PROCEDURES FOR CHANGING ENTERPRISE CHARTER CAPITAL

1. Legal basis

- Enterprise Law 2020

- Decree 01/2021/ND-CP

2. What is charter capital?

- Pursuant to the provisions of Clause 34, Article 4 of the Enterprise Law 2020

“Charter capital is the total value of assets contributed or committed to be contributed by company members and owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered to buy when establishing a joint stock company.”

- In addition, Clause 18, Article 4 of the Enterprise Law 2020 has regulations on charter capital contribution:

“Capital contribution is the contribution of assets to form the charter capital of a company, including capital contribution to establish a company or additional charter capital of an already established company.”

- During operation, after registering charter capital, businesses can continue to change charter capital depending on needs. Increasing or reducing charter capital plays an important role in changing the scale and financial capacity of that enterprise

3. Procedures for changing the charter capital of an enterprise

a. File:

Pursuant to Clause 1, Article 51 of Decree 01/2021/ND-CP

- Limited liability companies, joint stock companies, partnerships register to change charter capital, the company sends registration documents to change business registration content to the Business Registration Office where the company is located. headquarters. The dossier includes the following documents:

- Notice of change in business registration content signed by the legal representative of the enterprise.

- Resolutions and decisions of the company owner for one-member limited liability companies; Resolutions, decisions and meeting minutes of the Board of Members for limited liability companies with two or more members, partnerships, and the General Meeting of Shareholders for joint stock companies on capital changes regulations.

- Document from the Investment Registration Authority approving the capital contribution, share purchase, purchase of capital contribution of foreign investors, economic organizations with foreign investment in cases where formalities must be carried out. Procedures for registering capital contribution, purchasing shares, purchasing capital contributions according to legal regulations.

b. Procedure:

Step 1: Submit application

- Enterprises submit documents to change the company's charter capital to the Business Registration Office - Department of Planning and Investment where the enterprise is headquartered.

Step 2: Receive and process documents

- After receiving the business registration dossier, the Business Registration Office issues a Receipt, checks the validity of the dossier and issues a Business Registration Certificate to the enterprise.

- Within 3 working days from receipt of complete and valid documents. The Business Registration Office carries out procedures to change the charter and issue a Business Registration Certificate to the enterprise.

Step 3: Return results

- Enterprises bring the receipt to the one-stop department of the Business Registration Office to receive a new Business Registration Certificate.

- In case of online application, businesses need to submit additional original paper documents if submitting by business registration account, submit receipts and fee receipts to get results if submitting by public digital signature.

c. Competent authority to resolve

Business Registration Office - Department of Planning and Investment where the enterprise is headquartered

d. How to submit:

 - Method 1. Submit application directly to the Business Registration Office - Department of Planning and Investment where the enterprise is headquartered.

- Method 2. Submit online application at the National Information Portal at the address

https://dangkylanhdoanh.gov.vn (use digital signature or Business Registration Account)

e. Resolution deadline

- Within 03 (three) working days from the date of receipt of complete and valid documents.

4. Notes after changing the charter capital of an enterprise

- Pursuant to Clause 3, Article 32 of the Law on Enterprises 2020: After registering a change in charter capital, the enterprise must announce the change information on the national business information portal within 30 days from the date of change.

- Pursuant to Clause 3, Article 31 of the Enterprise Law 2020: One-member LLC, in case of increasing charter capital by mobilizing additional capital contributions from others, the company must organize company management according to one of two types. image:

+ LLC with two or more members and the company must change the business registration content within 10 days from the date of completing the change of charter capital

+ Joint stock company as prescribed in Article 202 of the Enterprise Law 2020

- After changing the charter capital of an enterprise that changes the license tax rate, the enterprise must submit a license tax declaration before December 31 of the same year. In the case of increasing charter capital and changing the level of license tax payment, the enterprise must pay additional license tax.

- As per the regulations outlined in Decree No. 139/2016/ND-CP and Circular No. 303/2016/TT-BTC, the applicable rates for business license tax depend on the form of the organization's production and business activities, as well as the registered capital stated in the Business Registration Certificate. Specifically:

• Enterprises with registered capital exceeding 10 billion VND are subject to an annual tax of 3,000,000 VND.
• Enterprises with registered capital of 10 billion VND or less are required to pay an annual tax of 2,000,000 VND.
• Branches, representative offices, business locations, public service units, and other economic organizations are subject to an annual tax of 1,000,000 VND.

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For more information, please contact:

Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

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Attention: This legal update is not an advice and should not be treated as such.