Company charter is required upon enterprise registration of establishment, so what is the company charter? what are the contents of the company charter?
1. What is the company charter?
The company charter means the agreement among the company’s owners/founders or between founders and capital contributors with the aim to make the commitment among members in general provisions, agreement on the establishment, capital contribution, organization structure, management, and activities....
In particular, the company charter is the Constitution of each enterprise. In accordance with Clause 1, Article 24, Law on Enterprise No. 59/2020/QH14, the charter company includes:
- The charter upon enterprise registration
- The charter is revised in the process of operation.
2. 13 compulsory contents in the company charter
Although there is no general definition of the company charter, the company charter must include the contents prescribed in Clause 2, Article 24, Law on Enterprise as follows:
1. Name and head office address of the company; name(s) and address(es) of branch(es) and representative office(s), if any;
2. Business lines;
3. Charter capital; total number of shares, types of shares and par value of shares of each type, for a joint stock company;
4. Full names, contact addresses and citizenship of general partners, for a partnership; of the company owner and members, for a limited liability company; or of founding shareholders, for a joint stock company; Contributed capital amount of each member and its value, for a limited liability company or partnership; number of shares, types of shares, and par value of shares of each type of founding shareholders, for a joint stock company;
5. Rights and obligations of members, for a limited liability company or partnership; or of shareholders, for a joint stock company;
6. Management organization structure;
7. Number and title of managers and rights and obligations of the at-law representative of the company; division of rights and obligations of at-law representatives, in case the company has more than one at-law representative;
8. Procedures for adoption of the company’s decisions; principles for the resolution of internal disputes;
9. Bases and methods of determining wages, remuneration, and bonuses for managers and supervisors;
10. Circumstances in which a member or shareholder is entitled to request the company to redeem its/his/her contributed capital amount, for a limited liability company, or redeem its/his/her shares, for a joint stock company;
11. Principles of distribution of after-tax profits and handling of losses in business operations;
12. Cases of dissolution, procedures for dissolution, and procedures for liquidation of the company’s assets;
13. Procedures for revision of the company charter.
3. Principles when building the company charter
3.1. Must not detect illegal acts/infringe upon the interests of the third parties
This is the first primary principle when composing the company charter.
Laws have open regulations that the company charter can be adjusted to be suitable with the orientation and specific business operation but must be within the general legal framework and corridors and not be contrary to the law provisions of Enterprise Law, Tax Laws, Law on Accounting, Labor Code...
3.2. Voluntary and agreed within the legal framework
The company charter is constructed on a voluntary basis and agreements come first, members/shareholders must have agreement and discussion among members/shareholders when composing or amending, and supplementing company charters.
3.3. Must ensure full main contents in accordance with law provisions
Clause 2, Article 24, Enterprise Law 2020 prescribes the principal contents in the company charter, so the above contents must be included in the company charter.
These contents are very important for the company’s organization and operations so Enterprise Law requires the company charter to include these contents.
3.4. Must have approvals from founding shareholders
Clause 3, Article 25, Enterprise Law prescribes that the company charter must include the full names, and signatures of the members as follows:
- General partners, for a partnership
- The individual company owner or at-law representative of the institutional company owner, for a single-member limited liability company;
- Individual members and at-law representatives or authorized representatives of institutional members, for a limited liability company with two or more members;
- Individual founding shareholders and at-law representatives or authorized representatives of institutional founding shareholders, for a joint stock company.
The company charter is constructed based on the approval of all company's founders, not only the signature on the company charter.