03 key considerations for transferring the owner of the one-member limited liability company

In an environment of ongoing economic changes, the transfer of ownership in companies is gaining popularity. This involves not just the necessity of transferring management rights and reorganizing capital flows, but also signifies a strategy to realign business operations in response to market demands. However, not all enterprises fully understand the legal procedures and important considerations when carrying out this process, leading to unnecessary legal risks.

This article will highlight 03 key considerations when executing the ownership transfer procedures for a one-member limited liability company (“one-member LLC”) in compliance with the Law on Enterprises 2020 (“Law on Enterprise”) and its accompanying regulations. These insights aim to assist enterprises in navigating the process efficiently while reducing potential disputes and risks in the future.

1. Remarks regarding circumstances and criteria for transferring ownership

a) Instances of ownership transfer in one-member LLC

According to Article 53 of Decree No. 01/2021/ND-CP, one-member LLC may change its owner under specific conditions outlined below:

• The owner transfers the entire charter capital to another individual or organization;
• Change of owner due to inheritance;
• Change of owner due to donation of the entire capital contribution;
• Change of owner according to the decision on division, separation, merger, or consolidation of the company;
• Change of owner according to the decision of the competent authorities on arrangement and renewal (Applicable to state-owned enterprises).

Furthermore, if the company has multiple individuals or organizations that collectively receive a transfer, donation, or inheritance of the owner’s capital contribution, the one-member LLC must undergo a change in its enterprise structure. As a result, the one-member LLC is required to transition to a multi-member limited liability company or a joint stock company to accommodate the new owners and comply with the stipulations of the Law on Enterprise.

b) Conditions for new owners

When executing ownership of a one-member LLC, it is essential to take into account the legal qualifications of the new owner. As stipulated in Article 17 of the Law on Enterprise, the new owner must be an individual or entity that is not disqualified from establishing and managing enterprises in Vietnam. Therefore, companies must thoroughly review and assess the personal background or legal standing of the new owner to prevent any issues during the submission of the change application at the business registration authority.

If the new owner is a foreign entity, in addition to meeting the general conditions under the Law on Enterprises, they must also fully comply with investment regulations under the Law on Investment 2020 and its guiding documents.

2. Consideration of the procedure for registering the change of owner

Upon finalizing the transfer transaction or establishing new ownership, the one-member LLC must undertake the necessary steps to register the ownership change with the business registration authority. This registration process must be completed within 10 days from the date of the ownership change. It is essential for the company to adhere to this timeline to prevent penalties for administrative violations as outlined in Decree 122/2021/ND-CP.

The registration application for ownership transfer is specifically outlined in Article 53 of Decree No. 01/2021/NĐ-CP. In instances that include foreign elements, it is essential to provide additional documentation from the Investment Registration Authority that approves capital contributions, share purchases, or the acquisition of capital contributions.

Throughout the transition process, the company will continue to inherit all rights and responsibilities of such enterprise. Therefore, it is crucial to conduct a comprehensive review of tax obligations, labor commitments, and existing contracts to mitigate potential risks in the future.

In practical scenarios, it is quite common for multiple parties to acquire capital contributions in a one-member LLC, particularly when the previous owner intends to distribute capital among several investors. In such instances, the enterprise must proactively develop a transition plan that outlines the nature of the transfer and clearly defines the capital contribution ratios, as well as the rights and responsibilities of the new members or shareholders. This preparation is essential to ensure transparency and maintain stable operations following the transition.

3. Consideration of responsibilities and obligations arising after transferring

Upon finalizing the process of transferring ownership of a one-member LLC, both the previous and current owners are subject to specific responsibilities and legal duties. Recognizing and adequately addressing these obligations is essential for maintaining the ongoing operations of the enterprise and reducing the likelihood of disputes arising after the transfer.

a) Responsibilities and obligations of the former owner

The former owner is accountable for meeting the financial obligations associated with the contributed capital, particularly ensuring that the charter capital is fully paid. If the former owner has not fulfilled their capital contribution obligations and proceeds with the transfer, it could result in disputes regarding the rights and responsibilities of the parties involved. Furthermore, the transfer of the company’s assets, records, and legal documents must be conducted clearly and thoroughly, preventing any concealment of information that could harm the new owner.

It is crucial to emphasize that for conditional assignments (such as handovers that occur only after the fulfillment of debt payment obligations or the achievement of specific commercial conditions), the terms of these conditions must be explicitly outlined in the transfer contract or handover record. This clarity aids in identifying any remaining responsibilities following the transfer, serving as a foundation for resolving potential disputes.

b) Responsibilities and obligations of the new owner

The new owner is required to assume all rights, obligations and responsibilities of the company, which encompasses the authority to collect debts as well as obligations related to taxes, labor, and existing contracts. This necessitates a thorough examination of the company’s financial and legal commitments by the new owner to develop an effective management strategy.

Furthermore, it is essential to modify the information regarding assets registered under the company’s ownership and to update this information with banks, business partners, tax authorities, and other pertinent entities to maintain seamless transaction continuity.

For companies operating within the specified conditional business sectors, the new owner needs to verify and, if needed, request the re-issuance or modification of sub-license information to ensure adherence to relevant specialized legal requirements.

In summary, the new owner assumes not only ownership but also complete accountability for the company’s operations following the transfer, which encompasses any legal risks and financial responsibilities that originated from the prior phase.

Transferring ownership of a one-member LLC is not merely an economic transition but also a complex legal process that requires strict compliance with current regulations. Familiarity with key aspects such as transfer conditions, procedural documentation, and stakeholder responsibilities can empower enterprises to take proactive measures and prevent potential legal issues. Given the evolving business landscape and legal framework in Vietnam, it is essential for companies to enhance their legal knowledge to safeguard their interests. Hopefully, this article has provided a comprehensive and useful perspective for enterprises that are undergoing or planning to undergo a change in ownership of a one-member LLC.

Article time: 08/09/2025