Does a company need to register a change in charter capital when increasing its charter capital? What is the penalty for not registering a change in charter capital?

1. Does a company need to register a change in charter capital when increasing charter capital?

According to the provisions of Clause 1, Article 112 of the Enterprise Law 2020:

"Article 112. Capital of a joint stock company

1. The charter capital of a joint stock company is the total par value of all types of shares sold. The charter capital of a joint stock company upon registration for establishment of an enterprise is the total par value of all types of shares registered for purchase and recorded in the company's charter."

Thus, your company's charter capital is the total par value of all types of shares sold. If the current charter capital has changed compared to the time of business registration, your company needs to register a change in charter capital in the business registration certificate.

2. What documents are required to register for a change in charter capital?

Pursuant to Article 51 of Decree 01/2021/ND-CP, it is stipulated that:

"Article 51. Registration of changes to charter capital, capital contribution, and capital contribution ratio

1. In case a limited liability company, joint stock company, or partnership registers to change its charter capital, the company shall submit a dossier of registration of changes to the business registration contents to the Business Registration Office where the company has its head office. The dossier includes the following documents:

a) Notice of change in business registration contents signed by the legal representative of the enterprise;

b) Resolutions and decisions of the company owner for a single-member limited liability company; resolutions, decisions and meeting minutes of the Board of Members for a limited liability company with two or more members, a partnership company, and of the General Meeting of Shareholders for a joint stock company on changing the charter capital;

c) Document of the Investment Registration Authority approving the capital contribution, share purchase, and capital contribution purchase of foreign investors and foreign-invested economic organizations in cases where it is required to carry out procedures for registration of capital contribution, share purchase, and capital contribution purchase according to the provisions of the Investment Law.

2. In case the company registers to change the capital contribution, the capital contribution ratio of members of a limited liability company with two or more members, or of general partners of a general partnership, the company shall submit a dossier of registration of changes to the business registration contents to the Business Registration Office where the company has its head office. The dossier includes the following documents:

a) Notice of change in business registration contents signed by the legal representative of the enterprise;

b) List of members of a limited liability company with two or more members; list of members of a partnership, which does not include declarations of capital contributing members. The lists must include the signatures of members whose capital contribution has changed, and are not required to include the signatures of members whose capital contribution has not changed;

c) Transfer contract or documents proving completion of the transfer in case of transfer of capital contribution; Donation contract in case of donation of capital contribution;

d) Document of the Investment Registration Authority approving the capital contribution, share purchase, and capital contribution purchase of foreign investors and foreign-invested economic organizations in cases where it is required to carry out procedures for registration of capital contribution, share purchase, and capital contribution purchase according to the provisions of the Investment Law.

3. In case the General Meeting of Shareholders approves the offering of shares to increase charter capital, and at the same time assigns the Board of Directors to carry out the procedures for registering the increase in charter capital after the end of each share sale, together with the Notice specified in Point a, Clause 1 of this Article, the dossier for registering the increase in charter capital must include the following documents:

a) Resolution and copy of the minutes of the General Meeting of Shareholders on the offering of shares to increase charter capital, clearly stating the number of shares offered and assigning the Board of Directors to carry out the procedures for registering the increase in charter capital after the end of each share offering;

b) Resolution, decision and copy of minutes of the meeting of the Board of Directors of the joint stock company on registration of increase in charter capital of the company after the end of each share sale.

4. In case of charter capital reduction, the enterprise must commit to ensure full payment of debts and other financial obligations after the capital reduction. In case a limited liability company with two or more members reduces its charter capital according to the provisions in Point a and Point b, Clause 3, Article 68 of the Law on Enterprises, the dossier for registration of charter capital reduction must be accompanied by the most recent financial report at the time of the decision to reduce the charter capital.

5. After receiving the business registration dossier, the Business Registration Office shall issue a Receipt, check the validity of the dossier and issue a Business Registration Certificate to the enterprise."

3. In case your company is a joint stock company, the application for changing charter capital requires the following documents:

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

- Resolutions, decisions and minutes of the General Meeting of Shareholders for joint stock companies on changing charter capital;

- Document of the Investment Registration Authority approving the capital contribution, share purchase, and capital contribution purchase of foreign investors and foreign-invested economic organizations in cases where it is required to carry out procedures for capital contribution registration, share purchase, and capital contribution purchase according to the provisions of the Investment Law.