to the provisions of Article 65 of this Law.

3. The company must have at least one legal representative who holds one of the following positions: Chairman of the Board of Members, President of the company or Director or General Director. If the company’s Charter does not stipulate, the Chairman of the Board of Members or President of the company is the legal representative of the company.

4. The functions, rights and obligations of the Board of Members, Company President, Director or General Director shall comply with the provisions of this Law.”

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

– Company President, Director or General Director;

– Board of members, Director or General Director.

3. Is it possible to increase charter capital based on the profits of a single-member limited liability company?

According to Article 87 of the Law on Enterprises 2020, the regulations on increasing and decreasing charter capital are as follows:

“Article 87. Increasing and decreasing charter capital

1. A single-member limited liability company increases its charter capital through the company owner contributing additional capital or mobilizing additional capital contributions from others. The company owner decides on the form and amount of charter capital increase.

2. In case of increasing charter capital by mobilizing additional capital contributions from others, the company must organize management in the form of a limited liability company with two or more members or a joint stock company. The organization and management of the company is carried out as follows:

a) In case of organization of management in the form of a limited liability company with two or more members, the company must notify the change in business registration content within 10 days from the date of completion of the change in charter capital;

b) In case of conversion into a joint stock company, the company shall comply with the provisions of Article 202 of this Law.

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

a) Refund a portion of 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 full payment of debts and other property obligations after returning the capital contribution to the company owner;

b) charter capital The charter capital is not paid in full and on time by the company owner according to the provisions of Article 75 of this Law.”

Accordingly, a single-member limited liability company increases its charter capital through the company owner contributing additional capital or mobilizing additional capital contributions from others. The company owner decides on the form and amount of charter capital increase. Thus, the owner has the right to use profits to increase the company’s charter capital as in normal capital contribution procedures. usually.