GUIDANCE ON CHARTER CAPITAL CHANGE FOR ONE-MEMBER LIMITED LIABILITY COMPANY
In the course of business, being a one-member limited liability company owner must sometimes make decisions about the change of charter capital in the company. The change of charter capital of a one-member limited liability company is the increase or reduction of charter capital compared to the original registered. How must the order and procedures for charter capital change be implemented? Below, Viecoi will help you answer questions about this issue more clearly in the article below.
WHAT IS CHARTER CAPITAL?
Charter capital of a one-member limited liability company is the total value of assets committed by the enterprise owner and recorded in the company's charter. The owner of a one-member limited liability company will have to contribute enough and the right type of assets committed to contribute. If the contribution is insufficient, the owner will have to carry out procedures for reducing the company's charter capital. In the course of business operations, the charter capital of a one-member limited liability company may increase or decrease, which will be decided by the company owner.
CHANGE OF CHARTER CAPITAL OF A ONE-MEMBER LIMITED LIABILITY COMPANY
1. Charter Capital Changes by Charter Capital Increase
A one-member limited liability company will increase its charter capital by the company owner investing more capital or mobilizing additional capital from others. The owner will be the one who decides the form of increase and the increase in charter capital.
1.1. In case the Owner of the Company increases its own investment capital
Self-raising capital is a way to increase charter capital effectively, company owners can protect their company from the intention to acquire enterprises of joint stock companies or other two-member limited liability companies. When increasing charter capital by self-investing capital, the owner of a one-member limited liability company will make registration of charter capital change for the company.
♣ Of capital self-increase dossiers include:
- Notification of changes in the registration contents of the enterprise.
- Decision of the owner of the enterprise on the increase of charter capital. It clearly states the amount of increased capital, the form and time of capital increase.
- Written authorization for the applicant to submit the dossier and personal certification papers of the person who comes to submit the dossier.
♣ Procedures for registration of charter capital increase:
Businesses will have to submit a soft copy to the national business registration portal. The applicant may be the company owner, legal representative or authorized person to file the application. After about 03 working days, it will be notified by state agencies. After receiving the valid notice, the applicant will submit a hard copy dossier at the Business Registration Office of the Department of Planning and Investment where the company is located. The business registration department specialist will check the documents and write the receipt. Within about 05 working days, the Registration Office settles the dossier and grants a new business registration certificate. Applicants will follow the receipt to receive the results.
♣ Note: After increasing the charter capital, the company will have to carry out the procedure of announcing the information on the national business portal. If the charter capital increase changes the payable license tax amount of the following year, the company owner must submit the license tax declaration dossier for the next year. The deadline for tax declaration is December 31 of the year with the change, then the accounting department will have to adjust the capital target on the accounting records of the enterprise
1.2. In case of Increasing Charter Capital by Raising More Capital From Others
The person who contributes additional capital to the business can be an organization or individual. When mobilizing capital contributions from others, the company will have to transform the type of its business. The company should engrave the new mark and make a notice to change the stamp pattern on the National Registration Portal. The company must then organize management in one of the following two types:
- Two or more members limited liability company. At this time, the company must notify the change of the business registration contents within 10 days from the date of completion of the change of its charter capital;
- Joint-stock companies (in accordance with the Law on Enterprises 2020).
2. Charter Capital Changes by Charter Capital Reduction
2.1. Cases of Procedures for Charter Capital Reduction
A one-member limited liability company shall have to reduce its charter capital in the following cases:
♣ In case the enterprise returns part of the contributed capital in the charter capital of the company
In case of reduction of this charter capital, it shall only apply when the following conditions are fully met: The Company has been doing business continuously for more than 02 years from the date of enterprise registration and must ensure full payment of debts and other property obligations after it has remored to the owner. The payment of debts will be based on the company's financial statements at the last period. Only when the above conditions are met, a one-member limited liability company will be refunded a portion of the registered contributed capital.
♣ In case the charter capital is not paid in full and on time by the owner as prescribed.
The owner of a one-member limited liability company has 90 days from the date of issuance of the Enterprise Registration Certificate to make payment of the committed capital contribution. After the expiration of the above time limit, the owner of the company contributes insufficiently, the company will have to carry out procedures for reducing charter capital. Within 30 days from the last day of full charter capital contribution, the owner must register the adjustment of charter capital equal to the value of the actual contributed capital.
2.2. Charter Capital Reduction Documents
Documents to be prepared will include:
- Notification of reduction of charter capital to the business registration office where the company has registered its business;
- A written decision on the reduction of charter capital of the owner of a one-member limited liability company;
- Financial statements of the company at the latest period with the time of decision on reduction of charter capital of the company;
- Commitment to ensure sufficient capital and assets to fully pay debts and other property obligations of the enterprise;
- Authorization documents and personal documents of the authorized person *certified copy).
2.3. Procedures for Registration of Charter Capital Reduction
First, the company submits a soft copy to the National Business Registration Portal. The applicant may be the company owner, legal representative or authorized person to file the application. The time to receive notifications is after 03 working days.
After receiving a valid notice, a hard copy must be submitted to the Business Registration Office where the company is headquartered. The business registration office will check the validity of the application and write a receipt.
Finally, the business registration office handles the processing of dossiers and grants new business registration certificates. The applicant will come to receive the results according to the appointment dated on the receipt.
Note: After proceeding with the reduction of charter capital, the company will have to carry out the procedure for announcing the change information on the National Portal. The change of capital changes the level of card tax, the company will have to re-declare the tax return to submit to the tax authorities.
Above is a guide on changing the charter capital of a one-member limited liability company that Viecoi offers. Hopefully the article can help you better understand the change of charter capital of the business. You can find other helpful instructions at Viecoi.