LLC Members and capital contribution ratios

Venture North Law Firm

30th April 2021

Can members of an LLC determine their capital contribution ratios based on their contributed capital in USD? This article discusses the situation of LLCs which increase the charter capital by raising funds from new investors and the calculation of the capital contribution ratio of new investors.

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.

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Venture North Law Firm

Vietnam
https://www.vnlaw.com.vn/

Venture North Law Limited (VNLaw) is a Vietnamese law firm established by Nguyen Quang Vu, a business lawyer with more than 17 years of experience. VNLaw is a boutique professional law firm focusing on corporate, commercial and M&A practices in Vietnam. Our goal is to be an efficient, innovative and client-friendly firm. To achieve that goal, we are designing a working environment and a compensation system which encourage our lawyers to provide more efficient services to clients and to focus on the long term benefit of the firm.

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LLC Members and capital contribution ratios

Venture North Law Firm

30th April 2021

Can members of an LLC determine their capital contribution ratios based on their contributed capital in USD? This article discusses the situation of LLCs which increase the charter capital by raising funds from new investors and the calculation of the capital contribution ratio of new investors.

Venture North Law Firm

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