Legal knowledge about two most typical types of enterprise in Vietnam20/11/2019 admin
Minimum number of founding members: from 2 to 50 members which can be individuals or legal entities. A LLC shall not be allowed to: (i) issue shares and (ii) list on Stock Exchange.
1. LLC with two members or more
- Organizational and managerial structure
Members’ Council which consists of all equity members, Chairman of the Members’ Council; (General) Director and Board of Inspectors in case there are more than 11 equity members; and
- Conditions for the convening meetings of the Members’ Council
A meeting of the Members’ Council shall be conducted where the attending members represent at least 65% of the charter capital. In case the first meeting does not satisfy the conditions to conduct the meeting, a meeting of the Members’ Council shall be conducted a second time where the attending members represent at least 50% of the charter capital. There will be no quorum requirement in case of the third meeting of the Members’ Council.
- Conditions for the passing of resolutions of the Members’ Council
A resolution of the Members’ Council will be passed where it is agreed by the number of votes representing at least 65% of the aggregate capital of the attending members by way of voting at meetings of the Members’ Council or at least 75% when dealing with the important issues.
Minimum number of founding shareholders: at least 3 shareholders and there is no restriction on the maximum number. Founding shareholders may be organizations or individuals.
- Operational and managerial structure may utilise either of the following models
– The General Meeting of Shareholders (“GMS”) is the highest decision-making authority of the company, the Board of Management (“BOM”), (General) Director and the Board of Inspectors (if there are less than 11 shareholders and the organization shareholders hold less than 50% of the total shares of the company, it is not required to have the Board of Inspectors); or
– The GMS, the BOM (if there is at least 20% of the number of members of the BOM which are the independent members and there is an internal auditing board under the BOM) and the (General) Director.
– The shareholding company is allowed to issue shares and list on the Stock Exchange.
– A shareholding company has ordinary shares and preference shares, with preference shares comprising voting preference shares, dividend preference shares, redeemable preference shares, and other preference shares as stipulated in the charter of the company (if any).
- Conditions to convene the meetings of the GM
The meeting of the GMS will be legally valid with the presence of shareholders representing at least 51% of the total number of shareholders with voting rights, unless otherwise provided for in the charter of the company. In case the first meeting fails to convene the required number of shareholders, the second meeting will need at least 33% of shareholders with voting rights. There will be no quorum requirement in case of the third meeting of the GMS.
- Resolutions of the GMS
– A resolution will be passed if at least 51% of the attending shareholders with voting rights approve such a resolution, unless otherwise stipulated in the charter of the company. This ratio is 65% for resolution of important issues of the company;
– To elect members of the BOM and of the Board of Inspectors, a cumulative voting method shall be applied.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.