I. Legal basis

Enterprise Law 2020

Charter capital is one of the most important factors that individuals and organizations need to consider when establishing a business. This is not only a financial resource for the business to operate, but also a legal basis for determining the business’s property responsibility before the law. One of the common questions that entrepreneurs often ask is: “What is the minimum charter capital required to establish a business?” Understanding the legal regulations on charter capital not only helps businesses comply with regulations but also creates a solid foundation for future development.

II. What is charter capital?

Charter capital is the total value of assets contributed or committed to be contributed by company members and owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered to buy when establishing a joint stock company.

Assets contributed to charter capital are Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be valued in Vietnamese Dong Male.

Meaning of charter capital: 

• Demonstrates members’ financial commitment to the company, customers and partners.
• It is the capital source that businesses use to invest in business activities.
• Basis for dividing profits as well as rights and obligations among capital contributing members.

In addition, charter capital represents the company’s scale, financial capacity and position in the market. 

III. Factors to consider when deciding the level of charter capital 

Determining the correct level of charter capital will make an important contribution to building reputation and sustainable development for the business. Some factors to consider before a business decides on the level of charter capital are as follows:

• Current financial capacity of the business.

• Expected scale and scope of activities.

• Actual costs during business operations.

• Projects and contracts signed with partners.

IV. What is the minimum charter capital required by law?

The law does not stipulate the charter capital and maximum level. Therefore, determining the charter capital of a newly established company will depend on the economic capacity of capital contributing members, operational purposes, and field of operation. 

V. Is charter capital legal capital?

The answer is no. Accordingly, Legal Capital is the minimum capital level prescribed by a competent authority, which is a necessary element to establish an enterprise according to the provisions of law. This is the amount of capital needed to start a business project when establishing a business and often fluctuates depending on each specific field and industry.

Legal capital is specifically applied to certain business sectors such as Securities, Gold Trading, Insurance, Currency Trading and Real Estate Business. The purpose of regulating legal capital is to minimize risks during business operations. Therefore, contributed capital or business capital needs to reach or exceed the minimum legal capital in that industry.

VI. Is there a penalty for not contributing enough charter capital?

If the enterprise does not contribute enough charter capital within 90 days, it may be fined from 30 – 50 million VND and must adjust its charter capital according to the provisions of Decree 122/2021/ND-CP.

Specifically, members/owners/shareholders of LLCs with 2 or more members, LLCs with 1 member, and joint stock companies must fully contribute capital within 90 days from the date of issuance of the Registration Certificate. business. If after 90 days the enterprise does not fully contribute charter capital, the enterprise must register to adjust charter capital with the business registration agency within 30 days from the last day to meet the capital contribution requirement. If after this deadline the company still does not contribute enough capital and no member or founding shareholder commits to contribute capital, the enterprise will be fined according to regulations.

VII. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm

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