Can members in a limited liability company withdraw their contributed capital without the consent of other members?

Question:

Dear PL and Partners Law Firm, we have a limited company with charter capital of VND 10 billion, including three members, me and two other friends of mine, in which, my contributed capital is VND 2 billion 500 million, accounting for 25% of the total charter capital. However, after 03 years of operation, the other two members and I had a conflict, so I want to withdraw all of my stakes from the company and propose that the company repurchase it. However, the other two members disagree.

So how do I get my money back? Please give me a consultation. Thank you.

Answer:

Thank you for your submission of question to the Q&A section of PL And Partners Law Firm. In terms of your question, we would like to reply as follows:

According to the provided information, we can identify your company as a multi-member limited liability company.

According to Clause 2 Article 50 of the Law on Enterprise 2020, provisions on capital withdrawal for members of a multi-member limited liability company are stated as follows:

“2. Do not withdraw capital from the company in any form; except for the cases specified in Articles 51, 52, 53 and 68 of this Law.”

Pursuant to the above provisions, you are not allowed to withdraw your contributed capital from the company in any form, except for the following cases:

  • The company repurchases your stakes under request;
  • Transfer of stakes;
  • Settlement of stakes in some special cases as prescribed in Articles 51, 52, 53 and 68 of the Law on Enterprise 2020.

Therefore, you cannot withdraw your capital from the company but only request the company to repurchase your stakes or transfer it to another person.

  • Requesting the company to repurchase the stakes:

Article 51 of the Law on Enterprise 2020 stipulates:

“1. A member is entitled to request the company to repurchase that member’s stake if that member has voted against a resolution or decision of the Members’ Council on the following issues:

a) Amendments to regulations of the company’s charter on rights and obligations of members and the Member’s Council;

b) Reorganization of the company;

c) Other issues prescribed by the company’s charter.

2. A written request for stake repurchase shall be sent to the company within 15 days from the day on which the resolution or decision mentioned in Clause 1 of this Article is ratified.

3. Within 15 days from the day on which the request mentioned in Clause 1 of this Article is received, the company shall repurchase that member’s stake at market value or at a value determined in accordance with the company’s charter, unless another value is agreed upon by both parties. The payment shall only be made if the company is still able to pay its debts and other liabilities afterwards.

4. In case the company is not able to pay for the repurchase of the stake as requested, the member is entitled to sell the stake to another member or a non-member.”

  • Transfer of the stake:

Article 52 of the Law on Enterprise 2020 stipulates:

“1. Except for the cases specified in Clause 4 Article 51, Clause 6 and Clause 7 Article 53 of this Law, a member of a multiple-member limited liability company is entitled to transfer part or all of their stake to another person as follows:

a) Offer the stake to other members in proportion to their holdings under the same conditions;

b) Transfer the stake under the same conditions as those applied to other members mentioned in Point a of this Clause to a non-member if the other members do not purchase or fully purchase the stake within 30 days from the first day of offering.”

Regarding your case, based on the above provisions, you are entitled to request the Company to repurchase your contributed capital if there is a conflict in the process of doing business, but must comply with conditions and process as prescribed by the Law on Enterprise 2020. In case the company fails to repurchase your stakes, you are entitled to freely transfer your contributed capital to another non-member of the company.

  • The above-mentioned consulting opinions are based on the provisions of the law and information provided by the client. Any legal opinions expressed (unless cited) are our own and for reference only.
  • At the time you read this article, the laws we refer to may have expired, or have been amended or supplemented. Therefore, we do not guarantee that the above information can be applied to all cases, to all subjects, at all times.
  • For accurate and specific consultancy, please contact PL&Partners’ lawyer via call center 093.1111.060 or email: info@pl-partners.vn.
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