Change of business registration to increase charter capital of the company in Vietnam
Depending on the purpose and financial situation, when operating, enterprises can adjust the charter capital of the company; in two forms increase or decrease of charter capital. Compared with the reduction of charter capital is somewhat more complicated and difficult; because enterprises want to reduce capital need to prove that there are no outstanding debts and fees; registration to increase charter capital is much simpler.
To better understand the process and procedures for changing the business registration to increase the company’s charter capital, please refer to the issues Lawyer X provided in the article about “Change of business registration to increase charter capital of the company in Vietnam”, as follows:
Legal grounds
Enterprise Law 2020
Circular 01/2021/TT-BKHDT
Decree 01/2021/ND-CP
What is an increase in the company’s charter capital?
According to the provisions of Clause 34, Article 4 of the Enterprise Law 2020, it is defined:
Charter capital is the total value of assets that company members or owners contribute or commit to contribute when establishing a limited liability company. limited liability companies, partnerships; is the total par value of shares sold or registered for purchase upon the establishment of a joint stock company. “
Thus, when businesses want to increase the company’s charter capital; Depending on the type, enterprises will have different forms of capital increase; based on the contributed assets of the company.
Time to increase charter capital
Enterprises need to complete the increase of charter capital and then carry out the procedures for registering to increase capital to ensure the amount of increased capital; avoid the case that after the registration is completed, the contribution is not enough in fact.
Form of increasing charter capital
1 member limited company
Accordingly, clause 1, Article 87 of the Law on Enterprises stipulates that one-member limited liability companies may increase their charter capital through two forms: the company owner makes additional investment or company owners raise capital from others.
Limited liability company with 2 or more members
Accordingly, clause 1, Article 68 of the Law on Enterprises stipulates that a limited liability company with two or more members may increase its capital in two cases: Increase a member’s contributed capital or receive a new member’s contributed capital.
joint stock company
According to the provisions of Circular 19/2003/TT-BTC, a joint stock company may increase its charter capital in the following cases:
- Issuing new shares to raise more capital in accordance with the law; including the case of debt restructuring of the enterprise in the form of converting debt into share capital as agreed upon between the enterprise and its creditors.
- Converting issued bonds into shares: The increase in charter capital can only be done when all conditions are met for bonds to be converted into shares in accordance with the law; and the plan to issue convertible bonds.
- Paying stock dividends.
- Issuing new shares to carry out the merger of a division; or all other enterprises into the company.
- Transferring capital surplus to supplement and increase charter capital.
So After completing the actual increase of charter capital, the enterprise shall carry out the procedures for registration of a change in the charter capital of the enterprise according to the increased capital.
Change of business registration to increase charter capital of the company
Step 1: Submit an application to increase charter capital
The enterprise sends a notice to the business registration office where the enterprise has registered. The content of the notice is specified in Clause 1, Article 51 of Decree No. 01/2021/ND-CP, including:
- Name, enterprise identification number, tax identification number; or the number of the Business Registration Certificate (in case the enterprise does not have an enterprise code or tax code);
- Full name, address, nationality, number of ID card, passport or other lawful personal identification as prescribed in Article 10 of this Decree; or establishment decision number, enterprise code number of each member, for limited liability companies with two or more members; of a general partner in the case of a partnership then
- Ratio of capital contribution of each member for limited liability companies with two or more members; or of each general partner in the case of a partnership then;
- Then registered charter capital and changed charter capital; time and form of capital increase or decrease;
- Full name, nationality, ID card number or Passport or other lawful personal identification; specified in Article 11 of this Decree, permanent address and signature of the legal representative of the limited company; or an authorized general partner in the case of a partnership.
In addition, the above Notice must be accompanied by a written Decision; and a valid copy of the meeting minutes of the Members’ Council, for limited liability companies with two or more members, and the General Meeting of Shareholders, for JSCs; Decision of the owner of the one-member limited liability company on the change of charter capital.
The decision, meeting minutes of the Members’ Council or the General Meeting of Shareholders; and the decision of the company owner must clearly state the amended contents in the company’s charter.
In case the General Meeting of Shareholders approves the issuance of shares for sale to increase charter capital
In case the General Meeting of Shareholders approves the issuance of shares for sale to increase charter capital; at the same time, assign the Board of Directors to carry out the procedures for registering to increase charter capital after the end of each share offering. Attached to the above notice, the application file for registration of change of charter capital must contain the following documents as prescribed in Clause 3, Article 51 of Decree No. 01/2021/ND-CP:
- Firstly, Resolution and copy of minutes of the General Meeting of Shareholders on the offering of shares to increase charter capital; which clearly states the number of shares offered for sale; and assigned the Board of Directors to carry out procedures for registration of an increase in charter capital after the end of each share sale;
- Secondly, Resolutions, decisions and copies of minutes of meetings of the Board of Directors of the JSC; about registering to increase the company’s charter capital after the end of each share sale.
The decision and meeting minutes must clearly state the amended contents in the company’s charter.
Step 2: Receive the result of increasing the company’s charter capital
So Upon receiving the notice, the Business Registration Office issues a receipt; and registers to increase capital for the enterprise within 03 working days; from the date of receipt of complete and valid dossiers.
Related article
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- The issue of withdrawing capital from a partnership in Vietnam
Related questions
During its operation, an enterprise has the right to change its charter capital to be more suitable and favorable. The change of charter capital has two main forms: increase of charter capital and decrease of charter capital.
Firstly, for registration to increase charter capital, enterprises should complete the increase of charter capital and then carry out the increase procedure to ensure the increased capital amount; avoid the case that after the registration is completed, the contribution is not enough in fact.
Secondly, after registering to change the charter capital, members of the company; The owners, and shareholders of the company are responsible for their share of the capital after registering changes in the business.
Thirdly, after changing the charter capital of the enterprise, which changes the license tax rate; the enterprise must submit the license tax return before December 31 of the same year. In the case of an increase in charter capital that changes the license tax payment rate; the enterprise must pay an additional license tax.
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