Cases of increasing and decreasing charter capital of limited liability companies with two or more members in Vietnam

Cases of increasing and decreasing charter capital of limited liability companies with two or more members in Vietnam (Internet image)

Regarding this issue, LawNet responded as follows:

1. Cases of increasing charter capital of limited liability companies with two or more members in Vietnam

According to Clauses 1 and 2, Article 68 of the Law on Enterprise 2020, a company may increase its charter capital in the following cases:

- Increase in the members’ capital contribution;

- Receipt of capital contribution from new members.

In case of increase in the members’ capital contribution, the increase will be distributed among the members in proportion to their holdings in the company. Members may transfer their right to contribute capital to other persons in accordance with Article 52 of the Law on Enterprise 2020.

In case a member does not contribute or fully contribute that member’s share of additional capital as distributed, the remainder shall be divided among other members in proportion to their holdings in the company unless otherwise agreed by the members.

2. Cases of decreasing charter capital of limited liability companies with two or more members in Vietnam

According to Clauses 3 and 4, Article 68 of the Law on Enterprise 2020, a company may decrease its charter capital in the following cases:

- The company returns part of the contributed capital to the members in proportion to their holdings in the company 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;

- The company repurchases the members’ stakes as prescribed in Article 51 of the Law on Enterprise 2020:

+ A member is entitled to request the company to repurchase that member’s stake if that member has voted against a resolution or decision of the Board of Members on the following issues:

++ Amendments to regulations of the company's charter on rights and obligations of members and the Board of Members;

++ Reorganization of the company;

++ Other issues prescribed by the company's charter.

+ A written request for stake repurchase shall be sent to the company within 15 days from the day on which the resolution or decision mentioned in Clause 1 of this Article is ratified.

+ Within 15 days from the day on which the request mentioned in Clause 1 of this Article is received, the company shall repurchase that member’s stake at market value or at a value determined in accordance with the company's charter, unless another value is agreed upon by both parties. The payment shall only be made if the company is still able to pay its debts and other liabilities afterwards.

+ In case the company is not able to pay for the repurchase of the stake as requested, the member is entitled to sell the stake to another member or a non-member.

Unless the two parties can agree on the price. The payment can only be made if, after fully paying the redeemed contributed capital, the company still fully pays all debts and other property obligations.

+ In case the company fails to pay the capital contribution requested for redemption as prescribed in Clause 3, Article 51 of the Law on Enterprise 2020, such member has the right to freely transfer his/her capital contribution to another member or a person who is not a member of the company.

- Charter capital is not fully and punctually contributed by the members as prescribed in Article 47 of the Law on Enterprise 2020.

* In the case specified in Point c Clause 3 of Article 68 of the Law on Enterprise 2020, within 10 days from the day on which the increase or decrease in charter capital is complete, the company shall send a written notification to the business registration authority. Such a notification shall contain the following information:

+ The company’s name, EID number, headquarter address;

+ The charter capital, the increase or decrease;

+ Time and method of increase or decrease;

+ Full names and signatures of the company’s legal representatives.

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