What is the charter capital of a joint-stock company? What is the minimum charter capital?

1. What is the charter capital of joint-stock companies?

In accordance with the Clause 34, Article 4 of the Enterprise Law 2020, charter capital is defined as follows:

Charter capital means the total value of assets which the members and owners of a company have contributed or committed to contribute upon establishment of a limited liability company or partnership; or the total par value of shares sold or registered to be purchased at the time of establishment of a joint stock company.

Accordingly, the Charter capital of a joint-stock company is the total par value of sold shares of assorted types.

Charter capital of a joint-stock company at the time of registration for enterprise establishment is the total par value of the shares of assorted types already registered for purchase and recorded in the company charter.

The Charter capital of a joint-stock company can be changed in the business activities. A joint-stock company must make the procedures for registration of changes in the contents of an enterprise registration certificate with the authorized agencies if having any changes in charter capital.

2. What is the minimum charter capital of joint-stock companies?

The amount of charter capital has not much effects on the business operations of an enterprise.

The Enterprise Law 2020 only prescribes that Shares and bonds of joint-stock companies may be paid for in Vietnam dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technology, technical know-hows, or other assets in Vietnam dong as prescribed at the Article 34.

Besides, there are no requirements on the minimum or maximum levels of charter capital.

Although there is no limitation for the registration of char, some special business lines must register the certain levels so as to satisfy the conditions in business activities.

Charter capital is one of the factors contributing to the reputation and responsibilities of the shareholders to customers and partners.

If the charter capital is low and too low, enterprise shall have difficulties in creating faith for customers and partners. High or very high charter capital can be easy to create the reputation and faith but cause the high responsibility and risks for shareholders.

3. How to increase or decrease the charter capital of a joint-stock company?

The increase or decrease in charter capital depends on the demands of each enterprise.

In accordance with the Article 51 of the Decree No. 01/2021/ND-CP on registration of change of charter capital, a joint-stock company must send a dossier for registration of changes in enterprise registration contents to the business registration division of the locality where its head office is based. 

Within that, a joint-stock company can register to change the contributed capital amounts and capital contribution ratio of the company’s members.

Currently, enterprises can easily take this procedure via the National Business Registration Portal