The original article Can a person under 18 years old own capital in the company in Viet Nam?
Issue: I am the owner and legal representative of a one-member limited liability company. I have a 16-year-old son and I want my son to own 40% of the company’s charter capital. Can my son own capital in the company?
Nghiep Thanh Law answers your questions as follows:
First, because your type of company is a one-member limited liability company and as expected, there will be one more person contributing capital to the company. That has increased the number of capital contributors, so you have to change the company type because the member number is no longer consistent with the regulations on the type of one-member limited liability company.
You need to convert your company into a two-member limited liability company to be suitable for the number of existing members.
However, it should be noted that your 16-year-old child is a minor (under 18 years old)[1]. Regarding minors, the Law on Enterprises regulates individuals who do not have the right to establish and manage businesses in Vietnam, including minors.
| “Article 17. Right to establish, contribute capital, purchase shares, purchase contributed capital and manage businesses (1) 2. The following organizations and individuals do not have the right to establish and manage businesses in Vietnam: dd) Minors; persons with limited civil act capacity; persons who have lost their civil act capacity; people with difficulties in cognition and behavior control; organizations without legal status;” |
Therefore, minors do not have the right to contribute capital, purchase shares or contributed capital to establish a business. As for the business manager, it is defined as “the manager of a sole proprietorship and the manager of the company, including the owner of the sole proprietorship, the general partner, the Chairman of the Board of Members, the member of the Board of Members, the Chairman of the company, the Chairman of the Board of Directors, the member of the Board of Directors, the director or general director, and the individual holding the title of manager as prescribed in the company’s charter.”[2] (2)
Nonetheless, regarding the contribution of capital, purchase of share, purchase of capital contributed to established joint-stock companies, limited liability companies, and partnerships, minors are not prohibited. Specifically,
| Article 17. Right to establish, contribute capital, purchase shares, purchase contributed capital and manage the business (3) 3. Organizations and individuals have the right to contribute capital, purchase shares, purchase capital contributed to joint-stock companies, limited liability companies, and partnerships under the provisions of this Law, except for the following cases: a) State agencies and units of the people’s armed forces use state-owned assets to contribute capital to businesses for purposes of private gains for their agencies and units; b) Subjects not allowed to contribute capital to businesses according to the provisions of the Law on Cadres and Civil Servants, the Law on Public Employees, and the Anti-corruption Law. |
From the above regulations,
* If converting into a limited liability company with two or more members, your son will become a member of the Board of Members and also the manager of the business. In addition, minors are not allowed to be business managers.
=> The option of converting into a two-member limited liability company is not possible.
* Solution:
You can convert to a joint-stock company because the business manager of a joint-stock company, not including shareholders and members of the Board of Directors, is not required to be a shareholder of the company. But currently, the number of shareholders is not enough 03 (minimum number of members) so you can find more people to contribute capital to the company to ensure the number.[3]
Because the conversion procedure is the same as the registration procedure for the establishment of a new joint-stock company due to the fact that the dossier also requires the Charter, the Application for registration of the establishment of a JSC, etc., therefore, allowing your child as a shareholder to purchase shares is a violation of the right of establishment for minors. You need to find someone from the age of 18 to be on behalf of your son.
Since the laws do not limit minors to purchase shares of a JSC, your child can register in his/her name later and receive the contributed capital transferred from the person in his/her name after the company conversion.
The above content is the advice on “Can under 18 years old own capital in the company in Viet Nam?”
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Translator: Le Khanh Linh
Content writer: Nguyen Linh Chi
Instructor: Lawyer Thuan
[1] Article 21.1 Civil Code 2015
[2] Article 4.24 Law on Enterprise 2020.
[3] Article 11.1.(b) Law on Enterprise 2020.
