The company is highly profitable and wants to increase its charter capital without calling for more money from outside — is that possible? The answer is yes, but it must go down the right path. Vietnamese law distinguishes two completely different capital-increase mechanisms: increasing capital through share issuance (share offering) — raising new money from investors, and increasing capital from owners equity sources (bonus shares) — an internal conversion that brings in no new money. Confusing the two paths is the source of many procedural violations.
1. Increasing capital through share issuance (share offering) — Articles 123–126 of the Enterprise Law
Under Article 123 of the Enterprise Law (cited per consolidated document 67/VBHN-VPQH 2025), a share offering means the company increases the number and classes of shares it is entitled to offer in order to increase its charter capital. There are 03 forms:
- Offering to existing shareholders (Article 124): selling all new shares to all shareholders in proportion to their current ownership. Shareholders have pre-emptive rights; the company must notify in writing no later than 15 days before the expiry of the subscription registration period; shareholders may transfer their pre-emptive rights to others.
- Private placement (Article 125): for non-public companies — not offered through mass media; offered to fewer than 100 investors (excluding professional securities investors). Existing shareholders retain pre-emptive rights (clause 2 Article 124), except in merger or consolidation cases; the remaining shares are sold to others on terms no more favorable, unless the General Meeting of Shareholders approves otherwise.
- Public offering (Article 126): conducted under securities law.
Authority: the classes of shares and the total number of shares entitled to be offered are proposed by the Board of Directors and decided by the General Meeting of Shareholders (point b clause 2 Article 138; Article 153). The issue price is decided by the Board of Directors but must not be lower than the market price at the time of sale or the latest book value — except in cases such as: first sale to non-founding shareholders; sale to existing shareholders in proportion to ownership; sale through brokerage or underwriting with a discount approved by the General Meeting of Shareholders (Article 126).
Charter capital change registration: within 10 days from the completion date of the share sale (clause 4 Article 123) — note the milestone is the completion of the offering, not the date of the resolution.
2. Increasing capital from owners equity (bonus shares) — public companies
The nature of this mechanism: no new money is raised — the company merely converts internal owners equity sources into share capital. The legal basis is Article 62 of Decree 155/2020/ND-CP — note the article-number trap: Article 60 covers share issuance for dividend payment, while capital increases from owners equity are under Article 62. Article 62 has been amended by Decree 245/2025/ND-CP (issued 11/9/2025, effective from signing date); the conditions below are kept at framework level because the specific amended wording has not been cross-checked against the original text:
- The issuance plan is approved by the General Meeting of Shareholders;
- Owners equity sources are sufficient for the capital increase, based on the latest audited financial statements by an approved auditing organization, comprising: share premium; development investment fund; undistributed after-tax profit; other funds (if any);
- The total value of the sources is not less than the total value of the additional share capital;
- A plan for handling fractional shares exists.
Procedure: the public company files a report dossier with the State Securities Commission; within 07 working days the SSC notifies receipt of the complete dossier (Article 69 of Decree 155/2020).
3. Key boundary: non-public companies
The Enterprise Law has no separate provision named “share issuance from owners equity” for non-public companies (unlike Decree 155/2020 for public companies). In practice, non-public companies proceed through the mechanism of offering/issuing additional shares to existing shareholders (Articles 123–124), paid from owners equity sources, as decided by the General Meeting of Shareholders under the charter. Do not infer procedures — Article 62 of Decree 155/2020 may not be applied to non-public companies.
For limited liability companies, the Enterprise Law lists only 02 cases of capital increase in clause 1 Article 68: (a) increasing members capital contributions (allocated in proportion to contributions; members may transfer their contribution rights under Article 52); (b) admitting new members capital contributions. The company notifies the business registration authority within 10 days after the capital contribution payment is completed (clause 4 Article 68).
4. Comparison table
| Criterion | Share issuance (offering) | Capital increase from owners equity (bonus shares) |
|---|---|---|
| Nature | Raises new money from investors | Internal conversion — no new money collected |
| Source of additional capital | Investors money for share purchase | Share premium, development investment fund, undistributed after-tax profit, other funds |
| Recipients of new shares | Existing shareholders (priority) / new investors (private) / the public | Existing shareholders in proportion to ownership |
| Dilution | May dilute (if existing shareholders do not fully subscribe) | No dilution |
| Company cash flow | Increases (new money received) | Unchanged (only reclassification within owners equity) |
| Source condition | No requirement for existing equity sources | Must have sufficient equity sources per latest audited financial statements |
| SSC reporting | Under the Securities Law | Mandatory for public companies (07 working days) |
| Authority | GMS (share classes + total entitled shares) | GMS (issuance plan — public companies) |
| Issue price | Decided by BOD, not below market price/book value | No “issue price” — issued at par from internal sources |
| Charter capital registration | 10 days from offering completion | Likewise after issuance completion |
Sources: Articles 68, 123–126, 138, 153 of the Enterprise Law; Articles 62 and 69 of Decree 155/2020/ND-CP (Article 62 amended by Decree 245/2025/ND-CP).
5. Which path to choose?
- Choose a share offering when the company needs real money to expand production or invest in new projects — accepting dilution risk and more complex procedures.
- Choose bonus shares (from owners equity) when the company wants to beautify its charter capital and reward existing shareholders without calling for new capital — provided owners equity sources are sufficient per the audited financial statements.
FAQs
Does a bonus share issuance bring the company more money?
No. It is an internal conversion of owners equity sources into share capital — company cash flow is unchanged and shareholder ownership ratios stay the same (no dilution).
Is Article 60 of Decree 155/2020 the capital increase from owners equity?
No. Article 60 covers share issuance for dividend payment; capital increases from owners equity are under Article 62 (amended by Decree 245/2025/ND-CP).
Can a non-public company apply Article 62 of Decree 155/2020?
No. Decree 155/2020 regulates public companies only. Non-public companies proceed through offering/issuing additional shares to existing shareholders under Articles 123–124 of the Enterprise Law, as decided by the General Meeting of Shareholders under the charter.
Legal sources
- Enterprise Law (consolidated document 67/VBHN-VPQH 2025): Article 68 (LLC capital increase), Articles 123–126 (share offerings), Articles 138 and 153 (authority).
- Securities Law 54/2019/QH14 (amended by Law 56/2024/QH15, effective 01/01/2025).
- Decree 155/2020/ND-CP: Article 62 (share issuance increasing share capital from owners equity — amended by Decree 245/2025/ND-CP, issued 11/9/2025), Article 69 (SSC reporting).
Is your company considering a charter capital increase — through a share offering or from owners equity sources? Reach us via the Contact page of FLAT Law Firm for structuring the capital increase plan, drafting the General Meeting of Shareholders resolutions and support throughout the capital change registration.
The legal content of this article is being reviewed by FLAT’s AI Legal Council and will be submitted to the owner for approval before publication; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.
For reference only, not legal advice.
