A multi-member limited liability companies may increase its charter capital in case of increase in the members’ capital contribution or receipt of capital contribution from new members… A multi-member limited liability companies may decrease its charter capital in cases the company returns part of the contributed capital to the members or repurchases the members’ stakes in case request the company to repurchase that member’s stake if that member has voted against a resolution or decision of the Board of Members.
Procedures of
INCREASING, DECREASING CHARTER CAPITAL
In a multi-member limited liability companies
A multi-member limited liability companies 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 increase 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 repurchase 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 companies 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 repurchases the members’ stakes in case request the company to repurchase 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 that 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, headquarter address; The charter capital, the increase or decrease; Time and method of increase or decrease; 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 repurchases 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 dis-advantages. 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 strictly and lawful manners.
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