Increase of charter capital

Reference situation:

A joint-stock company was established by 5 founding shareholders. The company would like to increase its charter capital from VND 5 billion to VND 10 billion to expand its business (each founding shareholder will contribute VND 1 billion). The company would like to consult lawyers about necessary documents and legal procedures relating to this.

Legal grounds:

  1. Law on Enterprise 2014;
  2. Decree No. 78/2015/NĐ-CP;
  3. Decree No. 108/2018/NĐ-CP;
  4. Circular No. 02/2019/TT-BKHĐT.

Our legal advice:

According to clause 29 Article 4 Law on Enterprise 2014: “Charter capital means the total value of assets contributed or undertaken to be contributed by members when establishing a limited liability company or partnership; or means the total aggregate par value of shares sold or registered for subscription when establishing an enterprise in the case of a joint-stock company.”

According to Article 122 Law on Enterprise 2014, a company can increase the number of shares that may be offered for sale and selling such shares during the course of operation in order to increase the charter capital. The offer to sell shares may be implemented by one of the following methods:

a) Offer for sale to existing shareholders;

b) Private share placement

c) Public offer for sale;

The company can select one of the three forms of increasing capital, as shown above. Each form will have different legal procedures.

Please click here to explore more about the procedures for changing the charter capital of a joint-stock company. 


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