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Acquisition of contributed capital in limited liability companies and joint-stock companies

Apolo Lawyers (Tel: +8428 66.701.709) would like to give some information on the provisions related to repurchasing the contributed capital of shareholder members:

In case a limited liability company or a joint-stock company want to repurchase the contributed capital of shareholder members, it must comply with the provisions of Articles 51, 132, 133, 134 of the Enterprise Law 2014.

1. Repurchase of contributed capital in a Multi-member limited liability company

A member has the right to request the company to repurchase his contributed capital if he has voted against the resolution of the Members Council on the following issues:

• Amending and supplementing contents in the company charter which related to the rights and obligations of members and the Members Council; Reorganization of the company;

• Other cases as prescribed in the company charter.

In case the company accepts the request to repurchase the contributed capital: the two parties will negotiate the price, if the agreement cannot be reached, the company must repurchase the contributed capital of member at the market price or the price determined according to the principles specified in the company charter within 15 days from the date receiving the request.

In case the company does not accept the request to purchase the contributed capital: the member making the request has the right to freely transfer his contributed capital to other members or the others who are not members.

>>> Reed more: Noteworthy points when signing an M&A contract

dich-vu-luat-su-apolo-lawyers2. Redemption the capital contribution in a joint-stock company

Shares of capital contributed by shareholders in a joint-stock company can be repurchase through two forms: redemption at the request of shareholders and redemption at the company decision.

2.1. Redemption at the request of shareholders

Similar to the case of repurchase of contributed capital in a Multi-member limited liability company, a shareholder in a joint stock company has the right to request the company to redeem his contributed capital if he votes against the resolution of the General Meeting of Shareholders.

The company must redeem the contributed capital of shareholders at the market price or the price calculated according to the principles specified in the company charter within 90 days from the date receiving the request.

If the price cannot be reached, the parties may request a professional valuation organization to appraise the price.

2.2. Acquisition at the company discretion

The General Meeting of Shareholders has the right to decide on the repurchase of the following types of shares:

• Repurchase no more than 30% of the total number of ordinary shares which were sold.

• Part or all of the dividend preference shares which were sold.

The Board of Directors may decide to repurchase no more than 10% of the total number of shares of each type offered for sale within 12 months.

In addition, the company can repurchase shares of each shareholder in proportion to their share in the company. The decision to repurchase shares of the company must be notified by a method that is guaranteed to reach all shareholders within 30 days from the date on which decision is approved by the general meeting of shareholders; Shareholders who agree to resell their shares must send their offer for sale by a method guaranteed to reach the company within 30 days from the date of notification.

The share repurchase price is decided by the Board of Directors, however:

• The redemption price for ordinary shares must not be higher than the market price at the time of redemption.

• The redemption price for other types of shares must not be lower than the market price, unless otherwise provided for in the company charter or the company and related shareholders can agree on the redemption price.

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dich-vu-luat-su-apolo-lawyers3. How can Apolo Lawyers support foriegn invester to conduct M&A activivities?

Apolo Lawyers is a law firm with many years of experience in legal issues relating to merger and acquisition transactions, especially cross-border merger and acquisitions field. Clients who are conducting merger and acquisition transactions can contact Apolo Lawyers for:

  • Advice on the process of mergers and acquisitions.
  • Support due diligence process and intellectual property due diligence
  • Consulting for foreign invester about the regulations of tax law.
  • Advice on the notes when making M&A transactions, legal regulations and common risks when merging and acquiring businesses.
  • Consulting and representing in the negotiation process of merger and acquisition transactions.

For further information, please contact us: Apolo Lawyers via email at contact@apolo.com.vn or Hotline - (+84) 903419479 for the best legal advice and support.

APOLO LAWYERS 

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