If a member of a limited liability company dies, how is their capital contribution handled?

What is the founding capital of a Limited Liability Company with two or more members?

Regulations on capital contribution issues of a Limited Liability Company with two or more members in Clause 18, Article 4 and Article 47 Law on Enterprises 2020 is specifically as follows:

“Article 4. Interpretation of terms

In this Law, the following terms are understood as follows:

…

18. Capital contribution is the contribution of assets to form the company’s charter capital, including capital contribution to establish a company. establish a company or contribute additional charter capital to an already established company.

…

Article 47. Contributing capital to establish a company and granting a certificate of capital contribution

1. The charter capital of a limited liability company with two or more members when registering to establish a business is the total value of the capital contributions of the members committed to contribute and recorded in the Charter of the Company. company.

2. Members must contribute capital to the company in full and with the right type of assets as committed when registering to establish the business within 90 days from the date of issuance of the Business Registration Certificate, excluding the time of transporting and importing capital contribution assets and carrying out administrative procedures to transfer ownership of assets. During this period, members have rights and obligations corresponding to the proportion of capital contributions committed by the company members can contribute capital to the company with assets other than the committed assets if approved by more than 50% of the remaining members.

3. After the deadline specified in Clause 2 of this Article, if there are still members who have not contributed capital or have not fully contributed capital as committed, it will be handled as follows:

a) Members who have not contributed capital as committed will automatically no longer be members of the company. company;

b) Members who have not fully contributed the committed capital have rights corresponding to the contributed capital;

c) The uncontributed capital of the members is offered for sale according to the resolutions and decisions of the Board of Members.

4. In case there are members who have not contributed capital or have not contributed the full amount of capital as committed, the company must register to change the charter capital, with the capital contribution ratio of the members equal to the amount of capital contributed within 30 days from the last day on which the capital contribution must be fully contributed as prescribed in Clause 2 of this Article. Members who have not contributed capital or have not contributed the full amount of committed capital must be responsible in proportion to the committed capital contribution ratio for the company’s financial obligations arising during the period before the date the company registers to change its charter capital and the member’s capital contribution ratio.

5. Except for the case specified in Clause 2 of this Article, the capital contributor becomes a member of the company from the time the capital contribution is paid and the information about the capital contributor specified in Points b, c and dd, Clause 2, Article 48 of this Law is fully recorded in the member registration book. At the time of full capital contribution, the company must issue a capital contribution certificate to the member corresponding to the value of the contributed capital.”

According to the provisions of Article 47 of the Law on Enterprises 2020 The charter capital of a limited liability company with two or more members when registering to establish a business is the total value of the capital contributions committed by the members and recorded in the company’s charter. And members must contribute capital to the company in full and with the right type of assets as committed when registering to establish a business within 90 days from the date of issuance of the Business Registration Certificate, excluding the time of transporting and importing assets to contribute capital, and carrying out administrative procedures to transfer asset ownership.

What ways do members want to withdraw capital from a limited liability company with two or more members?

Pursuant to Clause 2, Article 50 of the Law on Enterprises 2020, members of a limited liability company with two or more members are not allowed to withdraw contributed capital from the company in any form, except for the cases specified in Articles 51, 52, 53 and 68 of this Law. Thus, a member who wants to withdraw capital from a two-member limited liability company must fall into one of the following cases:

Withdrawal of capital contribution in case the member requests the company to buy back the capital contribution prescribed in Article 51 of the Law on Enterprises 2020, specifically:

– A member has the right to request the company to buy back his/her capital contribution if that member has voted against the resolutions and decisions of the Board of Members on the following issues:

+ Amending and supplementing contents in the Company’s Charter related to the rights and obligations of members and the Board of Members;

+ Reorganize the company;

+ Other cases as prescribed in the company’s Charter.

– The request to buy back the capital contribution must be in writing and sent to the company within 15 days from the date of passing the resolution or decision specified in Clause 1 of this Article.

– Within 15 days from the date of receiving the member’s request specified in Clause 1 of this Article, the company must buy back that member’s capital contribution at the market price or the price determined according to the principles specified in the company’s Charter, unless the two parties can agree on the price. Payment will only be made if, after fully paying for the repurchased capital contribution, the company still pays all debts and other property obligations.

– In case the company cannot pay the capital contribution required to be repurchased according to the provisions of Clause 3 of this Article, that member has the right to freely transfer his/her capital contribution to another member or person who is not a member of the company.

Withdrawal of capital contribution in case a member transfers capital contribution as prescribed in Article 52 of the Law on Enterprises 2020, specifically:

– Except for the cases specified in Clause 4, Article 51, Clause 6 and Clause 7, Article 53 of this Law, members of a limited liability company with two or more members have the right to transfer part or all of their capital contribution to others according to the following provisions:

+ Offer to sell that capital contribution to the remaining members in proportion to their capital contribution in the company with the same offering conditions;

+ Transfer with the same offering conditions for the remaining members specified in Point a of this Clause to non-members if the remaining members of the company do not buy or do not buy all within 30 days from the date of offering.

– The transferring member still has rights and obligations towards the company corresponding to the relevant capital contribution until information about the buyer specified in Points b, c and dd, Clause 2, Article 48 of this Law is fully recorded in the member registration book.

– In case of transfer or change of capital contributions of members resulting in only one member of the company remaining, the company must organize management in the form of a one-member limited liability company and register to change the business registration content within 15 days from the date of completion of the transfer.

Withdrawal of contributed capital in special cases specified in Article 53 of the Law on Enterprises 2020:

– In case a company member who is an individual dies, the heir according to the will or law of that member is a member of the company.

– In case a member is an individual who is declared missing by the Court, the member’s rights and obligations are exercised through the member’s asset manager in accordance with the provisions of civil law.

– In case a member has limited or lost civil act capacity, has difficulty in cognition and behavior control, that member’s rights and obligations in the company are exercised through a representative.

– Members’ capital contributions are repurchased or transferred by the company according to the provisions of Article 51 and Article 52 of this Law in the following cases:

+ Heir does not want to become a member;

+ The recipient as prescribed in Clause 6 of this Article is not approved as a member by the Board of Members;

+ Company members are dissolved or bankrupt organizations.

– In case the capital contribution of a company member who is an individual dies without an heir, the heir refuses to inherit or is disqualified from inheritance, that capital contribution shall be resolved in accordance with the provisions of civil law.

– In case a member donates part or all of his/her capital contribution in the company to another person, the recipient becomes a member of the company according to the following regulations:

+ If the donor is a legal heir according to the provisions of the Civil Code, this person is automatically a member of the company;

+ A recipient who is not subject to the provisions of Point a of this Clause will only become a member of the company when approved by the Board of Members.

– In case a member uses capital contribution to repay debt, the payment recipient has the right to use that capital contribution in one of the following two forms:

+ Become a member of the company if approved by the Board of Members;

+ Offer to sell and transfer that capital contribution according to the provisions of Article 52 of this Law.

– In case a company member is an individual who is detained, is serving a prison sentence, or is serving administrative measures at a compulsory drug treatment facility or compulsory education facility, that member authorizes another person to exercise some or all of his or her rights and obligations at the company.

– In case a company member is an individual banned by the Court from practicing certain professions or doing certain jobs, or a company member is a commercial legal entity banned by the Court from doing business or operating in certain fields within the scope of the company’s business lines, that member is not allowed to practice or do banned jobs at that company or the company temporarily suspends or terminates the relevant business lines according to the Court’s decision.

Withdrawal of contributed capital in case the company reduces its charter capital and returns contributed capital to company members specified in Clause 3, Article 68 of the Law on Enterprises 2020, as follows:

The company may reduce its charter capital in the following cases:

– Refund a portion of capital contribution to members according to the proportion of their capital contribution in the company’s charter capital if it has operated continuously for 02 years or more from the date of enterprise registration and ensures full payment of debts and other property obligations after repayment to members;

– The company repurchases members’ capital contributions according to the provisions of Article 51 of this Law;

– The charter capital is not paid in full and on time by members according to the provisions of Article 47 of this Law.

If members of a limited liability company die, how will their capital contributions be handled?

Pursuant to Article 53 of the Law on Enterprises 2020, which stipulates the treatment of capital contributions of deceased company members as follows: after:

– In case a company member who is an individual dies, the heir according to the will or law of that member is a member of the company.

– Members’ capital contributions are repurchased or transferred by the company according to the provisions of Article 51 and Article 52 of this Law in the following cases:

+ Heir does not want to become a member;

+ The recipient as prescribed in Clause 6 of this Article is not approved as a member by the Board of Members;

+ Company members are dissolved or bankrupt organizations.

– In case the capital contribution of a company member who is an individual dies without an heir, the heir refuses to inherit or is disinherited, that capital contribution shall be resolved in accordance with the provisions of civil law.

Thus, with the above regulations, in case a company member who is an individual dies, that member’s will or legal heir will inherit the capital contribution and become a company member. If the heir does not want to become a member, the member’s capital contribution will be bought back or transferred by the company according to regulations.

In case the capital contribution of a company member who is an individual dies without an heir, the heir refuses to inherit or is disqualified from inheritance, that capital contribution will be resolved according to the provisions of civil law.