Organizational structure of one-member limited liability company

If you have been wanting to establish a one-member limited liability company but don’t know how to allocate the organizational structure, in this article MVA Vietnam will share with you the standard structural system that is properly applied. Let’s find out now.

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

One-Member Limited Liability Company is a type of business in which there is only one owner. Below are some basic characteristics of this type of company:

1. Sole owner: A 1-member limited liability company has only one individual or organization as the owner. This owner has the sole discretion to decide all matters related to the company.
2. Limited Liability: The owner is only responsible for the company’s debts and financial obligations to the extent of the capital contributed to the company. This means that the owner’s personal assets are not affected if the company is in financial difficulty.
3. Legal status: A 1-member limited liability company has legal status from the date of issuance of the Enterprise Registration Certificate. The company has the right to sign contracts, own assets and participate in business activities on its own.
4. Company management: The company owner can directly run the company or hire someone else as a Director/General Director to run the day-to-day business. Major corporate decisions usually have to go through the Board of Members or the Board of Directors.
5. Capital transfer: The owner of a 1-member limited liability company has the right to transfer part or all of the charter capital to another person, thereby being able to convert into a limited liability company with two or more members or other types of enterprises.
6. Legal regulations: A 1-member limited liability company operates under the regulation of the Law on Enterprises and related guiding documents.

This type of business is suitable for individuals or organizations who want to control and manage the business on their own without having to share decision-making power with others, and at the same time want to minimize personal financial risks.

II. Understanding the organizational structure of a 1-member limited liability company

Currently, the organizational structure of a one-member limited liability company is completely regulated by the owner. Specifically, the owner of a one-member limited liability company can be an individual or an organization.

2.1. One-member limited liability company owned by an individual

Pursuant to the Law on Enterprises 2020, the organizational structure of a 1-member limited liability company owned by an individual includes: Chairman of the company, director or general director. The owner of the company has the right to appoint the company’s president, director, general director or may concurrently hold the above positions.

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2.2 One-member limited liability company owned by an organization

For the type of 1-member limited liability company owned by an organization, the organizational structure of the enterprise is as follows: 

• Model 1: Company president, director or general director; 
• Model 2: Board of members, director or general director. 

There must be at least 1 legal representative holding one of the following positions: Chairman of the Board of Members, Chairman of the company, Director or General Director. The Chairman of the Board of Members or the Chairman of the company will be the legal representative if the company’s charter does not stipulate.

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2.3. One-member limited liability company owned by a state-owned enterprise

The owner is the state holding 100% of the company’s charter capital and has the full right to change the organizational structure such as appointing, dismissing, and hiring business management levels, according to the following 2 models: 

• Model 1: Chairman of the company, director or general director, control board; 
• Model 2: Board of members, director or general director, control board.

III. Understanding the rights and obligations of the owner of a 1-member limited liability company

The owner of a 1-member limited liability company has specific rights and obligations specified in the Law on Enterprises of Vietnam. Here are the main rights and obligations of the owner:

3.1 Rights of the owner of a one-member limited liability company

• Decide on the company’s organizational structure and management

Decide on issues related to the organization and management of the company such as organizational structure, management apparatus, appointment, dismissal, and dismissal of management positions.

• Decide on strategy and business plan

Develop and approve the company’s development strategies, business plans and annual financial plans.

• Capital decisions

Decide to increase or decrease the company’s charter capital.

Transfer part or all of the charter capital to another individual or organization.

• Decide on profit distribution

Decide on the distribution of after-tax profits and handle losses during the business process.

• Decide on the establishment of subsidiaries and joint venture companies

Decide on the establishment of subsidiaries, joint ventures, affiliated companies and other forms of investment.

• Decision to amend and supplement the company charter

Decision on amending and supplementing the company charter.

• Dissolve or convert the company

Decide to dissolve the company or convert the business form.

3.2 Obligations of the owner of a one-member limited liability company

• Contribute charter capital in full and on time

Contribute fully and on time the capital committed when establishing the company. If they do not contribute in full and on time, the owner must be responsible for the company’s debts and property obligations within the committed capital amount.

• Responsible within the scope of capital contribution

The owner is only responsible for the debts and other property obligations of the company within the amount of capital contributed to the company.

• Management and use of company assets

Manage and use company assets legally and effectively, ensuring compliance with the provisions of law and the Company’s Charter.

• Comply with legal regulations

Comply with legal regulations on accounting, finance, taxes and other regulations related to the company’s business activities.

• Store and preserve company records

Store and preserve company records and documents according to the provisions of law and the company’s Charter.

• Reporting and disclosing information

Report and publicize information on business activities, financial situation and other issues of the company according to the provisions of law.

The owner of a one-member limited liability company plays a very important role in directing and managing the company’s business activities. Correct compliance with rights and obligations will help the company operate effectively and sustainably.

1. Conclusion

Thus, this article MVA Vietnam has explained to everyone the most specific organizational structure of a single-member limited liability company. Everyone can learn more for practical application. If you have any questions or need further advice or support, please contact the hotline number or comment below this article. Thank you!