How much capital is needed to establish a company in Vietnam?
Me and my friend want to establish a company. How much capital do we need?
Pursuant to Clause 34 Article 4 of the Law on Enterprises in 2020 stipulating as follows:
Charter capital means the total value of assets that have been contributed or promised by the members/partners/owners when the limited liability company or partnership is established; or the total of nominal values of the sold or subscribed shares when a joint stock company is established.
In addition, the Law on Enterprises in 2020 does not specify the specific amount of capital required to establish a company.
Therefore, the determination of the charter capital of a newly established company will depend on the financial capacity of the members of the joint stock company, the purpose of operation, and the field of operation. In the case of you who want to establish a company, determine the charter capital based on the following factors, for example:
- Financial capacity;
- The field of operation of the company;
- The scope, scale, and type of activities of the company;
- Estimated budget for the actual activities of the company after establishment;
However, you need to note that if your company operates in business lines with conditions on the legal capital or requires a deposit, the charter capital of the company must be at least the legal capital or meet the deposit requirements as stipulated by law.
How much capital is needed to establish a company in Vietnam? - Source: Internet
When can a single-member limited liability company in Vietnam reduce its charter capital?
I have a question. When can a single-member limited liability company in Vietnam reduce its charter capital?
Pursuant to Clause 3 Article 87 of the Law on Enterprises in 2020 stipulating increasing, decreasing charter capital as follows:
A single-member limited liability company may decrease its charter capital in the following cases:
- Part of the contributed capital is returned to the company’s owner after the company has operated for at least 02 consecutive years from the enterprise registration date and the company is able to fully pay its debts and other liabilities after the return of capital;
- Charter capital is not fully and punctually contributed by the owner as prescribed in Article 75 of this Law.
Above are cases in which a single-member limited liability company in Vietnam may reduce its charter capital.
How to handle the case of not contributing enough capital to a limited liability company in Vietnam?
I am a member of a multi-member limited liability company. I would like to ask about the case where some members contribute capital to the company but after 90 days of contribution, they do not contribute enough of the amount they initially committed. How to handle the case of not contributing enough capital to a limited liability company in Vietnam?
Pursuant to Clause 2 Article 47 of the Law on Enterprises in 2020 stipulating capital contribution to establish the limited liability company as follows:
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.
After the above period of time, if there are still members who have not contributed capital or have not contributed enough of the capital they have committed, they will be dealt with in accordance with Clause 3, Article 47 of the Law on Enterprises in 2020 as follows:
- Members who have not contributed capital as committed are automatically no longer members of the company.
- Members who have not contributed enough of the capital they have committed have the rights corresponding to the capital they have contributed.
- The uncontributed capital of the members is offered for sale according to the resolution or decision of the Board of Members.
Therefore, in the case where capital is contributed to a multi-member limited limited liability company and after 90 days, the capital is not fully contributed, it will be dealt with in accordance with the above 3 cases.