What is a single-member limited liability company and its characteristics?

1. Definition of a single-member LLC

According to Article 74 of the 2014 Enterprise LawA single-member limited liability company is a unit owned by an individual or an organization. The owner will be legally responsible for the debts, financial obligations and other legal liabilities of the company and the scope of this responsibility is limited to the amount of charter capital that the owner has invested in the company.

A single-member limited liability company owned by an individual has a Chairman, Director or General Director. The owner of the company acts as the Chairman of the company and may concurrently hold the position or hire another person to be the Director or General Director to manage and operate the company's operations.

Thus, a single-member limited liability company not only shapes business operations but also strictly complies with relevant legal regulations, ensuring transparency and compliance in all aspects of business operations.

For example: Mr. A lives in Ho Chi Minh City and registers to establish a one-member LLC operating in the cosmetics industry with a registered charter capital of 300 million VND. After completing all legal procedures and paying the required capital, Mr. A's company will be granted a Business Registration Certificate and officially become a legal entity.

Suppose after more than 2 years of operation, Mr. A's company is operating at a loss and has a debt of 1 billion VND. Even though he has liquidated all of his assets, it is still not enough to cover the debt, so Mr. A does not need to use his personal assets to pay the debt on behalf of the company.

In the same case above, if Mr. A registers as a Private Enterprise, he must use personal assets to pay off debts.

2. Characteristics of a single-member LLC

A single-member LLC has the following 6 characteristics:

• Number of members in the company;
• Charter capital;
• Responsibilities of property owners;
• Capital mobilization;
• Legal status;
• The right to purchase shares or contribute capital to other companies.