Regulations on increasing and decreasing charter capital for one-member limited liability companies

The Enterprise Law 2020 has no regulations on the minimum or maximum charter capital of enterprises. Therefore, in the course of operation, depending on the actual needs, the owner can increase or decrease the charter capital for a one-member limited liability company. This article of TASCO will provide more specific information to customers about the increase and decrease of charter capital.

1. Regulations on charter capital for one-member limited liability companies:

🔅 The Charter capital of a one-member limited liability company when registering for business establishment is the total value of assets committed to contributing by the company's owner and stated in the company's charter.

🔅 The owner of the company is responsible with all his assets for the financial obligations of the company, for damage caused by not contributing, not fully contributing, or not contributing on time to the charter capital.

🔅 During its operation, the charter capital of a one-member limited liability company may increase or decrease depending on the business needs of the enterprise. The company owner will decide on the change of charter capital.

2. Cases of increase or decrease of charter capital:

2.1. In case of an increase in charter capital:

🔗A one-member limited liability company increases its charter capital through the owner of the company contributing additional capital or mobilizing additional capital contributed by others. The company owner decides the form of increase and the rate of increase of charter capital.

🔗In case the charter capital is increased by mobilizing additional capital contributed by others, the company must organize its management in the form of a limited liability company with two or more members or a joint-stock company. The organization and management of the company are carried out as follows:

✔  If the management organization is in the form of a limited liability company with two or more members, the company must notify the change of business registration information within 10 days from the date of completion of the evolution of charter capital;

✔ In case of conversion into a joint stock company, the company shall comply with the provisions of Article 202 of this Law.

🔗 One member limited liability company increases capital because the company owner decides to contribute more capital.

🔗 One member limited liability company increased its capital by raising more capital contributed by new members.

2.2. In case of reduction of charter capital:

🔗 Return a part of the contributed capital to the company owner if the company has operated continuously for 02 years or more from the date of enterprise establishment registration and ensure the full payment of debts and other property obligations after the capital contribution has been returned to the company's owners..

🔗 Charter capital is not paid in full and on time by the company owner as prescribed

🔗 One member limited liability company may reduce its capital by returning part of the contributed capital to the owner when it meets the following conditions:

✔ The company has operated continuously for 2 years from the date of business registration;

✔ The company must ensure to pay all debts and other property obligations after the capital contribution has been returned to the company owner.

🔗 One-member limited liability companies reduce capital if the owner does not contribute enough capital per the provisions of the Law on Enterprises.

3. Procedures for changing charter capital:

👉 Step 1: Receive information from entrepreneurs and conduct consultation on the change of charter capital.

👉 Step 2: Prepare and draft documents to change charter capital for businessmen to sign.

👉 Step 3: Submit the application to the Department of Planning and Investment, and monitor the processing of the application.

👉 Step 4: Receive the results at the Department of Planning and Investment, and hand delivery to entrepreneurs.

👉 Step 5: After completing the consultation for business people.

 ⏩ A dossier of change of charter capital includes:

➥ Decision of the company owner on the increase or decrease of charter capital;

➥ The company's financial statements for the period closest to the time of the decision to reduce charter capital;

➥ Declaration of applicant information;

➥ Original or copy of Certificate of Business Registration.

   ⇒ Register here for TASCO's earliest advice or contact hotline: 0975480868 (Zalo)


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