Is the owner of a single-member limited liability company entitled to withdraw capital before fully contributing the registered charter capital?
During the course of business operations, it is not uncommon for the owner of a single-member limited liability company to wish to withdraw capital previously contributed to the company. In practice, however, a frequent issue arises: after registering the establishment of the company or registering an increase in charter capital, the owner has not yet fully contributed the committed or newly registered capital. In such a case, is the owner permitted to withdraw capital from the company? Let us explore this issue in detail below.
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1. Forms of capital withdrawal in a single-member limited liability company
Pursuant to clause 5 Article 77 and point a clause 3 Article 87 of the Law on Enterprises 2020, the recognised forms of capital withdrawal in a single-member limited liability company, include: (i) the company owner transferring part or all of the charter capital to another individual or organisation; and (ii) the company returning a portion of the contributed capital to the owner.
2. Is the owner of a single-member limited liability company entitled to withdraw capital before fully contributing the charter capital?
2.1. Is the company owner entitled to withdraw contributed capital before fully contributing the committed charter capital at the time of establishment?
– According to clause 1 Article 75 of the Law on Enterprises 2020, the charter capital of a single-member limited liability company upon registration of establishment is defined as: “The initially registered charter capital of a single-member limited liability company is the total assets promised by the owner and shall be written in company’s charter.”
– According to clause 2 of this Article, the provision regarding the owner’s obligation to contribute capital when registering the establishment of a single-member limited liability company is defined as: “The owner shall contribute adequate and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. During this period, the owner shall have rights and obligations that are proportional to the promised capital.”
Where the owner fails to contribute sufficient charter capital within the prescribed period, clause 3 of this Article requires that the owner must register an adjustment to reduce the charter capital to the actual contributed amount within 30 days from the last day of the contribution period.
From the above provisions, it can be concluded that the Law on Enterprises 2020 obliges the owner to contribute the full committed capital within 90 days from the issuance date of the Enterprise Registration Certificate. Should the contribution remain incomplete, the owner must register a corresponding reduction in the charter capital to reflect the actual contribution.
Accordingly, when considering a case where the owner wishes to withdraw capital through a transfer of ownership or a refund of contributed capital by the company, the Law on Enterprises currently only regulates such withdrawal where the owner has fully contributed the registered charter capital. It does not provide for capital withdrawal in cases where the owner has not yet fully contributed the committed capital at the time of registration.
2.2. Is the company owner entitled to withdraw capital before fully contributing the charter capital after registering an increase?
– According to clause 34 Article 4 of the Law on Enterprises 2020: “34. “charter capital” means the total value of assets that have been contributed or promised by the members/partners/owners when the limited liability company or partnership is established; or the total of nominal values of the sold or subscribed shares when a joint stock company is established.” Accordingly, the charter capital of a single-member limited liability company after its establishment is the total value of assets the owner has actually contributed.
– According to clause 4 Article 28 and clause 1 Article 30 of the Law on Enterprises 2020, when a company intends to increase its charter capital, it must register such increase with the business registration authority.
– According to clause 3 Article 8 of the Law on Enterprises 2020 and clause 1 Article 4 of Decree No. 168/2025/NĐ-CP, enterprises are obliged to ensure the accuracy and truthfulness of information declared in business registration dossiers.
Based on these provisions, when an enterprise registers an increase in charter capital, the owner is obliged to fully contribute the additional capital and to declare truthfully the actual value of the contributed capital in the application submitted to the business registration authority.
Accordingly, as analysed in Section 2.1 above, the Law on Enterprises currently only governs cases where the owner withdraws capital through a transfer or refund after fully contributing the registered charter capital. It does not regulate capital withdrawal where the owner has not yet fully contributed the increased charter capital.
3. Conclusion
Under current law, the owner of a single-member limited liability company is required to fully contribute the charter capital – including both the initially committed amount and any subsequently registered increase. The law does not provide for cases where the owner withdraws capital before fully contributing the registered charter capital.
Therefore, capital withdrawal in such circumstances is not legally recognised and poses potential legal risks for both the enterprise and the owner, particularly if the competent authority reviews the accuracy of capital declaration or the validity of transactions involving such withdrawal.
Enterprises should also take note of the following:
– If the company fails to fully contribute the registered charter capital upon establishment and does not register a corresponding reduction within the statutory time limit, it may be subject to administrative penalties for falsely declaring charter capital. The fine ranges from VND 20,000,000 to VND 100,000,000 depending on the unfulfilled capital amount, and the enterprise will be required to adjust its registered capital to match the actual contribution, as provided in Article 47 of Decree No. 122/2021/NĐ-CP.
– If the company fails to fully contribute the registered capital increase, it may be fined for inaccurate or untruthful declarations in the business registration dossier, with a fine ranging from VND 20,000,000 to VND 30,000,000 under Article 43 of Decree No. 122/2021/NĐ-CP.
For any enquiries or legal assistance regarding procedures for changing business registration details or other related legal services, please contact CBI Law Firm for support.
