The capital contribution in all types of enterprises has been stipulated by law in the Law on Enterprises 2020 (LOE) number of guiding documents. However, in fact, there are still many people who do not understand these regulations, leading to them being confused when problems related to their capital contributions occur.
1. Limited Liability Company with 2 or more members
According to the provisions of Clause 2, Article 50 of the LOE, members of the company are not allowed to withdraw their contributed capital from the company in any form, except for some of the following cases:
(i) Requesting the company to repurchase the contributed capital (Article 51 of the LOE)
A company member has the right to request the company to repurchase its contributed capital in case such member has voted against the resolution or decision of the Board of members on the following issues:
– Amending and supplementing the contents of the company’s charter related to the rights and obligations of members and the Board of members;
– Reorganization of the company;
– Other cases as prescribed in the company’s charter
Within 15 days from the date of receipt of the request to repurchase the member’s contributed capital, the company must repurchase the member’s contributed capital at the market price or determined according to the principles specified in the company’s charter, unless the two parties agree on the price.
(ii) Handling of contributed capital in some special cases (Article 53 of the LOE)
– After requesting the company to buy back the contributed capital, if the company fails to pay this contributed capital, the member has the right to freely transfer his/her contributed capital to another member or a person who is not a member of the company (Clause 3, Article 52 of the LOE)
– Withdraw capital in the form of donating contributed capital to others according to the provisions of Clause 6, Article 53 of the LOE
– Withdraw capital in the form of debt repayment with contributed capital as prescribed in Clause 7, Article 53 of the LOE
(iii) Transfer of contributed capital (Article 52 of the LOE)
In addition to the handling of contributed capital in some special cases mentioned above, a company member may transfer his/her contributed capital to another person according to the following provisions:
– Offer the contributed capital to the remaining members in proportion to their contributed capital in the company with the same offering conditions.
– Transfer with the same conditions of offering for the remaining members to non-members.
Thus, members of a limited liability company with two or more members are not allowed to directly withdraw their contributed capital from the company, except for the case of requesting the company to buy back its contributed capital, transfer the contributed capital and some special cases as prescribed by law.
2. Joint Stock Company
Pursuant to Article 119 of the LOE, shareholders in a joint-stock company are not allowed to withdraw their contributed capital from the company in any form, except for the case of repurchase of shares by the company or others. Concrete:
(i) Requesting the company to repurchase the contributed shares (Article 132 of the LOE)
The company’s shareholders may request the company to repurchase their contributed shares in case the shareholders have voted not to approve the resolution on the reorganization of the company or change the rights and obligations of shareholders specified in the company’s charter.
Within 10 days from the date the General Meeting of Shareholders approves the resolution on these issues, the shareholder must make a written request for share repurchase, clearly stating the name and address of the shareholder, the number of shares of each type, the intended selling price, etc the reason for requesting the company to buy back.
The company must repurchase shares at the request of shareholders specified in Clause 1 of this Article at the market price or the price calculated according to the principles specified in the company’s charter within 90 days from the date of receipt of the request.
(ii) Transfer of contributed capital to other shareholders
In case the company’s charter does not provide for restrictions on share transfer, shareholders can withdraw capital by transferring all shares to other shareholders. At the same time, shareholders must meet the following conditions:
– The transferred shares are ordinary shares and dividend preference shares (Clause 1, Article 115, Clause 2, Article 117 of the LOE)
– If such shareholder is a founding shareholder, within 3 years from the date the company is granted the Enterprise Registration Certification (ERC), he/she is free to transfer his/her shares to other founding shareholders and may only transfer his/her ordinary shares to other shareholders other than founding shareholders with the approval of the General Meeting of Shareholders (Article 120 of the LOE).
Therefore, after the 3-year period, the restrictions on transfer are abolished, founding shareholders have the right to freely transfer their ordinary shares to others without the approval of the General Meeting of Shareholders.
(iii) Transfer of contributed capital to other persons other than shareholders of the company
Except for the restriction of the founding shareholders mentioned above or the company’s charter stipulating the restriction on the transfer of shares, shareholders are allowed to freely transfer shares to others.
Thus, shareholders in a joint-stock company are not allowed to withdraw their contributed capital in ordinary shares from the company in any form, except for some cases in which the company or others buy back shares as above.
3. Partnerships
For general partners, Article 185 of the LOE stipulates the termination of general partnership, whereby the general partners have the right to withdraw capital from the company if it is accepted by the Board of members. In this case, the member wishing to withdraw capital must notify in writing the request for capital withdrawal at least 6 months before the date of capital withdrawal, noting that the capital can only be withdrawn at the end of the fiscal year and the approved financial statement of that fiscal year.
For capital contributors, according to Clause 1, Article 187 of the LOE, capital contributors have the right to transfer their capital contributions at the company to others. Currently, LOE does not limit this transfer activity as for general partners and capital contributors who can transfer to any person without the permission of the company. Therefore, if a capital contributor wants to withdraw capital, he or she shall transfer it to another person and proceed to make a transfer contract.
Thus, with the type of enterprise of a personal nature such as a partnership, the general partner has the right to withdraw capital from the company if it is accepted by the Board of members; capital contributors are free to transfer their contributed capital.
In summary, entities contributing capital to the enterprise do not automatically have the right to withdraw capital from the enterprise when conflicts and disagreements arise, and the right to withdraw capital from the company will be determined based on each type of business in which you invest.
