Charter capital is an amount being contributed into establishing an enterprise of its members. Registration for change in the charter capital is important and necessary content to publish changed information to the State management authority and other relevant parties. Accordingly, enterprises need to clearly understand legal regulations on registering changes in the charter capital, helping them overcome potential legal risks, enhance their reputation in the business market and strictly comply with Law. NPLaw sincerely knows its concerns as well as enterprise’s obstacles, so we would like to provide Readers (Clients) with beneficial information on such a complicated issue through the following article:
I/ Current state of registration for change in the charter capital
In recent years, the market economy of the world has been undergoing several challenges, large fluctuations, unstable changes and progressively inflationary. In fact, there are many undesirable problems from competitive strategies, disasters, infectious diseases, climate changes, etc., firstly increasing risks for financial markets and currency, which bring the world economy into unexpected situations. In such an era, accordingly, the Vietnamese’s business market also faces many significant changes, involving both improving market entries and restricting business scope of enterprises. The need of registering changes in the charter capital is essential, requiring enterprises to obtain full knowledge on processes and procedures for implementing the registration according to the Law.
II/ Legal regulations on the registration for change in the charter capital
1. What is registration for change in the charter capital?
Registration for change in the charter capital is an important process that enterprises are requested to implement when they intend to adjust total asset value contributed or committed to contributing.
2. What forms of the registration for change in the charter capital are?
The change in the charter capital involves two main forms: Increase in the charter capital and Decrease in the charter capital.
3. Procedures for the registration for change in the charter capital
Procedures for implementing the registration for change in the charter capital are as follows:
- Submitting a dossier
For the limited liability company, joint-stock company, and partnership: Companies submit a dossier of changing the business registration content (including change in the charter capital) to the Business Registration Office in which companies locate their headquarters.
- Receiving, checking and issuing the Certificate
After receiving the application dossier, the Office shall check its validity and issue a new Enterprise Registration Certificate for enterprises with full conditions according to Law.
4. Notes for implementing the registration for change in the charter capital
For cases of decreasing the charter capital, enterprises are required to make commitments on fully paying debts and other financial obligations.
For cases of increasing the charter capital by raising capital contributions from other entities in a single-member limited liability company, such a company is obliged to reorganize its business type into a multi-member limited liability company or a joint - stock company.
III/ Some questions on the registration for change in the charter capital
1. Are business lines required to adjust when registering the charter capital change according to regulations on legal capital?
The legal capital is a mandatory minimum capital of traders for setting up their enterprises according to Law. It is considered under each specific business line without depending on business types. Thus, the change in the charter capital can lead to adjusting business lines according to the Law.
2. When is the period for conducting the registration for change in the charter capital?
The period for conducting the registration for change in the charter capital is as follows:
- Single-member limited liability company increases its charter capital by additionally investing from the owner or raising capital contributions from other entities. If the company performs an increase in mobilizing capital from other people, it is obliged to reorganize and manage its business type into two following types: multi-member limited liability company or joint - stock company, simultaneously notify change in business registration content within 10 working days from the date of completing such the change.
- Multi-member limited liability company can increase its charter capital in two cases: Increase in capital contributions of its members or from new members.
- Joint-stock company shall adjust its charter capital by issuing new stocks as defined by the Law, including a reorganization of debts in a form of converting debts into capital contributions as stocks under agreements between enterprise and creditors.
After completing the increase in capital, enterprises conduct procedures for the registration for change in the charter capital corresponding with increased capital. The duration is 10 days from the date of fulfilling such a stock issuance period or obtaining a decision on changing the charter capital.
3. Can enterprises be fined due to failing the change registration when they increase the charter capital?
Enterprises are obliged to implement the registration for change in the charter capital when adjusting the charter capital. If the change isn’t registered, they can be fined from 20.000.000 VND to 30.000.000 VND as defined by Point b, Clause 1, Article 57 of the Decree No. 122/2021/ND-CP.
IV/ Legal services on advising and supporting in implementing the registration for change in the charter capital
All necessary information on the registration for change in the charter capital are presented specifically by NPLaw’s aforesaid article. If Clients have any further questions or need to resolve other legal issues, please do not hesitate to contact NPLaw to obtain direct and prompt support from our team.
