The right to request capital repurchase of members of an LLC

Request capital repurchase of members of an LLC is a legal right of a member of a limited company according to the provisions of Vietnamese law. This process involves transferring capital contributions, financial accounting and changing the business ownership structure. Procedures for repurchasing capital are quite complicated, especially in cases of acquisition, merger or acquisition of companies. In this article, Long Phan will analyze in detail the legal aspects of the right to request capital repurchase.

Cases where members have the right to request capital repurchase of members of an LLC

The right to request the company to buy back the capital contributions of members of the LLC to ensure the members’ interests during the business operations of the enterprise. Clause 1, Article 51 of the Law on Enterprises 2020 specifically stipulates cases where members of a limited company have the right to request the company to buy back their capital contribution as follows:

In the first case, members have the right to request the LLC to buy back their capital contribution when disagreeing with the resolution of the Board of Members on issues related to the rights and obligations of members, or the organization. back to the company. This applies when members have voted not to pass that resolution.

In the second case, members have the right to request the LLC to buy back their capital contribution if the company charter specifically stipulates this. The company’s charter may stipulate other cases in which members have the right to request the company to buy back their capital contributions, in addition to the cases prescribed by law.

Distinguish requests to buy back capital from other forms of capital withdrawal

Requesting capital repurchase is a member’s right stipulated in the Enterprise Law 2020, allowing members to request the company to repurchase their capital contribution in specific cases. This process reduces the company’s charter capital in proportion to the capital contribution of the member the company acquires, and changes the capital ownership structure of the remaining members of the company.

On the other hand, the company can return a portion of capital contribution to members in proportion to their capital contribution, provided that the company has been in continuous business operation for 2 years or more from the date of establishment registration. enterprise and must ensure the completion of debt obligations and other assets after repaying members according to the provisions of Point a, Clause 3, Article 68 of the Law on Enterprises 2020.

This form is often applied when the company reduces its charter capital or the member wants to terminate his/her membership. Withdrawing capital in this form also reduces the company’s charter capital, which may affect the company’s ability to operate and pay.

Transfer of capital contribution is another form of capital withdrawal, in which a member transfers his/her capital contribution to another person, which can be another member of the company or an outsider. This process does not change the company’s charter capital, only the membership structure. Transfer of contributed capital is often applied when members want to divest capital but do not want to affect the company’s operations.

Legally, requests to buy back and return a portion of capital contribution need to comply with specific procedures and conditions under the Enterprise Law. Meanwhile, capital transfer can be done more flexibly, depending on the agreement between the parties and the provisions in the company charter.

Process for making request capital repurchase of members of an LLC

Prepare documents to request capital repurchase

The first step in the process of requesting to buy back capital contributions is to prepare complete and accurate documents. Members need to make a written request for the company to buy back their capital contribution.

The written request to buy back the capital contribution must clearly state the member’s information, the reason for the buy back request, and the expected selling price. Members also need to provide documents proving ownership of the capital contribution, such as a Capital Contribution Certificate or equivalent documents.

In addition, the application must be accompanied by other relevant documents such as a copy of the company charter, resolutions of the Board of members (if any) and other documents as required by the company or legal regulations. Preparing complete and accurate documents will help the process of reviewing and implementing the request take place quickly and smoothly.

Procedures for submitting requests and processing deadlines

After fully preparing the documents, the member sends a request to buy back the capital contribution to the company. This request must be sent in writing, possibly via direct mail, post or other method specified in the company charter. The Company is responsible for confirming receipt of the member’s request.

According to Clause 3, Article 51 of the Law on Enterprises 2020, the company has a period of 15 days from the date of receiving the request to buy back the member’s capital contribution, unless the company charter or the parties have another agreement on the time limit. term. During this time, the company needs to conduct internal procedures such as meeting the Board of Members to approve the repurchase of capital contributions.

According to Clause 4, Article 51 of the Law on Enterprises 2020, if the company refuses to repurchase the capital contribution or does not repurchase within the prescribed time limit, members have the right to freely transfer their capital contribution to another member or non-member. Must be a company member. This ensures members’ rights in case the company does not fulfill its obligation to repurchase capital contributions.

Method of valuation and payment of capital contribution

Valuing the equity stake is an important step in the acquisition process. According to regulations, the price to repurchase the capital contribution is determined on the principle of agreement between the parties. However, if an agreement cannot be reached, the parties can ask a professional appraisal organization to determine the acquisition price. After determining the price, the two parties will negotiate the payment method and deadline.

Payment is usually made in cash or bank transfer, according to the agreement of the parties. In some cases, the parties may agree on other forms of payment, such as assets or ownership in company projects. The payment process needs to be done on time and ensure transparency and compliance with tax and accounting regulations.

Legal consulting services on request capital repurchase of members of an LLC

From arising cases, implementation processes, to accounting and dispute resolution, each step needs to be handled carefully. The following services of Long Phan will be effective solutions to the problem of requesting to buy back the capital of members of the LLC:

• Consulting on the rights and obligations of LLC members.
• Consulting on drafting related documents on capital contribution repurchase activities.
• Support in implementing procedures to request repurchase of capital contributions.
• Consulting on legal regulations on dispute resolution related to the right to request capital repurchase.
• Consulting on capital management strategies and protecting the interests of company members.

The right to request repurchase of capital from members of a limited company is a complex issue, requiring in-depth understanding of corporate law. To ensure rights and legal compliance during the process of repurchasing capital contributions, customers should consult experts. Contact Long Phan immediately via hotline: 0906.735.368 for detailed advice on this issue.