During operations, companies have the right to decide to increase charter capital in accordance with the needs of the company and investors. Regarding increasing charter capital, the issue of the capital contribution deadline when increasing charter capital in accordance with the law is something that many people are concerned about. The following article by Viet An Law Firm will provide you with the most detailed information about the capital contribution time limit when increasing charter capital in Vietnam.
Charter capital is the total value of assets contributed or committed to be contributed by company members and owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered to buy when establishing a joint stock company.
Capital contribution is the contribution of assets to form the company’s charter capital, including capital contribution to establish a company or additional charter capital contribution of an already established company.
Increasing charter capital is an activity aimed at restructuring charter capital. Increasing charter capital is an activity that businesses carry out when they want to expand the scale of business operations or increase loan limits in banks.
Each type of company will have different ways to increase charter capital, specifically as follows:
Single-member LLCs increase the charter capital in the following ways:
Multiple-member LLCs increase charter capital in the following ways:
Joint stock companies increase charter capital by:
The sale of shares can be done in the following forms:
Bond issuance can be done in the following forms:
To increase charter capital, it can be done in one of the following two forms:
Based on the following legal provisions:
The date of change is understood as the date capital is added to the company’s capital account. Such a deadline Capital contribution when increasing charter capital for joint stock companies, single-member limited liability companies, and multiple-member limited liability companies or more is 10 days. After 10 days from the date of completion of capital increase procedures, the company shall register to increase charter capital.
According to the provisions of Clause 2, Article 186 of the Law on Enterprises 2020, partners or capital-contributing members must pay the full amount of capital committed to contributing to the company within 15 days from the date of approval, unless the Association the partner decide on another deadline.
The time limit for capital contribution when establishing an enterprise is 90 days from the date of obtaining the business registration certificate (Clause 2, Article 47 of the Enterprise Law 2020).
Thus, the capital contribution period when the company increases capital will be shorter than the capital contribution period when established. The reason is that when establishing a business, charter capital is needed for the business to exist. Meanwhile, capital contribution when increasing charter capital is only a form to help businesses develop and expand their scale.
Step 1: Submit documents to increase the company’s charter capital at the Department of Planning and Investment at the Provincial/City level
The legal representative or authorized person submits the application to increase the company’s charter capital at the Business Registration Office of the Department of Planning and Investment of the Province/City where the enterprise is headquartered. The registration office officer checks the validity of the application and gives a receipt. Dossiers include:
Step 2: Receive the results of the charter capital increase application
After 03 working days from the date of receiving the dossier, the business registration office will return the result as a new enterprise registration certificate with a new charter capital (if the dossier is valid). Or return notice of amendments to the dossier (if the dossier needs further amendments).
Step 3: Publication of the change information on the national business portal.
Note on procedures
For a single-member limited liability company, increasing charter capital by mobilizing additional capital contributions from others will break the “single-member” regime of the company, the company must organize management according to one of two types. image:
For joint stock companies, the General Meeting of Shareholders approves the issuance of shares for sale to increase charter capital, and at the same time assigns the Board of Directors to carry out procedures for registering to increase charter capital after each share offering completely.
Increasing a business’s capital increases the business license tax rate. The applicable license tax rate in 2023 is based on the charter capital of the enterprise as follows:
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