LEGAL PROVISIONS ON CAPITAL CONTRIBUTION TERM IN COMPANY LIMITED 2 OR MORE MEMBERS

At present, assets contributed as capital to the company is a matter of concern to many businesses because it is related to the property liability of the members. members after the enterprise is established and put into operation. When establishing a limited liability company with 2 or more members, the members commit to contribute enough capital to the company within a certain period of time. How long can members contribute capital to the company? What should I do if I do not contribute enough registered capital? Within the scope of the article, DTD will analyze and give a clearer legal perspective to readers on this issue.

1. Regulations on charter capital and time limit for capital contribution

1.1. What is charter capital?

Pursuant to Clause 1, Article 47 of the Law on Enterprises 2020, the charter capital of a limited liability company with two or more members when registering for the establishment of an enterprise is the total value of capital contributions committed by members to contribute and recorded in the Company rules. Members may contribute capital in VND, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets valuable in VND.

1.2. Time limit for capital contribution

Pursuant to the provisions of Clause 2, Article 47 of the Law on Enterprises 2020, members must contribute capital to the company in full and accordance with the type of assets committed when registering for business establishment within 90 days from the date the enterprise be granted an Enterprise Registration Certificate (excluding the time for transporting and importing assets contributed as capital, carrying out administrative procedures to transfer property ownership). 

Note: In case a company member contributes capital with assets different from the committed assets, the consent of more than 50% of the remaining members in the company must be obtained.

2. Handling measures when not contributing enough capital within the committed time limit

2.1. For capital-contributing members

After the time limit specified in Section 1.2, there are still members who have not contributed capital or fully contributed capital as committed, shall be handled as follows:
- Members who have not contributed capital according to their commitments is no longer a member of the company;

- Members who have not yet fully contributed the committed capital contribution shall have the rights corresponding to the contributed capital;

- Shares of uncontributed capital of members are offered for sale according to resolutions and decisions of the Members' Council.

2.2. For the company

Within 90 days (from the date of issuance of the Enterprise Registration Certificate), if any member has not contributed capital or fully contributed the committed capital amount, the company must register for a change in charter capital, percentage capital contribution of members is equal to the amount of capital contributed. This change registration procedure must be carried out within 30 days from the last day of full capital contribution as prescribed in Section 1.2. 

The order and procedures for registration of change of charter capital and percentage of contributed capital shall comply with the provisions of Article 51 of Decree No. 01/2021/ND-CP. Specifically, the enterprise must send the application for registration of changes to the business registration information to the Business Registration Office where the company's head office is located. The application file includes:

1. Notice of change of business registration information signed by the legal representative of the enterprise;
2. Resolution, decision and meeting minutes of the Members' Council, for limited liability companies with two or more members, on the change of charter capital;
3. The investment registration authority's document approving the capital contribution, share purchase, purchase of capital contributions from foreign investors or foreign-invested economic organizations, in the case of having to do the following: carry out the procedures for registration of capital contribution, share purchase, purchase of contributed capital in accordance with the Law on Investment;
4.  List of members of limited liability companies with two or more members;

In case the time limit of 30 days from the last day to fully contribute the prescribed capital contribution is expired, the enterprise has not yet carried out the procedures for registration of change of charter capital or the proportion of contributed capital of members, the enterprise will be subject to penalties. Administrative penalties as prescribed in Article 28 of Decree 60/2016/ND-CP are as follows: 

“Article 28. Violations against regulations on enterprise establishment

3.A fine of between VND 10,000,000 and 20,000,000 shall be imposed for failing to register changes with the business registration authority when failing to contribute capital in full Article rates as registered.”

The authority to impose administrative sanctions belongs to the Chief Inspector of the Department of Planning and Investment or the head of the Department-level specialized inspection team.

Note: 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 the commitment. the company registers to change the charter capital and the percentage of contributed capital of the members.

3. Remedial measures

After being sanctioned for the act of failing to register changes with the business registration agency when failing to contribute enough charter capital as registered, the enterprise is forced to register for adjustment of charter capital, the percentage of contributed capital of the enterprise. members by the amount of capital contributed.