What is the difference between charter capital and voting capital in Vietnam?

What is the difference between charter capital and voting capital in Vietnam?

Clause 33 and Clause 34, Article 4 of the Enterprise Law 2020 defines:

- “voting capital” means the stake or share that endows the holder the right to vote on the issues within the jurisdiction of the Board of Members or General Meeting of Shareholders.

- “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.

Thus, charter capital and voting capital will be different.

- Charter capital is the total value of assets that have been contributed or promised by the members and owners when establishing the company.

- Unlike charter capital, when owning voting capital, the holder has the right to vote on the issues within the jurisdiction of the Board of Members or General Meeting of Shareholders.

What is the difference between charter capital and voting capital in Vietnam? (Image from the Internet)

What is the implementation of increasing, decreasing charter capital of a multiple-member limited liability company in Vietnam?

Pursuant to Article 68 of the Enterprise Law 2020, regulating increasing, decreasing charter capital of a multiple-member limited liability company:

1. A company may increase its charter capital in the following cases:

a) Increase in the members’ capital contribution;

b) Receipt of capital contribution from new members.

2. In case of increase in the members’ capital contribution, the increase will be distributed among the members in proportion to their holdings in the company. Members may transfer their right to contribute capital to other persons in accordance with Article 52 of this Law. In case a member does not contribute or fully contribute that member’s share of additional capital as distributed, the remainder shall be divided among other members in proportion to their holdings in the company unless otherwise agreed by the members.

3. A company may decrease its charter capital in the following cases:

a) The company returns part of the contributed capital to the members in proportion to their holdings in the company 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;

b) The company repurchases the members’ stakes as prescribed in Article 51 of this Law;

c) Charter capital is not fully and punctually contributed by the members as prescribed in Article 47 of this Law.

4. In the case specified in Point c Clause 3 of this Article, within 10 days from the day on which the increase or decrease in charter capital is complete, the company shall send a written notification to the business registration authority. Such a notification shall contain the following information:

a) The company’s name, EID number, headquarter address;

b) The charter capital, the increase or decrease;

c) Time and method of increase or decrease;

d) Full names and signatures of the company’s legal representatives.

5. The notification mentioned in Clause 4 of this Article shall be enclosed with the resolution or decision and the minutes of the meeting of the Board of Members and, in case of charter capital decrease specified in Point a and Point b Clause 3 of this Article, the latest financial statement.

6. The business registration authority shall update information about the increase or decrease in charter capital within 03 working days from the day on which the notification is received.

Best regards!