Reducing Charter Capital of a Multi-Member LLC: Cases & Procedure

Short answer: A multi-member limited liability company may reduce its charter capital in the following cases: returning part of the contributed capital to members (when the company has operated continuously for at least 02 years and ensures full payment of debts), repurchasing members’ capital contributions, or reducing capital because members have not fully contributed capital. The procedure is carried out by registering the change of enterprise registration contents at the Business Registration Office under the Department of Finance; processing time is 3 working days. This article provides detailed guidance under the Law on Enterprises 2020 (as amended by Law No. 76/2025/QH15) and Decree 168/2025/ND-CP.

Legal basis

• The Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/07/2025) — provisions on charter capital changes of multi-member LLCs;
• Decree 168/2025/ND-CP on enterprise registration (replacing Decree 01/2021/ND-CP, effective from 01/07/2025).

Cases in which charter capital may be reduced

1. Returning part of the contributed capital to members in proportion to their capital contributions in the charter capital, if the company has operated continuously for at least 02 years from the date of establishment registration and ensures full payment of debts and other property obligations after the return;
2. The company repurchasing members’ capital contributions under the rules on capital contribution repurchase;
3. Charter capital not fully and timely paid by members — the company registers to adjust down the charter capital to the value actually paid by members.

Mandatory conditions for capital reduction

• After the reduction, the company still ensures full payment of debts and other property obligations;
• The capital reduction is adopted by the Board of Members at the statutory voting ratio;
• Within 10 days from the date of the charter capital change, the company must register the change with the Business Registration Office.

Dossier for registering charter capital reduction

• Notice of change of enterprise registration contents using the current prescribed form;
• Resolution/decision and a copy of the minutes of the Board of Members meeting on the charter capital reduction;
• The company’s written commitment to ensuring full payment of debts and other property obligations after the reduction (for the capital return case);
• The latest financial statements or documents proving solvency (as actually required by the registration authority);
• Authorization letter for the person submitting the dossier (if the submitter is not the legal representative).

Implementation steps

Step 1. Approve the capital reduction

The Board of Members meets and adopts the reduction plan (reduction amount, method, timing of return/repurchase), prepares minutes, and issues the resolution/decision.

Step 2. Review solvency

The company accountant prepares a report confirming the company ensures full payment of debts and other property obligations after the reduction; notifies major creditors (if needed) to avoid disputes.

Step 3. Submit the dossier

Submit 01 set of the dossier to the Business Registration Office under the Department of Finance where the company has its head office — in person or online via the National Enterprise Registration Portal (dangkykinhdoanh.gov.vn).

Step 4. Receive the result

The Business Registration Office processes it within 3 working days; issues the Enterprise Registration Certificate with the new charter capital and publishes the enterprise registration contents.

Related tax obligations

• Income of individual members from receiving back contributed capital (the excess over the original contribution) may incur personal income tax obligations under tax law;
• The company updates the new charter capital on e-invoices and related records.

Frequently asked questions

May a company established 01 year ago reduce its capital?

For the case of returning part of contributed capital, the company must have operated continuously for at least 02 years. Other capital reduction cases (capital repurchase, members’ failure to fully contribute) are not subject to this 2-year condition.

Does capital reduction affect reputation and credit relationships?

It may. Partners and banks often assess financial capacity through charter capital; the company should consider and transparently notify major creditors and partners.

What if a member disagrees with the capital reduction?

The capital reduction is decided by the Board of Members at the statutory voting ratio; a dissenting member must still comply with a validly adopted resolution, unless the resolution violates the law or the charter and is annulled through procedure.

Notes on applying current laws

This article is for general enterprise knowledge and is presented for reference, helping readers understand the legal issue at a general level before carrying out the procedure. Legal regulations may change over time and depending on each enterprise’s specific circumstances. To determine the exact procedure applicable, please contact an ANT Legal lawyer at 0966.475.966 for verification and advice before proceeding.

Common risks to watch out for

• Reducing capital before 02 years of operation in the capital return case.
• Failing to ensure debt payment capacity after the reduction.
• Board of Members meeting held improperly or with the wrong voting ratio.
• Outstanding tax obligations arising from receiving back capital.

How ANT Legal can help

ANT Legal advises on capital reduction plans, drafts Board of Members resolutions and change registration dossiers, carries out procedures at the Business Registration Office, and reviews related tax obligations. For quick advice, please contact our lawyers at 0966.475.966.

Related articles

• Procedure for Increasing Charter Capital of a Joint-Stock Company
• How to Change Founding Shareholders of a Joint-Stock Company
• Rights and Obligations of Enterprises
• Guide to Dissolving a Company
• Converting a Joint-Stock Company into a Multi-Member LLC