Charter Capital of VND 100bn Not Fully Paid: Risks & Fixes

Charter Capital Stated at VND 100 Billion but Not Fully Contributed: 10 Questions Every Business Should Read

"State VND 100 billion to look strong, contribute gradually later" — one of the most common and riskiest decisions when incorporating in Vietnam. The charter capital figure on the enterprise registration certificate is not decoration: it is a legal commitment to contribute within 90 days, the basis for limited liability, and the first thing tax authorities, banks and counterparties look at.

This article answers the 10 most frequently asked questions about unpaid charter capital — deadlines, remedies, and the tax and administrative risks many owners never anticipate.

Contents

• Questions 1–10: see section 9
• 1. Why do businesses like stating high capital?
• 2. Legal framework: 90 days and 30 days
• 3. Consequences by entity type
• 4. Three risks beyond enterprise law: tax, banks, administrative fines
• 5. Options for resolving the shortfall
• 6. Prevention: how much capital should you state?
• 7. What does the capital-reduction filing include?
• 8. A practical 60-day remediation roadmap
• 9. Frequently asked questions
• References

1. Why do businesses like stating high capital?

The usual reasons: high charter capital signals scale, eases bidding, borrowing and negotiations. Some conditional business sectors also require minimum legal capital, prompting businesses to "round up" for safety.

The problem: charter capital is not a marketing figure. Under the 2020 Enterprise Law, it is the total asset value members/shareholders have contributed or commit to contribute at incorporation — and the "commit to contribute" portion must become "contributed" within 90 days. Stating 100 billion while contributing 20 billion, then ignoring the 80 billion gap past 90 days, leaves a legal obligation hanging — not something to "deal with later".

2. Legal framework: 90 days and 30 days

Two decisive milestones:

• 90 days from enterprise registration certificate issuance: the deadline for members/shareholders to fully contribute committed capital (unless the charter sets a shorter period).
• 30 days from the contribution deadline: the period for the company to register a charter capital reduction to the actually contributed amount, if any member/shareholder has not fully contributed.

Missing the 30-day registration puts the company in administrative violation — and every subsequent transaction and financial statement rests on a fictitious capital figure.

3. Consequences by entity type

Multi-member LLC: a member who has not fully contributed has rights (voting, profit sharing) only in proportion to actually contributed capital. The company must register the reduction within 30 days.

Single-member LLC: the owner must contribute fully within 90 days; failing that, register an adjustment to the actually contributed amount within 30 days. Key point on liability: under Art. 74 of the Enterprise Law, the owner is liable for the company's debts and asset obligations within the registered charter capital — i.e. the registered figure, not the contributed amount. Until the reduction is registered, the owner remains exposed at the registered number. This differs sharply from the "only liable within what was contributed" reading.

Joint-stock company: shareholders must fully pay for subscribed shares within 90 days. After the deadline with partial or no payment: the non-paying shareholder automatically ceases to be a shareholder and may not transfer the purchase right; a partially-paying shareholder has rights only for paid shares and may not transfer the right to purchase unpaid shares; unpaid shares are deemed unsold; the company registers the capital reduction within 30 days.

4. Three risks beyond enterprise law: tax, banks, administrative fines

Tax: interest expense corresponding to the charter capital shortfall is not deductible for CIT purposes. A business borrowing VND 50 billion while short VND 80 billion of capital will have a corresponding portion of interest disallowed — a routine tax audit item.

Banks: actually contributed capital is a financial-capacity indicator. "Phantom" capital weakens credit standing; loan files score lower or demand more collateral.

Administrative fines: false charter capital declaration may be penalised under Decree 122/2021/ND-CP. Beyond fines, the enterprise is compelled to register the adjustment to reality.

5. Options for resolving the shortfall

Depending on circumstances:

1. Top up the contribution: simplest if members still have financial capacity; keep full contribution evidence (transfers, minutes).
2. Register a capital reduction: bring the figure back to reality; file with the business registration office within 30 days.
3. Transfer the capital portion: a member transfers its stake (with the remaining contribution duty); the contract must state who bears the outstanding obligation.
4. Raise capital from new investors: admit new members/shareholders — but the old shortfall must still be resolved before or together with the increase, not "covered" by new money.

6. Prevention: how much capital should you state?

Counsel's rule of thumb: state what you can actually contribute within 90 days, plus a margin for the 12–24-month fundraising plan. Capital can be increased anytime (the increase procedure is simple); but overstating then reducing costs procedures and leaves a "scar" in legal records that sharp counterparties will ask about.

For startups raising in rounds, structure charter capital around the actual fundraising roadmap rather than stating the Series B/C figure from day one.

7. What does the capital-reduction filing include?

When opting for a charter capital reduction, the company prepares a change-of-registration dossier filed with the Business Registration Office — Department of Finance of the province/city where the company is headquartered. The core components:

1. Notice of change of enterprise registration (standard form): stating the old charter capital, the new reduced charter capital, and each member's/shareholder's ratio and form of contribution.
2. Resolution/decision and meeting minutes of the Members' Council (multi-member LLC), the owner (single-member LLC) or the General Meeting of Shareholders (JSC) approving the reduction.
3. Amended company charter (provisions on charter capital and post-reduction ownership structure).
4. Updated member/shareholder list reflecting each person's actually contributed capital.
5. Contribution confirmations / bank transfer evidence proving the actually contributed capital — the basis on which the registration office accepts the new figure.

Note: the registration office only records capital the enterprise can prove was actually contributed. Filing a new figure still above reality risks rejection — or a fresh violation cycle.

8. A practical 60-day remediation roadmap

For a company already past the 90-day deadline with a capital shortfall, the leanest roadmap usually looks like this:

• Days 1–7: reconcile the books — aggregate each member's actual contributions (transfers, assets), pin down the exact shortfall and how overdue it is.
• Days 8–20: internal decision on the option — top-up, reduction, transfer or a combination; if contributing assets, re-value them under Article 36 of the Enterprise Law.
• Days 21–35: finalise legal paperwork — resolutions, amended charter, member list, contribution evidence; file the registration change.
• Days 36–60: receive the new enterprise registration certificate; update the member/shareholder register, notify banks and key counterparties of the new charter capital; re-check deductible interest for the most recent tax finalisation.

Done properly, this ends the administrative violation and leaves a "clean" capital file for banks and investors.

9. Frequently asked questions

What is the deadline for fully contributing charter capital? Under the 2020 Enterprise Law, LLC members and JSC shareholders must contribute their committed capital within 90 days of the enterprise registration certificate issuance, unless the charter sets a shorter period. This is a statutory deadline, not an extendable courtesy period.

What must the company do after 90 days if capital is still unpaid? The company must register a reduction of charter capital to the actually contributed amount within 30 days of the contribution deadline (depending on entity type). Failure exposes the company and its legal representative to administrative penalties.

What rights does a member who has not fully contributed have? An LLC member may only vote, share profits and bear liability in proportion to actually contributed capital. A JSC shareholder who has not fully paid for subscribed shares: the unpaid portion creates no shareholder rights; a partially-paying shareholder has rights only for the paid shares and may not transfer the right to purchase the unpaid shares.

Is stating high charter capital without contributing it punishable? Yes. Falsely declaring charter capital (stating high capital without contributing and without registering an adjustment) may be administratively penalised under Decree 122/2021/ND-CP on planning and investment violations. The exact fine follows the text in force at the time of violation.

How does unpaid capital affect tax? It directly affects interest deductibility: interest expense corresponding to the shortfall in charter capital is not deductible for corporate income tax purposes. This is a routine check item for tax authorities at finalisation.

Will banks lend when charter capital is not fully contributed? Banks typically treat actually contributed charter capital as a financial-capacity indicator. "Phantom" capital (high stated, low paid) weakens credit standing; loan applications score lower or face higher collateral demands. Some banks insert capital-contribution covenants into credit contracts.

Can an unpaid capital portion be transferred to another person? An LLC member may transfer its capital contribution under statutory pre-emption rules. But the transferee must be aware of the unpaid status and the remaining contribution duty; the transfer contract should state clearly who bears the outstanding contribution obligation to avoid disputes.

Can the company raise capital from new investors instead of forcing old members to pay up? Yes, by increasing charter capital (admitting new members/shareholders or increasing contributions). But this does not erase the duty to resolve the old shortfall: the company must still register the capital adjustment to reflect actual contributions before (or together with) the increase, so records match reality.

What about a single-member LLC whose owner has not fully contributed? The owner must contribute the full charter capital within 90 days of certificate issuance. After the deadline, the owner must register a capital adjustment to the actually contributed amount within 30 days, and bears liability for the company's debts and asset obligations within the REGISTERED charter capital (Art. 74) — until the reduction is registered, exposure follows the registered figure, not the contributed amount.

When should counsel review the capital file? Before fundraising, major bank borrowing, M&A, or when the 90-day deadline has passed without resolving the shortfall. Counsel reviews the member/shareholder register, contribution confirmations and registration records, then proposes: top-up, reduction or restructuring — before regulators or counterparties discover it.

FLAT Law Firm supports businesses in reviewing and perfecting charter-capital files and enterprise registration in compliance with the law. Contact hotline 0988424851 for case-specific advice.

References

1. Enterprise Law No. 59/2020/QH14 dated 17/6/2020 (amended 2022 and Law No. 76/2025/QH15).
2. Decree No. 122/2021/ND-CP on administrative penalties in planning and investment.

—