The law provisions on the transfer and acquisition of stakes in a multiple-member limited liability

A multiple-member limited liability company is an enterprise with at least 2 to 50 members being organizations and individuals. The transfer and acquisition of stakes in such a company are stipulated as follows:

1. Regarding the transfer of stakes

First, when a member transfers his/her stake, such member must prioritize offering it to the remaining members in proportion to his/her stake in the company.

Second, it is necessary to ensure the same conditions apply for offering the stake to both members and non-members of the company.

Third, the conditions on the time limit of the offering of the stake to other members of the company must be met. It is stipulated by the law that the time limit of the offering to other members is 30 days. If, after 30 days, the stake remains unsold or is not purchased by any member, the transferring member has the right to transfer it to non-members of the company. If, within 30 days from the date of the offering, the stake is not purchased by any of the remaining members in the company, the member who wishes to transfer his/her stake has the right to transfer it to non-members of the company, ensuring that the same conditions apply for offering it to the remaining members in the company.

This provision aims to prioritize the right of existing members to contribute capital in a multiple-member limited liability company and also limits the participation of non-members in the company's internal affairs. However, there are three cases of transfer in which the above principle is not mandatory to apply.

First, the case specified in Clause 4, Article 51 of the Law on Enterprises 2020.

Accordingly, in case a member requests the company to repurchase his/her stake and the company is not able to pay for the repurchase as requested under Clause 3, Article 51 of the Law on Enterprise 2020, the member is entitled to sell the stake to another member or a non-member.

Second, in case a member gives away part or all of his/her stake to another person as prescribed in Clause 6, Article 53 of the Law on Enterprises 2020. At that time:  

a) If the beneficiary is a lawful heir as prescribed by the Civil Code, he/she is obviously a member of the company;

b) If the beneficiary is not a lawful heir mentioned in Point A of this Clause, he/she will only become a member if it is accepted by the Board of Members.

Third, in case a member uses that member’s stake to pay debt as prescribed in Clause 7, Article 53 of the Law on Enterprises 2020, the beneficiary may:

a) Become a member of the company if it is accepted by the Board of Members;

b) Offer and sell the stake in accordance with Article 52 of the Law on Enterprises 2020.

2. For the acquisition of stakes in a multiple-member limited liability company

According to Article 51 of the Law on Enterprises 2020, a member of a multiple-member limited liability company is entitled to request the company to repurchase that member’s stake if that member has voted against a resolution or decision of the Board of Members on the following issues: a) Amendments to regulations of the company's charter on rights and obligations of members and the Board of Members; b) Reorganization of the company; c) Other issues prescribed by the company's charter.

For example, Mr.A is a member of B Ltd. The Board of Members convened a meeting on March 01, 2023, to discuss increasing the Company's charter capital and requested members to contribute additional capital. Mr. A voted against the Resolution of the Board of Members regarding the capital increase. Therefore, in this case, Ms. A has the right to request the Company to repurchase his stake.

A member who requests the company to repurchase his/her stake is required to submit a written request to the company within 15 days from the date on which the resolution or decision is ratified. When receiving a written request from a member to repurchase his/her stake, the company must carry out the procedures for repurchasing the stake in accordance with the law.

Within 15 days from the day on which the request is received, the company shall repurchase that member’s stake at market value or at a value determined in accordance with the company's charter, unless another value is agreed upon by both parties. The payment shall only be made if the company is still able to pay its debts and other liabilities afterwards.

In case the company is not able to pay for the repurchase of the stake as requested above, the member is entitled to sell the stake to another member or a non-member.

In addition, a member’s stake shall be repurchased by the company in accordance with Article 51 and Article 52 of the Law on Enterprise 2020 in the following cases: a) The member’s heir does not wish to become a member; b) The beneficiary of the stake is not accepted as a member by the Board of Members; c) The member that is an organization is dissolved or goes bankrupt.

3. Conclusion

In summary, for a multiple-member limited liability company, the right to transfer stakes aims to prioritize existing members while limiting the participation of non-members in the company's internal affairs. The right to request the company to repurchase stakes is considered a way to help members withdraw their stake from the company and protect their interests against adverse decisions issued by the company.

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