Charter capital change service joint stock companies are one of the important financial strategies to help businesses improve competitiveness, scale up operations and attract capital from potential investors. However, this process needs to comply with clear and strict procedures and procedures in accordance with the law. The following article compiled by Navi will help you understand
What is the charter capital of a joint stock company?
The charter capital of a joint stock company is determined as the total par value of all types of shares that have been issued.
When registering to establish an enterprise, the charter capital of the joint-stock company is the total par value of the types of shares registered for purchase and recognized in the Charter of the company.
(According to Clause 1, Article 112 of the Law on Enterprises 2020)
Cases of increase in charter capital of a joint stock company
The current common form of increase of charter capital of a joint stock company is the offering of shares, in order to attract additional capital to the charter capital.
Methods of offering shares may include:
– Offer shares to current shareholders.
– Private offering of shares.
– Public offering of shares.
For the public offering of shares, public companies and other organizations must comply with the provisions of the law on securities.
The Company needs to register the change of charter capital within 10 days from the completion of the share offering.
(Article 123, Law on Enterprises 2020)
What documents are included in the dossier for increase of charter capital of a joint stock company?
– The documents required to change the charter capital of a joint stock company include the following documents:
+ Notice of change of enterprise registration content, signed by the legal representative of the enterprise.
+ Resolutions and decisions of the General Meeting of Shareholders related to the adjustment of charter capital.
+ Written approval from the investment registration agency on the contribution of capital, purchase of shares or contributed capital by foreign investors or foreign-invested economic organizations, in case it is necessary to carry out the registration procedures in accordance with the provisions of the Law on Investment.
– If the General Meeting of Shareholders agrees to offer shares in order to increase the charter capital, and at the same time assign the Board of Management to carry out the procedures for registration of capital increase after each share sale ends.
– In addition to the stated Notice, the dossier for registration of charter capital increase must also include the following documents:
+ The resolution and a copy of the meeting minutes of the General Meeting of Shareholders on the offering of shares to increase the charter capital, which must specify the number of shares offered and assign the Board of Management to carry out the procedures for registration of capital increase after each sale ends.
+ Resolutions, decisions and copies of minutes of meetings of the Board of Management on the registration of increase of charter capital of the company after each share sale.
(Clause 1, Clause 3, Article 51 of Decree 01/2021/ND-CP)
Procedures for increasing charter capital of joint stock companies
► Step 1: Filing
When a joint stock company needs to adjust its charter capital, the company needs to send a dossier of registration for change of enterprise registration contents to the Business Registration Office where the company is headquartered.
► Step 2: Resolve documents and receive results
After receiving the business registration dossier, the Business Registration Office will issue a receipt, check the validity of the dossier and issue an enterprise registration certificate to the company. (Clauses 1 and 5, Article 51 of Decree 01/2021/ND-CP)
What is the purpose of increasing the charter capital of a joint stock company?
– Increasing the charter capital of a joint stock company helps to establish trust for shareholders, increase the sustainability of the business, establish credibility with creditors and partners.
– The main purpose of increasing the charter capital of a company is to strengthen financial capacity and expand development opportunities in business activities. This can be achieved through self-replenishment from within or raising capital from investors. However, the increase of charter capital also has different purposes and effects.
– Other purposes of increasing the charter capital include:
+ Increase the borrowing limit from financial institutions such as banks.
+ Affirm the development of the company, build trust from shareholders and business partners.
+ Limit acquisitions from third parties.
+ Meet capital requirements when participating in activities such as bidding or listing on the stock exchange.
– Increasing the charter capital of a joint stock company is the process of rebuilding the structure of the charter capital. In addition, the increase of charter capital may be in the form of calling for investment or due to the owner’s own capital contribution. The increase of charter capital will have several purposes as follows:
+ The company expands its business activities and needs more capital for that field. The increase of charter capital will help the company increase its financial capacity, expand development opportunities in new business areas.
+ Increase the loan limit of banks or other credit institutions.
+ Increase charter capital to affirm the development of the company, strengthen the trust of shareholders and limit risks for customers.
– The increase of charter capital will also have important effects on the company:
+ Open up opportunities to implement new business strategies and develop.
+ Create favorable conditions for cooperation with larger organizations and enterprises.
+ Increase the responsibilities and commitments of shareholders to the company due to the increase in the value of the company’s assets.
+ Increase the payable license tax equivalent to the increased charter capital.
+ When there is a profit, the increase in charter capital also means an increase in taxes payable to both individuals and companies.
In short, the process of increasing charter capital is not only an increase in the amount of capital contribution but also brings many new benefits and responsibilities to the company and shareholders.
Frequently asked questions about charter capital change services
► What is the duration of capital contribution when increasing the charter capital of a joint stock company?
The Law on Enterprises does not specify the duration of capital contribution of shareholders when increasing or decreasing charter capital. Therefore, shareholders must ensure full and timely payment of the number of shares they have registered to buy to increase the charter capital within the time specified by the company.
► Is it necessary to file a license fee (tax) declaration when increasing the charter capital?
Yes. When there is a change in the charter capital, the joint stock company needs to submit the declaration of additional license fees no later than January 30 of the year after the year of the change.
Dossiers and procedures for increasing charter capital of joint stock companies have been synthesized by Navi in this article. If you have any questions, you can contact us for the most detailed solution. Navi consultants offer 100% free support. You are having difficulties in implementing the procedures for changing the charter capital and legal regulations. Contact us now for legal advice and get the best service offer right away.
See also:
► Add or change business lines
► Add more shareholders and capital contributors
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