CAPITAL DECREASE OF MULTIPLE-MEMBER LIMITED LIABILITY COMPANY

To suit the business situation, in some cases multiple-member limited liability company are forced to decide to decrease charter capital. The decision of capital decrease of multiple-member limited liability company should be made after careful consideration and implementation of necessary legal procedures according to the law to ensure legality and transparency.

In what cases can the capital decrease of multiple-member limited liability company be implemented?

According to the current Enterprise Law, the capital decrease of multiple-member limited liability company be implemented 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’ stake under the request of the member if that member has voted against a resolution or decision of the Board of Members on the following issues:

+ Amendments to regulations of the company’s charter on rights and obligations of members and the Board of Members;

+ Reorganization of the company;

+ Other issues prescribed by the company’s charter.

– Charter capital is not fully and punctually contributed by the members.

How is the capital decrease of multiple-member limited liability company implemented?

Organizing a meeting of the company’s Board of Members to decide on capital decrease

Decision to increase or decrease charter capital, when and how to mobilize additional capital is under the authority of the Board of Members. At the same time, the meeting documents and approval of the Board of Members are also in the list of documents that need to be submitted when carrying out procedures to decrease the charter capital of a multiple-member limited liability company at the competent state agency.

The meeting of the Board of Members is convened and chaired by the Chairman of the Board of Members, complying with the conditions and formalities prescribed by law.

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Notifying to the competent state agency on the capital decrease of multiple-member limited liability company

The notification must be made in writing by the company to the Business Registration Authority.

Dossier of notification on the capital decrease of multiple-member limited liability company include:

– Notification of charter capital decrease;

– Resolutions, decisions and meeting minutes of the Board of Members on capital decrease of multiple-member limited liability company;

– 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.