Is it permissible to contribute assets, which are different from assets as promised when applying for multi-member limited liability company registration in Vietnam?

Is it permissible to contribute assets, which are different from assets as promised when applying for multi-member limited liability company registration in Vietnam?

Me and my friend intend to establish a multi-member limited liability company trading in transportation. At first, I promise to contribute money. However, due to the epidemic, I am unable to have the capital as promised. I want to contribute my land use right instead of money. I asked them, but some of them denied my request. What should I do in this situation?

Answer:

Pursuant to Clause 2 Article 47 of the Law on Enterprise in 2020 stipulating capital contribution to establish the company and issuance of the certificate of capital contribution in Vietnam as follows:

The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration, excluding the time needed to transport or import the contributed assets and for completing ownership transfer procedures. During this period, the members shall have rights and obligations that are proportional to their promised contribution. The members may only contribute assets that are different from the promised ones if the change is approved by more than 50% of the remaining members.

As regulations above, the members are only permissible to contribute assets that are different from the promised ones if the change is approved by more than 50% of the remaining members.

In your case, if you want to ontribute assets, which are different from assets as promised, your request must be approved by more than 50% of the remaining members.

Are rights of organizations and individuals being owners of multi-member limited liability companies in Vietnam the same?

I have a question. Are rights of organizations and individuals being owners of multi-member limited liability companies in Vietnam the same? Thank you!

Answer:

Pursuant to Article 76 of the Law on Enterprise in 2020 stipulating rights of the owner in Vietnam as follows:

1. The owner that is an organization has the rights to:

a) Draw up and revise the company's charter;

b) Decide the company’s annual business plan and development strategy;

c) Decide the company’s organizational structure; designate, dismiss the company’s executives and controllers;

d) Decide the company’s investment projects?

dd) Decide solutions for market development, marketing and technology;

e) Approve contracts for borrowing, lending, sale of assets and other contracts prescribed by the company's charter whose value are at least 50% of the total assets written in the latest financial statement (or a smaller ratio or value specified in the company's charter);

g) Ratify the company’s annual financial statements;

h) Decide increase or decrease in the company’s charter capital, transfer part or all of the company’s charter capital to another organization or individual; decide issuance of bonds;

i) Decide establishment of subsidiary companies and contribution of capital to other companies;

k) Organize the supervision and assessment of the company’s performance;

l) Decide the use of profits after the company’s tax liabilities and other financial obligations have been fulfilled;

m) Decide the company’s reorganization, dissolution or file bankruptcy;

n) Recover all assets of the company after the dissolution or bankruptcy process is complete;

o) Other rights prescribed by this Law and the company's charter.

2. The owner that is an individual has the rights specified in Points a, h, l, m, n and o Clause 1 of this Article; the right to decide investment, business operation and the company’s administration, unless otherwise prescribed by the company's charter.

Therefore, unless otherwise provided for in the company's charter, the individual company owner will have fewer rights than the organization owner according to the above provisions.

How shall the members, who fail to fully contribute capital as promised when applying for multi-member limited liability company registration in Vietnam?

Me and a few friends opened a limited liability company. However, due to the difficult economic situation, I have only contributed half of the promised capital. But now I can't contribute any more. How will the capital that I have contributed and the amount of capital I have not contributed be handled? Will I be removed from the member list?

Answer:

Pursuant to Clause 3 and 4, Article 47 of the Law on Enterprise in 2020 stipulating capital contribution to establish the company and issuance of the certificate of capital contribution in Vietnam as follows:

3. In case a member fails to contribute or fully contribute capital as promised by the expiration of the period mentioned in Clause 2 of this Article:

a) The member that has not contributed capital at all is obviously no longer a member of the company;

b) The member that has not fully contributed capital will have the rights that are proportional to the contributed capital;

c) The right to contribute the missing capital will be sold under a resolution or decision of the Board of Members.

4. In the cases mentioned in Clause 3 of this Article, the company shall register the change in charter capital and the members’ holdings within 30 days from the deadline for contributing capital specified in Clause 2 of this Article. The members who fail to contribute or fully contribute capital shall be responsible for the financial obligations incurred by the company during the period before the company registers the change in charter capital and the members’ holdings in proportion to their promised contributions.

Best regards!