The role of the board of members in the company

Article overview

The board of members is the highest decision-making body in limited liability companies or partnerships. The board of members has a role in making strategic decisions, monitoring business activities and ensuring the rights of members. This article will help customers understand the role of the board of members to help the company operate more effectively, maintain transparency in management, and build a solid foundation for sustainable development.

Board of members in limited liability company
Board of members in limited liability company

Who are the members of the board of members in a limited liability company?

Firstly, for LLCs with two or more members

According to the provisions of Clause 1, Article 55 of the Law on Enterprises 2020, the Board of Members is the highest management body in the company, responsible for deciding important issues related to the company’s operations, such as development strategy, profit distribution, and major financial decisions.

Board members include:

  • All company members are individuals;
  • The authorized representative of a company member is an organization.

Second, for one-member limited liability companies

For single-member LLCs, it is not required to have a Board of Members. Depending on the owner’s decision, they will choose an organizational structure with a Board of members or not.

Pursuant to Clause 1, Article 80 of the Law on Enterprises 2020, the structure of the Board of Members of a single-member LLC includes:

  • There are from 3 to 7 members;
  • Members of the Board of Members are appointed and dismissed by the company owner for a term not exceeding 5 years.

The role of the Board of Members in a limited company

LLC with two or more members

According to the provisions of Clause 2, Article 55 of the Law on Enterprises 2020, the role of the Board of Members of a LLC with 2 or more members is as follows:

  • Decide on the company’s development strategy and annual business plan;
  • Decide to increase or decrease charter capital, decide when and how to mobilize additional capital; decision to issue bonds;
  • Decide on investment and development projects of the company; solutions for market development, marketing and technology transfer;
  • Through loan, lending, asset sale contracts and other contracts as prescribed in the Company Charter with a value of 50% or more of the total asset value or a smaller ratio or value as prescribed in the Company Charter;
  • Elect, dismiss, and dismiss the Chairman of the Board of Members; decide to appoint, dismiss, dismiss, sign and terminate contracts with the Director or General Director, Chief Accountant, Controller and other managers specified in the company’s Charter;
  • Decide on salaries, remunerations, bonuses and other benefits for the Chairman of the Board of Members, Director or General Director, Chief Accountant and other managers specified in the company’s Charter;
  • Approve the company’s annual financial report, plan for using and distributing profits or dealing with losses;
  • Decide on the company’s organizational and management structure;
  • Decision to establish subsidiaries, branches, representative offices;
  • Amending and supplementing the company charter;
  • Decide to reorganize the company;
  • Decision to dissolve or request bankruptcy of the company;
  • Other rights and obligations according to the provisions of this Law and the company’s Charter.

One member LLC

According to the provisions of Article 80 of the Law on Enterprise 2020, the Board of Members of a single-member limited liability company has the following roles:

  • The Board of Members, on behalf of the company owner, exercises the rights and obligations of the company owner;
  • On behalf of the company, exercise the rights and obligations of the company;
  • Be responsible before the law and the company owner for implementing assigned rights and obligations.
Regulations on the role of the board of members
Regulations on the role of the board of members

Which contracts and transactions must be approved by the Board of Members?

The rights and obligations of the Board of Members of a LLC with two or more members are specified in Clause 2, Article 55 of the Law on Enterprises 2020, which stipulates the types of contracts and transactions that must be accepted by the Board of Members. Specific agreements are as follows:

  • Loan contract;
  • Loan contract;
  • Contracts to sell assets with a value of 50% or more of the total asset value (or another percentage if prescribed by the Company Charter) must be approved by the Board of Members before implementation.

For a one-member limited liability company, transactions transferring part or all of the company’s charter capital can be approved by members.

Contracts and transactions need to be approved
Contracts and transactions need to be approved

Consulting services for establishing a board of members of a LLC with 2 or more members

Long Phan specializes in providing consulting and support services on establishing a board of members of a LLC with 2 or more members, including the following services:

  • Conditions for establishing the Board of Members;
  • Consulting on the organizational structure of Council members;
  • Instructions on establishment processes and procedures;
  • Advise on the rights and obligations of the Board of Members;
  • Consulting on transactions in limited liability companies that are required to be approved by the Board of Members;
  • Consulting and supporting the development of effective operating plans for the Board of Members;
  • Advise on other issues related to the Board of Members.

Long Phan with a team of experts has many years of experience in the field of consulting and supporting the establishment of Board of Members for businesses. We believe that we will provide customers with the most dedicated and effective consulting and support services. If you need advice on the establishment, organization and operation of the Limited Company Board of Members, please contact us via the hotline: 0906735386 for timely support.