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Regulations on multi-member limited liability company

11/10/2021
The model of a multi-member limited liability company is an intermediate model. So what are the legal regulations on this type of company? Let's find out with Siglaw.

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

According to Article 46 of Law on Enterprise 2020, the multi-member limited liability company is regulated as follows:

  • A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise, except for the cases specified in Clause 4 Article 47 of this Law. The member’s stake (contributed capital) may only be transferred in accordance with Articles 51, 52 and 53 of Law on Enterprises 2020.

  • A multiple-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.

  • Multiple-member limited liability companies must not issue shares except for equitization.

  • Multiple-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds shall comply with Article 128 and Article 129 of Law on Enterprises 2020.

2. Features of multi-member limited liability company

According to Law on Enterprise 2020, features of multi-member limited liability company include:

About company members

Number of members: Members of a multi-member limited liability company have a minimum of two and a maximum of 50 members.

Conditions: A member of a multi-member limited liability company that is an individual or an organization may have Vietnamese or foreign nationality. However, these individuals and organizations are not prohibited from establishing, contributing capital, buying shares, buying contributed capital and managing enterprises.

About the charter capital of the company

According to Clause 1, Article 47 of the Law on Enterprises 2020, the charter capital of a multi-member limited liability company when registering for enterprise establishment is the total value of the contributed capital which members commit to contribute and stated in the company's charter.

Members must contribute capital to the company with the full amount and the right type of assets as committed when registering for enterprise establishment within 90 days from the time of being granted the enterprise registration certificate (ERC), excluding the time for transporting, importing, contributing assets, and carrying out administrative procedures to transfer property ownership.

During this period, the member has rights and obligations in proportion to the committed capital contribution ratio. Members of the company may only contribute capital to the company with an asset which is different from the committed one if it is approved by more than 50% of the remaining members.

In case there are members who have not yet contributed or have not fully contributed the committed capital, the company must register to adjust the charter capital, the proportion of contributed capital of the members equivalent to the contributed capital within 60 days from the last day when members must contribute capital in full.

About property liability of members

The company is solely responsible with all its assets because the company has legal status.

Members are responsible for the debts and other property obligations of the enterprise to the extent of the amount of their contributed capital.

Particularly for the time of company establishment: Within 90 days from the date of issuance of the Enterprise Registration Certificate (ERC) or a shorter time limit specified in the charter. The members who have not contributed capital or have not fully contributed the committed capital shall be responsible in proportion to the committed capital contribution for the financial obligations of the company arising during this time.

About legal status

A multi-member limited liability company has legal status from the date of issuance of the Certificate Enterprise Registration (ERC). As a result, the company may act on its own behalf in business transactions and activities.

About organizational structure

The organizational structure of a multi-member limited liability company is quite strict, including: Board of Members, President of the Board of Members, Director/General Director. A limited liability company with 11 or more members must establish a Board of Controllers; In case there are less than 11 members, the Board of Controllers may be established in accordance with the requirements of corporate governance. The rights, obligations, standards, conditions and working regime of the Board of Controllers and the Head of the Board are stipulated in the company's charter.

About capital mobilization

A multi-member limited liability company cannot raise capital by issuing shares because shares are specific characteristics of the joint stock company model to raise capital. However, a multi-member limited liability company can still apply the following methods of raising capital:

  • Increase the company's charter capital by admitting new members but not exceeding 50 members.

  • Increase the company's charter capital by raising capital from active members in the company.

  • Mobilize capital through activities of borrowing capital and credit from individuals and organizations.

  • Release bonds.

For comprehensive support, please contact:

Siglaw legal company limited (Siglaw Firm)

Hotline: +84 967 818 020

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Address: Floor 12A Sao Mai building, No. 19 Le Van Luong street, Nhan Chinh Ward, Thanh Xuan District, Hanoi.

Hotline: +84 967 818 020

Email: hanoi@siglaw.vn

Ho Chi Minh City Branch:

Address: 21 N4 street, Commercial service and housing complex at No.16/9 Bui Van Ba street, Tan Thuan Dong Ward, District 7, Hochiminh city.

Hotline: +84 985 982 659

Email: hcm@siglaw.vn 


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CÔNG TY SIGLAW
Headoffice in Hanoi:
Address: Floor 12A Sao Mai building, No. 19 Le Van Luong street, Nhan Chinh Ward, Thanh Xuan District, Hanoi.
Hotline: +84 967 818 020
Email: hanoi@siglaw.vn
 
Ho Chi Minh City Branch:
Address: 21 N4 street, Commercial service and housing complex at No.16/9 Bui Van Ba street, Tan Thuan Dong Ward, District 7, Hochiminh city.
Hotline: +84 985 982 659
Email: hcm@siglaw.vn
 
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