Repurchase and transfer of contributed capital in multi-member LLC under Viet Nam Law
Members of a multi-member LLC have the right to request the company to repurchase or transfer their contributed capital to another person. Viet Nam law has regulations on repurchase and transfer of contributed capital in multi-member LLC. Let’s find out this issue with Lawyer X through the following case: “Dear Lawyer! I want to ask about how does a member request the company to repurchase their contributed capital in multi-member LLC and how does a member transfer their contributed captital to another person according to Viet Nam Law? Thanks for answering me!”
Legal grounds
2020 Viet Nam Law on Enterprises
What is a multiple-member limited liability company?
The definition of an enterprise is specified in Clause 10, Article 4 of Law on Enterprise 2020, whereby: “Enterprise means an organization that has a proper name, assets, premises, is established or registered in accordance with law for business purposes.”
According to the Enterprise Law 2020, inheriting the previous legal regulations, currently enterprises include the following four types: private enterprises, partnerships, limited liability companies, joint-stock companies. Thus we can answer the question if enterprise and company are the same? Enterprise has broader connotations than company. Company refers to types of enterprises that are: Partnerships, Limited Liability Companies, Joint-Stock Companies. All types of companies are considered as enterprises. But not every type of enterprises is considered as a corporation, in particular private enterprise is not considered a company.
Limited liablity company comprises 2 types which are single-member limited liability company and Multiple-member limited liability company.
A multiple-member limited liability company is an enterprise which has characteristics as follows:
– A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise, except for the cases specified in Clause 4 Article 47 of Law on Enterprises. The member’s contributed capital (contributed capital) may only be transferred in accordance with Articles 51, 52 and 53 of Law on Enterprises.
– A multiple-member limited liability company has the status of a juridical person from the day on which the Enterprise Registration Certificate is issued.
– Multiple-member limited liability companies must not issue shares except for equitization.
– Multiple-member limited liability companies may issue bonds in accordance with Law on Enterprises and relevant laws; private placement of bonds shall comply with Article 128 and Article 129 of Law on Enterprises.
Repurchase of contributed capital
A member is entitled to request the company to repurchase that member’s contributed capital 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 contributed capital 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 Law on Enterprises is ratified.
Within 15 days from the day on which the request mentioned in Clause 1 of Article 51 of Law on Enterprises is received, the company shall repurchase that member’s contributed capital 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 contributed capital as requested, the member is entitled to sell the contributed capital to another member or a non-member.
Transfer of contributed capital
Except for the cases specified in Clause 4 Article 51, Clause 6 and Clause 7 Article 53 of Law on Enterprises, a member of a multiple-member limited liability company is entitled to transfer part or all of their contributed capital to another person as follows:
– Offer the contributed capital to other members in proportion to their holdings under the same conditions;
– Transfer the contributed capital 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 contributed capital within 30 days from the first day of offering.
The transferor still has the rights and obligations to the company in proportion to the contributed capital until information about the buyer mentioned in Point b, c and dd Clause 2 Article 48 of Law on Enterprises is fully recorded in the member register.
In case only one member remains after transfer or change of the members’ contributed capital, 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.
Settlement of contributed capital in some special cases
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 contributed capital shall be transferred or repurchased by the company in accordance with Article 51 and Article 52 of Law on Enterprises 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 contributed capital shall be settled in accordance with civil laws.
In case a member gives away part or all of his/her contributed capital 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 hair mentioned in Point a of Clause 6 Article 53 of Law on Enterprises, he/she will only become a member if it is accepted by the Board of Members.
In case a member uses that member’s contributed capital 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 contributed capital in accordance with Article 52 of Law on Enterprises.
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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Frequently asked questions
A member is entitled to request the company to repurchase that member’s contributed capital 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.
In case the company is not able to pay for the repurchase of the contributed capital as requested, the member is entitled to sell the contributed capital to another member or a non-member.
Except for the cases specified in Clause 4 Article 51, Clause 6 and Clause 7 Article 53 of Law on Enterprises, a member of a multiple-member limited liability company is entitled to transfer part or all of their contributed capital to another person as follows:
– Offer the contributed capital to other members in proportion to their holdings under the same conditions;
– Transfer the contributed capital 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 contributed capital within 30 days from the first day of offering.
Conclusion: So the above is Repurchase and transfer of contributed capital in multi-member LLC under Viet Nam Law. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
