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Posted in: Corporate
Below is a table providing comparison between a multiple member limited liability company (Multiple LLC) and a joint stock company (JSC) under the Enterprise Law 2020 in some key areas. This post is written by Nguyen Quang Vu and edited by Ha Kieu Anh.
The team at Venture North Law has prepared a sample draft charter of a private joint stock company in Vietnam under the new Enterprise Law 2020. There are a few points to note:
The draft is prepared with the interest of the controlling shareholder and company’s managers in mind;
The draft is prepared for a private joint stock company which has been set up and which has paid up its initial charter capital;
The draft needs to be read in parallel with the Enterprise Law 2020 since we do not simply cut and paste various articles of the Enterprise Law 2020 in the sample charter;
In the recent controversial case of shareholder dispute in Vietnam, the appellate court of Ho Chi Minh City (Appellate Court) held that two following articles of a company charter conflict with each other and therefore the provisions of the Enterprise Law 2014 are applied to resolve the dispute:
· Article 10.1 of the company charter which provides a member’s right to request the redemption of its capital contribution portion if such member objects a resolution of the Members’ Council on some important matters of the company; and
· Article 23.1 of the company charter which requires a consensus of all members on some important matters of the company.
1. There are cases where foreign invested companies in form of a limited liability company (LLC) registered the charter capital in USD. The capital contribution ratios of members were also determined based on their contributed capital in USD as at the time of establishment. If such companies increase the charter capital by raising funds from new investors. The question is that whether the capital contribution ratio of new investors can be calculated based on their contributed capital in USD.
2. Legally speaking, under the Enterprise Law 2020, the capital contribution ratios of members in an LLC are calculated based on the value in VND of the contributed capital or assets contributed by such members to the charter capital. That said, in this specific case, licensing authorities might consider accepting the determination of the capital contribution portions of new investors based on their contributed capital in USD on the ground of guidance of the Ministry of Planning and Investment (MPI) under Letter 5437/BKHDT-DKKD dated 12 July 2016 (MPI Guidance).
This post is written by Ha Thi Dung.
Please download the full pdf version Here.