PROCEDURES ON CHARTER CAPITAL DECREASE OF SINGLE-MEMBER LIMITED LIABILITY COMPANY

The reduction of charter capital does not merely reflect the internal governance will of the company’s owner but also entails potential implications for the legitimate rights and interests of employees, creditors, and other relevant stakeholders. Accordingly, safeguarding creditors’ rights, ensuring transparency of corporate records, disclosing relevant resolutions, and fulfilling all payment obligations constitute mandatory conditions under the law. Against this backdrop, the question arises: how should the procedure for charter capital decrease of single-member limited liability company be properly carried out to ensure legal compliance while simultaneously mitigating legal risks for the owner?

Charter capital decrease of single-member limited liability company in which case?

A single-member limited liability company may decrease its charter capital in the following cases:

Part of the contributed capital is returned to the company’s owner

Note, in case of changing the charter capital of single-member limited liability company, the company must meet the following conditions:

(i) the company has operated for at least 02 consecutive years from the enterprise registration date; and

(ii) the company is able to fully pay its debts and other liabilities after the return of capital.

Charter capital is not fully and punctually contributed by the owner 

The owner shall register the contributed capital as charter capital within 30 days from the deadline.

In this case, the owner shall be responsible for the financial obligations incurred by the company during the period before the change in charter capital is registered in proportion to the promised capital.

>> PROCEDURES FOR RE-ISSUANCE OF ENTERPRISE REGISTRATION CERTIFICATE https://linconlaw.vn/procedures-for-re-issuance-of-enterprise-registration-certificate/

>> INCREASE OF CAPITAL CONTRIBUTION OF COMPANY MEMBERS https://linconlaw.vn/increase-of-capital-contribution-of-company-members/

Legal procedures on charter capital decrease of single-member limited liability company

In case a single-member limited liability company registers to change its charter capital, the company sends the application for changes to enterprise registration information complying with regulations.

Competent agency for procedure handle

Business Registration Office of province where it is headquartered.

Legal procedures implementation

The company prepares and sends an application for changes to enterprise registration information to the Business Registration Office.

Documents announcing the charter capital decrease of single-member limited liability company include:

– Application form for registration of changes in enterprise registration information;

– The resolution or decision of the owner of the single-member limited liability company (original or valid copy).

The business registration agency will update information about the charter capital decrease of single-member limited liability company within 03 working days from the date of receipt of the notice.