Transfer of capital contributions in a limited liability company with two or more members How is it regulated by law?

How is the transfer of capital contributed by an Enterprise regulated?

Pursuant to Clause 27, Article 4 of the Law on Enterprises 2020, it is stipulated as follows:

“Articles 4. Explain the terms

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

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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.”

Thus, according to regulations, capital contribution is the total value of assets of a member who has contributed or committed to contribute to a limited liability company or partnership. Transfer of capital contribution is when a member owning capital contribution in a two-member limited liability company transfers part or all of his/her capital contribution to a member of the Company or an individual or organization that is not a member of the Company. This transfer includes the transfer of capital contribution and includes the rights and obligations corresponding to that capital contribution.

How is the transfer of capital contributions in a limited liability company with two or more members?

According to Clause 1, Article 52 of the Law on Enterprises 2020, it is stipulated as follows:

“Article 52. Transfer of capital contributions

1. Except for the cases specified in Clause 1. 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:

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

b) 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.

Regarding the transfer of capital contributions in a Limited Liability Company with two or more members, members of a Limited Liability Company with two or more members have the right to transfer part or all of their capital contributions to others according to the following regulations:

– 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 to the remaining members according to regulations 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.

However, the following cases are not allowed to transfer capital:

– In case the company cannot pay the capital contribution required to be repurchased within 15 days from the date of receiving the member’s request according to regulations, the company must repurchase that member’s capital contribution at the market price or the price determined according to the principles specified in the company’s Charter.

– 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 regulations

Legal consequences after transferring capital contributions in a limited liability company with two or more members?

In Clause 2, Clause 3, Article 52 of the Law on Enterprises 2020, stipulates the legal consequences after transfer Capital contribution in a Limited Liability Company with two or more members is as follows:

“Article 52. Transfer of capital contribution

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2. The transferring member still has the 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 of Article is received. 48 of this Law is fully recorded in the membership register.

3. In case of transfer or change of members’ capital contributions 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.”

Thus, when transferring capital contribution, the transferring member still has rights and obligations towards the company corresponding to the relevant capital contribution until information about the buyer 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. At the same time, register to change the business registration content within 15 days from the date of completion of the transfer. Transferring capital contributions is a member’s right, but it must also ensure compliance with the Company’s Charter as well as the provisions of law. This both ensures the benefits of members and the Company.