A member of a limited company means an individual or an organization that owns part or all of the charter capital of the company. These members often have a relationship with each other in terms of personality. The law has stipulated rights as well as obligations of a shareholder (a member of limited liability company) on the Law on Enterprise 2020. To have an insight into this problem, please follow this article of LSX legal firm: “Shareholders’ rights in a limited liability company in Vietnam”
Legal ground
- Law on Enterprise 2020
Rights of capital contributor of a limited liability company
As a member of a limited company, capital contributors have the following rights:
Rights to enjoy profits
- To receive profits in proportion to the contributed capital after the company has fully paid taxes and fulfilled other financial obligations as prescribed by law.
- Receive the value of the company’s remaining assets in proportion to the contributed capital when the company goes dissolved or bankrupt.
- Given priority to contribute more capital to the company when the company increases its charter capital.
- Capital contribution:
- Redemption of contributed capital: A member has the right to request the company to buy back his or her contributed capital if such member has voted against the resolution of the Members’ Council on amendments and supplements of the charter relates to the rights and obligations of members, reorganization of the company and other cases specified in the company’s charter.
- Transfer of contributed capital: A member has the right to transfer part or all of his/her contributed capital to another person, but must offer it to the remaining members in the company in proportion to his/her capital contribution in the company under the same conditions. After 30 days, if the remaining members do not buy or do not buy all, the member who transfers the contributed capital has the right to transfer it to outsiders.
- A member has the right to donate part or all of his/her capital contribution in the company to another person.
- Members have the right to use their contributed capital to repay debts
Rights to manage the company
- Participate in meetings of the Board of Members; discuss, propose, and vote on the issues within the jurisdiction of the Board of Members.
- Have a number of votes that are proportional to the member’s holding, except for the cases specified in Clause 2 Article 47 of the Law on Enterprise 2020.
- By themselves or on behalf of the company, sue for civil liability against the Chairman of the Board of Members, the Director or General Director, the legal representative, and other managers.
Special rights
A member or group of members owning 10% or more of the charter capital or a smaller percentage as provided for in the company’s charter shall have the following additional rights:
- Request to convene a meeting of the Board of Members to resolve issues within its competence.
- Check, review, look up the notebooks, and monitor transactions, accounting books, and annual financial statements;
- Check, review, look up and copy the register of members, meeting minutes, and resolutions of the Board of Members, and other files of the company;
- To request the court to annul a resolution of the Board of Members within 90 days from the end of the meeting of the Board of Members, if the order, procedures, conditions of the meeting, or the contents of such resolution are not properly implemented or inconsistent with the provisions of this Law and the company’s charter.
In case a company has one member owning more than 90% of the charter capital and the company’s charter does not stipulate a smaller percentage, the remaining group of members will automatically enjoy the above special rights.
Depending on the agreement, the members can add benefits beyond the above rights to the company’s charter, as long as the rights do not exceed the provisions of the enterprise law.
Obligations of capital contributor of a limited liability company
- Firstly, fully and punctually contribute capital as promised; take on a liability for the company’s debts and liabilities which is equal to the contributed capital, except for the cases specified in Clause 2 and Clause 4 Article 47 of the Law on Enterprise 2020.
- Secondly, do not withdraw capital from the company in any shape or form; except for the cases specified in Articles 51, 52, 53, and 68 of the Law on Enterprise 2020.
- Thirdly, comply with the company’s charter.
- Fourthly, implement the resolutions and decisions of the Board of Members.
- Also, take personal responsibility when performing the following actions in the name of the company:
- Violations of law.
- Business operations or transactions that do not serve the company’s interests and cause damage to others.
- Pay debts before they are due while the company is facing financial risks.
- Other obligations prescribed by law.
Procedures for capital contribution when establishing a limited liability company with two or more members
The members shall contribute sufficient 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 members shall have rights and obligations that are proportional to their promised contribution.
The members may only contribute assets that are different from the promised ones if the change is approved by more than 50% of the remaining members.
At the time of full capital contribution, the company must issue a certificate of capital contribution to the member corresponding to the value of the contributed capital. A capital contribution certificate has the following contents:
- The company’s name, EID number, headquarter address;
- The company’s charter capital.
- Full name, signature, mailing address, nationality, and legal document number if the member is an individual; EID number or legal document number, headquarters address if the member is an organization.
- The capital contributed and the member’s holding.
- The number and date of issuance of the certificate of capital contribution.
- Full names and signatures of the company’s legal representatives.
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Contact LSX
Finally, hope this article is useful for you to answer the question about “Shareholders’ rights in a limited liability company in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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Related questions
The current Law on Enterprise does not stipulate the required level of charter capital that a limited company needs to register upon its establishment (except in the case of a company dealing in lines of business with regulated capital and margin). Therefore, founders can freely choose the level of charter capital for their company accordingly.
In the case of a limited liability company operates business in industries that require legal capital (for example, security services, banking, insurance, …) or require a deposit (such as film production service, debt collection, etc.), the charter capital that the company must register upon its establishment must equal or more than the legal capital or deposit as prescribed.
Firstly, Business type
Secondly, Business name
Thirdly, Headquarter address
Fourthly, Business line
Next, Charter capital and the corresponding tax
Then, the Legal representative
Lastly, Application for business registration
Notice of business suspension;
The decision of the Board of Members on business suspension;
A copy of the meeting minutes of the Board of Members on business suspension;
Power of attorney for individuals to carry out the procedures (if enterprises cannot do it themselves);
Copy of the company’s business registration certificate (if any).
Conclusion: So the above is Shareholders’ rights in a limited liability company in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
