Scenario: A two-member LLC, A and B, has charter capital of VND 20 billion, each committing VND 10 billion. After two months, the members clash bitterly over management rights; member A declares, “while we are in dispute, I am suspending payment of my remaining VND 5 billion until the court rules.” Member B asks: is A entitled to do that, and what happens if A does not contribute?
The legal basis: the contribution duty is absolute
Article 47(2) of Enterprise Law No. 59/2020/QH14 (effective 1 January 2021) provides that members of a multi-member LLC must contribute in full, in the committed asset type, within 90 days of the issuance of the Enterprise Registration Certificate, excluding time for transporting or importing contributed assets and completing administrative procedures to transfer asset ownership. During this period, members enjoy rights and bear obligations corresponding to their committed capital portions.
The key point: the law provides no exception allowing suspension or deferral of the contribution duty on the ground of an internal dispute. The dispute is one legal relationship; the contribution duty is another, independent one. Being “in litigation” creates no legal basis for delaying capital contributions.
Refusing to contribute because of a dispute: the concrete consequences
If member A carries out the threat and withholds the remaining VND 5 billion, then once the 90-day period expires, Article 47(3) of Enterprise Law 59/2020/QH14 applies. First, a member who has contributed nothing as committed automatically ceases to be a member (Article 47(3)(a)). Second, in A’s situation — partial contribution — A retains only the rights corresponding to the capital actually contributed and may not transfer the right to purchase the uncontributed portion (Article 47(3)(b)). The uncontributed VND 5 billion is offered for sale under a decision of the Members’ Council, and the company must register changes to its charter capital and members’ capital ratios to reflect actual contributions.
In practice, using a “contribution freeze” as leverage in a dispute is a double-edged sword: the withholding member gains no pressure and risks losing membership status — and with it, negotiating standing in the very dispute being pursued.
Voting rights follow capital actually contributed, not committed capital
A common misconception is that committing VND 10 billion automatically confers 50% voting rights even though only VND 5 billion has been paid. The law draws a clear line between two phases. Within the 90 days, members have rights and obligations corresponding to committed capital (Article 47(2)). After expiry without full contribution, a member retains only rights corresponding to capital actually contributed (Article 47(3)(b)).
The reverse also holds: no one may “lock” another member’s lawful voting rights on the pretext of a dispute, unless the company charter provides a different mechanism consistent with the law. A Members’ Council resolution passed by unlawfully stripping a member’s voting rights risks being declared void when the dispute is adjudicated.
Where are member disputes resolved?
The dispute does not disappear just because the contribution duty continues — it must be channeled properly. The practical order is: first, the dispute-resolution mechanism in the company charter (many charters require negotiation and internal mediation first); next, commercial arbitration if the parties have an arbitration agreement; finally, the courts — disputes between members over company rights and obligations are business and commercial disputes, resolved under the Civil Procedure Code No. 92/2015/QH13.
The point to remember: while negotiation, mediation, arbitration or court proceedings run their course, the 90-day contribution clock keeps ticking. The sound strategy is to fulfil the contribution duty in full to preserve legal standing, while pursuing the dispute through the proper channel.
Frequently asked questions
While suing each other, may a member suspend capital contributions?
No. Enterprise Law 59/2020/QH14 provides no exception suspending the contribution duty because of a dispute. Members must still contribute in full and on time within 90 days; failure triggers Article 47(3).
If member A never pays the remaining VND 5 billion, how does the company handle it?
After 90 days, A retains only rights corresponding to capital actually contributed (Article 47(3)(b)); the uncontributed VND 5 billion is offered for sale under a Members’ Council decision; the company registers changes to charter capital and capital ratios based on actual contributions.
May voting rights be used to “punish” a disputing member?
No. Voting rights attach to capital contributions under the law; restricting a member’s rights contrary to the law may render the Members’ Council resolution void in a dispute.
How are disputes over the value of contributed assets handled?
Article 36 of Enterprise Law 59/2020/QH14 applies: contributed assets other than Vietnamese dong, freely convertible foreign currency or gold must be valued in Vietnamese dong. Where an asset is valued above its actual value at the time of contribution, the members are jointly liable to contribute the difference and jointly responsible for damage caused by intentionally overvaluing the asset.
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This legal analysis has been verified against current Vietnamese regulations and cross-border FDI transaction practices by the attorneys at FLAT LAW FIRM.
