Forms of capital withdrawal in a single-member limited liability company
A single-member limited liability company (LLC) is an enterprise owned by either an organization or an individual (hereinafter referred to as the “company owner”). The company owner is liable for the debts and other property obligations of the company to the extent of the company’s charter capital. In practice, however, there are many instances where the owner seeks to withdraw capital from the company. Under current law, the withdrawal of capital in a single-member LLC is permitted, but only under certain specific circumstances. The following article will examine the legal framework governing capital withdrawal in a single-member LLC.
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1. What is the charter capital of a single-member LLC?
Pursuant to clause 34 Article 4 and clause 1 Article 75 of the Law on Enterprises 2020, the Charter capital of a single-member LLC is defined as the total value of assets contributed or committed to be contributed by the company owner upon the establishment of the company, as recorded in the Company’s charter.
2. Legal grounds governing capital withdrawal in a single-member LLC
3. What forms of capital withdrawal exist in a single-member LLC?
Pursuant to clause 5 Article 77 of the Law on Enterprises 2020:“5. The company’s owner may only withdraw capital by transfer part or all of the charter capital to another organization or individual. If the capital is withdrawn otherwise, the owner and relevant organizations and individuals shall be jointly responsible for the company’s debts and other liabilities.” Accordingly, the owner of a single-member LLC may withdraw capital by transferring part or all of the charter capital that they have contributed to another organization or individual.
Pursuant to point a clause 3 Article 87 of the Law on Enterprises 2020: “a) Part of the contributed capital is returned to the company’s owner after the company has operated for at least 02 consecutive years from the enterprise registration date and the company is able to fully pay its debts and other liabilities after the return of capital;”. Accordingly, the owner of a single-member LLC may withdraw capital through the mechanism whereby the company returns a portion of the contributed capital to the owner and registers a corresponding reduction of the charter capital.
Pursuant to clause 6 Article 208 of the Law on Enterprises 2020: “6. After the dissolution costs and debts have been fully paid, the remainder shall be divided among the owner, members/partners, shareholders in proportion to their stakes/shares;”.Accordingly, the owner of a single-member LLC may also withdraw capital through the dissolution of the company.
Thus, based on the foregoing legal grounds, it can be observed that the owner of a single-member LLC may withdraw capital through three forms, including:
(i) The transfer of part or all of the charter capital to another individual or organization;
(ii) The return of a portion of the contributed capital to the company owner; and
(iii) The dissolution of the company.
For each of the aforementioned forms of capital withdrawal, the owner of a single-member LLC should take note of certain issues relating to the applicable conditions and legal procedures (if any), specifically as follows:
3.1. Capital withdrawal through the transfer of part or all of the charter capital to another organization or individual
Pursuant to clause 5 Article 77 of the Law on Enterprises 2020, capital withdrawal by way of transfer of charter capital in a single-member LLC may take one of two forms: (i) Transfer of the entire charter capital; or (ii) Transfer of part of the charter capital.
(i) Transfer of the entire charter capital to another organization or individual:
The transfer of the entire charter capital of a single-member LLC to another organization or individual results in:
– Case 1: a change of company owner, where the entire charter capital is transferred to a single organization or individual.
– Case 2: a conversion of the enterprise type, where the entire charter capital is transferred to two or more organizations or individuals. In this case:
+ The single-member LLC must be converted into a multiple-member LLC if, after the transfer, there are two organizations or individuals holding capital contributions; or
+ The single-member LLC may choose to convert into either (a) a multiple-member LLC if, after the transfer, there are between three and fifty organizations or individuals holding capital contributions, or (b) a joint stock company if, after the transfer, there are at least three organizations or individuals holding capital contributions.
Accordingly, once the owner withdraws capital by transferring the entire charter capital, the company is required to carry out the procedures for registering a change of company owner or for converting the enterprise type with the provincial-level Business Registration Authority where the company has its head office.
It should be noted that such legal procedures must be completed within 10 days from the date of completion of the capital transfer[1].
(ii) Transfer of part of the charter capital to another organization or individual:
In this case, the single-member LLC must proceed with the conversion of its enterprise type, similar to the requirements analyzed in Case 2 of the item above regarding (i) The transfer of the entire charter capital.
3.2. Capital withdrawal through the return of part of the contributed capital to the company owner
Pursuant to point a clause 3 Article 87 of the Law on Enterprises 2020, a single-member LLC may return part of the contributed capital to its owner, provided that the company has conducted continuous business operations for at least two years from the date of its enterprise registration and that it is able to fully discharge all debts and other property obligations after the return of capital to the owner.
In such case, the charter capital of the company shall be reduced. Consequently, the company must carry out the procedures for registering the change of charter capital with the provincial-level Business Registration Authority where the company has its head office[2].
3.3. Capital withdrawal through the dissolution of a single-member LLC
In practice, there are instances where the owner of a single-member LLC wants to withdraw the entirety of his or her contributed capital while simultaneously terminating the company’s operations. In such circumstances, the owner has the right to decide on the dissolution of the company pursuant to point d clause 1 Article 207 of the Law on Enterprises 2020. However, the company must satisfy certain conditions and comply with statutory procedures, specifically as follows:
Conditions for dissolution, according to clause 2 Article 207 of the Law on Enterprises 2020, an enterprise may only be dissolved if it meets the following conditions:
(i) All debts and other property obligations have been fully settled; and
(ii) The enterprise is not in the process of resolving disputes at a Court or Arbitration.
Procedures for dissolution, pursuant to Article 64 of Decree No. 168/2025/ND-CP and clauses 1, 5 Article 39 of the Law on Tax Administration 2019, the dissolution of an enterprise requires the completion of the following legal procedures with competent state authorities:
(i) Submission of the owner’s resolution or decision on dissolution, together with a debt settlement plan (if any), to the provincial-level Business Registration Authority where the company has its head office;
(ii) Completion of tax obligations and termination of the validity of the company’s tax identification number with the competent tax authority; and
(iii) Submission of the dissolution registration dossier to the provincial-level Business Registration Authority where the company has its head office.
It should be noted that, prior to filing the dissolution dossier, the company must complete the procedures for terminating the operations of its branches, representative offices, and business locations with the provincial-level Business Registration Authority where such entities are situated[3].
4. Conclusion
In a single-member LLC, there are three forms of capital withdrawal: (i) The transfer of part or all of the charter capital to another individual or organization; (ii) The return of a portion of the contributed capital to the company owner; and (iii) The dissolution of the company. Each form entails specific conditions and corresponding legal procedures. It is therefore evident that the company owner does not possess an unrestricted right to withdraw capital from a single-member LLC. The restriction of the owner’s rights and obligations within the framework of controlling the withdrawal of charter capital is one of the mechanisms designed to ensure that the single-member LLC model operates effectively and sustainably, while also safeguarding the legitimate rights and interests of related individuals and organizations.
For any inquiries or legal assistance concerning enterprise registration amendments or other related legal services, clients are kindly invited to contact CBI Law Firm for support.
[1] Clause 2 Article 30 of the Law on Enterprises 2020.
[2] Clause 2 Article 30 of the Law on Enterprises 2020.
[3] Clause 4 Article 64 of Decree No. 168/2025/ND-CP.
