When is it Permissible to Request Purchase or Transfer of Contributed Capital?

When is it allowed to request the repurchase or transfer of contributed capital? - Illustrative image.

According to the provisions of Article 51 Law on Enterprises 2020, a member is entitled to request the company to repurchase their contributed capital if they have voted against the resolution or decision of the Members' Council concerning the following matters:

- Amendment, supplementation of the company's charter relating to the rights and obligations of members and the Members' Council;

- Reorganization of the company;

- Other cases as stipulated in the company's charter.

Note that the request for the repurchase of the contributed capital must be in writing and sent to the company within 15 days from the date of adoption of the resolution or decision. Within 15 days from the date of receipt of the member's request, the company must repurchase the contributed capital of the member at market value or value determined according to principles stipulated in the company's charter, unless otherwise agreed by both parties regarding the price. Payment shall only be executed if, after completing the payment for repurchased contributed capital, the company can still pay off its debts and other asset obligations.

In case the company cannot pay for the repurchased contributed capital, the member shall have the right to freely transfer their contributed capital to other members or non-members of the company.

Additionally, Article 52 of the Law on Enterprises 2020 stipulates that unless a member requests the repurchase of their contributed capital or handles the contributed capital in certain special cases, a member of a multi-member limited liability company has the right to transfer part or all of their contributed capital to another person under the following regulations:

- Offer the contributed capital to the other members proportionally to their shares in the company under the same conditions;

- Transfer under the same offer conditions to non-members if the other members do not buy or do not buy all within 30 days from the offering date.

In case the transfer or change of the members' contributed capital results in only one remaining member, the company must reorganize its management in the form of a single-member limited liability company and register the change in enterprise registration content within 15 days from the completion date of the transfer.

For further details, please refer to Law on Enterprises 2020, effective as of January 1, 2021.

Le Vy

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