Vietnamese
Charter capital is an important consideration for foreign investors establishing a company in Vietnam. Determining the appropriate charter capital involves not only the capital contribution commitments of the owner, members or shareholders, but also the company’s financial capacity and compliance obligations.
- I. LEGAL FRAMEWORK OF CHARTER CAPITAL
- 1. What Is Charter Capital?
- 2. Capital Contribution Assets and Contribution Deadlines
- 2.1. Capital Contribution Assets
- 2.2 . Capital Contribution Deadlines
- 3. Legal Consequences of Failure to Make Full Capital Contributions or Comply with Capital Contribution Deadlines
- 4. Charter Capital and Statutory Capital
- II. CONCLUSION
Vietnamese law does not prescribe a universal minimum charter capital requirement applicable to all business sectors. Accordingly, investors should understand the regulations governing capital contribution assets, contribution deadlines, the legal consequences of failing to contribute the registered capital in full, and the distinction between charter capital and statutory capital.
I. LEGAL FRAMEWORK OF CHARTER CAPITAL
1. What Is Charter Capital?
Clause 34, Article 4 of the Law on Enterprises 2020 provides that: “Charter capital means the total value of assets contributed or committed to be contributed by the members or owner of a company upon establishment of a limited liability company or partnership; or the total par value of shares sold or registered for subscription upon establishment of a joint-stock company.”
For a limited liability company (LLC), charter capital is the total value of assets contributed or committed to be contributed by the owner or members upon establishment of the company[1]. For a joint-stock company, charter capital is the total par value of shares sold or registered for subscription upon establishment of the company in accordance with applicable laws.
For foreign investors, charter capital represents their financial commitment to a company in Vietnam. Accordingly, the registered amount should be consistent with the investors’ financial capacity, anticipated business needs, and relevant legal requirements. Charter capital should not be registered solely to satisfy company establishment formalities; investors should also consider their ability to fulfil their capital contribution obligations in practice.
2. Capital Contribution Assets and Contribution Deadlines
2.1. Capital Contribution Assets
Under Article 34 of the Law on Enterprises 2020, capital contributions may be made in Vietnamese dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how and other assets capable of being valued in Vietnamese dong.
The contributor must be the lawful owner of the contributed asset or have the lawful right to use such asset. Capital contributions in the form of assets must comply with applicable regulations on asset valuation and the transfer of ownership or usage rights, where required.
2.2 . Capital Contribution Deadlines
The deadlines for capital contributions vary depending on the type of company, as follows:
No. | Type of Company | Capital Contributor | Capital Contribution Deadline | Notes |
1 | Single-member limited liability company | The company owner | Within 90 days from the date of issuance of the Enterprise Registration Certificate. | The period required to transport or import contributed assets and complete administrative procedures for transferring ownership of such assets is excluded from the 90 days |
2 | Multi-member limited liability company | All of the company members | Members must contribute the full amount of capital committed and in the form of assets as committed. A member may contribute capital in a form different from that originally committed only with the approval of more than 50% of the remaining members | |
3 | Joint-stock company | Shareholders subscribing for shares | Within 90 days from the date of issuance of the Enterprise Registration Certificate, unless a shorter period is specified in the company’s Charter or the share subscription agreement. | The time required to transport or import contributed assets and complete administrative procedures for transferring ownership of such assets is excluded from the 90 days, as prescribed by law. |
3. Legal Consequences of Failure to Make Full Capital Contributions or Comply with Capital Contribution Deadlines
Failure to contribute the full registered charter capital and failure to make capital contributions within the prescribed deadlines are closely related. Where the owner, members or shareholders fail to fulfil their capital contribution commitments in full by the applicable deadline, Vietnamese law provides for the following consequences depending on the type of company:
Type of Company | Failure to Contribute the Full Registered Charter Capital | Failure to Comply with Capital Contribution Deadlines |
Single-member limited liability company | The owner must register an adjustment to the charter capital to reflect the actual amount contributed. The owner remains liable for the company’s financial obligations incurred before the adjustment is registered, to the extent of the capital contribution committed.
| The owner must complete the charter capital adjustment procedure within 30 days from the last day of the capital contribution deadline. |
Multi-member limited liability company | A member who has not made any capital contribution as committed automatically ceases to be a member. A member who has contributed only part of the committed amount is entitled to rights corresponding to the amount actually contributed. The un-contributed capital may be offered for sale in accordance with a resolution of the Members’ Council. | The company must register adjustments to its charter capital and the capital contribution ratios of its members to reflect the actual amounts contributed within 30 days from the last day of the capital contribution deadline. |
Joint-stock company | A shareholder who fails to pay for the shares subscribed for ceases to be a shareholder and is not entitled to transfer the right to subscribe for those shares. A shareholder who has only partially paid for the subscribed shares is entitled to rights corresponding to the number of shares paid for. Unpaid shares are treated as unsold shares and may be offered for sale by the Board of Directors.
| The company must register an adjustment to its charter capital to reflect the total par value of the shares paid for within 30 days from the expiry of the payment deadline, unless all unpaid shares have been sold within this period. |
In addition to the consequences relating to membership status, shareholder rights and financial liability described above, certain acts involving capital contributions and charter capital registration may also be subject to administrative penalties, as follows:
Violation | Principal Penalty | Remedial Measure |
Falsely declaring charter capital[2]
| A fine ranging from VND 20 million to VND 100 million, depending on the amount of charter capital falsely declared. | Compulsory registration of an adjustment to the charter capital to reflect the actual amount contributed. |
Failure to register an adjustment to charter capital or changes to founding members or shareholders where required by law[3] | A fine ranging from VND 30 million to VND 50 million.
| Compulsory completion of the procedures for adjusting charter capital or registering changes to founding members or shareholders |
4. Charter Capital and Statutory Capital
Charter capital and statutory capital are two distinct concepts.
Charter capital is the amount of capital registered by the owner, members or shareholders in accordance with applicable law and committed to be contributed or paid up, depending on the type of company. In general, enterprises may determine their charter capital based on their operational needs and financial capacity, unless relevant sector-specific legislation provides otherwise.
Statutory capital refers to the minimum amount of capital that an enterprise must satisfy when conducting business in certain conditional business sectors, as prescribed by sector-specific legislation. This requirement does not apply universally to all enterprises and may vary depending on the sector, type of business activity, and applicable regulations at the relevant time.
Accordingly, before establishing a company in Vietnam, foreign investors should review the market access conditions and sector-specific requirements applicable to their intended business activities. Investors should not assume that every enterprise is subject to the same minimum capital requirement or rely on capital thresholds found in older regulations without first verifying whether those regulations remain in force.
II. CONCLUSION
Charter capital is not merely an item of information registered with the business registration authority. It also reflects an investor’s financial commitment and is closely linked to the company’s legal obligations during its operation. Proper preparation and assessment of the matters discussed above can help investors mitigate risks relating to capital contribution obligations, ownership structure, and legal compliance when establishing and operating a business in Vietnam.
When establishing a company in Vietnam, foreign investors should:
✅ Determine charter capital that is appropriate to their financial capacity and actual business needs.
✅ Ensure that capital contribution assets are lawfully owned or used, capable of valuation, and transferable in accordance with applicable requirements.
✅ Fulfil capital contribution obligations within the prescribed deadlines and complete the necessary adjustment procedures where required.
✅ Verify any minimum capital requirements or financial conditions imposed by sector-specific legislation.
[1] Article 47.1 and Article 75.1 Law on Enterprise 2020
[2] Article 47 Decree No. 122/2021/ND-CP
[3] Article 46.3.a Decree No. 122/2021/ND-CP
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The article is written by experts from Asia Legal – a law firm with many years of experience in mergers and acquisitions (M&A), capital markets, foreign investment, mining and energy, real estate, labor, personal data protection, and dispute resolution.
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