Question 24:  Currently, I and some friends are planning to establish a limited company with two or more members. Please specify the time limit for making capital contribution to a limited liability company with two or more members?

 Answer: 

According to Clause 2, Article 48 of the Enterprise Law, every member must contribute capital properly in terms of sufficiency and type of assets as agreed within 90 days from the day on which the Certificate of Business registration is issued. Company’s members may only contribute assets other than the promised assets it such assets are approved by the majority of other members. After the said deadline, each member has the rights and obligations proportional to their promised capital contribution.

Question 25:  XYZ Company Limited has three members, X, Y, Z. After the establishment of enterprise, member X does not contribute capital as committed. Please provide the regulations on the handling of cases where a member of a limited liability company with two or more members fails to contribute  fully and on time the committed amount? 

 Answer: 

According to Clause 2, Article 48 of the Enterprise Law, every member must contribute capital properly in terms of sufficiency and type of assets as agreed within 90 days from the day on which the Certificate of Business registration is issued. Company’s members may only contribute assets other than the promised assets it such assets are approved by the majority of other members. After the said deadline, each member has the rights and obligations proportional to their promised capital contribution.

At the same time, Clause 3 and Clause 4, Article 48 of the Enterprise Law stipulate that after the time limit stipulated in Clause 2 of this Article, a member who has not contributed or has not fully contributed the committed capital shall be handled as follows:

a) The member who fails to contribute capital as promised is obviously no longer a company’s member;

b) The member who fails to fully contribute capital as promised shall have the rights proportional to his/her contributed capital;

c) The right to contribute capital of the member who fails to contribute capital shall be offered under a decision of the Board of members.

Moreover, the company shall register a change to charter capital and the member’s stake holding within 60 days from the deadline for making sufficient capital contribution. Any member who fails to contribute capital or fails to fully contribute capital as agreed shall take responsibility up to the value of promised capital contribution for the company’s financial obligations incurred before the day on which the company registers the changes to the charter capital and its members’ stakes.

Question 26:  I have contributed capital to a limited company with two or more members. What are the rights I can have when I join a limited liability company with two or more members?

 Answer: 

As a member of limited liability company with two or more members, the member shall have the rights stipulated in Article 50 of the Enterprise Law. As follows:

1. Participate in meetings of the Board of members; discuss, propose, votes for the issues within the competence of the Board of members.

2. Cast a number of votes that is proportional to the member’s stake, except for the case in Clause 2 Article 48 of this Law.

3. Receive a proportion of profits that is proportional to the member’s stake after the company has settled all taxes and fulfilled other financial obligations as prescribed by law.

4. Receive a proportion of remaining assets that is proportional to the member’s stake after the company is dissolved or goes bankrupt.

5. Has the preemptive right to contribute additional capital when the company’s charter capital is increased.

6. Dispose of his/her own stake by transfer part or all of it, give, donate or otherwise in accordance with law and the company’s charter.

7. File a lawsuit against the President of the Member assembly, Director/General Director, legal representative, or another manager in accordance with Article 72 of this Law, whether single-handedly or on behalf of the company.

8. Except for the case in Clause 9 of this Article, any member or group of members that owns at least 10% of the charter capital (or a smaller amount prescribed by the company’s charter) shall have the additional rights below:

a) Request meetings of the Board of members to resolve issues within its competence;

b) Inspect, examine books and monitors transactions, accounting books, and annual financial statements;

c) Inspect, examine, copy the member register, meeting minutes, Resolutions of the Board of members, and other documents of the company.

d) Request the Court to annul the resolution of the Board of members within 90 days from the ending date of the meeting if the procedures, conditions for meeting, or contents of such resolution are not correct or not conformable with this Law and the company’s charter.

9. If a company’s member owns more than 90% of charter capital and the company’s charter does not provide for a smaller rate as prescribed in Clause 8 of this Article, the group of other members shall naturally have the rights prescribed in Clause 8 of this Article.

10. Other rights prescribed by this Law and the company’s charter.

Question 27:  Have contributed capital to a limited company with two or more members. What are the obligations I can have when I join a limited liability company with two or more members?

 Answer: 

According the provisions of Article 51 of the Enterprise Law, as a member of limited liability company with two or more members, the member shall have the following obligations:

1. Contribute capital fully and punctually; take liability for the debts and other liabilities of the company up to the value of capital contributed, except for the cases in Clause 2 and Clause 4 Article 48 of this Law.

2. Do not withdraw contributed capital in any shape or form, except for the cases in Articles 52, 53, 54, and 68 of this Law.

3. Comply with the company’s charter.

4. Comply with resolutions and decisions of the Board of members.

5. Take personal responsibility when committing the following acts on behalf of the company:

a) Violations of law;

b) Business operations or transactions that do not serve the company’s interests and cause damage for other persons;

c) Payment of undue debts while the company is facing financial risk.

6. Fulfill other obligations prescribed by this Law.

Question 28:  Mr. X is a member of XYZ Limited. After the meeting of the Members' Council, Mr. X did not agree with the Resolution on the reorganization of the company and Mr. X asked the company to buy back his shares. Please indicate whether Mr. X's request is in compliance with the law?

Answer:

Clause 1, Article 52 of the Law on Enterprises already provides for this issue. Accordingly, the member has the right to request the company to buy back his contributed capital, if such member has voted against the resolution of the Members' Council on the following issues:

a) Amendments to the company’s charter that are related to rights and obligations of members and/or the Board of members;

b) Company restructuring;

c) Other cases prescribed by the company’s charter.

The request for repurchase of a stake must be made in writing and sent to the company within 15 days from the day on which the Resolution is ratified as prescribed in this Clause.

Based on the above provisions, Mr. X has the right to request the company to buy back his contributed capital.

  Hoang Thanh Tuan

(Source: Agency for Business Registration)