In which cases can a limited liability company with 2 or more members increase its charter capital?

1. In what cases can a limited liability company with 2 or more members increase its charter capital?

According to Clause 1, Article 68 of the Enterprise Law 2020, charter capital can be increased in the following cases:

- Increase member capital contribution;

- Receive additional capital contributions from new members.

In case of increasing the capital contribution of a member, the additional capital contribution shall be divided among the members in proportion to their capital contribution in the company's charter capital. Members may transfer their capital contribution rights to others in accordance with the provisions of Article 52 of the Enterprise Law 2020.

In case a member does not contribute or only contributes a part of the additional capital contribution, the remaining capital of the additional capital contribution of that member shall be divided among other members in proportion to their capital contribution in the company's charter capital if the members have no other agreement.

2. In what cases can a limited liability company with 2 or more members reduce its charter capital?

The company may reduce its charter capital in the following cases:

- Refund a portion of the capital contribution to members in proportion to their capital contribution in the company's charter capital if the company has been in continuous business operation for 02 years or more from the date of business registration and ensure full payment of debts and other financial obligations after refunding to members;

- The company repurchases the capital contribution of members according to the provisions of Article 51 of the Enterprise Law 2020;

- Charter capital is not paid in full and on time by members as prescribed in Article 47 of the Enterprise Law 2020.

(Clause 3, Article 68, Law on Enterprises 2020)

3. How long must a company notify in writing of an increase or decrease in charter capital?

- Except in cases where the charter capital is not paid in full and on time by the members as prescribed, within 10 days from the date the increase or decrease in charter capital has been paid, the company must notify the Business Registration Authority in writing of the increase or decrease in charter capital. The notification must include the following main contents:

+ Name, head office address, business registration number;

+ Charter capital, increased or decreased capital;

+ Time and form of capital increase or decrease;

+ Full name and signature of the legal representative of the enterprise.

- Attached to the above-mentioned notice must be the resolution, decision and meeting minutes of the Board of Members; in case of reduction of charter capital due to return of part of capital contribution to member and the company repurchases the capital contribution of member as prescribed in Section 2, must be accompanied by the latest financial report.

- The business registration authority shall update information on the increase or decrease of charter capital within 03 working days from the date of receipt of the notice.

(Clause 4, 5, 6, Article 68 of the Enterprise Law 2020)

4. Who has the right to decide to increase or decrease the charter capital of a limited liability company with two or more members?

According to point b, clause 2, Article 55 of the Enterprise Law 2020, it is stipulated as follows:

The Board of Members has the following rights and obligations:

- Decide on the company's development strategy and annual business plan;

- Decision to increase or decrease charter capital, decide on the timing and method of raising additional capital; decide on bond issuance;

- Decide on the company's development investment projects; market development solutions, marketing and technology transfer;

- Approve loan, lending, asset sale contracts and other contracts as stipulated in the Company Charter with a value of 50% or more of the total asset value recorded in the company's most recent financial statement or a smaller ratio or value as stipulated in the Company Charter;

- Elect, dismiss, remove the Chairman of the Board of Members; decide to appoint, dismiss, remove, sign and terminate contracts with the Director or General Director, Chief Accountant, Controller and other managers as prescribed in the Company Charter;

- Decide on salary, remuneration, bonus and other benefits for the Chairman of the Board of Members, Director or General Director, Chief Accountant and other managers as prescribed in the Company Charter;

- Approve the annual financial report, profit use and distribution plan or loss handling plan of the company;

- Decide on the company's management structure;

- Decision to establish subsidiaries, branches, representative offices;

- Amendment and supplementation of the Company Charter;

- Decision to reorganize the company;

- Decision to dissolve or request bankruptcy of the company;

- Other rights and obligations as prescribed by the Enterprise Law 2020 and the Company Charter.