Very few projects need all their capital on day one. A factory built over eighteen months, a property project passing through stages, a joint venture expanding by revenue milestones — all want capital called in line with the real spending schedule rather than sitting idle in an account from establishment day. The capital call mechanism is global investment practice’s answer. But placed into the Vietnamese legal frame, capital calls collide with two hard clocks: the Enterprise Law’s 90-day deadline for fully contributing charter capital, and the contribution schedule recorded in an FDI project’s investment registration certificate. This article explains how staged funding is lawfully designed in Vietnam — by splitting charter capital into scheduled increase rounds rather than promising to pay in slowly against a pre-registered charter capital — what tools handle a partner who does not pay on time, and at what boundary a capital call becomes a licence amendment procedure.
Lawful design: deliberately low initial charter capital and an increase schedule by project milestone
The point many investors get wrong from the start: Vietnamese law does not allow registering a large charter capital and paying it in over several years. For limited liability companies, Article 47 of Enterprise Law No. 59/2020/QH14 requires members to contribute their committed portions in full within 90 days of the enterprise registration certificate date (the charter may only shorten, never extend, this period), and joint stock companies bear the same discipline in Article 113. Staged funding in Vietnam is therefore not implemented by delaying the contribution duty of a registered charter capital, but by structuring capital in layers: initial charter capital is recorded at the level sufficient for the first phase, and later capital rounds are executed as charter capital INCREASES by pre-agreed project milestones — each increase being a members’ council or general meeting decision, a charter amendment and a change registration. An FDI project adds one more layer: the investor’s contribution schedule is content recorded in the investment registration certificate under Investment Law No. 143/2025/QH15, so the call schedule must be reflected into that schedule from project establishment or by a certificate adjustment when the schedule changes. When designed correctly, the capital call mechanism in the joint venture agreement acts as a pre-commitment: the parties undertake to pass the capital increase decisions on the defined schedule and trigger milestones (completing construction phase 1, obtaining a sub-licence, reaching a revenue milestone), undertake to contribute their own portion in each round, and pre-agree the full consequences of not contributing — because the future increase decision itself cannot force a party who has changed their mind.
A partner who does not pay on time: the ladder of tools from statutory to contractual
The foundational statutory tool sits in Article 47 itself: a member who has not contributed or not fully contributed their committed portion bears liability corresponding to the unpaid portion for the company’s financial obligations arising during the period before the company re-registers charter capital at the actually contributed amount — that is, “hanging” capital is not a liability-free zone. On that base, the joint venture agreement and charter commonly build four contractual tools. First, late contribution interest: the late portion bears an agreed penalty or interest rate per day of delay, as pre-agreed liquidated compensation. Second, substitute contribution and dilution: the performing party may contribute the defaulter’s portion in their place, and ownership ratios are recalculated on actually contributed capital — this dilution mechanism is the most effective deterrent because it touches what the defaulter cares about most. Third, suspended rights: the defaulter’s voting rights and profit distribution rights are limited in proportion to the unpaid portion during the default, within the limits the charter and agreement can regulate. Fourth, a forced exit: a contribution default lasting beyond a grace period gives the other parties the right to buy out the defaulter’s entire capital portion at a formula price (usually discounted against fair value), or to demand dissolution or sale of the project in pure project joint ventures. The technical point to remember: every tool above must be written into the joint venture agreement and charter from day one, together with the capital call notice mechanics and a clear notice period — a capital call without notice in the agreed form is a call the called party has legitimate grounds not to meet on time.
Building a capital call mechanism for a Vietnamese joint venture
- Do not register large charter capital and pay in over years: Articles 47 and 113 of the Enterprise Law lock 90 days — structure it as initial capital plus a milestone increase schedule.
- Reflect the call schedule into the investment registration certificate’s contribution schedule (FDI projects) from the start, or adjust it when the schedule changes.
- The joint venture agreement pre-commits: trigger milestones for each round, that increase decisions will be passed, the call notice form and notice period.
- The defaulter ladder: late interest, then substitute contribution and dilution, then suspended rights on the unpaid portion, then a buyout right after the grace period.
- A call round exceeding the total investment or contributed capital on the investment licence is a licence adjustment procedure, not just an internal matter.
Frequently Asked Questions
Can capital be contributed gradually by progress instead of all at once?
Yes, but it must be structured the Vietnamese way. The law does not allow registering a charter capital and paying it in over years: Article 47 of the 2020 Enterprise Law obliges limited liability company members to contribute in full within 90 days of the enterprise registration date, with joint stock companies under the same rule in Article 113. The lawful method is to register initial charter capital at the first phase’s need, then execute later funding rounds as charter capital increases at project milestones the parties pre-committed to in the joint venture agreement (each round: an increase decision, a charter amendment, a change registration). For an FDI project, this funding schedule must also match the contribution schedule recorded in the investment registration certificate — if the real schedule deviates from the licence, the certificate must be adjusted.
What happens when a partner does not contribute on time?
In two layers. The statutory layer: under Article 47 of the 2020 Enterprise Law, an under-contributing member bears liability corresponding to the unpaid portion for the company’s financial obligations arising before the company re-registers charter capital at the actually contributed amount — hanging capital does not let them escape liability. The contractual layer, which must be written in advance into the joint venture agreement and charter: charging late interest or a penalty on the late portion; allowing the performing party to contribute in their place and recalculating ownership on actually contributed capital (dilution); limiting voting and profit rights in proportion to the unpaid portion; and, if the default outlasts a grace period, giving the other parties the right to buy out the defaulter’s capital portion at a formula price. The called party is also protected by procedure: a capital call binds them only with notice in the agreed form and within the agreed notice period.
Does calling more capital require amending licences?
It depends where the call sits relative to current licences. If the round falls within already registered charter capital and the schedule recorded in the investment registration certificate, contributing is simply performing an existing obligation with bookkeeping updates and bank confirmations. If the call raises charter capital beyond the registered amount, it is a capital increase procedure: a decision of the company’s competent body, a charter amendment and an enterprise registration change. And if the round changes the investor’s contributed capital or the FDI project’s total investment capital against the investment registration certificate, that certificate must also be adjusted. The common mistake is parties paying real money in first and discovering afterwards that the licence was never amended — the money flow then deviates from the file the bank and the registration authority hold, and retroactive regularisation always costs more time than doing it in the right order.
What must a capital call notice contain for the call to bind the partner?
A capital call binds only when issued under the pre-agreed mechanism, with four minimum elements: the trigger basis (the project milestone or calendar date committed in the joint venture agreement), the amount called and each party’s pro-rata portion, a payment deadline matching the agreed notice period (practice usually allows enough room for the called party to arrange an international money flow), and the designated account and money route — for an FDI project, the enterprise’s investment capital account. A notice missing its trigger basis, calling beyond the committed schedule, or allowing a shorter period than agreed gives the called party legitimate grounds to not yet contribute without being in default, which is why the call notice form should be a ready-made annex of the joint venture agreement rather than drafted fresh each time.
This article has been quality-reviewed by the FLAW AI Legal Council
