INSUFFICIENT CONTRIBUTION OF CHARTER CAPITAL IN MULTIPLE-MEMBER LIMITED LIABILITY COMPANY

In business activities, sufficient contribution of charter capital is one of the basic legal requirements for all businesses in the establishment stage, including enterprise in the form of multiple-member limited liability. In case of insufficient contribution of charter capital in multiple-member limited liability company according to regulations, some legal and financial consequences may be faced.

How is the charter capital of multiple-member limited liability company determined?

Charter capital is determined as the amount of capital contributed or committed to contribute at the time of company establishment. Specifically, charter capital is the total value of assets contributed or committed to by members of multiple-member limited liability company upon company establishment.

The charter capital of multiple-member limited liability company when registering to establish enterprise is the total value of the capital contributions committed by the members and recorded in the company’s charter.

How is the deadline for contributing charter capital to multiple-member limited liability company?

Enterprises must comply with the charter capital contribution deadline as prescribed by law.

The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration, excluding the time needed to transport or import the contributed assets and for completing ownership transfer procedures.

During this period, the members shall have rights and obligations that are proportional to their promised contribution. 

What should be performed upon insufficient contribution of charter capital in multiple-member limited liability company?

The law sets out legal procedural requirements for cases of not contributing or not being eligible to contribute capital to the charter of multiple-member limited liability company, as the members have not contributed capital or not contributed the full amount of committed capital. Accordingly, the company must register to change its charter capital to the actual amount of contributed capital.

The implementation deadline is 30 days from the last day to contribute the full capital contribution according to regulations.

Members who have not contributed capital or have not contributed with full amount of capital as committed will be responsible in proportion to the committed capital contribution ratio for the company’s financial obligations arising in the period before the date of incorporation. Register to change charter capital and capital contribution ratio of members.

What are the responsibilities of the company members upon insufficient contribution of charter capital in multiple-member limited liability company?

In case a member has not contributed capital or has not fully contributed the committed capital contribution, it will be handled as follows:

– Members who have not contributed capital as committed are automatically no longer members of the company;

– Members who have not fully contributed their committed capital have rights corresponding to their capital contribution;

– Uncontributed capital of members is offered for sale according to resolutions and decisions of the Board of Members.

Insufficient contribution of charter capital in single-member limited liability company but not performing capital decrease procedures, will be fined?

The company may be fined from 30,000,000 VND to 50,000,000 VND for failure to carry out capital adjustment procedures according to regulations at the business registration agency at the end of the capital contribution period.

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