Vietnam: Notes on capital contribution to establish the company? Failure to issue capital contribution certificates to capital contributors to establish a company will be penalized?
- What types of companies are there under current regulations of Vietnam?
- What are the notes when contributing capital to establish a company according to current regulations of Vietnam?
- Failure to issue capital contribution certificates to capital contributors to establish a company will be sanctioned in Vietnam?
What types of companies are there under current regulations of Vietnam?
Pursuant to Clause 6, Article 4 of the Law on Enterprises 2020 stipulates as follows:
Article 4. Definitions
For the purpose of this document, the terms below are construed as follows:
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6. A “company” can be a limited liability company, joint stock company or partnership.
According to Clause 7, Article 4 of the Law on Enterprises 2020 stipulates as follows:
Article 4. Definitions
For the purpose of this document, the terms below are construed as follows:
…
7. A “limited liability company” can be a single-member limited liability company or multiple-member limited liability company.
Thus, there are currently 3 types of companies: limited liability companies, partnerships and joint stock companies.
For a limited liability company, it includes a one-member limited liability company and a limited liability company with two or more members.
Vietnam: Notes on capital contribution to establish the company? Failure to issue capital contribution certificates to capital contributors to establish a company will be penalized?
What are the notes when contributing capital to establish a company according to current regulations of Vietnam?
- Assets contributed by capital
Pursuant to Article 34 of the Law on Enterprises 2020 stipulates as follows:
Article 34. Contributed assets
1. Contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND.
2. Only the individual or organization that has the lawful right to ownership or right to use the asset mentioned in Clause 1 of this Article may contribute it as capital as prescribed by law.
Accordingly, individuals and organizations are only allowed to use Vietnamese dong, freely convertible foreign currency, gold, land use rights, etc. to contribute capital to establish a company when such assets are legally owned by organizations or individuals or have legal use rights.
- Term of capital contribution
+ Limited liability company with two or more members
Pursuant to Clause 2, Article 47 of the Law on Enterprises 2020 stipulates as follows:
Article 47. Capital contribution to establish the company and issuance of the certificate of capital contribution
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2. The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration, excluding the time needed to transport or import the contributed assets and for completing ownership transfer procedures. During this period, the members shall have rights and obligations that are proportional to their promised contribution. The members may only contribute assets that are different from the promised ones if the change is approved by more than 50% of the remaining members.
Accordingly, members of a two-member limited liability company must contribute in full and correct assets as committed within 90 days from the date of issuance of the certificate of business registration.
+ One-member limited liability company
Pursuant to Clause 2, Article 75 of the Law on Enterprises 2020 stipulates as follows:
Article 75. Contributing capital to establish the company
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2. The owner shall contribute adequate and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. During this period, the owner shall have rights and obligations that are proportional to the promised capital.
Thus, the owner of a one-member limited liability company must contribute capital to establish the company in full and in accordance with the committed assets within 90 days from the issuance of the certificate of business registration.
+ Joint-stock company
Pursuant to Clause 1, Article 113 of the Law on Enterprises 2020 stipulates as follows:
Article 113. Paying for subscribed shares upon enterprise registration
1. Shareholders shall fully pay for the subscribed shares within 90 days from issuance date of the Certificate of Enterprise Registration unless shorter time limit is specified by the company's charter or the shares registration contract. In case of capital contribution by assets, the time needed to transport or import the contributed assets and for completing ownership transfer procedures shall be added to this time limit. The Board of Directors shall supervise the shareholders fully and punctually paying for the subscribed shares.
Accordingly, the shares of a joint-stock company must pay the full number of shares registered for purchase within 90 days from the issuance of the certificate of business registration.
+ Partnership
Pursuant to Clause 1, Article 178 of the Law on Enterprises 2020 stipulates as follows:
Article 178. Capital contribution and issuance of the capital contribution certificate
1. General partners and limited partners shall contribute capital fully and punctually as promised.
Accordingly, general partners and capital contributors must contribute capital to establish a company in full and in accordance with the type of assets as committed.
According to this regulation, there is no limit on the time of capital contribution to establish a partnership. The capital contribution to establish a partnership will be made on the principle of agreement of the inspectors so that the time for capital contribution is reasonable so that the company can go into production and business activities.
Failure to issue capital contribution certificates to capital contributors to establish a company will be sanctioned in Vietnam?
Pursuant to Clause 2, Article 52 of Decree 122/2021/ND-CP stipulates as follows:
Article 52. Violations against other regulations on organization and management of enterprises
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2. A fine ranging from VND 30,000,000 to VND 50,000,000 shall be imposed for any of the following violations:
a) Failure to issue the certificate of capital contribution to a company’s member;
b) Failure to make a member register or register of share-issuing shareholders;
c) Failure to put up the enterprise’s name at its head office, failure to put up the name of branch, representative office or business location at its location;
d) Failure to retain documents at the head office or another location specified in the company’s charter.
Accordingly, in case a limited liability company or partnership does not issue a capital contribution certificate to a capital contributor to establish a company, it will be administratively sanctioned from VND 30,000,000 to VND 50,000,000.
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