INCREASE OF CAPITAL CONTRIBUTION OF COMPANY MEMBERS

Increase of capital contribution of company members is a form of increasing the charter capital of a multiple-member limited liability company. Raising capital is an important activity in the process of operating and expanding the scale of operations and business development. The process of increasing capital from existing members in multiple-member limited liability company requires accuracy, transparency and compliance with the law.

In what cases can the increase of capital contribution of company members be implemented?

The current Enterprise Law stipulates two forms of capital increase of multiple-member limited liability company:

– Increase in the current members’ capital contribution;

– Receipt of capital contribution from new members.

What should be noted upon capital increase of multiple-member limited liability company by increase of capital contribution of company members

In case of increase of capital contribution of company members, the increase will be distributed among the members in proportion to their holdings in the company.

However, members have the right to transfer their capital contribution rights to others.

In case a member does not contribute or fully contribute that member’s share of additional capital as distributed, the remainder shall be divided among other members in proportion to their holdings in the company unless otherwise agreed by the members.

Is it mandatory to hold a meeting of the Board of Members to decide on capital increase of multiple-member limited liability company by increase of capital contribution of company members?

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

A two-member LLC is responsible for notifying the competent state agency about increasing the charter capital of the two-member LLC through the form of increasing the capital contribution of company members. The implementation period is 10 days from the date the charter capital increase has been paid.

The agency competent to receive and process procedures is the business registration agency.

Documents announcing the increase in capital contribution of company members include:

– Notification of charter capital increase;

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

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.