Rights of the owner of an LLC

The owner of an LLC holds the ultimate decision-making power in the business. The owner can be an individual or a legal entity, owning the entire charter capital and management rights of the company. They act as legal representatives, deciding on business strategies and organizational structures. The owner is responsible for debts within the scope of charter capital. This article will analyze in detail the rights of LLC owners.

Concept and characteristics of a one-member limited liability company

Definition of an LLC

According to Article 74 of the Law on Enterprises 2020, a one-member limited liability company is an enterprise owned by an organization or individual. The company owner is responsible for the debts and other property obligations of the company. company within the company’s charter capital. This characteristic creates a difference compared to other types of businesses, especially joint stock companies or limited liability companies with two or more members.

The charter capital of an LLC is decided by the owner and must be clearly stated in the company’s charter. The owner is responsible for contributing the committed charter capital in full and on time. Changes to charter capital must comply with the provisions of law and be recorded in the company charter after completing the procedures for changing business registration.

Organizational structure of One Member Limited Liability Company

The organizational structure of a One Member Limited Liability Company is specifically regulated in Article 79 of the Law on  Enterprises 2020. Accordingly, the company can be organized, managed and operated according to one of two models:

• Company President, Director or General Director;
• Board of members, Director or General Director.

In the first model:

• The company president is the legal representative, unless the company charter stipulates that the Director or General Director is the legal representative;
• The company president has the right to decide on issues related to the organization, management and business of the company, except for issues within the authority of the owner.

In the second model:

• The Board of Members includes the Chairman of the Board of Members and other members. The number of members is decided by the company owner, but must not exceed 07 people;
• The Board of members, on behalf of the company owner, exercises the rights and obligations of the owner; On behalf of the company, exercise the rights and obligations of the company, except for the rights and obligations of the Director or General Director.

The Director or General Director is the person who runs the company’s daily business activities, and is responsible to the President of the company or the Board of Members and to the law for the implementation of his or her rights and obligations.

In addition, according to Clause 2, Article 79 of the Law on Enterprises 2020, for companies whose owner is a state-owned enterprise as prescribed in Clause 1, Article 88 of this Law, a Control Board must be established; Other cases are decided by the company.

Distinguishing the owner of an LLC

The owner of an LLC can be an individual or a legal entity, each type of ownership has its own characteristics and regulations. This difference affects the way the company is managed, operated and responsible. Understanding the distinction between individual owners and legal entities helps to accurately determine the rights and obligations of the owner.

When the owner is an individual:

• That person directly exercises the rights and obligations of the company owner. This individual has the highest decision-making authority on all company activities, including appointing and dismissing company managers, deciding on business strategies, and approving financial reports;
• The individual owner often simultaneously holds the position of President of the company or Director/General Director, directly managing the daily operations of the business.

When the owner is a legal entity:

• The rights and obligations of the owner are exercised through the legal representative or authorized person of that organization;
• The owner’s legal entity often appoints a Board of members to exercise the rights and obligations of the owner. This council can consist of from 1 to 7 members, decided by the owner’s legal entity.

Regarding financial responsibility:

• Both individual owners and legal entities are responsible for the company’s debts and other property obligations within the company’s charter capital. However, the way this responsibility is carried out may vary;
• For individual owners, this responsibility is attached to their personal assets within the scope of charter capital. As for the owner being a legal entity, this responsibility belongs to that legal entity.

Regarding the right to legal representation:

• When the owner is an individual, that person is often directly the legal representative of the company;
• When the owner is a legal entity, the legal representative of the company is usually the Chairman of the Board of Members or the Director/General Director, depending on the provisions of the company’s Charter.

Rights of the owner of an LLC according to the Law on Enterprises 2020

Financial rights of the owner of the LLC

The owner of an LLC holds important financial rights in the business. These rights ensure owners have a decisive say in major transactions that significantly affect the company’s assets and operations. The financial rights of the owner of a One Member Limited Liability Company according to Clause 1, Article 76 of the Law on Enterprises 2020 include:

• Approving loan contracts, lending, asset sales and other contracts stipulated by the company charter with a value of 50% or more of the total asset value recorded in the company’s most recent financial report or a ratio or other value smaller than specified in the company charter;
• Through the company’s financial statements;
• Decision to increase the company’s charter capital; Transfer part or all of the company’s charter capital to other organizations or individuals; decision to issue bonds.

Representation and management rights of the owner of an LLC

The owner of an LLC has the rights to represent and manage the business as well as make important decisions that affect the entire business. This allows the owner to build an effective and flexible management apparatus according to the actual needs of the business. The representation and management rights of the owner of a One Member LLC according to Clause 1, Article 76 of the Law on Enterprises 2020 include:

• Decide on the content of the Company Charter, amend and supplement the Company Charter;
• Decide on the company’s development strategy and annual business plan;
• Decide on the company’s organizational and management structure, appoint, dismiss, and dismiss managers and controllers of the company;
• Decide on investment and development projects;
• Decide on market development, marketing and technology solutions;
• Decide to establish a subsidiary or contribute capital to another company;
• Organize monitoring and evaluation of the company’s business activities;
• Decide on the use of profits after completing tax obligations and other financial obligations of the company;
• Decide to reorganize, dissolve and request bankruptcy of the company;
• Recover the entire value of the company’s assets after the company completely dissolves or goes bankrupt.

Management consulting services One Member Limited Liability Company

The establishment and operation of a Limited Liability Company must comply with the provisions of law. The following services of Long Phan will be the optimal solution, helping business owners ensure legal issues during business operations:

• Consulting services for establishment and management of One Member Limited Liability Company;
• Support in drafting the Charter and internal documents;
• Support in implementing procedures to request repurchase of capital contributions;
• Consulting on corporate management strategy
• Consulting on legal regulations on the rights of LLC owners;
• Advise on plans and plans to manage risks that may arise
• Update and advise on new regulations in the Enterprise Law 2020.

The owner of a single-member LLC holds many important rights according to corporate law. Understanding your rights and obligations not only helps customers protect their personal interests but also ensures that their business activities take place legally and effectively. If you need legal advice on business law and other related issues, contact Long Phan immediately via hotline: 0906.735.386 for support.