According to the Enterprise Law 2014, members of a limited liability company are allowed to transfer their capital contribution to other members of the company. In cases where a member wishes to transfer their capital contribution to someone who is not a member of the company, they must first offer the capital to the remaining members proportionally to their ownership share in the company under the same conditions. If the remaining members do not purchase or do not fully purchase the offered capital within 30 days from the date of the offer, the member is then allowed to transfer the capital under the same conditions to a non-member.
In all cases of transferring capital contribution, the company must carry out the procedures to amend its business registration with the Department of Planning and Investment.
This is a key difference compared to joint-stock companies. In joint-stock companies, founding shareholders are required to notify the Department of Planning and Investment when transferring shares. Restrictions on transferring shares to non-shareholders apply only to founding shareholders within the first three years from the company’s establishment. Common shareholders have the right to freely transfer their shares without notifying the Department of Planning and Investment.
Procedures for changing members of a limited liability company are as follows:
Step 1: Preparing and submitting the application
The application for changing members of a limited liability company includes:
- Notification of changes in enterprise registration details
- Minutes of the members’ council meeting
- Decision of the members’ council
- Notification of the creation of a member register
- List of members
- Request for publication
- Transfer agreement and liquidation minutes
- Certified copies of ID card or passport of the individual receiving the transfer
- Business Registration Certificate/Enterprise Registration Certificate of the organization receiving the transfer (except for organizations such as ministries/provincial People’s Committees), along with certified personal identification and authorization decisions of the authorized representative of the organization
- Resolution of capital contribution by the organization receiving the transfer
- Letter of introduction or power of attorney for the person submitting the application
- Certified copy of the ID card or passport of the person submitting the application
After preparing the complete application, the enterprise submits it to the Department of Planning and Investment where the enterprise is headquartered.
Step 2: Publishing information on enterprise registration changes
After obtaining the new Enterprise Registration Certificate, the company must publish the information at the Department of Planning and Investment.
Publishing information is a mandatory step when amending enterprise registration.
According to Article 26, Decree No. 50/2016/ND-CP, effective from July 15, 2016, on administrative penalties in the planning and investment sector, businesses that fail to publish their enterprise registration information on time will be fined between VND 1,000,000 and VND 2,000,000 and must rectify the violation by publishing the content on the National Enterprise Registration Portal.
Outcome:
- Enterprise Registration Certificate
- Confirmation of changes in enterprise registration
- Receipt and proof of information publication
- Internal documents to be archived at the company office
In case you require further consultation on issues related to capital contribution transfer, please feel free to contact MLT Lawyers at 0286.2727.987 or 0919.211.048, or via email at [email protected]