Tiếng ViệtIn the course of operation, many limited liability companies (LLCs) arise the need to transfer capital contributions — whether for investment restructuring, changes in strategic shareholders, or divestment from the enterprise. This is not merely a financial transaction but rather a strategic move that profoundly impacts ownership rights, corporate governance, and the long-term development orientation of the company.
Unlike joint-stock companies, the transfer of capital contributions in an LLC is strictly governed by the Law on Enterprises, the company’s charter, transfer tax regulations, and relevant administrative procedures. Even a minor procedural or documentation error may render the transaction invalid and result in serious legal consequences.
So, what should enterprises be aware of when conducting a capital transfer? The following article by LexConsult & Partners analyzes in detail the legal framework, conditions, procedures, risks, and practical recommendations, helping businesses carry out capital transfer transactions safely, lawfully, and effectively.
1. Legal Basis for the Transfer of Capital Contributions in a Limited Liability Company (LLC)
The transfer of capital contributions in an LLC is primarily governed by the following legal instruments:
– Law on Enterprises 2020, particularly:
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Article 51: Rights of Members;
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Article 52: Procedures for the Transfer of Capital Contributions;
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Article 53: Handling of Capital Contributions in Certain Special Circumstances.
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– Civil Code 2015 (with respect to ownership rights, obligations, and inheritance);
– Decree No. 168/2025/NĐ-CP on enterprise registration;
– The company charter, which serves as an internal legal source that must be consulted, as it may provide more specific regulations regarding transfer forms, approval conditions, and internal procedures.
2. Conditions and Principles Governing the Transfer of Capital Contributions in an LLC
Before proceeding with the capital transfer, it is necessary to determine whether the transferee is a Vietnamese or foreign individual/entity, as the conditions and procedures may differ. Additionally, depending on whether the company is a single-member LLC or a multi-member LLC, the legal requirements and procedures also vary, as outlined below:
2.1. Conditions for Capital Transfer in a Single-Member LLC
If the owner of a single-member LLC wishes to transfer their capital contribution to another individual or organization, there are two possible scenarios:
– Partial Transfer of Capital Contribution: If the owner transfers part of their capital contribution to another individual or organization, the company will consequently have more than one owner. In this case, the company must undergo procedures to convert its legal form into either a multi-member LLC or a joint-stock company.
– Full Transfer of Capital Contribution: If the owner transfers all of their capital contribution to another individual or organization, the company must carry out procedures to change its owner in accordance with the law.
2.2. Conditions for Capital Transfer in a Multi-Member LLC
When transferring capital in a multi-member LLC, two possible situations may arise:
– Transfer Not Affecting the Number of Members: If the number of members remains at least two after the transfer, the company only needs to file a notification of changes to the members and their respective capital ownership ratios.
– Transfer Affecting the Number of Members: If the transfer results in only one remaining member, the company must convert into a single-member LLC and register the conversion with the Business Registration Office – Department of Planning and Investment of the province or city where the company is headquartered, within 15 days after the completion of the transfer.
Members of a multi-member LLC have the right to transfer their capital contributions, but must comply with the following conditions:
– Priority Right of Existing Members: The transferring member must first offer the capital portion to the remaining members in proportion to their existing ownership ratio and under the same terms and conditions (Point a, Clause 1, Article 52 of the Law on Enterprises 2020).
This mechanism aims to preserve internal stability within the LLC and protect the pre-emptive rights of existing members.
– Transfer to Non-Members: A member may only transfer their capital contribution to a non-member if the existing members do not purchase or do not fully purchase the offered portion within 30 days from the date of the offer (Clauses 3 and 4, Article 51 of the Law on Enterprises 2020).
If the company does not buy back the capital contribution, the member has the right to freely transfer it to another member or to a non-member.
In cases where a member gifts part or all of their capital contribution to another person:
– If the recipient is the spouse, child, parent, or relative within the third degree of inheritance, such recipient shall automatically become a member of the company;
– If the recipient is another person, they may only become a member upon approval of the Members’ Council.
3. Procedures for the Transfer of Capital Contributions in a Limited Liability Company (LLC)
The process for transferring capital contributions in an LLC consists of the following main steps:
a. Preparation and Compilation of the Transfer Dossier
The dossier typically includes:
– Notice of change in enterprise registration details;
– Decision of the company owner (for a single-member LLC);
– Minutes of meeting and resolution of the Members’ Council on the transfer, and updated list of members (for a multi-member LLC);
– Capital contribution transfer agreement;
– Minutes of liquidation or evidence of completion of the transfer;
– Certified copy of the transferee’s valid ID card or passport;
– Company charter (if specific provisions are included);
– Power of attorney (if applicable).
b. Submission of the Dossier
The dossier shall be submitted to the Business Registration Office under the Department of Planning and Investment where the company is headquartered.
Processing time: The enterprise shall receive the result within 3–5 working days from the date of submission.
Note: In addition, the company must record the transferee’s information in the Register of Members in accordance with Clause 2, Article 52 of the Law on Enterprises 2020.
4. Key Legal Considerations When Transferring Capital Contributions
The transfer of capital contributions in an LLC—whether between existing members or to external parties—entails various legal risks if the process does not strictly comply with statutory regulations and the company’s charter.
Below are important legal points that enterprises should pay particular attention to:
4.1. Prohibition Against Transfers in Breach of the Company Charter or Without Offering to Existing Members
Under Article 52 of the Law on Enterprises 2020, a member of a multi-member LLC may only transfer their capital contribution to an external party after offering it to all existing members and only if those members do not purchase or fail to purchase the entire portion within 30 days from the date of offer.
This is a mandatory obligation designed to protect the pre-emptive purchase rights of existing members and to maintain internal stability in the company’s ownership structure. Any transfer that does not comply with this procedure has no legal effect and may result in internal disputes or rejection of the change by the Business Registration Office.
Additionally, if the company charter provides more specific conditions or procedures for transfer, or requires approval by the Members’ Council, such provisions must be strictly followed, as the charter is legally binding on all members of the company.
4.2. Transparency in Transfer Price – Right to Request Company Buyback in Certain Cases
Pursuant to Article 51 of the Law on Enterprises 2020:
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A member has the right to request the company to buy back their capital contribution if they voted against a resolution or decision of the Members’ Council regarding:
a) Amendments or supplements to the company charter affecting members’ rights and obligations or the Members’ Council;
b) Reorganization of the company;
c) Other cases as stipulated in the company charter. -
The buyback request must be made in writing and submitted to the company within 15 days from the date the resolution or decision was adopted.
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Within 15 days from the date of receiving such request, the company must repurchase the member’s capital contribution at market value or at a price determined according to the principles set out in the company charter, unless otherwise agreed between the parties.
Payment shall only be made if, after repurchase, the company remains capable of fully meeting its debts and other financial obligations.
Accordingly, a member has the right to request the company to repurchase their capital contribution in accordance with the above provisions.
The request must be submitted in writing within 15 days from the date the relevant resolution was passed.
When conducting a private capital transfer, the parties must ensure the transfer price is transparent and clearly documented.
Significant discrepancies between the contractual value and actual value may lead to tax consequences or raise regulatory concerns about the transaction’s legitimacy.
If the parties cannot agree on a fair price, they may engage an independent valuation organization to determine the market value of the capital contribution.
4.3. The Transfer Takes Effect Only Upon Registration in the Members’ Register
Under Clause 2, Article 52 of the Law on Enterprises 2020:
“The transferring member shall retain their rights and obligations related to the transferred capital contribution until the information of the transferee, as specified in Points b, c, and d, Clause 2, Article 48 of this Law, is fully recorded in the company’s Register of Members.”
A unique feature of an LLC is that the legal recognition of member status is not based on the execution of the transfer agreement, but on the recording of such information in the company’s Register of Members.
Therefore, only when the transferee’s details have been entered into the Register of Members will they be officially recognized as a member with the corresponding rights and obligations.
Accordingly, completing the company’s internal procedures—including updating the membership register and filing the change with the Business Registration Office—is a mandatory condition for the transaction to take legal effect.
4.4. Special Forms of Capital Transfer: Inheritance, Gift, or Debt Settlement
Not all transactions involving the transfer of ownership over capital contributions constitute a “transfer” in the commercial sense.
Certain special cases include:
– Inheritance of Capital Contribution: The heir may become a member if permitted under the company charter, or the company must repurchase the deceased member’s capital contribution (Article 53).
– Gift of Capital Contribution: The transfer must be formalized under a written gift agreement, and the recipient must not fall under the prohibited categories from managing enterprises under Vietnamese law.
– Use of Capital Contribution for Debt Settlement: The assignment of capital contributions for debt repayment must comply with Article 450 of the Civil Code 2015 and must not contravene internal company regulations.
In all the above cases, the changes must be recorded in the Members’ Register, and if they alter the list of members, the company must register the change with the Business Registration Office.
4.5. Restrictions on the Legal Capacity of Transferors or Transferees
The member or the transferee must have full civil act capacity and must not fall under any of the following prohibitions:
– Persons restricted or deprived of civil act capacity;
– Persons under criminal investigation or serving a prison sentence;
– Persons prohibited from engaging in business activities under a court decision.
If an existing member falls into any of the above categories, the right to transfer their capital contribution must be exercised through a lawful representative in accordance with the Civil Code and the Law on Enterprises.
5. Legal Advisory from Lawyers on the Transfer of Capital Contributions in an LLC
The transfer of capital contributions in a limited liability company (LLC) is both a lawful right of members and a flexible mechanism that enables investment restructuring or business strategy adjustments.
However, as it directly affects the company’s ownership structure, management, and governance, this activity is strictly regulated under the Law on Enterprises and the company’s charter.
To minimize risks and ensure legal compliance in capital transfer transactions, we recommend that members and enterprises should:
– Carefully review the company’s charter: This is a legally binding internal document that may impose stricter provisions than the Law on Enterprises, particularly concerning conditions for accepting new members, voting ratios, and timelines for offering capital to existing members.
– Fully comply with the Law on Enterprises, especially Articles 51, 52, and 53, which govern buyback rights, transfer procedures, and special cases such as inheritance, donation, or debt repayment through capital contributions.
– Prepare a complete and accurate transfer dossier, including the transfer agreement, meeting minutes, Members’ Council resolution (if applicable), and the notice of changes to enterprise registration details.
– Clearly determine the transfer value, timing of ownership transfer, and related rights and obligations to ensure transparency and avoid potential tax-related risks.
– Consult a corporate lawyer before signing any transaction, particularly in complex cases involving foreign transferees, cross-holding structures, or potential disputes.
In summary, the transfer of capital contributions in an LLC requires not only strict adherence to legal provisions but also careful consideration of business strategy and corporate governance. Even minor errors in documentation, procedures, or assessment of the transferee’s legal capacity may result in serious legal consequences and prolonged disputes.
To ensure that transactions are conducted lawfully, smoothly, and safely, enterprises should thoroughly review their company charter, prepare complete documentation, and seek professional legal counsel.
LexConsult & Partners proudly accompanies clients in all aspects of capital transfer transactions — from strategic legal advisory and contract drafting to representation before competent authorities — ensuring protection of clients’ rights and optimization of legal efficiency in their investment and business operations.
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