The transfer of shares or capital contribution within joint stock companies and limited liability companies is a fundamental aspect of corporate governance. Understanding the regulations governing this process and its procedures is crucial for businesses to navigate ownership changes seamlessly while ensuring compliance with legal requirements. In this discussion, we will delve into the essential aspects of these regulations, shedding light on the steps involved and the significance of adhering to them.
Question:
My advertising joint-stock company has a member who wants to resign and transfer their contributed capital to another member within the company. Could you please let me know what procedures I need to follow for this change?
Answer:
The Department of Business Registration responds to your question as follows:
– According to Clauses 3 and 4 of Article 120 of the Law on Enterprises 2020:
“3. Within 03 years from the issuance date of the Certificate of Enterprise Registration, the ordinary shares of founding shareholders may be transferred to other founding shareholders and may only be transferred to a person that is not a founding shareholder if the transfer is accepted by the GMS. In this case, the transferor does not have the right to vote on this transfer.
4. The limitations specified in Clause 3 of this Article do not apply to the following ordinary shares:
a) Additional shares acquired by founding shareholders after the enterprise is registered;
b) Shares that have been transferred to other persons that are not founding shareholders.”
– According to Article 57 of Decree No. 01/2021/NĐ-CP dated January 4, 2021, of the Government: “Notification of changes in information about founding shareholders to the Business Registration Office shall be carried out only when the founding shareholder does not yet make payment or makes partial payment for subscribed shares according to Article 113 of the Law on enterprises. The enterprise shall make notification of change in information of founding shareholders within 30 days from the deadline for payment for subscribed shares.”
– Furthermore, the Law on Enterprises 2020, specifically in Article 11, Article 122, and Article 127, allows for the free transfer of shares through contract or securities market transactions. In this situation, the individual or entity receiving the shares becomes a shareholder of the company as soon as their information is completely recorded in the Shareholders’ Register. There is no necessity for registration or notification with the business registration authority, except when the recipient shareholder is a foreign investor.
Question:
A two-member limited liability company has one member that is an organization represented by Mr. A as an authorized representative. Now the organization wants to transfer its contributed capital in the company to individual Mr. A. Is this transfer legally permissible?
Answer:
The Department of Business Registration responds to your question as follows:
– According to point e, clause 1 of Article 49 of Law on Enterprises 2020, the rights of members are stipulated as follows: “Transfer, give away or otherwise dispose of the member’s own stake in accordance with regulations of law and the company’s charter“.
– The documentation, procedures, and processes for changing a member through the transfer of contributed capital are carried out in accordance with the provisions of Clause 2 of Article 52 of Decree No. 01/2021/NĐ-CP dated January 4, 2021, of the Government on business registration.
Question:
A joint stock company is established with 3 members. However, 2 members have not contributed any capital so far. What should I do? Can I change it to a one-member limited liability company? What are the procedures? Is it necessary to transfer the shares of the 2 non-contributing members? Are there any fines or taxes/fees for the non-contributing members?
Answer:
– According to Article 113 of Law on Enterprises 2020:
“1. Shareholders shall fully pay for the subscribed shares within 90 days from issuance date of the Certificate of Enterprise Registration unless shorter time limit is specified by the company’s charter or the shares registration contract. In case of capital contribution by assets, the time needed to transport or import the contributed assets and for completing ownership transfer procedures shall be added to this time limit. The Board of Directors shall supervise the shareholders fully and punctually paying for the subscribed shares.
……..
3. In case a shareholder fails to pay or to fully pay for the subscribed shares by the deadline specified in Clause of this Article:
a) The shareholder that fails to pay for the subscribed shares is no longer a shareholder of the company and must not transfer the right to purchase the shares to another person;
b) The shareholder that only pays for part of the subscribed shares will be entitled to a number of votes, dividends and benefits that are proportional to the paid shares and must not transfer the right to purchase the unpaid shares to another person;
c) The shares that are not paid for shall be considered unsold shares and may be sold by the Board of Directors;
……..”.
– The documentation, procedures, and processes for changing founding shareholders are carried out according to the provisions of Article 57 of Decree No. 01/2021/NĐ-CP dated January 4, 2021, of the Government on business registration. It is recommended to consult the specific regulations and contact the Department of Business Registration directly for guidance on the procedures applicable to your company.
Conclusion
In conclusion, in the dynamic landscape of the business world, the transfer of shares and capital contributions stands as a frequent event, often motivated by a range of strategic, financial, and operational factors. Consequently, it becomes essential for companies to prioritize the integrity of this process by unwaveringly adhering to the established regulations and procedures. This commitment not only guarantees adherence to the law but also cultivates an atmosphere of transparency, trustworthiness, and equity in corporate transactions. By developing an extensive comprehension of these regulations and executing the transfer process meticulously, businesses not only can actively nurture an environment that fosters investment but also expansion, and prosperity for all parties involved.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
