What are penalties for enterprises when declaring false charter capital in Vietnam?

1. What are penalties for enterprises when declaring false charter capital in Vietnam? 

Pursuant to Article 16 of the Enterprise Law 2020 stipulates the following prohibited acts:

1. Issuing or refusing to issue the Certificate of Enterprise registration against regulations of this Law; requesting the founder to submit additional documents against regulations of this Law; delaying, obstructing, harassing enterprise founders and business operation of enterprises.

2. Obstructing the enterprise’s owner, members/partners/shareholders from performing their rights and obligations prescribed in this Law and the enterprise’s charter.

3. Doing business as an enterprise without applying for enterprise registration; carrying on busines operation after the Certificate of Enterprise Registration has been revoked or while the enterprise is being suspended.

4. Providing dishonest or incorrect information in the enterprise registration application or application for changes to enterprise registration information.

5. Declaring false charter capital; failure to contribute adequate charter capital as registered; deliberate contribution of assets with false value.

6. Engaging in banned business lines or business lines from which foreign investors are banned; engaging in restricted business lines without fulfillment of conditions or failure to maintain fulfillment of conditions during operation in restricted business lines.

7. Frauds, money laundering, terrorism financing.

In Article 47 of Decree 122/2021/ND-CP, violations against regulations on declaration of charter capital are as follows:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. Remedial measures: The violator is compelled to declare the actual charter capital, which equals the actually contributed capital if any of the violations specified in Clauses 1 through 5 of this Article is committed.

According to Clause 2, Article 4 of Decree 122/2021/ND-CP stipulating fine levels:

2. The fines for administrative violations specified in this Decree are imposed upon organizations (except for the fines for violations specified in Point c Clause 2 Article 28; Points a and b Clause 2 Article 38; Article 62 and Article 63 of this Decree, which are imposed upon individuals). For the same violation, the fine incurred by an individual is 1/2 (half) that incurred by an organization.

Thus, according to the above provisions, the declaring false charter capital in Vietnam is a prohibited act. If any enterprise has acts of declaring false charter capital in Vietnam, it may be fined up to 100,000,000 VND. The amount of the fine depends on the overstated capital value. In addition, enterprises are required to register to adjust their charter capital equal to the actual contributed capital.

2. Is the charter capital listed in the company's charter in Vietnam? 

Pursuant to Clause 2, Article 24 of the Enterprise Law 2020, the company charter includes the following main contents:

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;

m) Procedures for revising the company's charter.

Therefore, according to the above provisions in the content of the company's charter, charter capital is included in Vietnam.

Best Regards!