If the capital contribution is overdue, can single-member limited liability companies decrease their charter capital in Vietnam?
If the capital contribution is overdue, can single-member limited liability companies decrease their charter capital in Vietnam? Who is responsible for failure to punctually contribute charter capital of single-member limited liability companies in Vietnam?
Hi, I have a problem that needs to be answered. My friend and I together established D single-member limited liability company specializing in real estate and was granted the Certificate of Business Registration on April 13, 2022. For some reason, my friend has not yet managed to raise enough money to contribute capital as registered.
Can I ask if the capital contribution deadline is over, can single member limited liability company reduce its charter capital? Who is responsible for failure to punctually contribute charter capital of single-member limited liability companies in Vietnam?
Please advise. Thankyou.
1. If the capital contribution is overdue, can single-member limited liability companies decrease their charter capital in Vietnam?
In Clause 3, Article 87 of the Enterprise Law 2020, increasing, decreasing charter capital is 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 Clause 2, Article 75 of the Enterprise Law 2020, contributing capital to establish the company is as follows:
2. The owner shall contribute adequate and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. During this period, the owner shall have rights and obligations that are proportional to the promised capital.
Thus, according to the above provisions, when the time limit for capital contribution has expired in Vietnam, a single-member limited liability company can register to reduce its charter capital. If your friend has not fully contributed the registered capital within 90 days, you must change the charter capital by reducing.
2. Who is responsible for failure to punctually contribute charter capital of single-member limited liability companies in Vietnam?
Pursuant to Clause 4, Article 75 of the Enterprise Law 2020, contributing capital to establish the company is as follows:
4. The owner’s liability for the company’s financial obligations and the damage caused by the failure to contribute or to fully and punctually contribute charter capital prescribed by this Article shall be equal to all of the owner’s assets.
Therefore, when failing to punctually contribute charter capital as prescribed by law, the responsible person is the owner’s liability for the limited liability company. If you are the owner of Single Member Limited Liability Company D, you are responsible with all your assets for the financial obligations of the company in Vietnam.
Best Regards!
