Vietnam: How will the company be penalized for making false declarations to register a charter capital that is higher than the actual contributed capital?
- Does the content of the enterprise registration application form include charter capital?
- Is charter capital one of the mandatory contents in the company's charter?
- How will the company be penalized for making false declarations to register a charter capital that is higher than the actual contributed capital?
Does the content of the enterprise registration application form include charter capital?
Pursuant to Clause 4, Article 23 of the 2020 Law on Enterprises of Vietnam stipulating as follows:
Content of the enterprise registration application form in Vietnam
The following information shall be provided in the enterprise registration application form:
1. The enterprise’s name;
2. The enterprise’s headquarters, phone number, fax number, email address (if any);
3. The enterprise’s business lines;
4. The charter capital (or investment capital if the enterprise is a sole proprietorship);
5. Types of shares, face value of each type and total authorized shares of each type if the enterprise is a joint stock company;
6. Tax registration information;
7. Expected quantity of employees;
8. Full name, signature, mailing address, nationality and legal documents of each partner (for partnerships) or the owner (for sole proprietorships);
9. Full name, signature, mailing address, nationality and legal documents of the legal representative (for limited liability companies and joint stock companies).
Thus, according to the above provisions, the enterprise registration application form in Vietnam includes the above contents, including the content of charter capital.
Vietnam: How will the company be penalized for making false declarations to register a charter capital that is higher than the actual contributed capital?
Is charter capital one of the mandatory contents in the company's charter?
Pursuant to Clause 2, Article 24 of the 2020 Law on Enterprises of Vietnam stipulating the company's charter as follows:
The company's charter
1. The company's charter includes the initial charter submitted upon enterprise registration and revisions made during the operation.
2. Primary contents of the company's charter:
a) The company’s name, addresses of the headquarters, branches and representative offices (if any);
b) The company’s business lines;
c) The charter capital; total quantity of shares, types of shares and face value of each type (for joint stock companies);
d) Full name, mailing address, nationality of each partner (for partnerships), the owner and each member (for limited liability companies) or the founding shareholders (for joint stock companies). Stakes held by each member or partner (for limited liability companies and partnerships) and values thereof. Quantity of shares, types of shares and value of each type held by founding shareholders (for joint stock companies);
dd) Rights and obligations of the members or partners (for limited liability companies and partnerships) or shareholders (for joint stock companies);
e) The organizational structure;
g) Quantity, titles, rights and obligations of each of the enterprise’s legal representatives;
h) Method for ratifying the company’s decisions; rules for settlement of internal disputes;
i) Basis and method for determination of salaries and bonuses of the executives and controllers;
k) Cases in which members/shareholders may request the company to repurchase their stakes/shares (For limited liability companies/joint stock companies);
l) Rules for distribution of post-tax profits and settlement of business losses;
m) Cases of dissolution; procedures for dissolution and liquidation of the company’s assets;
n) Procedures for revising the company's charter.
...
Thus, the company's charter includes the charter when registering the business and the amended and supplemented charter in the course of operation, whereby the content of the company's charter must include the content of the charter capital of the company.
How will the company be penalized for making false declarations to register a charter capital that is higher than the actual contributed capital?
According to the provisions of Article 47 of Decree 122/2021/ND-CP, enterprises that commit violations against declaration of charter capital shall be subject to the following penalties:
- A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed if the falsely declared charter capital is less than VND 10 billion.
- A fine ranging from VND 30,000,000 to VND 40,000,000 shall be imposed if the falsely declared charter capital is from VND 10 billion to less than VND 20 billion.
- A fine ranging from VND 40,000,000 to VND 60,000,000 shall be imposed if the falsely declared charter capital is from VND 20 billion to less than VND 50 billion.
- A fine ranging from VND 60,000,000 to VND 80,000,000 shall be imposed if the falsely declared charter capital is from VND 50 billion to less than VND 100 billion.
- A fine ranging from VND 80,000,000 to VND 100,000,000 shall be imposed if the falsely declared charter capital is VND 100 billion or more.
- Remedial measures: The violator is compelled to declare the actual charter capital, which equals the actually contributed capital if any of the above violations is committed.
Thus, depending on the value of the charter capital declared falsely, there will be corresponding fines mentioned above. At the same time, apply remedial measures to force registration to adjust charter capital equal to the actual contributed capital for each act.
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