The Limited Liability Company (LLC) is the predominant corporate vehicle for foreign investors entering Vietnam. While an LLC protects foreign investors from shareholder liability, operational compliance depends entirely on governance design.
Under the Law on Enterprises 59/2020/QH14, Vietnam separates ownership oversight from executive management. Multinational parents that import foreign governance practices risk stalling local operations. Drafting an enforceable charter, calibrating voting majorities, and complying with residency and capital deadlines are prerequisites for legal control. The full licensing sequence, from entity choice to post-incorporation filings, is covered in the step-by-step setup sequence. For how LLCs differ from JSCs, see the LLC vs JSC comparison.
1. How Single-Member and Multi-Member LLCs Are Governed
Foreign investors must align their corporate structure with statutory organizational frameworks defined under the Law on Enterprises 2020.
| Organizational Parameter | Single-Member LLC (One Corporate Owner) | Multi-Member LLC (2 to 50 Members) |
|---|---|---|
| Governing Statute | Law on Enterprises 59/2020/QH14, Section on single-member LLCs | Law on Enterprises 59/2020/QH14, Section on multi-member LLCs |
| Supreme Governing Body | Company President OR Members’ Council (3 to 7 persons) | Members’ Council (Composed of all equity members) |
| Executive Management | Director or General Director (Can be concurrent) | Director or General Director (Appointed by Council) |
| Oversight Mechanism | 1 to 5 Controllers, decided by the Owner; mandatory only where the Owner is a state-owned enterprise | Supervisory Board mandatory only for state-owned companies and their subsidiaries |
| Ownership Transfer | Reassignment of capital requires ERC/IRC amendment | Right of first refusal: Must offer to existing members first |
For a Single-Member LLC owned by a foreign parent corporation, Vietnamese law permits two organizational models under Article 79:
- Model A (Company President): The foreign parent designates a single authorized representative as the Company President (Chủ tịch công ty). The President exercises all shareholder rights and directly appoints or dismisses the Director/General Director. This model suits wholly owned subsidiaries that want centralized decision-making.
- Model B (Members’ Council): The foreign parent designates between 3 and 7 authorized representatives to form a Members’ Council (Hội đồng thành viên). The Owner appoints, or the Council elects, a Chairperson. This model is preferred by multinational conglomerates where regional directors and corporate functional heads share joint oversight.
In contrast, a Multi-Member LLC operates through a Members’ Council comprising all equity members. In joint ventures, governance shifts to negotiated charter terms, contractual veto mechanisms, and statutory majorities.
2. Delineation of Authority: Members’ Council vs. General Director
A frequent source of corporate friction in foreign-invested subsidiaries is operational overlap between ownership representatives and executive directors.
+------------------------------------------------------------------------------------+
| LLC GOVERNANCE POWER ALLOCATION |
+------------------------------------+-----------------------------------------------+
| MEMBERS' COUNCIL (SUPREME BODY) | DIRECTOR / GENERAL DIRECTOR (EXECUTIVE HEAD) |
+------------------------------------+-----------------------------------------------+
| - Approves annual business plans | - Manages day-to-day business operations |
| - Amends corporate charter | - Implements resolutions of Members' Council |
| - Adjusts charter capital levels | - Signs commercial contracts within limits |
| - Appoints / dismisses Director | - Hires and manages operational personnel |
| - Approves asset sales >= 50% | - Proposes operational budgets and staffing |
+------------------------------------+-----------------------------------------------+The Law on Enterprises 2020 explicitly divides statutory responsibilities between strategic ownership and operational execution:
The Members’ Council (Ownership Authority)
The Members’ Council is the highest decision-making authority. The Council possesses exclusive statutory power to:
- Determine medium-term development strategies and annual business operating plans.
- Decide on increases or reductions in charter capital, and determine the timing and method of capital mobilization.
- Approve major commercial contracts, borrowing facilities, and asset transactions valued at 50% or more of total assets recorded on the most recent financial statement (or a lower percentage if specified in the charter).
- Elect, appoint, remove, or dismiss the Chairperson of the Members’ Council, the Director or General Director, and the Controllers.
- Decide on corporate reorganization, division, merger, conversion into a joint-stock company, or voluntary dissolution.
The Director or General Director (Executive Authority)
The Director or General Director is the executive officer responsible for managing day-to-day corporate operations. The Director is accountable to the Members’ Council for the execution of delegated corporate duties.
When drafting the charter, foreign investors should establish clear financial authorization caps (e.g. requiring Members’ Council approval for contracts exceeding USD 50,000) to prevent unauthorized corporate commitments.
3. Statutory Quorum and Voting Thresholds for Members’ Resolutions
Decision-making in a Multi-Member LLC follows mandatory quorum rules under Articles 58 and 59 of the Law on Enterprises 2020. Minority joint-venture partners should know these benchmarks.
| Procedural Phase | Statutory Requirement |
|---|---|
| First Meeting Quorum | Attending members representing at least 65% of charter capital |
| Second Meeting Quorum | At least 50% of charter capital (convened within 15 days) |
| Third Meeting Quorum | Valid regardless of attendance or capital ratio (convened within 10 days) |
Ordinary resolutions pass at 65% of the attending capital and special resolutions at 75%. Special resolutions cover charter amendments, reorganization or dissolution, and sales of assets worth 50% or more of total assets. A capital increase or decrease passes at 65% unless the charter raises it, but a charter amendment needed to record the new capital still requires 75%. Full voting thresholds, veto effects and the Supervisory Board rules are set out in the LLC vs JSC comparison.
A minority investor holding 30% to 40% in a restricted-sector joint venture can block special resolutions by attending and voting against, provided the charter keeps the 75% rule. The charter may also set a higher percentage (such as 85% or unanimous consent) for critical decisions, which gives foreign minority partners contractual protection.
4. Legal Representative Residency Mandates and Appointment Criteria
The Legal Representative (Người đại diện theo pháp luật) occupies a unique legal position under Vietnamese corporate jurisprudence. The Legal Representative is not merely an executive employee; the individual is the statutory representative of the enterprise in its transactions and before courts and arbitration. Personal exposure is covered in the guide to legal representative liability risks.
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| LEGAL REPRESENTATIVE RESIDENCY RULES |
+--------------------------+---------------------------------------------------------+
| STATUTORY REQUIREMENT | COMPLIANCE RULE |
+--------------------------+---------------------------------------------------------+
| Mandatory Local Resident | At least ONE Legal Representative MUST reside in VN |
+--------------------------+---------------------------------------------------------+
| Leaving Vietnam (sole | Must give a written Power of Attorney (POA) to another |
| resident representative) | Vietnam-resident individual before departure |
+--------------------------+---------------------------------------------------------+
| Sole Representative Away | If absent from VN over 30 days without POA, the owner/ |
| | Council appoints a replacement |
+--------------------------+---------------------------------------------------------+
| Expatriate Appointee | Foreign national must hold a valid Work Permit under |
| | Decree 219/2025/ND-CP, or exempt with advance notice |
+--------------------------+---------------------------------------------------------+Multiple Legal Representatives
The Law on Enterprises 2020 permits LLCs to have more than one Legal Representative. A corporate charter can designate two Legal Representatives, typically appointing the foreign-nominated Chairman of the Members’ Council as the primary legal representative for strategic governance, and a locally based General Director as the operational legal representative for banking, tax, and labor matters.
Where multiple representatives are appointed, the Company Charter must explicitly delineate their respective scopes of authority. If the charter fails to define their separate duties, each Legal Representative is deemed by law to possess full, unrestricted representative authority to bind the company, creating significant potential exposure to conflicting corporate commitments.
5. 90-Day Capital Contribution Deadline and Beneficial Ownership Disclosure
Foreign-invested LLCs must meet capital formation deadlines and beneficial ownership reporting to keep their licenses in good standing.
The 90-Day Capital Contribution Clock
Capital contributors must pay the full registered charter capital within 90 calendar days from the ERC issuance date, through the company’s foreign investment capital account (formerly DICA). A shortfall means registering a capital reduction within 30 days, and a member who has contributed nothing ceases to be a member. Account opening, remittance rules and penalties are covered in the capital account compliance guide.
Beneficial Ownership Transparency
Corporate entities in Vietnam must identify and declare their ultimate beneficial owners (UBO) under Decree 168/2025/ND-CP, as amended by Decree 296/2026/ND-CP. A beneficial owner is defined as an individual who:
- Directly or indirectly owns 25% or more of the enterprise’s charter capital.
- Exercises ultimate control over the enterprise in practice, for example by appointing management or amending the charter.
The enterprise declares the beneficial owner list in its registration file, keeps it on record, and notifies the business registration authority within 10 days of any change in the information or ownership percentage. Companies established before 01 July 2025 add this information at their next registration change. The three-tier test and how to trace a foreign parent are covered in our beneficial ownership guide.
6. Deadlock Resolution and Governance Penalties
Joint-venture LLCs with equal 50/50 ownership or polarized voting blocs often hit deadlocks that disrupt operations.
Deadlock Exit Mechanisms
To keep 50/50 joint ventures operating, the Company Charter should incorporate private contractual deadlock solutions: (1) A Chairman’s casting vote on ordinary resolutions; (2) Escalation to mediation or the Vietnam International Arbitration Centre (VIAC); and (3) Buyout mechanisms allowing one partner to purchase the other’s equity stake upon irreconcilable impasse.
Administrative Penalties
Violations of corporate governance regulations and enterprise registration obligations incur specific statutory sanctions under Decree 122/2021/ND-CP:
| Violation Category | Statutory Decree Citation | Fine Range (Corporate) | Mandatory Remedial Action |
|---|---|---|---|
| Failure to register capital reduction after the contribution deadline | Decree 122/2021/ND-CP, Article 46 | VND 30,000,000 to VND 50,000,000 | Compelled registration of charter capital reduction |
| Failure to register changes to ERC content | Article 44 (as amended by Decree 288/2026/ND-CP) | VND 30,000,000 to VND 70,000,000 | Compelled registration of the updated ERC content |
| Failure to maintain local resident Legal Representative | Article 51 | VND 20,000,000 to VND 30,000,000 | Compelled appointment of resident Legal Representative |
| Failure to maintain register of members | Article 52 (as amended by Decree 288/2026/ND-CP) | VND 40,000,000 to VND 70,000,000 | Compelled establishment and maintenance of member register |
Fines above follow Decree 122/2021/ND-CP (as amended by Decree 288/2026/ND-CP); article numbers refer to that Decree.
Maintaining compliant governance structures, clear charter limits, and timely filings preserves corporate stability and helps foreign investors retain effective legal control over their Vietnamese enterprises.
Indochina Link Vietnam provides specialized corporate legal advisory and corporate secretarial services. Our legal team structures foreign-invested LLC governance, drafts tailored charters, and coordinates statutory filings. Contact our corporate legal specialists to design a compliant LLC governance framework.
