Regulations on repurchase and transfer of stakes for multiple-member limited liability company in Vietnam

Regulations on repurchase and transfer of stakes for multiple-member limited liability company in Vietnam (Internet image)

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

1. Regulations on repurchase of stakes for multiple-member limited liability company in Vietnam

Regulations on repurchase of stakes for multiple-member limited liability company in Vietnam according to Article 51 of the Law on Enterprises 2020 are as follows:

- 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 Article 51 of the Law on Enterprises 2020 is ratified.

- Within 15 days from the day on which the request mentioned in Clause 1 of Article 51 of the Law on Enterprises 2020 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.

2. Regulations on transfer of stakes for multiple-member limited liability company in Vietnam

Regulations on transfer of stakes for multiple-member limited liability company in Vietnam according to Article 52 of the Law on Enterprises 2020 are as follows:

- Except for the cases specified in Clause 4 Article 51, Clause 6 and Clause 7 Article 53 of the Law on Enterprises 2020, a member of a multiple-member limited liability company is entitled to transfer part or all of their stake to another person as follows:

+ Offer the stake to other members in proportion to their holdings under the same conditions;

+ Transfer the stake under the same conditions as those applied to other members mentioned in Point a of this Clause to a non-member if the other members do not purchase or fully purchase the stake within 30 days from the first day of offering.

- The transferor still has the rights and obligations to the company in proportion to the stake until information about the buyer mentioned in Point b, c and dd Clause 2 Article 48 of the Law on Enterprises 2020 is fully recorded in the member register.

- In case only one member remains after transfer or change of the members’ stakes, the company shall be converted into a single-member limited liability company and apply for change of enterprise registration information within 15 days from the day on which the transfer is complete.

3. Regulations on settlement of stakes in some special cases for multiple-member limited liability company in Vietnam

Regulations on settlement of stakes in some special cases for multiple-member limited liability company in Vietnam according to Article 53 of the Law on Enterprises 2020 are 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 Article 53 of the Law on Enterprises 2020 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 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.

- 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.

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