Below are detailed instructions on choosing the charter capital level, how to contribute charter capital, time limit for capital contribution, and regulations on charter capital of the enterprise.
1. Understanding the charter capital of the enterprise #
Authorized capital is the total value of assets contributed or committed by the company's members and owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered for purchase upon the establishment of a joint stock company.
+ For a one-member limited liability company: The company owner is responsible for the company's debts and other property obligations. within the amount of charter capital of the company.
+ For a limited liability company with two or more members: The member is responsible for the debts and other property obligations of the enterprise to the extent the amount of capital contributed to the business (Generally the charter capital).
+ For joint-stock companies: Shareholders are only responsible for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise.
Thus, it can be seen that the "business owners" are responsible for a maximum of the company's charter capital. Therefore, if there is no specific need, the registration of a higher charter capital than necessary increases the liability unnecessarily.
2. How to calculate charter capital #
To calculate a reasonable level of charter capital that should be registered for an enterprise, you can apply the following calculation method:
Registered charter capital = Fixed capital requirement + Working capital requirement + Capital reserve
You set up a trading business, importing food for consumption in Vietnam.
- Your initial investment: 200 million VND
- Working capital 1 month approx = Value of inventory + Receivables (Amount owed to customers) – Payables (Amount not yet paid to sellers) = approx 1 billion
- Other monthly working capital needs (office, electricity, water, reception, salary, social insurance ...) is 200 million
- You want a capital reserve of about 30%
The amount of charter capital you should register is: (200 million + 1 billion + 200 million) x 130% = 1,82 billion dong.
The registration of the charter capital level is not reasonable, lower than the demand level, leading to having to borrow personal loans (business owners) to compensate.
Currently, with the regulations on related-party transactions, arising transactions between business owners and enterprises, or too high a bank loan may cause enterprises to fall into the case of associated transactions (transfer pricing). , now, 3 problems arise for businesses:
i. Transfer pricing reports must be submitted to tax authorities.
ii. Controlled interest expenses are included in deductible expenses when calculating corporate income tax.
iii. Possibility of linked transaction inspection.
3. Regulations on charter capital contribution #
The time limit for charter capital contribution is the time limit for fully contributing charter capital.
+ The company owner must have enough capital for the company and the right type of assets as committed when registering for business establishment within 90 days from the date of being granted the Certificate of Business registration.
+ A member must contribute capital to the company in full and with the right type of assets committed when registering for business establishment within 90 days from the date of being granted the Certificate of Business Registration.
+ Shareholders must pay in full for the number of shares registered to buy within 90 days from the date of issuance of the Certificate of Business Registration.
Thus, the time limit for fully contributing charter capital is within 90 days from the date of issuance of the enterprise registration certificate.
Circular 09/2015/TT-BTC guiding Article 6 of Decree 222/2013/ND-CP on payment in cash of the Ministry of Finance stipulates:
Article 3. Forms of payment in capital contribution transactions and purchase, sale and transfer of capital contributions to other enterprises
1. Businesses that do not use cash (paper money, metal money issued by the State Bank) for payment when performing transactions capital contribution and purchase, sale and transfer of capital contribution to other enterprises.
2. When conducting capital contribution transactions and buying and selling, transferring capital contributions to other enterprises, enterprises shall use the following forms:
a) Pay in Czech;
b) Payment by payment authorization - money transfer;
c) Other forms of non-cash payment in accordance with current regulations.
3. Enterprises when performing capital contribution transactions and buying, selling and transferring capital contributions to other enterprises with assets (not in cash) shall comply with the law on enterprises.
Based on the above provisions, enterprises are not allowed to use cash when contributing capital, buying, selling or transferring capital contributed to enterprises. The above regulations are not mandatory for individuals when contributing capital to enterprises.”
Thus, enterprises can apply the Regulation on charter capital contribution as follows:
- Enterprises using their own capital to invest capital in other enterprises: No cash
- Individuals contributing capital to the enterprise: You can use cash or by bank
Although it is possible to contribute capital in cash to businesses, however, cash contribution contributes to the following issues:
- Must check big money
- There is a risk of counterfeit money
- The receipts must be stored carefully, if the loss will greatly affect the business when it proves to contribute sufficient capital to the tax authorities, the state and shareholders.
- Signature must be checked accurately on the receipt, must be 5 signatures
- If the company has 1 members, the reliability is not high
- The retention of large amounts of money is at risk
- If auditing is required, the proof of capital contribution is very complicated and difficult
- Low reliability
With the above risks, the decision to receive capital contribution in cash should be carefully considered. If the cash capital contribution is not done properly, leading to not being accepted as having contributed enough capital, what are the consequences for the enterprise:
- It is not allowed to calculate loan interest on expenses when calculating corporate income tax if not contributing enough charter capital
- Violation of enterprise law on capital contribution
- Can not prove financial capacity with partners and shareholders