What is Legal Capital?

Statutory Capital is the minimum required capital for establishing an enterprise. The statutory capital is determined by a competent authority and varies depending on the specific business sector.

For example: The minimum statutory capital required for real estate business registration is 6 billion VND, and for security services, it is 2 billion VND.

Previously, the Enterprise Law 2005 stipulated conditions regarding statutory capital. However, as of now, the Enterprise Law 2014 has removed the determination of statutory capital to actualize the freedom to conduct business in all sectors not prohibited by law as stipulated in the 2013 Constitution. Nevertheless, specific statutory capital requirements remain clearly defined for certain industries to establish enterprises.

The statutory capital has the following characteristics:

- The statutory capital in Vietnam is determined according to specific business sectors;- The regulations on specific statutory capital in Vietnam are primarily established through sub-law documents issued by the executive authority;- While most countries around the world are tending to reduce the role and influence of statutory capital on enterprises, in Vietnam, statutory capital requirements are gaining traction again in many industries.- Throughout the business process, an enterprise’s capital ownership must not fall below the statutory capital;- Currently, some sectors are required to have statutory capital, such as banking operations, securities underwriting, insurance, security services, real estate business, debt collection services, etc. These regulations are outlined in specialized laws. For enterprises engaging in these sectors, the business registration dossier must include a document confirming the statutory capital from a competent authority or organization for that sector.

In practice, when registering to establish an enterprise, many people are still unclear about the concepts of charter capital and statutory capital. The Enterprise Law 2014 stipulates: “Charter capital is the total value of assets contributed or committed to be contributed by members when establishing a limited liability company, a partnership; it is the total nominal value of shares sold or registered for purchase when establishing a joint-stock company.”

See more regulations on charter capital here

Related Documents:

Real Estate Business Law 2014

Law on Credit Institutions 2010

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