Two-Member Limited Liability Company: Can Charter Capital Be Reduced When Repurchasing Members' Capital Contributions?
Can a Two-Member Limited Liability Company Reduce its Charter Capital When Repurchasing Members' Contributed Capital?
According to Clause 3, Article 68 of the Law on Enterprises 2020, the cases in which a company is allowed to reduce its charter capital are provided as follows:
Increase and Reduction of Charter Capital
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3. A company may reduce its charter capital in the following cases:
a) Refund a part of the members' contributed capital according to their respective proportion in the company’s charter capital if the company has conducted continuous business for more than 2 years since the date of enterprise registration and ensures the payment of all debts and other asset liabilities after the refund to the members;
b) The company repurchases members' contributed capital as provided in Article 51 of this Law;
c) The charter capital is not fully and timely paid by the members as stipulated in Article 47 of this Law.
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Based on the above regulation, a two-member limited liability company may reduce its charter capital when repurchasing members' contributed capital.
Can a two-member limited liability company reduce its charter capital when repurchasing members' contributed capital?
Within How Much Time Must a Two-Member Limited Liability Company Repurchase Members' Contributed Capital After Receiving a Request?
Pursuant to Article 51 of the Law on Enterprises 2020 regarding the repurchase of members' contributed capital as follows:
Repurchase of Contributed Capital
1. A member has the right to request the company to repurchase their contributed capital if they voted against the resolution or decision of the Members' Council on the following issues:
a) Amendments or supplements to the company charter related to the rights and obligations of members, the Members' Council;
b) Reorganization of the company;
c) Other cases as stipulated in the company charter.
2. The repurchase request must be in writing and sent to the company within 15 days from the date the resolution or decision as stipulated in Clause 1 of this Article is passed.
3. Within 15 days from the date the company receives the repurchase request as stipulated in Clause 1 of this Article, the company must repurchase the member's contributed capital at the market price or a price determined according to the principles stipulated in the company charter, unless otherwise agreed by the parties. Payment shall only be made if after the repurchase, the company can still ensure payment of all debts and other asset liabilities.
4. If the company cannot make the repurchase as stipulated in Clause 3 of this Article, the member is free to transfer their contributed capital to another member or to a non-member of the company.
A two-member limited liability company must repurchase members' contributed capital within 15 days from the date of receiving the request from the member.
The value of this contributed capital is determined according to the market price or a price determined according to the principles stipulated in the company charter, unless otherwise agreed by the parties.
When Reducing Charter Capital, Within What Time Must a Two-Member Limited Liability Company Notify the Business Registration Authority?
Based on Clauses 4 to 6, Article 68 of the Law on Enterprises 2020 regarding the increase and reduction of charter capital as follows:
Increase and Reduction of Charter Capital
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4. Except for the case stipulated in Point c, Clause 3 of this Article, within 10 days from the date the increase or reduction of charter capital is fully paid, the company must notify the Business Registration Authority in writing about the increase or reduction of charter capital. The notice must include the following key contents:
a) Name, address of the head office, enterprise code;
b) Charter capital, amount of capital increased or decreased;
c) Time and method of increase or reduction of capital;
d) Full name, signature of the legal representative of the enterprise.
5. The notice stipulated in Clause 4 of this Article must be accompanied by the resolution or decision and the minutes of the meeting of the Members' Council; in case of reduction of charter capital according to Points a and b, Clause 3 of this Article, the most recent financial statement must be included.
6. The Business Registration Authority updates information about the increase or reduction of charter capital within 3 working days from the date of receiving the notice.
Therefore, when reducing the charter capital, a two-member limited liability company must notify the Business Registration Authority within 10 days from the date the reduction of charter capital is fully paid.
The Business Registration Authority updates information about the increase or reduction of charter capital within 3 working days from the date of receiving the notice.
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