Many startups want to set up a company to do business with questions such as “How much capital does it take to establish a company?”, “Does the establishment of a company need to follow the minimum or maximum capital?”. In the article In this writing, Lawyer X would like to advise you on how much is the minimum charter capital when establishing a company?
Legal grounds
Enterprise Law 2020.
Decree 01/2021/ND-CP on business registration.
What is charter capital?
Charter capital is the total value of assets that contributed or committed to contributing by members when establishing a limited liability company or partnership; is the total par value of shares which sold or registered for purchase upon business establishment, for a joint-stock company.
Charter capital at the time of company establishment registration is the amount of capital that a company member commits to contribute recorded in the company’s charter.
What is the minimum charter capital when establishing a company?
Regarding the issue of minimum charter capital to establish a company, there is no specific level for all types of enterprises.
Depending on which business registered, what is the business line?
If normal business registration does not require a legal capital level, currently, the law does not stipulate a minimum charter capital level.
That is, you can declare the level of charter capital by the actual size of the business as much as you like.
If an enterprise registers a business line that requires legal capital, the enterprise needs to declare a minimum charter capital equal to the prescribed level of that business line.
Under the provisions of the Enterprise Law 2020, the law does not stipulate a specific capital level for enterprises in general.
Accordingly, depending on the economic ability of the members of the company and the purpose of operation of the company, the charter capital is decided specifically. Therefore, when deciding to establish an enterprise, members of the company should determine the charter capital based on the following bases:
- Your financial ability;
- The scope and scale of the company’s activities;
- Actual operating expenses of the company after its establishment (because the company’s charter capital that used for the company’s activities after its establishment);
- Project signed with partners…
Minimum charter capital of the joint-stock company
Charter capital of a joint-stock company is the total amount of capital that contributed or committed to contributing by members or shareholders within a certain period and recorded in the company’s charter.
After that, the company registered with the Department of Planning and Investment according to the operational needs of the company.
The law does not stipulate how much the minimum charter capital is, or how much is the maximum charter capital of the company when an enterprise registers for a normal business line.
To know how much a joint-stock company must meet, it must be based on the company’s business line.
Minimum charter capital of a limited liability company
Charter capital of a limited liability company at the time of business registration is the total value of assets which committed by the owner to contribute and stated in the company’s charter (one-member limited liability company) or the total value of capital shares. contribute members committed to contributing to the company (Limited companies with 2 or more members).
Owners, as well as members, are responsible for debts and other property obligations of the enterprise within the amount of capital committed to contributing to the enterprise.
Minimum charter capital of a one-member limited liability company
Charter capital of a one-member limited liability company at the time of business registration is the total value of assets committed by the owner to contribute and stated in the company’s charter (one-member limited liability company).
Business owners can contribute capital with Assets of Vietnam Dong, freely convertible foreign currencies, gold, the value of land use rights, the value of intellectual property rights, technology, technical know-how, other assets. other can value in Vietnam Dong.
Minimum charter capital of a limited liability company with 2 or more members
Charter capital of a limited liability company with two or more members at the time of business registration is the total value of assets committed by the capital contributors to contribute and stated in the company’s charter (2-member limited liability company or more).
However, when registering the charter capital for the company, you should note the following issues:
- The registration of capital to establish the company should be properly balanced because it is directly related to the business cooperation of the company.
- In business, when you register a business with too low charter capital, not many businesses are willing to believe in your ability to conduct transactions.
- If you register an enterprise with a charter capital that is too high compared to the actual capital of your business, it will greatly affect the responsibilities and obligations of the members when registering to join the company. In addition, enterprises are subject to a higher license tax rate, and the interest expense corresponding to the insufficiently contributed charter capital is not tax-deductible.
Please see more articles
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Frequently asked questions
Dissolution is the termination of the existence of an enterprise that is no longer or is not qualified to exist as a whole. Accordingly, the business owner must carry out legal procedures to terminate the legal status of the enterprise and the related rights and obligations of the enterprise with the Business Registration Authority.
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