Regulations on donating capital contributions in limited liability companies with two or more members according to Vietnamese law

1. What is the capital contribution in a limited liability company with two or more members?

Pursuant to Clause 27, Article 4 of the Law on Enterprises 2020, the terms of capital contribution in the company are explained as follows:

“Article 4. Interpretation of terms

[…]

27. Contributed capital is the total value of assets that a member has contributed or committed to contribute to a limited liability company or partnership. The capital contribution ratio is the ratio between the capital contribution of a member and the charter capital of a limited liability company or partnership.

Accordingly, contributed capital is the total value of assets that a member has contributed or committed to contribute to a limited liability company or partnership. The capital contribution ratio is the ratio between the capital contribution of a member and the charter capital of a limited liability company or partnership.

2. How are capital contributions to establish a company and issuance of certificates of capital contribution in a limited liability company with two or more members?

Contributing capital to establish a company and granting a certificate of capital contribution in a limited liability company with two or more members is stipulated in Article 47 of the Law on Enterprises 2020, specifically:

– 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.

– 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.

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

+ Members who have not contributed capital as committed are automatically no longer members of the company;

+ Members who have not fully contributed their committed capital have rights corresponding to their capital contribution;

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

– 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, the capital contribution ratio of the members is 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 yet 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.

– 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.

– The capital contribution certificate must include the following main contents:

+ Name, business code, and head office address of the company;

+ charter capital of the company;

+ Full name, contact address, nationality, legal document number of individual for individual members; name, business code or legal document number of the organization, head office address for organizational members;

+ Capital contribution, capital contribution ratio of members;

+ Number and date of issuance of capital contribution certificate;

+ Full name, signature of the company’s legal representative.

– In case the capital contribution certificate is lost, damaged or destroyed in another form, the member will be re-issued the capital contribution certificate by the company according to the order and procedures specified in the company’s Charter.

3. Is it possible for a sister-in-law to donate her capital contribution in a 2-member LLC to her brother-in-law? Can my brother-in-law become a member to replace my sister-in-law?

According to Article 53 of the Law on Enterprises 2020 stipulates the handling of capital contributions in some special cases as follows:

– 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 or 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:

+ The 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 recipient 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;

+ Offering and transferring 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. 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 line according to the Court’s decision. judgment.

Accordingly, in case the wife exchanges and donates her capital contribution in the company to her brother-in-law, this person will become a member of the company when approved by the Board of Members according to point b, Clause 6, Article 53 of the Law on Enterprises 2020.