Registering to reduce charter capital or registering to reduce charter capital is one of the biggest concerns of enterprises after operating and wishes to reduce charter capital. This is one of the very important business change registration procedures that enterprises must pay special attention to to avoid bearing risks and liabilities later. Let’s find out with Pham Consult about this issue!
However, enterprises are not always allowed to register to reduce charter capital. The Enterprise Law 2020 stipulates the following cases where an enterprise may register to reduce its charter capital:
• Refund part of capital contribution to members.
• The company buys back the capital contribution of the members in accordance with 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.
1. Cases eligible for registration to reduce charter capital:
Clause 3, Article 68 of the Enterprise Law 2020 stipulates the following cases in which the charter capital reduction can be registered in a two-member limited liability company:
1.1 Reduction of charter capital due to partial return of contributed capital to members.
Specifically, the Company will refund a part of the contributed capital to the member in proportion to their contributed capital if:
• The company has operated continuously for 02 years or more from the date of business registration
• The company guarantees to pay all debts and other property obligations after they have been repaid to members.
1.2 Reduction of charter capital because the company buys back the contributed capital from members according to the provisions of Article 51 of the Law on Enterprises 2020.
According to the provisions of Article 51 of the Enterprise Law 2020, the Company can buy back the contributed capital of the members upon request. Specifically:
A member has the right to request the company to buy back his/her contributed capital if that member has voted against the resolution or decision of the Members’ Council on the following issues:
a) Amending and supplementing contents in the company’s charter related to the rights and obligations of members and the Members’ Council;
b) Reorganization of the company;
c) Other cases as prescribed in the company’s charter.
2. The request for redemption of contributed capital must be in writing and sent to the company within 15 days from the date of adoption of the resolution or decision specified in Clause 1 of this Article.
3. Within 15 days from the date of receipt of a request from a member specified in Clause 1 of this Article, the company must repurchase that member’s contributed capital at the market price or the price determined according to the rules of law. specified in the company’s charter, unless the two parties can agree on the price. The payment can only be made if, after fully paying the redeemed contributed capital, the company still fully pays all debts and other property obligations.
4. In case the company fails to pay the capital contribution requested for redemption as prescribed in Clause 3 of this Article, that member has the right to freely transfer his/her capital contribution to another member or a person who is not a member of the company. company members.”
Thus, when a member requests the company to buy back his/her contributed capital, the company must carry out the procedures specified in Article 51 and at the same time carry out the procedures for registration of a decrease in charter capital to the agency. competent authority to register the reduction of charter capital.
1.3 Reduction of charter capital because charter capital is not paid in full and on time by members as prescribed in Article 47 of the Enterprise Law 2020.
Clause 4, Article 47 of the Enterprise Law 2020 stipulates: “In case a member has not contributed capital or has not fully contributed the committed capital amount, the company must register to change the charter capital, the proportion of capital contribution of the members. equal to the amount of capital contributed within 30 days from the last day to fully contribute the contributed capital as prescribed in Clause 2 of this Article. The members who have not contributed capital or have not fully contributed the committed capital amount shall be responsible in proportion to the committed capital contribution ratio for the financial obligations of the company arising in the period before the date of registration of the company. sign changes to the charter capital and the percentage of contributed capital of the members.”
Thus, after the time limit for capital contribution, if a member still has not contributed the correct and sufficient amount of capital as committed by the member, the Company is responsible for registering a change of charter capital within 30 days from the last day contribute enough capital.
2. Dossier to reduce charter capital of limited liability companies with two or more members:
Profile components include:
• Notice of change of business registration content
• Resolutions, decisions and meeting minutes of the Members’ Council of a limited liability company with two or more members on the change of charter capital
• Financial statement closest to the time of decision to reduce charter capital in case of decrease in charter capital because the company returns part of the contributed capital to the member and the decrease in charter capital because the company buys back the contributed capital of the member. pellets.
• Authorization letter for the person to submit the application for change of business registration on behalf of the applicant.
3. Order and procedures for registration of reduction of charter capital of limited liability companies with two or more members:
Step 1: The company holds a meeting of the Members’ Council, issues resolutions and decisions on the change of charter capital and prepares other documents
Step 2: Carry out the procedures for submitting the application for registration of change of charter capital on the Enterprise Registration Certificate (ERC).
Implementing agency: Department of Planning and Investment where the Company is located
Implementation time: within 03 – 05 days from the date of receipt of complete and valid documents
Step 3: Carry out the procedures for submitting the application for registration of change of charter capital on the Investment Registration Certificate (IRC) for foreign-invested companies.
In addition, for companies with foreign investment, the Company needs to prepare other relevant documents and documents to explain to the Department of Planning and Investment.
Implementing agency: Department of Planning and Investment where the Company is located
Implementation time: within 10-15 days from the date of receiving complete and valid dossiers.
Thus, the procedure for registering to reduce charter capital of a limited liability company with 2 or more members is also one of the most difficult and complicated procedures, especially for foreign-invested companies.