The setup: an FDI company registers VND 50 billion in charter capital but actually contributes 30 billion. The investor wants to reduce charter capital to match reality — and wonders whether the IRC must change too. Two linked but separate procedures: reducing charter capital under the Enterprise Law, and amending the IRC’s investment capital under the Investment Law. Doing one without the other leaves a mismatch the tax authority will question.
When may charter capital be reduced?
- LLCs (Articles 68 and 87, Enterprise Law 59/2020/QH14): return part of contributed capital to members; the company repurchases capital contributions; or reduce to the actually contributed amount when members fail to pay in full.
- Joint-stock companies (Article 112(5), amended by Article 1(17) of Law 76/2025/QH15, effective 1 July 2025) — four cases: (i) the shareholders’ meeting returns part of capital pro rata, if the company has operated for at least 2 years (excluding suspension periods) and can still pay all debts afterwards; (ii) the company repurchases issued shares under Articles 132–133; (iii) charter capital not fully paid on time (Article 113); (iv) redemption of redeemable preference shares.
The two-step procedure
Step 1 — Enterprise Law: the owner, members’ council or shareholders’ meeting resolves the reduction; notify the business registration office under Decree 168/2025/ND-CP and receive the amended ERC. The company must ensure it can still pay all debts and obligations after the reduction. Step 2 — Investment Law: file an IRC amendment adjusting the project’s total investment capital (Article 56, Decree 96/2026/ND-CP), because the capital figure on the IRC no longer matches reality.
Three warnings
1. Reducing charter capital does not automatically reduce IRC investment capital — the IRC amendment is a separate filing. 2. New joint-stock companies cannot return capital pro rata before 2 years of operation — use the other cases. 3. Notify creditors in practice: the law requires the company to remain able to pay debts; informing major creditors avoids disputes.
Frequently asked questions
1. Does reducing charter capital require amending the IRC?
Yes, if the project’s total investment capital on the IRC changes — file the IRC amendment under Article 56 of Decree 96/2026/ND-CP.
2. May a one-year-old joint-stock company return capital to shareholders?
Not pro rata — that case requires 2 years of operation excluding suspension. The other three cases remain available.
3. Must creditors be notified of the reduction?
The law requires the company to stay able to pay all debts after reduction; notifying major creditors in practice prevents disputes.
4. Any tax on capital returned to a foreign investor?
Amounts received exceeding the originally contributed capital may be taxable under the tax legislation — check before distributing.
5. Is there a minimum charter capital after reduction?
It must not fall below any statutory capital required for the sector; otherwise the sector’s minimum applies.
This article has been quality-reviewed by the FLAW AI Legal Council
