Are the increased amounts due to the issuance of new stocks accounted into financial incomes of joint stock companies in Vietnam?
- Are the increased amounts due to the issuance of new stocks accounted into financial incomes of joint stock companies in Vietnam?
- In what cases is a joint stock company allowed to increase its charter capital in Vietnam?
- When can a joint stock company use differences between selling prices and par values of stocks issued for increasing its charter capital in Vietnam?
Are the increased amounts due to the issuance of new stocks accounted into financial incomes of joint stock companies in Vietnam?
Pursuant to Section 3, Part I of Circular 19/2003/TT-BTC stipulating as follows:
3. All activities of purchasing and selling treasury stocks or issuing new stocks to mobilize capital are not considered financial business activities of joint-stock companies. The increased amounts due to the purchase or sale of treasury stocks and the differences between issuance prices of new stocks being higher than their par values shall be accounted into capital increment accounts, but not as enterprises’ financial incomes. Enterprise income tax and value added tax shall not be imposed on such increments.
Thus, this regulation affirms that all activities of purchasing and selling treasury stocks or issuing new stocks to mobilize capital are not considered financial business activities of joint-stock companies.
Specifically, the increased amounts due to the purchase or sale of treasury stocks and the differences between issuance prices of new stocks being higher than their par values shall be accounted into capital increment accounts, but not as enterprises’ financial incomes. Enterprise income tax and value added tax shall not be imposed on such increments.
Are the increased amounts due to the issuance of new stocks accounted into financial incomes of joint stock companies in Vietnam?
In what cases is a joint stock company allowed to increase its charter capital in Vietnam?
According to the provisions of subsection 1, Section A, Part II of Circular 19/2003/TT-BTC as follows:
1. Charter capital of a joint-stock company shall be increased in the following cases:
a/ Issuance of new stocks to mobilize more capital according to the provisions of law, including the case of restructuring of its debts by mode of conversion of such debts into share capital contributions according to agreements between the enterprise and its creditors.
b/ Conversion of already issued bonds into shares: The increase of charter capital shall be effected only when the conditions for converting bonds into shares as prescribed by law and stated in the plan on issuance of convertible bonds are fully met.
c/ Payment of dividends in the form of stocks.
d/ Issuance of new stocks for merging part or whole of another enterprise into the company.
e/ Carrying forward of the capital increment source to supplement the charter company.
Thus, charter capital of a joint-stock company shall be increased in the following cases:
- Issuance of new stocks to mobilize more capital according to the provisions of law, including case of restructuring of its debts by mode of conversion of such debts into share capital contributions according to agreements between the enterprise and its creditors.
- Conversion of already issued bonds into shares: The increase of charter capital shall be effected only when the conditions for converting bonds into shares as prescribed by law and stated in the plan on issuance of convertible bonds are fully met.
- Payment of dividends in form of stocks.
- Issuance of new stocks for merging part or whole of another enterprise into the company.
- Carrying forward of the capital increment source to supplement the charter company.
When can a joint stock company use differences between selling prices and par values of stocks issued for increasing its charter capital in Vietnam?
Pursuant to the provisions in subsection 2, Section A, Part II of Circular 19/2003/TT-BTC as follows:
2. The carrying forward of the capital increment source to supplement the charter company of joint-stock companies (according to the provisions in Paragraph e, Point 1, Section A, Part II) must satisfy the following conditions:
a/ The companies are entitled to use the whole increase differences between selling prices and original purchasing prices of treasury stocks to increase their charter capital. In cases where the companies have not yet sold out their treasury stocks, they shall only be allowed to use increase differences between the capital increment source and the total original price of treasury stocks not yet sold to supplement their charter capital. If the total original price of treasury stocks not yet sold is equal to or larger than the capital increment source, the companies shall not be allowed to increase their charter capital with such capital source.
b/ For differences between selling prices and par values of stocks issued for executing investment projects, joint-stock companies shall only be allowed to use them to supplement their charter capital three years after such investment projects are completed and put into exploitation and operation.
For differences between selling prices and par values of stocks issued for restructuring debts or supplementing business capital, the joint-stock companies shall only be allowed to use them to increase their charter capital one year after the end of the issuance.
c/ The capital increment sources specified in Paragraphs a and b, Point 2, Section A, Part II above shall be divided to shareholders in form of stocks according to their stock ownership proportions.
Thus, a joint stock company may use differences between selling prices and par values of stocks issued for increasing its charter capital when:
- For differences between selling prices and par values of stocks issued for executing investment projects, joint-stock companies shall only be allowed to use them to supplement their charter capital three years after such investment projects are completed and put into exploitation and operation.
- For differences between selling prices and par values of stocks issued for restructuring debts or supplementing business capital, the joint-stock companies shall only be allowed to use them to increase their charter capital one year after the end of the issuance.
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