Converting from a private enterprise to a limited liability company: Implementation procedures

Converting from a private enterprise to a limited liability company is an important step in the business development process. This procedure requires compliance with current legal regulations and careful preparation of documents and papers. This article will provide detailed instructions on the steps to convert from a private enterprise to a limited liability company, to assist customers in carrying out this procedure smoothly and effectively.

Conditions for converting from a private enterprise to a limited liability company

The conversion from a private enterprise to a limited liability company must meet the conditions specified in Clause 1, Article 205 of the Law on Enterprises 2020. These conditions include:

• The converted enterprise must meet all the conditions as prescribed in Clause 1, Article 27 of the Law on Enterprises 2020.
• The owner of a private enterprise commits in writing to be personally responsible with all assets for unpaid debts.
• The owner of the private enterprise shall agree in writing with the parties to the unliquidated contract regarding the receipt and performance of those contracts by the LLC.
• The owner of the private enterprise commits in writing or agrees with other capital contributors to receive and use existing employees.

Documents for conversion from a private enterprise to a limited liability company

Pursuant to Clause 1, Article 26 of Decree 01/2021/ND-CP, documents for conversion from a private enterprise to a limited liability company include:

1. Application for business registration.
2. Company charter.
3. Copies of the following documents:

• Legal documents of the individual for the legal representative of the enterprise;
• Legal documents of the company owner who is an individual or organization (for a one-member limited liability company); Legal documents of members who are foreign investors, individuals or organizations (for 2-member limited liability companies;
• Legal documents of the individual for the authorized representative and document appointing the authorized representative;
• For company owners or members who are foreign organizations, copies of the organization’s legal documents must be consular legalized;

4. A written commitment by the private enterprise owner to be personally responsible with all of his or her assets for all unpaid debts and to commit to paying the debt in full when due.
5. Written agreement of the private enterprise owner with the parties to the unliquidated contract on the conversion of the company to receive and continue to perform those contracts.
6. Written commitment or written agreement of the private enterprise owner with other capital contributing members on the reception and use of existing employees of the private enterprise.
7. Transfer contract or documents proving completion of transfer in case of capital transfer of private enterprises; Donation contract in case of donating capital to a private enterprise; Copy of document certifying the legal inheritance rights of the heir in case of inheritance according to the provisions of law.
8. Document from the Investment Registration Authority approving the capital contribution and capital contribution purchase of foreign investors and foreign-invested economic organizations in cases where capital contribution registration and capital contribution purchase procedures must be carried out according to regulations.

Procedures for converting from a private enterprise to a limited liability company

Procedures for converting from a private enterprise to a limited liability company are carried out according to the following steps:

Step 1: Submit application

Submit the application at the Business Registration Office where the enterprise is headquartered through one of the following methods:

• Direct;
• Through postal service.

After receiving the business registration application, the Business Registration Office issues a Receipt of receipt of the application to the applicant.

Step 2: Appraise documents and issue certificates

• The Business Registration Office issues the Business Registration Certificate within 03 working days from the date of receipt of valid documents.
• In case the dossier is not valid or the business name requested to be registered does not comply with regulations, the Business Registration Office will notify in writing the content that needs to be amended or supplemented to the business founder or enterprise within 03 working days from the date of receipt of the dossier.
• In case of refusal to register a business, the Business Registration Office will notify the business founder in writing and clearly state the reason.

Notes when converting from a private enterprise to a limited liability company

When converting a private enterprise to a limited liability company, you need to pay attention to the following issues to ensure legal and effective business operations:

• Learn carefully the legal regulations on converting business types.
• Prepare complete and accurate documents according to regulations.
• Correctly follow conversion registration procedures and post-conversion procedures.
• It is necessary to clearly define the responsibility of the private enterprise owner for debts before conversion.
• Make a detailed list of existing contracts and agreements to ensure a smooth transfer to the LLC.
• Evaluate and develop current labor use plans for private enterprises.

Consulting services and guidance on converting from a private enterprise to a limited liability company

Long Phan Consulting Company provides comprehensive consulting and guidance services on procedures for converting from a private enterprise to a limited liability company. Our services include:

• Review and evaluate the legal status of private enterprises before converting;
• Consulting on appropriate conversion options;
• Consulting and drafting all necessary documents for the conversion process;
• Consulting and guidance on conversion registration;
• Representing customers to carry out conversion procedures;
• Consulting and supporting businesses to carry out tasks and procedures after conversion;
• Consulting and providing optimal solutions for businesses to operate effectively after conversion;
• Consulting and answering other related issues.

Frequently asked questions about converting a private enterprise to a limited liability company

Below are some frequently asked questions about converting a private enterprise to a limited liability company, please refer to:

What are the core benefits of converting a private enterprise to a limited liability company?

The conversion helps businesses separate asset responsibilities, create favorable conditions for capital mobilization, business expansion and enhance reputation with partners and customers.

Does a private enterprise need to be dissolved before establishing a new LLC?

No, the change process allows private enterprises to convert directly to LLCs without the need for separate dissolution procedures.

In case a private enterprise has outstanding debts, what responsibilities must the business owner have after converting into a limited liability company?

The owner of a private enterprise must commit to being personally responsible with all of his or her assets for unpaid debts.

After completing the conversion procedure, can the private enterprise’s seal be used again?

No, after converting to a limited company, the business must redo a new seal according to the limited company form.

When changing the form of business like that, is it necessary to change the information on the electronic invoice?

Yes, the LLC needs to carry out procedures to change information on electronic invoices with the tax authority.

Is the legal representative of a limited company required to be the owner of a private enterprise before conversion?

Optional. The legal representative can be one of the members of the LLC who is unanimously elected by the members.

If there is foreign investment, will the conversion procedure change much?

Yes, if there is foreign investment capital, a document from the Investment Registration Authority approving the capital contribution and purchase of capital contributions from foreign investors and economic organizations with foreign investment capital will be required.

The conversion from a private enterprise to a limited liability company opens up new development opportunities for businesses. Customers should carefully study the legal regulations and prepare complete documents to make the transition process go smoothly. If you need further advice, please contact Long Phan Consulting Company immediately via the hotline: 0906735386 for support.