Can members of a LLC with 2 or more members contribute capital with assets other than the committed assets?

Can members of a LLC with 2 or more members contribute capital with assets other than the committed assets, according to the regulations defined in Clause 2, Article 47 of the Law on Enterprises 2020 as follows:

Contributing capital to establish a company and issuing 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 committed by the members and recorded in the company’s charter.

2. 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. During this period, members have rights and obligations corresponding to the committed capital contribution ratio. Company members can only contribute capital to the company with assets other than the committed assets if approved by more than 50% of the remaining members.

…

Accordingly, members of a LLC with 2 or more members can contribute capital to the company with assets other than the committed assets if approved by more than 50% of the remaining members.

Is a LLC with 2 or more members required to buy back the capital contributions of company members upon request, right?

According to the provisions of Clause 1, Article 51 of the Law on Enterprises 2020, a member of a limited liability company with 2 or more members 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 issue:

– 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.

Whether a LLC with 2 or more members is required to buy back the capital contributions of company members upon request, according to the provisions of Clauses 3 and 4, Article 51 of the 2020 Enterprise Law, is as follows:

Repurchasing capital contribution

…

3. 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.

4. 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 capital contribution to another member or person who is not a member of the company.

According to the above regulations, a limited liability company with 2 or more members can only repurchase capital contributions if, after fully paying for the repurchased capital contributions, the company still pays all debts and other property obligations.

Therefore, in case after repurchasing the capital contribution, a limited liability company with 2 or more members fails to fully pay its debts and other property obligations, the company is not required to repurchase this capital contribution.

And then, company members have the right to freely transfer their capital contributions to other members or people who are not members of the company.

If a member of a 2-member limited liability company uses capital contributions to repay debt, can the creditor become a member of the company?

If a member of a 2-member limited liability company uses capital contribution to repay debt, can the creditor become a member of the company, according to the provisions of Clause 7, Article 53 of the 2020 Enterprise Law as follows:

Handling capital contributions in some special cases

…

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

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

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

Thus, when a member of a 2-member LLC uses capital contribution to repay debt, the creditor can become a member of the company if approved by the Board of Members.

In case the Board of Members is not approved, this creditor can offer to sell and transfer that capital contribution according to regulations.