Changing a company's charter capital is a critical aspect of business management and development. The following guide provides a comprehensive overview of the methods for changing charter capital and the corresponding procedures.
Changing a company's charter capital is a critical aspect of business management and development. The following guide provides a comprehensive overview of the methods for changing charter capital and the corresponding procedures.
1.1 Increasing Charter Capital
- Joint Stock Company:
- Issuance of New Shares: The company may issue additional shares to raise capital from existing or new shareholders. Existing shareholders have preemptive rights to purchase the new shares.
- Capital Increase through Investment: Existing shareholders can contribute additional capital, or the company may offer shares to new investors.
- Single-Member Limited Liability Company:
- Owner’s Contribution: The owner can inject additional capital into the company.
- External Investment: The company may seek capital from external investors, including individuals or institutions.
- Limited Liability Companies with Two or More Members:
- Capital Increase from Existing Members: Current members may contribute additional capital to the company.
- Capital Increase from New Members: The company may accept capital from new members joining the company.
1.2 Reducing Charter Capital
- Joint Stock Company:
- Return of Contributed Capital: The company may return part of the contributed capital to shareholders, provided the company has been operational for at least two years and meets all debt and obligation payments.
- Repurchase of Shares: The company may repurchase issued shares to decrease charter capital.
- Reduction Due to Unpaid Contributions: If shareholders fail to fully pay their capital commitments, the company may reduce its charter capital accordingly.
- Single-Member Limited Liability Company:
- Return of Contributed Capital: Similar to joint stock companies, if the company is operational and solvent, it may return capital to the owner.
- Reduction Due to Unpaid Contributions: The company may reduce its charter capital if the owner has not fully paid the committed capital.
- Limited Liability Companies with Two or More Members:
- Return of Contributed Capital: The company may return capital to members based on their contribution percentages.
- Repurchase of Members' Capital: The company may repurchase capital from one or more members to reduce charter capital.
- Reduction Due to Unpaid Contributions: If members have not fully paid their committed capital, the company may adjust its charter capital accordingly.
2.1 Procedures for Increasing Charter Capital
- Step 1: Prepare and Submit the Dossier
- Dossier Components:
- Notification of changes in enterprise registration content, detailing the capital change.
- Decision and minutes of the meeting from the Board of Members (for limited liability companies with two or more members) or the General Meeting of Shareholders (for joint stock companies).
- Decision of the owner for single-member limited liability companies regarding the capital change.
- Written confirmation of capital contributions from new members, if applicable.
- Notarized copy of identity documents (CCCD/ID card/passport) for shareholders/new members.
- Power of attorney for individuals handling the capital change procedures.
- Notarized copy of identity documents for the authorized person.
- Submission Methods:
- Submit directly to the Business Registration Office of the Department of Planning and Investment at the company’s registered address.
- Register online via the National Business Registration Portal using public digital signatures (available for Hanoi and Ho Chi Minh City).
- Step 2: Review of Application
- The Business Registration Office will issue a receipt upon receiving the dossier and will verify its validity.
- Issuance of Business Registration Certificate: A Certificate will be issued within 3 working days if the dossier is valid.
- Notice of Request for Amendments: If the dossier is invalid, the company will be notified to amend or supplement it. The company must complete these amendments within 60 days; otherwise, the application will be canceled.
2.2 Procedures for Reducing Charter Capital
- Capital Reduction Dossier: The requirements are similar to those for capital increases, with the addition of financial statements to demonstrate the company’s ability to settle debts and obligations post-reduction.
- Financial Statements: Must show sufficient liquidity to repay contributed capital and settle debts. For joint stock companies with foreign ownership exceeding 50%, financial statements must be audited by an independent auditor.
- Legal Capital Requirements: Ensure that the reduced capital complies with any legal capital requirements or adjust business activities if the reduction falls below required levels.
- Complete Capital Increase Before Registration: Ensure all capital contributions are fully made before registration to avoid discrepancies.
- Conversion of Company Type: If external capital is increased, a single-member limited liability company may need to convert to a joint stock company or a limited liability company with multiple members.
- License Tax Adjustment: Declare and pay additional license tax if the change in charter capital impacts the tax rate.
- Notification to Relevant Agencies: Notify any agencies if the capital reduction affects previously recorded obligations.
- Regulatory Compliance: Ensure compliance with the prohibitions outlined in Clause 1, Article 65 of Decree 01/2021/ND-CP.
- Responsibility of Owners and Shareholders: Owners and shareholders remain responsible for their capital commitments following any changes.
If you need more information or support, please contact ADVN LAW for detailed advice.
- Address: F2&F3, No. 2 Phung Khac Khoan, Da Kao Ward, District 1, Ho Chi Minh City
- Phone: 0903.693.301 – 0909.393.329
- Email: vanphongluatsuadvn@gmail.com; advnlaw@gmail.com
