The company’s charter is a mandatory document in the business registration file of the enterprise. Therefore, the company’s charter is one of the most important issues for any business. It is both legally binding on state agencies; It is also the basis for long-term business development. However, with the current number of newly established enterprises increasing day by day; Not all companies know how to draft the company’s charter properly. So how to draft a company charter?
Let’s find out with Lawyer X through the following article:
Legal grounds
Enterprise Law 2020
Decree 01/2021/ND-CP
Consulting content
What is the company charter?
According to Clause 1, Article 24 of the Enterprise Law 2020, the company’s charter includes: The charter when registering the establishment of the company; and the Charter that amended and supplemented in the course of operation.
Thus, you can understand that the company’s charter is the commitment of all members and shareholders in the company when it is established and operated. The charter is built on the basis of enterprise law.
In particular, the company’s charter can be considered as the “contract” or “law” of the company; of company owners. The company’s charter that made by the parties themselves, but the contents must not be contrary to the provisions of the Enterprise Law. The establishment, cancellation and replacement of the company’s charter must comply with the provisions of law.
What is the role of the company charter?
The company’s charter is the basis for competent authorities to settle disputes; at the same time it is also a tool to keep the company stable.
This is a document that clearly defines the scope of rights and obligations of shareholders/members in the company based on the agreement; and other legal grounds.
With what is stipulated in the charter, it will create an operating mechanism for the company, the members of the company strictly comply, from which the activities will gradually stabilize and create momentum for development.
Principles of building company charter
Firstly, the Charter must ensure that it has all the main contents in accordance with the provisions of the Enterprise Law 2020, must not contravene the provisions of the enterprise law and relevant laws such as the Enterprise Law, the Civil Code and the Enterprise Law, Commercial Law, etc.
Secondly, when drafting the Charter, it must be based on the principle of voluntary agreement and agreement; The charter is a multi-party contract, stipulating rights; and obligations of the parties, the company owners; regulations on the organization, management and operation of enterprises.
Finally, do not infringe on the interests of third parties.
What should be included in drafting the company’s charter?
According to the law, the company’s charter must contain the following contents:
- Above all, name and address of the head office of the company, and name, address of branch and representative office (if any);
- Business line;
- Moreover, authorized capital, total number of shares and types of shares and par value of each type of shares, for joint-stock companies;
- Full name, contact address and nationality of the general partner, in case of a partnership; of the company owner, members, for limited liability companies; of founding shareholders for joint-stock companies. Share of capital and value of contributed capital of each member, for limited liability companies and partnerships; number of shares; classes of shares; par value of each type of shares of the founding shareholders, for joint-stock companies;
- After that, rights and obligations of members; Management structure;
- Number and title of manager and rights and obligations of the legal representative of the enterprise; division of rights and obligations of the legal representative in case the company has more than one legal representative;
- The mode of adoption of decisions of the company; internal dispute settlement principles;
- Bases and methods for determining salary, remuneration and bonus of managers and controllers;
- Principles of profit sharing after-tax and handling of business losses;
- In case of dissolution, the order of dissolution and procedures for liquidation of company assets;
- Procedure for amending and supplementing the company’s charter.
Related article:
Joint Stock Company – Note when reducing charter capital in Vietnam
Procedures and documents for dissolution of a joint-stock company under Vietnamese law.
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Frequently asked questions
According to the provisions of the Enterprise Law 2020, the following types of enterprises must develop a charter, including:
– Joint-stock company;
Partnerships;
– One member limited liability company;
– Limited liability company with two or more members.
However, for a private enterprise, a charter is not required.
In order to obtain a business registration certificate, founding members or shareholders of a partnership, limited liability company; or joint-stock company need to submit a draft of the charter to the business registration agency.
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