Issue 250925 - Regulations on capital-contributing members under the Enterprise Law

Dear Valued Clients,

Capital-contributing members are one of two groups of members that make up a partnership company. Their presence creates a unique feature in the organizational structure, because although they do not directly participate in management, they still play an important role in providing capital and ensuring the operation of the enterprise. The Enterprise Law 2020 amended and supplemented 2022, 2025 (“The Enterprise Law”) has clear regulations to determine the legal status, rights and obligations of capital-contributing members, thereby helping to maintain the stability and reputation of this type of enterprise.

In practice, the participation of capital-contributing members can sometimes give rise to issues related to the scope of authority and responsibility, especially in the relationship with partnership members. If the legal regulations are not fully understood, the company may encounter legal risks or internal disputes that affect its general operations.

I. OVERVIEW OF CAPITAL CONTRIBUTING MEMBERS

According to Clause 1, Article 177 of the Enterprise Law, a partnership company is an enterprise in which there must be at least two partners doing business together under a common name. In addition, the company may have additional capital-contributing members. Capital-contributing members can be individuals or organizations, participating in the company through capital contribution but not directly managing or operating business activities. They are only responsible for the company’s financial obligations within the scope of the contributed capital. This provision clearly distinguishes between partnership members and capital-contributing members, and at the same time creates conditions for the partnership to ensure cohesion in management and expand financial resources for production and business activities.

In the structure of a partnership company, the presence of a capital-contributing member is intended to supplement the financial resources of the enterprise without creating additional management burdens or unlimited liability. This is a way for the company to raise capital from investors with financial potential but not directly involved in operations. Having this type of member allows the partnership to maintain its “partnership” nature with managers who have unlimited liability, while also having more opportunities to expand its scale and enhance its business capacity through capital contributions.

The fact that capital-contributing members are only liable to a limited extent within the scope of their capital contribution is designed by law to balance benefits and risks. They do not participate in management, operations or represent the company in transactions, so they cannot be forced to bear unlimited liability like partnership members. This provision helps attract individuals or organizations who want to invest but are not willing to accept too much risk. As a result, the partnership company can expand its capital base, while the legal liability remains primarily borne by the partnership members.

II. IMPLEMENTING CAPITAL CONTRIBUTIONS IN A PARTNERSHIP COMPANY

According to Article 178 of the Enterprise Law, capital-contributing members are obliged to fully fulfill their capital contribution commitments. In case they fail to fully and timely contribute the committed capital, the uncontributed capital will be considered a debt of that member to the company. In this situation, the capital-contributing member may be expelled from the company by the Board of Members. This provision aims to ensure binding responsibilities and fairness among members, while maintaining capital stability for the company’s operations. In addition, pursuant to Clause 1, Article 55 of Decree 122/2021/ND-CP on administrative sanctions in the field of planning and investment, if a partnership member or capital-contributing member fails to pay the full committed capital within 15 days from the date of approval, unless the Board of Members decides on another period, a fine of 30-50 million VND will be imposed.

At the time of fully contributing the committed capital, the capital contributor is granted a capital contribution certificate by the company. This is the legal basis confirming their rights and status as a capital contributor in the company. This certificate must include basic information such as information about the company, charter capital, personal or organizational information of the member, value and type of contributed assets, date of issue, as well as the rights and obligations of the owner. This detailed regulation helps ensure transparency and clarity in establishing the rights of capital-contributing members.

In addition, in case the capital contribution certificate is lost, damaged or destroyed in any form, the company is responsible for reissuing it to the member. This regulation contributes to protecting the legitimate rights of capital-contributing members, while affirming the sustainability of ownership of capital-contributing members in the partnership company.

III. RIGHTS AND OBLIGATIONS OF CAPITAL CONTRIBUTORS

According to Article 187 of the Enterprise Law, capital-contributing members in a partnership company are recognized by law with many important rights to ensure their interests and position in the enterprise. First of all, capital-contributing members have the right to participate in some key decisions of the company, specifically, they are allowed to attend, discuss and vote at the Board of Members on issues that directly affect their rights and obligations, such as amending and supplementing the Company Charter, reorganizing or dissolving the company. This is a legal mechanism to ensure the voice of capital-contributing members in strategic decisions, even though they do not participate in direct management[1].

In addition, capital-contributing members have the right to receive annual profits corresponding to the proportion of capital contributed in the company’s charter capital. They also have the right to be provided with annual financial reports, and at the same time request the Chairman of the Board of Members or partnership members to provide truthful information about the business situation. In addition, capital-contributing members have the right to transfer their capital contribution, dispose of their capital through inheritance, donation, mortgage, pledge or other forms as prescribed by law and the Company Charter. In case the company is dissolved or bankrupt, they are entitled to a portion of the remaining assets corresponding to their capital contribution ratio. These rights affirm the legal status of capital-contributing members and protect their legitimate economic interests[2].

In parallel with the above rights, Article 187 also clearly stipulates the obligations of capital-contributing members. First of all, they are only responsible for the debts and other property obligations of the company within the scope of the capital they have committed to contribute. However, to ensure transparency and management order, capital-contributing members are not allowed to participate in the management of the company nor conduct business activities on behalf of the company. In addition, they must comply with the Company Charter, resolutions and decisions of the Board of Members, as well as other obligations as prescribed by law. These obligations both limit excessive interference by capital-contributing members in the management activities and ensure the stable operation of the partnership company[3].

In summary, Article 187 of the Enterprise Law has established a legal framework that balances the rights and obligations of capital-contributing members. These provisions both protect their interests as investors and ensure that the partnership maintains a special management mechanism, in which the executive power belongs to the partnership members. This is one of the points that shows the uniqueness of the partnership company model compared to other types of enterprises.

The above article outlined the basic provisions of current law related to capital-contributing members in a partnership company under the Enterprise Law 2020, and at the same time point out some points to note in the process of practical application.

Kind regards,