Charter capital in corporate mergers plays an important role in determining the financial capacity, legal status, and scope of liability of the enterprise after the merger, while also serving as a legal basis for State authorities to assess the legality and operational capability of the newly formed enterprise.

I. Introduction to issues relating to charter capital in corporate mergers

During the corporate merger process, charter capital in corporate mergers is one of the core matters because it directly affects the financial structure, shareholders’ interests, and operational capacity of the enterprise after the merger.

The determination, adjustment, and recognition of charter capital not only reflect the actual contributed capital value but also constitute an important legal basis for competent State authorities to review the legality of the merger process, while ensuring transparency in the relationship among relevant parties and minimizing the risk of arising disputes.

II. Understanding charter capital in corporate mergers

1. What is charter capital in a corporate merger and how does it differ from initial charter capital?

Pursuant to Clause 34, Article 4 of the Law on Enterprise 2020, charter capital is defined as the total value of assets contributed or committed to be contributed by members or company owners upon establishment of a limited liability company or partnership; or the total par value of shares sold or registered for subscription upon establishment of a joint-stock company.

In the context of mergers, charter capital in corporate mergers is re-determined on the basis of consolidation, succession, or adjustment from the charter capital of the merged enterprise and the receiving enterprise, reflecting the total actual contributed capital after the enterprise restructuring process. The distinction from initial charter capital is that initial charter capital is established at the time of enterprise incorporation, whereas charter capital in mergers is formed after the restructuring process and may change in terms of scale, capital contribution ratio, and ownership structure to align with the new operational model after the merger.

2. What is the role of charter capital in corporate mergers in determining the financial capacity of the new enterprise when participating in bidding activities?

Charter capital in corporate mergers plays an important role in evaluating the financial capacity of the enterprise after the merger, particularly in bidding activities. It serves as one of the bases demonstrating capital scale, the financial commitment level of owners, and the ability to satisfy contractual performance requirements of the newly formed enterprise after the merger.

In bidding activities, charter capital is often used to assess minimum financial capacity, thereby helping the procuring entity determine whether the enterprise possesses sufficient capability to participate in and perform the bidding package.

Accordingly, after the merger, accurate determination of charter capital not only reflects the consolidated financial strength of the enterprise but also directly affects its ability to satisfy bidding eligibility requirements, particularly for bidding packages with high requirements regarding financial capacity or owner’s equity.

3. What are the common forms of charter capital contribution in corporate mergers?

Pursuant to Clause 1, Article 34 of the Law on Enterprise 2020, assets contributed as capital to an enterprise may exist in various forms, provided that such assets can be valued in Vietnamese Dong. Accordingly, the parties commonly contribute charter capital through the following forms:

  • First, capital contribution in cash or bank transfer in Vietnamese Dong or freely convertible foreign currencies. It is the simplest and most common method, facilitating prompt determination of charter capital after the merger.
  • Second, contribution by tangible assets such as machinery, equipment, vehicles, factories, or goods. These assets must be clearly valued and legally transferred to the post-merger enterprise.
  • Third, contribution by intangible assets such as land use rights, intellectual property rights, trademarks, technology, or technical know-how. Such a type of assets often carries significant value and plays an important role in enhancing the competitiveness of the enterprise after the merger.
  • Finally, the parties may contribute other assets capable of being valued in monetary terms as agreed, provided that such assets are lawful and clearly recorded in the merger documentation.

In general, forms of charter capital contribution in corporate mergers are diverse; however, all must comply with the principle that the assets can be valued and lawfully transferred, thereby ensuring transparency and legal safety for the enterprise after the merger.

4. Is it mandatory to disclose charter capital in corporate mergers to shareholders and related parties?

Pursuant to Article 201 of the Law on Enterprise 2020 regarding corporate mergers, when a merger is conducted, all assets, rights, and obligations of the merged enterprise are transferred to the receiving enterprise and must be reflected in the merger dossier, charter, and merger plan of the relevant parties. In addition, Article 24 of the Law on Enterprise 2020 stipulates that a company charter must record charter capital and other important corporate contents, and such charter documents must be provided to shareholders and company members for approval of enterprise restructuring decisions.

Accordingly, in practice, determination and recording of the new charter capital after the merger are mandatory and must be reflected in the charter, merger plan, and fully disclosed to shareholders, members, and related parties for voting or approval purposes.

III. Legal regulations relating to charter capital in corporate mergers

1. Which laws and legal instruments regulate the establishment of charter capital in corporate mergers in Vietnam?

The establishment and recognition of charter capital in corporate mergers in Vietnam are primarily governed by the legal framework on enterprises and business registration.

Specifically, the Law on Enterprise 2020 is the fundamental legal instrument, providing the definition of charter capital in Clause 34, Article 4 and regulations on corporate mergers in Article 201, according to which the receiving enterprise inherits all assets, rights, and obligations of the merged enterprise, thereby forming the basis for re-determination of charter capital after the merger.

In addition, registration of changes to charter capital following a merger is further guided by regulations on enterprise registration, including Decree No. 168/2025/ND-CP on enterprise registration, which sets out detailed procedures for recording and updating charter capital in enterprise dossiers.

2. How is the process of inspection and assessment of charter capital in corporate mergers conducted by regulatory authorities?

The inspection and assessment of charter capital in corporate mergers are mainly conducted by business registration authorities during the stage of receipt and processing of merger dossiers, in accordance with the management mechanism prescribed under the Law on Enterprise 2020 (Article 201 regarding corporate mergers) and Decree No. 168/2025/ND-CP (Article 26 regarding enterprise registration dossiers in cases of conversion of enterprise types).

The basic process includes the following steps:

- Step 1: Receipt of merger dossier

The business registration authority receives the dossier, including the merger agreement, merger plan, post-merger company charter, and documents relating to charter capital.

- Step 2: Examination of dossier validity

The authority reviews the completeness and legality of the dossier and compares information relating to charter capital, capital contribution structure, and capital commitments of the enterprise in accordance with legal regulations.

- Step 3: Assessment of charter capital content

The authority compares the registered charter capital against:

  • The value of assets and obligations transferred from the merged enterprise;
  • Capital contribution commitments of owners/members/shareholders;
  • Business sectors, particularly sectors subject to statutory capital requirements.

- Step 4: Request for clarification or supplementation (If any)

If unclear issues or signs of inconsistency are identified, the business registration authority may request the enterprise to provide clarification or amend the dossier.

- Step 5: Recording and updating charter capital after the merger

Once the dossier is deemed valid, the authority updates the new charter capital information in the National Enterprise Registration Database and issues an amended Enterprise Registration Certificate.

3. What are the legal consequences where the actual contributed charter capital after a merger does not match the commitment stated in the merger agreement?

Where charter capital after a merger is not fully contributed or does not comply with the commitments stated in the merger agreement, the enterprise may be subject to sanctions under Article 46 of Decree No. 122/2021/ND-CP on violations relating to enterprise establishment and capital contribution.

Specifically, where members/shareholders fail to fully contribute capital as committed, but the enterprise fails to implement procedures for adjusting charter capital or changing founding members/shareholders within the prescribed period, such conduct may result in administrative fines ranging from 30,000,000 VND to 50,000,000 VND for organizations (Point a, Clause 3, Article 46).

In addition, the enterprise may be subject to remedial measures, including:

  • Mandatory implementation of procedures for adjusting charter capital; or
  • Mandatory replacement of members/shareholders who fail to fulfill their capital contribution commitments.

It should be noted that individuals committing violations shall be subject to fines equal to one-half of the fines imposed on organizations under Clause 2, Article 4 of Decree No. 122/2021/ND-CP.

IV. Questions related to charter capital in corporate mergers

1. What is the procedure for notifying changes to charter capital after a corporate merger at the Department of Finance?

Pursuant to Article 44 of Decree No. 168/2025/ND-CP, the registration of changes to charter capital after a corporate merger shall be implemented at the provincial-level business registration authority (Department of Finance) where the enterprise’s head office is located, according to the following basic procedure:

- Step 1: Preparing and submitting the dossier

The enterprise shall submit a dossier for registration of changes to enterprise registration contents, including:

  • An application for registration of changes to enterprise registration contents;
  • A resolution/decision of the owner, Members’ Council, or General Meeting of Shareholders regarding the change of charter capital;
  • Meeting minutes (for limited liability companies with two or more members);
  • Documents proving that capital contribution or share purchase has been fully paid (if increasing capital);
  • Written approval from the investment registration authority (if foreign investors are involved).

- Step 2: Receiving the dossier

After receiving the dossier, the Department of Finance shall issue a receipt and schedule the date for returning the results to the enterprise.

- Step 3: Examining the dossier’s validity

Within 03 working days, the business registration authority shall examine the completeness and validity of the dossier, and compare the amended charter capital contents with the merger plan and legal regulations.

- Step 4: Issuing or requesting the amendment of the dossier

  • If the dossier is valid: Issuing an amended Enterprise Registration Certificate recording the new charter capital after the merger;
  • If the dossier is invalid: Issuing a written notice requesting the enterprise to amend or supplement the dossier.

2. What sanctions apply to acts of falsely declaring charter capital in corporate mergers?

According to Clause 5 Article 16 of the Law on Enterprise 2020, acts such as falsely declaring charter capital, failing to contribute sufficient capital as registered, or intentionally overvaluing contributed assets are prohibited acts in enterprise activities.

Regarding sanctions, under Article 47 of Decree No. 122/2021/ND-CP, false declaration of charter capital shall be subject to administrative sanctions depending on the severity of the violation, specifically ranging from 20,000,000 VND to 100,000,000 VND, depending on the value of the falsely declared charter capital (increasing according to thresholds from under 10 billion VND to 100 billion VND or more).

In addition to monetary fines, enterprises are also subject to remedial measures requiring them to register adjustments to charter capital in accordance with the actual contributed capital in order to ensure transparency and honesty in enterprise registration.

3. How can charter capital after a corporate merger be determined to satisfy conditions for business lines requiring statutory capital?

The determination of charter capital after a corporate merger must ensure that it is not lower than the statutory capital required for conditional business sectors, in accordance with specialized laws and the Law on Enterprise 2020.

First, the enterprise must accurately determine the post-merger business lines and compare them with specialized legal documents regulating statutory capital requirements (for example: finance, real estate, transportation, banking, etc.).

Next, the post-merger charter capital must be determined based on:

  • The total actual contributed capital value of the parties participating in the merger;
  • The value of assets, rights, and obligations transferred from the merged enterprise;
  • At the same time, it must not be lower than the minimum statutory capital if the enterprise continues operating in such business sectors.

If the post-merger charter capital does not meet the statutory capital requirement, the enterprise must increase its charter capital to satisfy legal conditions or restrict/remove business sectors requiring statutory capital that the enterprise does not yet qualify to conduct.

4. What are the consequences if an enterprise operates under the new capital level after a merger without registering changes to charter capital?

According to Article 44 of Decree No. 122/2021/ND-CP, failure to register changes to the Enterprise Registration Certificate contents (including charter capital) while the enterprise has already operated under the new capital level after the merger constitutes a violation of regulations on the time limit and obligation to register changes to enterprise registration contents.

Specifically, failure to register changes to charter capital may result in administrative fines ranging from 20,000,000 VND to 30,000,000 VND for organizations. For individuals committing violations, the fine equals one-half of the organizational fine, corresponding to 10,000,000 VND to 15,000,000 VND, under Clause 2 Article 4 of Decree No. 122/2021/ND-CP.

In addition to monetary penalties, enterprises are also subject to remedial measures requiring them to register amendments to the Enterprise Registration Certificate to accurately record the actual charter capital after the merger.

5. What legal remedies apply if the buyer and seller enter into unlawful agreements regarding the determination of charter capital in a corporate merger?

Where the buyer and seller agree on the determination of charter capital in a corporate merger but such agreement violates legal regulations (for example: false declaration of capital, incorrect valuation of contributed assets, or distortion of actual charter capital), such agreement may be wholly or partially invalid under the principle of invalid civil transactions due to violations of prohibitive provisions of law under the Civil Code 2015.

Regarding legal remedies, the enterprise must simultaneously fulfill the following obligations:

  • Adjusting the charter capital to accurately reflect the actual contributed value, ensuring it corresponds to the actual value of assets and contributed capital portions after the merger;
  • Canceling or amending unlawful contents in the merger agreement to ensure compliance with the Law on Enterprise 2020;
  • Implementing procedures for registering amendments to enterprise registration contents with the business registration authority to update the actual charter capital;
  • In cases involving violations such as false declaration or incorrect valuation, related parties may also be subject to administrative sanctions under Decree No. 122/2021/ND-CP and required to implement remedial measures such as adjusting the charter capital to match the actual contributed capital.

V. Are you looking for a skilled and reputable lawyer to assist with issues related to charter capital in corporate mergers?

During the corporate merger process, issues relating to the determination, declaration, and adjustment of charter capital may give rise to numerous legal risks if not carried out in compliance with legal regulations. With the support of NPLaw, enterprises receive comprehensive consultation and assistance to ensure that merger dossiers are accurate, legally compliant, and free from errors throughout the implementation process.

The above information is for reference purposes only. If clients require detailed advice for specific cases, please contact NPLaw for immediate consultation.