Is it allowed to use stake of multiple-member limited liability company to pay debt in Vietnam?

Is it allowed to use stake of multiple-member limited liability company (LLC) to pay debt in Vietnam? (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Is it allowed to use stake of multiple-member limited liability company (LLC) to pay debt in Vietnam?

According to Clause 7, Article 53 of the Law on Enterprises 2020:

In case a member uses that member’s stake to pay debt, the beneficiary may:

- Become a member of the company if it is accepted by the Board of Members;

- Offer and sell the stake in accordance with Article 52 of the Law on Enterprises 2020.

Thus, according to this regulation, members of multiple-member limited liability company (LLC) have the right to use their stake to pay debt. The payment recipient with the right to use that stake can become a member of the company if approved by the Board of Members. In case of not becoming a member of the company, the payee can offer to sell and transfer that stake according to the law.

2. Settlement of stakes in some special cases in Vietnam

In addition to Section 1 above, Article 53 of the Law on Enterprises 2020 also stipulates the settlement of stakes in some special cases in Vietnam as follows:

- In case of the death of a member that is an individual, his/her heir at law or designated by a will shall become a member of the company.

- In case a member that is an individual is declared missing by the Court, his/her rights and obligations shall be performed through his/her asset manager as prescribed by civil laws.

- In case a member that is an individual is incapacitated, has limited legal capacity or has difficulty controlling his/her behaviors, his/her rights and obligations shall be performed through his/her representative.

- A member’s stake shall be transferred or repurchased by the company in accordance with Article 51 and Article 52 of the Law on Enterprises 2020 in the following cases:

+ The member’s heir does not wish to become a member;

+ The beneficiary mentioned in Clause 6 of this Article is not accepted as a member by the Board of Members;

+ The member that is an organization is dissolved or goes bankrupt.

- In case a member that is an individual dies without an heir or the heir refuses the inheritance or is disinherited, the stake shall be settled in accordance with civil laws.

- In case a member gives away part or all of his/her stake to another person, the beneficiary will become a member of the company in the following cases:

+ If the beneficiary is a lawful heir as prescribed by the Civil Code, he/she is obviously a member of the company;

+ If the beneficiary is not a lawful heir mentioned in Point a of this Clause, he/she will only become a member if it is accepted by the Board of Members.

- In case a member that is an individual is being kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, he/she shall authorize another person to perform some or all of his/her rights and obligations to the company.

- A member that is an individual and is banned by the court to do certain jobs must not do those jobs at the company; A member that is a juridical person and is banned by the court from certain business lines must suspend or stop business operation in those business lines.

Nguyen Ngoc Que Anh

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE