Multi-member limited liability companies: A multiple-member limited liability company is an enterprise that has 02 to 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that the member contributed to the enterprise. A multiple-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration. Multiple-member limited liability companies must not issue shares except for equitization but may issue bonds.
Multi-member limited liability company is one of the most popular forms of enterprise in Vietnam thanks to its multiple advantages in comparison to other forms.
RE-PURCHASE OF STAKES
In multi-member limited liability companies
A member is entitled to request the company to re-purchase that member’s stake if that member has voted against a resolution or decision of the Board of Members on the following issues:
- Amendments to regulations of the company’s charter on rights and obligations of members and the Board of Members;
- Reorganization of the company;
- Other issues prescribed by the company’s charter.
- A written request for stake re-purchase shall be sent to the company within 15 days from the day on which the resolution or decision is ratified.
- Within 15 days from the day on which the request to re-purchase is received, the company shall re-purchase that member’s stake at market value or at a value determined in accordance with the company’s charter, unless another value is agreed upon by both parties. The payment shall only be made if the company is still able to pay its debts and other liabilities afterward.
- In case the company is not able to pay for the re-purchase of the stake as requested, the member is entitled to sell the stake to another member or a non-member.
TRANSFER OF STAKES
In multi-member limited liability companies
Except for the cases where the company is not able to pay for the re-purchase of the stake as requested, or in case a member gives away part or all of his/her stake to another person or in case a member uses that member’s stake to pay debt, a member of a multiple-member limited liability company is entitled to transfer part or all of their stake to another person as follows:
- Offer the stake to other members in proportion to their holdings under the same conditions;
- Transfer the stake under the same conditions as those applied to other members in proportion to their holdings under the same conditions to a non-member if the other members do not purchase or fully purchase the stake within 30 days from the first day of offering.
- The transferor still has the rights and obligations to the company in proportion to the stake until information about the buyer: Full name, signature, mailing address, nationality and legal document numbers of members that are individuals; names, EID numbers or legal document numbers and headquarters addresses of members that are organizations; Stakes, holdings, contribution time, types of contributed assets, quantity and value of each type of contributed assets of each member… are fully recorded in the member register.
- In case only one member remains after transfer or change of the members’ stakes, the company shall be converted into a single-member limited liability company and apply for change of enterprise registration information within 15 days from the day on which the transfer is complete.
INCREASING, DECREASING CHARTER CAPITAL
In multi-member limited liability companies
A multi-member limited liability company may increase its charter capital in the following cases:
- Increase in the members’ capital contribution;
- Receipt of capital contribution from new members.
- In case of increasing in the members’ capital contribution, the increase will be distributed among the members in proportion to their holdings in the company.
- Members may transfer their right to contribute capital to other persons in case request the company to re-purchase that member’s stake if that member has voted against a resolution or decision of the Board of Members. In case a member does not contribute or fully contribute that member’s share of additional capital as distributed, the remainder shall be divided among other members in proportion to their holdings in the company unless otherwise agreed by the members.
A multi-member limited liability company may decrease its charter capital in the following cases:
- The company returns part of the contributed capital to the members in proportion to their holdings in the company after the company has operated for at least 02 consecutive years from the enterprise registration date and the company is able to fully pay its debts and other liabilities after the return of capital;
- The company re-purchases the members’ stakes in case request the company to re-purchase that member’s stake if that member has voted against a resolution or decision of the Board of Members;
- Charter capital is not fully and punctually contributed by the members the initially registered charter capital of a multiple-member limited liability company is the total capital contributed or promised by the members and shall be written in company’s charter and the members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration.
- In the case the charter capital is not fully and punctually contributed by the members, within 10 days from the day on which the increase or decrease in charter capital is complete, the company shall send a written notification to the business registration authority. Such a notification shall contain the following information: The company’s name, EID number, headquarters address; The charter capital, the increase or decrease; Time and method of increase or decrease; and Full names and signatures of the company’s legal representatives.
- The written notification to the business registration authority shall be enclosed with the resolution or decision and the minutes of the meeting of the Board of Members and, in case of charter capital decrease on the company returns part of the contributed capital to the members in proportion to their holdings, or the company re-purchases the members’ stakes upon request, the latest financial statement.
- The business registration authority shall update information about the increase or decrease in charter capital within 03 working days from the day on which the notification is received.
Each form of enterprise has its own advantages and disadvantages. The investors shall base on actual business industries, business plans to find the right form of enterprise, create more business advantages and prevent risks in advance.
Procedures of re-purchase or transfer of stakes, increasing or decreasing charter capital in multi-member limited liability companies also have more required compliance procedures on tax on investment capital, rights and obligations of the members, business records management… Thus those procedures shall be conducted in very strict and lawful manners.
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