Updated at 26/07/2022 - 11:20 am
Below are detailed instructions on choosing the charter capital level, how to contribute charter capital, time limit for capital contribution, and regulations on charter capital of the enterprise.
1. Understanding the charter capital of the enterprise #
Authorized capital is the total value of assets contributed or committed by the company's members and owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered for purchase upon the establishment of a joint stock company.
+ For a one-member limited liability company: The company owner is responsible for the company's debts and other property obligations. within the amount of charter capital of the company.
+ For a limited liability company with two or more members: The member is responsible for the debts and other property obligations of the enterprise to the extent the amount of capital contributed to the business (Generally the charter capital).
+ For joint-stock companies: Shareholders are only responsible for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise.
Thus, it can be seen that the "business owners" are responsible for a maximum of the company's charter capital. Therefore, if there is no specific need, the registration of a higher charter capital than necessary increases the liability unnecessarily.
2. How to calculate charter capital #
To calculate a reasonable level of charter capital that should be registered for an enterprise, you can apply the following calculation method:
Registered charter capital = Fixed capital requirement + Working capital requirement + Capital reserve
You set up a trading business, importing food for consumption in Vietnam.
- Your initial investment: 200 million VND
- Working capital 1 month approx = Value of inventory + Receivables (Amount owed to customers) – Payables (Amount not yet paid to sellers) = approx 1 billion
- Other monthly working capital needs (office, electricity, water, reception, salary, social insurance ...) is 200 million
- You want a capital reserve of about 30%
The amount of charter capital you should register is: (200 million + 1 billion + 200 million) x 130% = 1,82 billion dong.
The registration of the charter capital level is not reasonable, lower than the demand level, leading to having to borrow personal loans (business owners) to compensate.
Currently, with the regulations on related-party transactions, arising transactions between business owners and enterprises, or too high a bank loan may cause enterprises to fall into the case of associated transactions (transfer pricing). , now, 3 problems arise for businesses:
i. Transfer pricing reports must be submitted to tax authorities.
ii. Controlled interest expenses are included in deductible expenses when calculating corporate income tax.
iii. Possibility of linked transaction inspection.
3. Regulations on charter capital contribution #
The time limit for charter capital contribution is the time limit for fully contributing charter capital.
+ The company owner must have enough capital for the company and the right type of assets as committed when registering for business establishment within 90 days from the date of being granted the Certificate of Business registration.
+ A member must contribute capital to the company in full and with the right type of assets committed when registering for business establishment within 90 days from the date of being granted the Certificate of Business Registration.
+ Shareholders must pay in full for the number of shares registered to buy within 90 days from the date of issuance of the Certificate of Business Registration.
Thus, the time limit for fully contributing charter capital is within 90 days from the date of issuance of the enterprise registration certificate.
Circular 09/2015/TT-BTC guiding Article 6 of Decree 222/2013/ND-CP on payment in cash of the Ministry of Finance stipulates:
Article 3. Forms of payment in capital contribution transactions and purchase, sale and transfer of capital contributions to other enterprises
1. Businesses that do not use cash (paper money, metal money issued by the State Bank) for payment when performing transactions capital contribution and purchase, sale and transfer of capital contribution to other enterprises.
2. When conducting capital contribution transactions and buying and selling, transferring capital contributions to other enterprises, enterprises shall use the following forms:
a) Pay in Czech;
b) Payment by payment authorization - money transfer;
c) Other forms of non-cash payment in accordance with current regulations.
3. Enterprises when performing capital contribution transactions and buying, selling and transferring capital contributions to other enterprises with assets (not in cash) shall comply with the law on enterprises.
Based on the above provisions, enterprises are not allowed to use cash when contributing capital, buying, selling or transferring capital contributed to enterprises. The above regulations are not mandatory for individuals when contributing capital to enterprises.”
Thus, enterprises can apply the Regulation on charter capital contribution as follows:
- Enterprises using their own capital to invest capital in other enterprises: No cash
- Individuals contributing capital to the enterprise: You can use cash or by bank
Although it is possible to contribute capital in cash to businesses, however, cash contribution contributes to the following issues:
- Must check big money
- There is a risk of counterfeit money
- The receipts must be stored carefully, if the loss will greatly affect the business when it proves to contribute sufficient capital to the tax authorities, the state and shareholders.
- Signature must be checked accurately on the receipt, must be 5 signatures
- If the company has 1 members, the reliability is not high
- The retention of large amounts of money is at risk
- If auditing is required, the proof of capital contribution is very complicated and difficult
- Low reliability
With the above risks, the decision to receive capital contribution in cash should be carefully considered. If the cash capital contribution is not done properly, leading to not being accepted as having contributed enough capital, what are the consequences for the enterprise:
- It is not allowed to calculate loan interest on expenses when calculating corporate income tax if not contributing enough charter capital
- Violation of enterprise law on capital contribution
- Can not prove financial capacity with partners and shareholders
For one member limited liability company:
If the charter capital is not fully contributed within the prescribed time limit, within 30 days from the last day on which the charter capital must be fully contributed, the owner must register a change in the charter capital of the Company equal to the value of the charter capital. contributed capital;
During the time before the last date the company registers to change its charter capital, the owner shall be responsible in proportion to the committed capital contribution for the arising financial obligations of the company;
The owner of the company is responsible with all his assets for the financial obligations of the company, for damage caused by failure to contribute, not fully contributing, or failing to contribute on time the charter capital as prescribed.
For LLCs with two or more members:
After the prescribed time limit, if a member still has not contributed capital or has not fully contributed the committed capital contribution, the member shall be handled as follows:
a) A member who has not yet contributed capital as committed is automatically no longer a member of the company;
b) The member who has not yet fully contributed the committed capital contribution has the rights corresponding to the contributed capital;
c) The uncontributed capital portion of the members is offered for sale according to the resolution or decision of the Members' Council.
When a member has not contributed capital or has not fully contributed the committed capital, within 30 days from the last day on which the capital contribution must be fully contributed as prescribed, the Company must register for a change in the charter capital, the ratio capital contribution of members is equal to the amount of capital contributed.
In the time before the date the company registers to change the charter capital and the proportion of members' contributed capital, the members who have not contributed capital or have not fully contributed the committed capital amount shall be responsible in proportion to the capital share ratio. committed contributions to the company's financial obligations arising.
For Joint Stock Company:
In case after the prescribed time limit, the shareholder has not paid or can only pay a part of the number of shares registered to buy, the following provisions shall be followed:
a) A shareholder who has not yet paid for the number of shares registered to buy is automatically no longer a shareholder of the company and may not transfer the right to buy such shares to another person;
b) Shareholders only pay part of the number of shares registered to buy with voting rights, receive dividends and other rights in proportion to the number of paid shares; may not transfer the right to purchase unpaid shares to another person;
c) Unpaid shares are considered unsold shares and the Board of Directors is entitled to sell;
d) Within 30 days from the end of the time limit for paying in full for the number of shares registered to buy, the company must register to adjust the charter capital equal to the par value of the number of shares already paid in full, except for the following cases: in case unpaid shares have been sold out within this time limit; register to change founding shareholders.
Within the period before the date the company registers to adjust the charter capital as prescribed, the shareholder who has not paid or has not fully paid for the number of shares registered to buy shall be responsible for the total par value of the registered shares. purchase for the company's financial obligations arising.
Members of the Board of Directors and legal representatives shall be jointly responsible for any damage arising from failure to comply with or not comply with regulations.
Regulations on sanctioning of administrative violations in the field of planning and investment:
Violation of the deadline for registration of changes to the enterprise registration certificate:
1. Warning for acts of violating the time limit for registration of changes in contents of the enterprise registration certificate beyond the prescribed time limit from 01 day to 10 days.
2. Fine from 3.000.000 VND to 5.000.000 VND for acts of violating the time limit for registration of changes in contents of the enterprise registration certificate beyond the prescribed time limit from 11 day to 30 days.
3. Fine from 5.000.000 VND to 10.000.000 VND for acts of violating the time limit for registration of changes in contents of the enterprise registration certificate beyond the prescribed time limit from 31 day to 90 days.
4. Fine from 10.000.000 VND to 20.000.000 VND for acts of violating the time limit for registration of changes in contents of the enterprise registration certificate beyond the prescribed time limit from 91 days or more.
5. Fine from 20.000.000 VND to 30.000.000 VND for the act of not registering to change the contents of the Certificate of Business Registration.
6. Remedial measures: Forced registration to change the contents of the Certificate of Business Registration.
- Decree No. 122/2021/ND-CP takes effect from January 01, 01;
- Enterprise Law 2020; effective from 01/01/2021;