05 conditions for increase and decrease in charter capital of an investment company in Vietnam

Regarding this matter, LawNet would like to answer as follows:

1. 05 conditions for increase and decrease in charter capital of an investment company in Vietnam

Investment and business activities of investment companies are always associated with potential and risks. Therefore, when wanting to increase charter capital to expand scale, the companies must strictly comply with legal regulations.

Specifically, there are 05 conditions for increase and decrease in charter capital of an investment company as prescribed in Article 262 of Decree 155/2020/ND-CP as follows:

- The General Meeting of Shareholders (GMS) has approved the capital decrease or follow-on offering; the plan for follow-on offering or capital decrease.

- In case of decrease in charter capital, the company shall ensure that the charter capital after decrease and net asset value are not smaller than 50 billion VND.

- In case of charter capital increase by follow-on offering of shares or scrip issue, the company shall have adequate sources of financing from share premium and undistributed post-tax profits according to the latest audited or examined financial statement.

- In case of capital increase by offering or issuance, the company shall comply with regulations on public securities offering (for public investment companies), private placement (for private investment companies) and issuance to existing shareholders.

- For private investment companies: There are not more than 99 shareholders. Shareholders that are organizations shall contribute at least 03 billion VND. Shareholders that are individuals shall contribute at least 01 billion VND.

Thus, when wanting to increase charter capital, investment companies must strictly comply with 5 conditions including: being approved by the General Meeting of Shareholders, ensuring the charter capital and net asset value; having valid sources of financing; Complying with offering regulations; Number of shareholders.

2. Application for adjustment of charter capital of an investment company in Vietnam

According to the provisions of Article 263 of Decree 155/2020/ND-CP, the application for adjustment of charter capital of an investment company includes:

- The application form No. 94 in the Appendix of Decree 155/2020/ND-CP.

Form No. 94 Download 

- The resolution of the GMS on approval for the increase/decrease in charter capital, the plan for capital increase/decrease and the revised charter of the company.

- The list of shareholders after adjustment according to form No. 105 in the Appendix of Decree 155/2020/ND-CP.

Form No. 105 Download 

- In case of capital decrease, the following documents shall also be included: the report on decrease in charter capital enclosed with the written confirmation issued the depository bank, supervisory bank of the completion of payment to shareholders; quantity of shareholders, quantity of circulating shares after capital decrease.

- In case of capital increase by offering or issuance, the following documents shall also be included: The follow-on offering result report according to form No. 102 in the Appendix of Decree 155/2020/ND-CP and a written confirmation that the increase in capital has been frozen at the supervisory bank; the list of new investors (if any);

Form No. 102 Download 

- The latest annual financial statement which has been audited in accordance with Article 20 of the Law on Securities and the latest financial statement before the application is submitted.

- The prospectus and company’s charter (if revised).

Thus, to complete procedures for increasing charter capital in accordance with the law, investment companies need to prepare a full set of documents including many important documents.

Including the Form no. 94, resolution of the General Meeting of Shareholders, list of shareholders, most recent audited financial statements, offering results report and other related documents.

Best regards!

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