The term “charter capital increase” is quite familiar, but few know about one-member limited liability companies’ charter capital decrease. How should this be done?
REGULATIONS ON ONE-MEMBER LIMITED LIABILITY COMPANIES’ CHARTER CAPITAL DECREASE
Enterprise Law 2014, which took effect from July 1st, 2015, regulates one-member limited liability companies’ charter capital decrease. In detail, in Clause 1, Article 87 of the Enterprise Law 2014, one-member limited liability companies have the right to decrease charter capital in the following cases: Case 1: The charter capital has not been paid in sufficiently by the owner within 90 days from the date of issuance of the enterprise registration certificate. In this case, the owner of the company shall have to register for adjustment of charter capital to equal the actually contributed capital amount within 30 days from the last day the charter capital was due to be contributed in full.
Case 2: Returning part of the contributed capital in the charter capital of the company if the company’s business operation has been carried out continuously for more than 2 years from the date of enterprise registration; while ensuring that all debts and other property obligations may be paid in full after returning part of the contributed capital to its owner. Thus, individuals and organizations may decrease one-member limited liability companies’ charter capital if they fully meet the following conditions:
- The enterprise must have been operating for more than 02 years from the date of business registration.
- After charter capital decrease, enterprises must fully pay debts and fulfill other property obligations.
APPLICATION FOR ONE-MEMBER LIMITED LIABILITY COMPANIES’ CHARTER CAPITAL DECREASE
According to Article 44 of Decree No. 78/2015/ND-CP, the application for reduction of charter capital of one-member limited liability companies shall include the following papers:
- Notification of changes in enterprise registration contents (according to the Form in Appendix II-1 of Circular 20/2015/TT-BKHDT);
- The decision of the company owner to change the charter capital of the enterprise;
- Financial statements of the company in the latest period.
THE AGENCY THAT RECEIVES THE APPLICATION FOR ONE-MEMBER LIMITED LIABILITY COMPANIES’ CHARTER CAPITAL DECREASE
The agency receiving application dossiers for one-member limited liability companies’ charter capital decrease is the provincial-level business registration office where the enterprise is headquartered.
TIME LIMIT FOR RESOLUTION OF APPLICATION FOR ONE-MEMBER LIMITED LIABILITY COMPANIES’ CHARTER CAPITAL DECREASE
According to the Clause 1, Article 28 of Decree No. 78/2005/ND-CP, the changing of contents in Enterprise Registration Certificates in general and the decrease of one-member limited liability companies’ charter capital in particular shall be implemented within 03 working days from the date of receipt of valid dossiers.
PROCEDURES FOR APPLICATION FOR ONE-MEMBER LIMITED LIABILITY COMPANIES’ CHARTER CAPITAL DECREASE
Step 1: The enterprise submits dossiers at the business registration office.
Step 2: The business registration office shall check the validity of the dossiers. If the dossiers are valid, a receipt shall be handed to the dossier submitter.
Step 3: The enterprise shall go to the business registration office to receive the results.
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