During the process of business operations, a single-member limited liability company (LLC) may want to raise capital from one or several other individuals or organizations to expand production, which requires a business to change their type of enterprise. Enterprises may choose to convert a single-member LLC into a joint-stock company or convert from a single-member LLC into a multi-member limited liability company
Conversion from a single-member LLC into a multi-member LLC according to the following methods:
Owners transfer part of the company’s charter capital
Owners give away part of the company’s charter capital
Inheritance of the charter capital
Owners raise capital from other individuals
1. Documents required to convert from a single-member LLC into a multi-member LLC
- Application form for enterprise registration;
- The company’s charter;
- List of members (multiple-member LLC);
- Copies of legal documents of individuals or organizations;
- Copies of the investment registration certificate (if any);
- The contract for the transfer of stakes or documents proving completion of such transfer; the contract for a donation of stakes; the copy of the certificate of the inheritor’s lawful right to inheritance;
- The resolution or decision of the company’s owner regarding capital mobilization and documents certifying the capital contribution by new members; and
- A written approval is issued by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities
2. The order and procedures for converting a single-member LLC to a multi-member LLC
Step 1: Prepare 1 set of documents as described above
Step 2: Submit the application to the Department of Planning and Investment
The converting enterprise or its authorized person shall carry out the procedures for conversion of a single-member LLC to a multi-member LLC by the following methods:
- Register directly at the Business Registration Office;
- Registration via postal service;
- Registration via electronic information network at the National Portal for Business Registration
Step 3: Recieve results to convert a single-member LLC to a multi-member LLC
Within 3 business days, from the date of submission of valid documents, the enterprise will be issued a new enterprise license. Depending on the locality where the enterprise is located and the real situation, the enterprise will receive results in one of the two the following ways:
- The applicant returns to the Department of Planning and Investment with the receipt and receives the results directly.
- The applicant receives the results by mail.
3. Advantages of a multiple-member limited liability company
Due to their legal status, the members of the company only take on a liability for the company’s debts and liabilities which are equal to the contributed capital, so they pose low risk to the capital contributors;
The company has few members, who are usually acquaintances trusting one another, thus management and administration are not overly complicated;
Capital transfers are highly regulated. As a result, investors may easily manage membership changes. There are also limitations to the introduction of strangers into the company. Members who wish to transfer capital must offer the existing members of the company priority.
The above information describes how to carry out the procedure to convert from a single-member limited liability company to a multi-member limited liability company. If customers do not have much time to carry out the procedures, our business-type conversion service is available to help. Please contact us via phone number +84-916-545-618 or email hung.le@cnccounsel.com and thanh.tran@cnccounsel.com.
