Do single-member limited liability companies that increase their charter capital have to converted into another type of enterprises in Vietnam?
Do single-member limited liability companies that increase their charter capital have to converted into another type of enterprises in Vietnam? Can single-member limited liability companies reduce their charter capital by returning part of the contributed capital to the company’s owner in Vietnam?
Hello, I am the owner of a single-member limited liability company, now I want to increase the charter capital mobilized from others, is it mandatory to change the type of business? If before raising charter capital, I want the company to return the contributed capital, is it possible? My business has only been open for 1 year. Please advise.
1. Do single-member limited liability companies that increase their charter capital have to converted into another type of enterprises in Vietnam?
Pursuant to Clause 2, Article 87 of the Law on Enterprises 2020, increasing, decreasing charter capital is as follows:
2. In case of raising capital from other persons, the company shall be converted into a multiple-member limited liability company or joint stock company. To be specific:
a) In case of conversion into a multiple-member limited liability company, a notification of change in enterprise registration information shall be submitted within 10 days from the day on which the change in charter capital is complete;
b) In case of conversion into a joint stock company, follow the instructions in Article 202 of this Law;
Thus, the company will have to change the type of business in case of increasing charter capital from raising capital contribution from others. In case the charter capital is increased but contributed by the owner, there is no need to change the type of enterprise in Vietnam.
2. Can single-member limited liability companies reduce their charter capital by returning part of the contributed capital to the company’s owner in Vietnam?
According to Clause 3 of Article 87 of the Law on Enterprises 2020, it is prescribed as follows:
3. A single-member limited liability company may decrease its charter capital in the following cases:
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;
b) Charter capital is not fully and punctually contributed by the owner as prescribed in Article 75 of this Law.
According to this Article, the company will be refunded a part of the contributed capital to the owner if the above conditions are satisfied. If the company has only operated for 1 year, it will not be refunded according to regulations in Vietnam.
Best Regards!
