When shall a single-member limited liability company in Vietnam reduce its charter capital?

When shall a single-member limited liability company in Vietnam reduce its charter capital?

Pursuant to Article 87 of the Law on Enterprises in 2020 stipulating increasing, decreasing charter capital as follows:

Increasing, decreasing charter capital

1. A single-member limited liability company may increase its charter capital when its owner contributes capital or raises capital from other persons. The owner shall decide on the specific increase and the method.

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;

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.

As regulations above, a single-member limited liability company may decrease its charter capital in the following cases:

- 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;

- Charter capital is not fully and punctually contributed by the owner as prescribed by Law.

When shall a single-member limited liability company in Vietnam reduce its charter capital? - Source: Internet

What is the minimum charter capital of a single-member limited liability company in Vietnam?

Pursuant to Article 75 of the Law on Enterprises in 2020 stipulating contributing capital to establish the company as follows:

Contributing capital to establish the company

1. The initially registered charter capital of a single-member limited liability company is the total assets promised by the owner and shall be written in company's charter.

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.

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As regulations above, the initially registered charter capital of a single-member limited liability company is the total assets promised by the owner and shall be written in company's charter.

Therefore, the charter capital of single-member limited liability companies depends on each company.

Who shall have authority to decide on the increase of charter capital of a single-member limited liability company in Vietnam?

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

Rights of the owner

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;

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As regulations above, the owner is the person who have authority to decide on the increase of charter capital of a single-member limited liability company in Vietnam.

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