Charter capital is an important factor in the establishment and operation of a limited liability company. This is not only a financial commitment of the members but also affects the rights and legal responsibilities of the enterprise. The article below by NPLaw will provide readers with an overview of the charter capital of limited liability companies according to current legal regulations.
I. Understanding the charter capital of limited liability companies
Charter capital is an important factor that helps determine the financial capacity and legal basis for the operations of a limited liability company. This is not only a factor for assessing the financial capacity of the enterprise but also a legal basis for state authorities to supervise and manage the company's business activities. The charter capital not only includes cash but can also encompass other valuable assets such as land use rights, intellectual property rights, or fixed assets. Careful, transparent, and lawful preparation of charter capital is a necessary condition to ensure the development and legality of the enterprise.
II. Legal regulations on the charter capital of limited liability companies
1. What is the charter capital of a limited liability company?
Pursuant to Clause 34, Article 4 of the Law on Enterprises 2020, charter capital is the total value of assets contributed or committed to be contributed by company members or company owners when establishing a limited liability company or partnership company; it is the total par value of shares sold or registered for purchase when establishing a joint-stock company.
Thus, it can be understood that the charter capital of a limited liability company is the value of the assets committed to be contributed by the company members when establishing the company.
III. Cases that change the charter capital of a limited liability company
The cases in which the charter capital of a limited liability company must be changed are as follows:
1. Limited liability company with two or more members (pursuant to Article 68 of the Law on Enterprises 2020):
- Increase charter capital:
+ Increase member capital contributions.
+ Accept additional capital contributions from new members.
- Reduction of charter capital:
+ Refund a portion of the capital contribution to members according to their ratio of capital contribution in the company's charter capital as regulated.
+ The company buys back the member's capital contribution.
+ The charter capital is not fully paid on time by the members as regulated.
2. Single member limited liability company (pursuant to Article 87 of the Law on Enterprises 2020):
- Increase in charter capital: increasing charter capital through the company's owners contributing additional capital or raising additional capital contributions from others.
- Reduction of charter capital:
+ Refund a portion of the capital contribution to the company owner.
+ The charter capital was not fully paid on time by the company owner as regulated.
3. When changing the charter capital of a limited liability company, what procedures need to be followed?
Pursuant to Clause 1, Article 51 of Decree 01/2021/ND-CP: In the case of limited liability companies, joint-stock companies, and partnerships registering to change charter capital, the company shall submit the dossier for changes in enterprise registration content to the Business Registration Office where the company is headquartered.
Thus, when changing the charter capital, the limited liability company needs to carry out the procedure for registering changes to the enterprise registration content at the Business Registration Office where the company is headquartered, as per the above regulations.
IV. Some questions about the charter capital of limited liability companies
1. What contents must the latest notice of change in the charter capital of a limited liability company include? Why?
When changing the charter capital of a limited liability company, it is necessary to carry out the procedure for changing the enterprise registration content and submit the Notice of Change of Enterprise Registration Content pursuant to Clause 1, Article 51 of Decree 01/2021/ND-CP.
The current template for the Notice of Change in Enterprise Registration Content is regulated in Appendix II-1 issued together with Circular 01/2021/TT-BKHĐT, with the main content as follows:
- Section for Business Information
- Section for notifying changes in enterprise registration regarding changes in charter capital.
- Section for signature and stamp.
2. Where should the change in the charter capital information of a limited liability company be conducted?
Clause 1, Article 51 of Decree 01/2021/ND-CP regulates the registration of changes in charter capital as follows: In the case of limited liability companies, joint-stock companies, and partnerships registering changes in charter capital, the company shall submit the dossier for changes in enterprise registration content to the Business Registration Office where the company is headquartered.
Thus, the limited liability company makes changes to the charter capital information at the Business Registration Office where the company is headquartered.
3. What is the fee for changing the charter capital information of a limited liability company?
According to the fee schedule for enterprise registration issued together with Circular 47/2019/TT-BTC:
- The enterprise registration fee (including new issuance, re-issuance, changes to the content of the enterprise registration certificate, and the certificate of registration for the operation of branches, representative offices, and business locations of the enterprise) is 50,000 VND per time;
- The fee for publishing the content of the enterprise registration (in this case, the publication of the change in charter capital) is 100,000 VND per time.
Thus, the fee for changing the charter capital information of a limited liability company is 50,000 VND, and the fee for publishing the change in content of the charter capital is 100,000 VND, according to the above regulations.
4. When a limited liability company wants to increase its charter capital, is it against legal regulations for members to contribute capital before proceeding with the procedure to increase charter capital?
For a limited liability company with two or more members, Clause 4, Article 68 of the Law on Enterprises regulates, Except for the cases specified pursuant to Point c, Clause 3 of this Article, within 10 days from the date the increase or decrease in charter capital has been completed, the company must notify in writing the increase or decrease in charter capital to the Business Registration Authority…
When a limited liability company wants to increase its charter capital, within 10 days from the date the increase has been fully paid, the company must notify the business registration authority. Thus, carrying out the procedure to increase the charter capital after the members have fully contributed the charter capital is in accordance with the above regulations.
V. Legal consulting services related to the charter capital of limited liability companies
Above is the article by NPLaw about the current charter capital of limited liability companies. With a team of experienced lawyers and legal professionals, NPLaw provides reputable and professional legal services, ensuring the best protection of legal rights for our valued clients. If you need assistance with legal matters, you can contact NPLaw for support and consultation.
