Consulting services on the transfer of capital contribution

Transactions related to the transfer of shares and capital contributions shall be conducted in the form of share and capital contributions transfer contracts. So when conducting this transaction, shareholders in joint stock companies or members of limited liability companies owning the contributed capital should note what contents? To explain the contents, Hong Bang Law Firm, with a team of expertise in the field of legal counsel for businesses, would like to send the following remarks to clients:

Stages of transfer of contributed capital

Phase 1: Pre-trading phase

  • The parties drafting the written request for information and preliminary lists of documents to evaluate the information of the Company being purchased capital contribution.
  • The transferees check the Company’s legal documents
  • Making a legal review report

Phase 2: Trading Phase

  • The two sides shall exchange and propose to advise on the plan to carry out the transfer of contributed capital in the most beneficial way.
  • Review and negotiate deposit contracts, transfer contracts: Set key terms, negotiating limits, negotiating options.
  • Make a list of documents requesting the handover and suggest the time of payment of handover.
  • Check the conditions of approval of the transaction.
  • Make payments and handovers

Phase 3: Transaction Completion Phase

  • Hand over the results and sign the contract liquidation record, commit to ensuring obligations and papers to ensure the proof of payment.
  • Complete internal records and legal procedures at state agencies related to obligations to be fulfilled or the content of changes.
  • Complete other documents to prove ownership of the contributed capital.

Notes when transferring contributed capital

The purchase and sale of enterprises is not merely the purchase and sale of shares, the capital contribution and the business registration procedures are completed.

With the exception of private enterprises, the remaining types of enterprises such as joint stock companies, limited liability companies, partnerships are all independent legal partners, so the transfer of the Company does not change the rights and obligations for third parties, but only changes the owner of the capital contribution of the enterprise.

Because it does not change the legal status, including the transfer, the rights and obligations of the company have not changed. Therefore, for the transferees, it is necessary to note some issues as follows:

  • Before deciding to buy back shares and capital contributions of the Company, it is necessary to carry out the legal, financial and asset appraisal of the Company to accurately determine the debts, burdens and obligations before and at the time of transfer. This appraisal not only ensures that the buyer has the most accurate decision on whether to receive the Company’s transfer, but also decides the issue of the transfer price, the responsibility of the seller to the outstanding obligations of the enterprise. In the majority of cases of transfer of the Company’s capital contribution, the former owners are still responsible for certain obligations of the enterprise for a certain period of time after the completion of the transfer. Such contents, need to be included in the transfer contract.
  • The transfer of the Company does not change the rights and obligations of the enterprise, but has a great impact on the company’s officials and employees. Therefore, along with the plan to receive the business, the parties need to have a plan to use personnel in a reasonable way, avoiding cases of confusion, psychological fluctuations or brain drain. While this is not a legal issue, it is a common practical problem.
  • After completing the transfer (or when eligible under the transfer contract), the transferor shall hold a meeting of the General Meeting of Shareholders/Member Council to re-elect the company’s management positions, such as members of the Board of Directors,…. These internal procedures are necessary to ensure that the enterprise fully complies with the provisions of the law, ensuring the safety of the internal management of the enterprise.

The above is the advice of Hong Bang Law Firm on the process as well as note when transferring shares and capital contributions.

If you need more detailed advice and answers as well as how to access this service, please contact directly our Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the toll free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

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Best regards!