Companies may need to increase their chartered capital to keep up with their development. Today, we will guide you through the detailed procedure for increasing the chartered capital of your company or enterprise.
1 What is the procedure for changing chartered capital?
The procedure for changing chartered capital includes two main forms: increasing and decreasing chartered capital to suit the development needs of the business. When adjusting chartered capital, companies need to register to change the contents of their business registration certificates.
According to the Enterprise Law 2020, Decree No. 01/2021/ND-CP, and Circular No. 01/2021/TT-BKHDT, the following is the procedure for changing the chartered capital of different company models:
For a Multi-Member LLC
To increase the chartered capital, a multi-member LLC must meet certain conditions, such as increased capital contributions from members or the acceptance of new members’ capital contributions.
A multi-member LLC must meet the following conditions to be able to increase its chartered capital:
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Increased capital contributions from members.
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Acceptance of new members’ capital contributions.
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Adjustment of the chartered capital corresponding to the increase in the company’s asset value.
The documents required for increasing the chartered capital of a multi-member LLC include:
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Application for business registration changes.
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Decision to increase capital by the Members’ Council.
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Minutes of the Members’ Council meeting.
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Confirmation of new members’ capital contributions.
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Certified true copies of new members’ personal identification documents.
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Power of attorney for the organization or individual carrying out the procedure.
For a Single-Member LLC
A single-member LLC has the right to increase its chartered capital if the owner invests more capital or mobilizes additional capital contributions from others.
A single-member LLC can increase its chartered capital in the following cases:
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The owner invests more capital.
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The owner mobilizes additional capital contributions from others.
The documents required for increasing the chartered capital of a single-member LLC include:
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Application for business registration changes.
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Decision of the company owner to increase the chartered capital.
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Power of attorney for the organization or individual carrying out the procedure.
For a Joint-Stock Company
A joint-stock company needs to increase the number of shares it is entitled to offer to be able to increase its chartered capital.
According to the Enterprise Law 2014, a joint-stock company needs to increase the number of shares it is entitled to offer and sell those shares during its operation to be able to increase its chartered capital.
The offering of shares must comply with the provisions of securities law and can be done in one of the following forms:
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Offering to existing shareholders.
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Private placement of shares.
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Public offering of shares.
The documents required for increasing the chartered capital of a joint-stock company include:
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Application for business registration changes.
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Decision to increase capital by the General Meeting of Shareholders.
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Minutes of the General Meeting of Shareholders on increasing the chartered capital.
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Confirmation of new members’ capital contributions.
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Certified true copies of new members’ personal identification documents.
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Power of attorney for the organization or individual carrying out the procedure.
For reference:
2 What is the procedure for changing (increasing) the company’s charter capital?
For an LLC
An LLC needs to go through 3 steps to complete the procedure for increasing its chartered capital.
The company must prepare a complete set of documents and submit them to the Business Registration Office of the Provincial Department of Planning and Investment.
The Business Registration Office will examine the legality of the documents and complete the procedure for changing the company’s chartered capital within 3-5 days.
If the application is rejected, the Business Registration Office will notify the company in writing, stating the reasons for the rejection and any requests for amendments or supplements to the business registration application.
The company needs to prepare a complete set of documents and submit them to the Business Registration Office of the Provincial Department of Planning and Investment.
Upon completion of the business registration change procedure, the company will receive two types of documents:
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Business Registration Certificate, including 5 contents: company name, head office address, chartered capital, list of members, and legal representative.
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Confirmation of business registration information changes, including the following contents: business lines, authorized representative, tax registration information, and information about the company’s management.
The fee for changing the business registration contents or re-issuing the business registration certificate is 100,000 VND.
Note: All sample documents must be typed, not handwritten.
Within 30 days from the date of change, the company must publicize information about the change on the National Business Registration Portal.
After the company completes the procedure for publicizing information, the Business Registration Office of the Provincial Department of Planning and Investment will issue a Receipt for Publicizing Business Registration Information to the company.
Publicizing information about the change in chartered capital on the National Business Registration Portal is free of charge.
Declare Form 08, declare the business license tax, and pay the additional business license tax (Source: Internet)
If the company’s capital increase results in a higher business license tax, the company needs to complete the following procedures:
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Declare and submit Form 08.
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Submit a supplementary declaration of business license tax.
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Supplementary declaration of business license tax in accordance with the law: “If the taxpayer has any changes in the factors related to the basis for calculating the tax that affect the amount of business license tax to be paid for the following year, a tax declaration must be submitted for the following year, the deadline for tax declaration is December 31 of the year in which the change occurs.“
The business license tax that an LLC must pay ranges from 1,000,000 to 3,000,000 VND/year.
For a Joint-Stock Company
A joint-stock company needs to go through 5 steps to complete the procedure for increasing its chartered capital.
Shareholders must agree on a method for increasing the company’s chartered capital before making a decision.
The company must prepare a complete set of documents for increasing the chartered capital as mentioned in the “Documents and procedure for increasing the chartered capital of a joint-stock company” section and submit them to the Business Registration Office of the Provincial Department of Planning and Investment where the company’s head office is located.
The receiving agency will examine the legal nature of the documents. If the documents are valid and comply with the regulations, the agency will issue a Receipt to the company within 3-5 days. If the application is rejected, the company will receive a written response from the agency.
Upon completion of the procedure, the company will receive two types of documents: Business Registration Certificate and Confirmation of business registration information changes.
The fee for changing the business registration contents or re-issuing the business registration certificate is 100,000 VND.
The company must publicize information about the change on the National Business Registration Portal within 30 days from the date of the change.
After the company successfully completes this procedure, the Business Registration Office of the Provincial Department of Planning and Investment will issue a Receipt for Publicizing Business Registration Information to the company.
Form No. 08, supplementary declaration of business license tax (Source: Internet)
If the adjustment of the company’s chartered capital results in a higher business license tax, the company needs to complete the following procedure:
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Declare and submit Form No. 08.
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Submit a supplementary declaration of business license tax.
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Supplementary declaration of business license tax in accordance with the law: “If the taxpayer has any changes in the factors related to the basis for calculating the tax that affect the amount of business license tax to be paid for the following year, a tax declaration must be submitted for the following year, the deadline for tax declaration is December 31 of the year in which the change occurs.“
The business license tax that a joint-stock company must pay ranges from 1,000,000 to 3,000,000 VND/year.
Note:
According to the current Enterprise Law, from July 1, 2015, when a company makes any changes to the contents of its Business Registration Certificate, the Business Registration Certificate will only record 4 contents: company name, head office address, chartered capital, and legal representative.
Other contents such as business lines, authorized representative, founding shareholders, foreign investor shareholders, tax registration information, and information about the company’s management will be recorded on the Confirmation of business registration information changes.
Within 90 days from the date of being issued a business registration certificate with the content of increasing the
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