Charter capital is one of the important factors when establishing and operating an enterprise, reflecting the financial responsibility commitment of the members or shareholders to the company. However, during the process of business registration and operation, proving the charter capital must comply with many legal regulations to ensure its validity and avoid legal risks.
I. Understanding about the proving of charter capital
Proving charter capital is not a mandatory procedure for all enterprises, but it is very important in certain specific cases. Complying with legal regulations will help enterprises operate transparently, avoid legal risks, and build trust with partners and customers.
II. Legal regulations on proving charter capital
1. What is proving charter capital?
Charter capital is the total value of assets contributed or committed to be contributed by the company members or company owners when establishing a limited liability company or a partnership; it is the total par value of shares sold or registered for purchase when establishing a joint-stock company as regulated pursuant to Clause 34, Article 4 of the Law on Enterprises 2020.
From that, it can be understood: Proving charter capital is the process of providing valid documents and certificates to confirm that the enterprise or individual has contributed the committed capital when registering the establishment of the company.
2. In which cases is it required to prove charter capital?
Currently, the law does not require proving charter capital when registering the establishment of a company, except in cases where the business sector requires statutory capital/deposit, in which case proof must be provided (with bank confirmation of the charter capital deposited in a blocked account opened at that bank).
Which means that normally the charter capital is registered by the enterprise itself, the enterprise is responsible for the accuracy of the declared content. Note that faking the charter capital is strictly prohibited.
3. Who is responsible for proving the charter capital?
The responsibility to prove the charter capital lies with the owner, capital contributors, or shareholders of the enterprise, depending on the type of company. Specifically:
- For a sole member limited liability company, the owner of the company (individual or organization) is responsible for proving that they have contributed the registered charter capital. If the owner is an organization, it may be necessary to provide financial statements or related documents to prove the source of capital.
- For a limited liability company with two or more members, each contributing member is responsible for proving their contributed capital as committed. The Chairman of the Members' Council and the Director/General Director are responsible for supervising and confirming the capital contributions of the members.
- For joint-stock companies, founding shareholders are responsible for proving the capital they have contributed as committed when establishing the company. The Members' Council is responsible for checking and confirming the capital contribution status of the shareholders.
III. Answering some questions about proving charter capital
1. What documents does the enterprise need to prepare to prove its charter capital?
The owner/member/founding shareholder participating in the charter capital contribution needs to keep the following documents to prove the contributed capital:
- Company charter.
- Receipts for money collection, documents for contributed assets, and documents for bank transfers.
- The register of shareholders/members, the content in this document must clearly state the ratio of the contributed capital/shareholding/various types of contributed assets.
- Certificate of the contributed capital.
2. How to prove charter capital?
The enterprise can prove its charter capital in the following ways:
For capital contributions in cash or by bank transfer:
- The bank account statement shows the amount contributed to the company's account.
- Capital contribution confirmation letter among the company's members.
- Capital contribution contract if there are multiple members participating.
For contributions in the form of non-cash assets:
- Minutes of the asset capital contribution confirmed by the relevant parties.
- Asset transfer contract (if the asset is purchased from a third party).
- Asset valuation documents issued by an authorized organization.
- Certificate of ownership for contributed assets such as land, houses, and transportation vehicles.
3. How to avoid legal risks related to proving charter capital?
Proving charter capital can lead to many legal risks if the enterprise does not comply with regulations. Here are some ways to help enterprises avoid these risks:
- Contributing capital on time: The enterprise must contribute the full charter capital within 90 days from the date of issuance of the Enterprise Registration Certificate.
- Choose a valid form of capital contribution: The company should not contribute capital in cash but rather transfer it through a bank account to have valid documentation. If contributing capital in the form of assets, there must be a complete capital contribution contract, Minutes of the asset valuation, and a certificate of ownership (if applicable).
- Properly store capital contribution contracts: Enterprises should prepare and store documents to prove their charter capital.
- Avoid faking the charter capital: Registering a high charter capital without actual contribution can be considered fraud and subject to penalties. Enterprises should register their charter capital in accordance with their actual financial capacity to avoid investigation or sanctions from management authorities.
- Check the regulations on industries requiring legal capital: Some industries (such as banking, insurance, real estate business, etc.) require a minimum legal capital, and enterprises need to ensure they contribute the full amount.
4. Is it necessary to prove the charter capital when establishing a two-member limited liability company?
Pursuant to Article 47 of the Law on Enterprises 2020, which regulates the capital contribution for the establishment of a two-member limited liability company, the charter capital of a two-member limited liability company or more when registering the establishment of the enterprise is the total value of the capital contributions of the members committed to contribute and recorded in the company's charter. Members must contribute capital to the company with the full and correct type of assets as committed when registering the establishment of the enterprise within 90 days from the date of issuance of the Enterprise Registration Certificate, excluding the time for transportation, importation of contributed assets, and administrative procedures to transfer ownership of the assets.
Accordingly, there are currently no regulations on the minimum capital contribution required to establish a two-member limited liability company, nor is there a requirement to prove the company's charter capital.
5. What documents are required to prove capital contribution in the form of assets?
Pursuant to point e, Clause 5, Article 6 of Circular 68/2019/TT-BTC, in the case of capital contribution in the form of assets by organizations or individuals doing business in Vietnam to establish an enterprise, it is not required to issue an invoice but to use documents such as the capital contribution certified minutes, asset transfer minutes, and asset valuation minutes, along with a dossier on the origin of the assets.
Thus, the documents for contributed assets include the capital contribution certified minutes, asset transfer minutes, and asset valuation minutes, along with a dossier on the origin of the assets.
IV. Legal consulting services for proving charter capital
Above is all the detailed information that NPLaw provides to assist esteemed customers with the issue of proving charter capital. In case you have any further questions related to the above issue or other legal matters, please contact NPLaw immediately for our team to provide direct consultation and guidance.
