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PENALTIES FOR VIOLATIONS AGAINST REGULATIONS ON CHARTER CAPITAL CONTRIBUTION
PENALTIES FOR VIOLATIONS AGAINST REGULATIONS ON CHARTER CAPITAL CONTRIBUTION
1. Legal Basis
- Enterprise Law 2020
- Decree 122/2021/ND-CP dated 28/12/2021 of the Government on penalizing administrative violations in the field of planning and investment.
2. Content
2.1. Charter Capital
2.1. Charter Capital
Charter capital of a joint-stock company
According to Article 112 of the Enterprise Law 2020: "The charter capital of a joint-stock company is the total par value of shares of all kinds sold. The charter capital of a joint-stock company when registering for establishment of an enterprise is the total par value of shares of all kinds that have been registered for purchase and inscribed in the company's charter." Thus, the charter capital of the joint-stock company at the time of registration will be the charter capital when the shareholders contribute enough capital within the capital contribution period.
The charter capital of a joint-stock company is divided into many equal parts.
When registering the establishment of a business, the sold shares are the total number of shares of all kinds that have been purchased and fully paid to the company by the registered shareholders.
The charter capital of a joint-stock company is divided into many equal parts.
When registering the establishment of a business, the sold shares are the total number of shares of all kinds that have been purchased and fully paid to the company by the registered shareholders.
Charter capital of a single-member limited liability company
The charter capital of a single-member limited liability company when registering the establishment of an enterprise is the total value of assets committed by the company's owner and recorded in the company's charter.
The owner of the company is responsible for the company's debts and other property obligations within the company's charter capital.
The owner of the company is responsible for the company's debts and other property obligations within the company's charter capital.
Charter capital of a limited liability company with two or more members
The charter capital of a limited liability company with two or more members when registering the establishment of an enterprise is the total value of the contributed capital of the members committed to contribute and recorded in the company's charter.
Members are responsible for debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except for the case specified in Clause 4, Article 47 of the Enterprise Law 2020.
Members are responsible for debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except for the case specified in Clause 4, Article 47 of the Enterprise Law 2020.
2.2. Regulations on the Time Limit for Charter Capital Contribution
For limited liability companies with two or more members
Pursuant to the provisions of Clause 2, Article 47 of the Enterprise Law 2020, the time limit for charter capital contribution for limited liability companies with two or more members is prescribed as follows:
Members must contribute capital to the company fully and in accordance with the committed assets when registering the establishment of the enterprise within 90 days from the date of issuance of the Enterprise Registration Certificate. During this time limit, members have rights and obligations corresponding to the committed capital contribution ratio. A member of the company may only contribute capital to the company with assets other than the committed assets if approved by more than 50% of the remaining members.
The above period does not include the time of transporting and importing capital contributed assets, carrying out administrative procedures for transferring asset ownership
For single-member limited liability companies
Pursuant to the provisions of Clause 2, Article 75 of the Enterprise Law 2020, the time for charter capital contribution for single-member limited liability companies is prescribed as follows:
The owner of the company must contribute capital to the company in sufficient and appropriate types of assets committed when registering the establishment of the enterprise within 90 days from the date of issuance of the Enterprise Registration Certificate. During this period, the owner of the company has the same rights and obligations corresponding to the committed capital contribution.
The above time does not include the time of transporting and importing capital contributed assets, carrying out administrative procedures for transferring property ownership
For joint-stock companies
Pursuant to the provisions of Clause 1, Article 113 of the Enterprise Law 2020, the time for capital contribution of joint-stock companies is prescribed as follows:
Shareholders must fully pay the number of shares registered for purchase within 90 days from the date of issuance of the Enterprise Registration Certificate, unless the company's charter or share purchase registration contract stipulates another shorter term. In case a shareholder contributes capital with assets, the time for transportation and import, carrying out administrative procedures for transferring ownership of such assets is not included in this capital contribution period. The Board of Directors is responsible for supervising and urging shareholders to fully and punctually pay the shares registered for purchase.
For partnership companies:
Pursuant to the provisions of Clauses 1 and 3, Article 178 of the Enterprise Law 2020, the time limit for capital contribution of a partnership company is prescribed as follows:
For limited liability companies with two or more members
Pursuant to the provisions of Clause 2, Article 47 of the Enterprise Law 2020, the time limit for charter capital contribution for limited liability companies with two or more members is prescribed as follows:
Members must contribute capital to the company fully and in accordance with the committed assets when registering the establishment of the enterprise within 90 days from the date of issuance of the Enterprise Registration Certificate. During this time limit, members have rights and obligations corresponding to the committed capital contribution ratio. A member of the company may only contribute capital to the company with assets other than the committed assets if approved by more than 50% of the remaining members.
The above period does not include the time of transporting and importing capital contributed assets, carrying out administrative procedures for transferring asset ownership
For single-member limited liability companies
Pursuant to the provisions of Clause 2, Article 75 of the Enterprise Law 2020, the time for charter capital contribution for single-member limited liability companies is prescribed as follows:
The owner of the company must contribute capital to the company in sufficient and appropriate types of assets committed when registering the establishment of the enterprise within 90 days from the date of issuance of the Enterprise Registration Certificate. During this period, the owner of the company has the same rights and obligations corresponding to the committed capital contribution.
The above time does not include the time of transporting and importing capital contributed assets, carrying out administrative procedures for transferring property ownership
For joint-stock companies
Pursuant to the provisions of Clause 1, Article 113 of the Enterprise Law 2020, the time for capital contribution of joint-stock companies is prescribed as follows:
Shareholders must fully pay the number of shares registered for purchase within 90 days from the date of issuance of the Enterprise Registration Certificate, unless the company's charter or share purchase registration contract stipulates another shorter term. In case a shareholder contributes capital with assets, the time for transportation and import, carrying out administrative procedures for transferring ownership of such assets is not included in this capital contribution period. The Board of Directors is responsible for supervising and urging shareholders to fully and punctually pay the shares registered for purchase.
For partnership companies:
Pursuant to the provisions of Clauses 1 and 3, Article 178 of the Enterprise Law 2020, the time limit for capital contribution of a partnership company is prescribed as follows:
- General partners and capital contributors must contribute the committed capital in full and on time.
- In case a member contributes capital not fully and on time the committed capital amount, the insufficient capital contribution shall be considered as a debt of that member to the company; in this case, the relevant capital contributor may be expelled from the company under the decision of the Board of members.
Thus, the term of charter capital contribution of a partnership is based on the commitment of the general partners and capital contributors but does not specify the time like other types of enterprises.
2.3. Penalties for Violations in Case of Contributing Charter Capital Beyond the Specified Time Limit
In case the enterprise fails to contribute sufficient capital within the prescribed time limit, it may be penalized as follows:
(i): Fine
Pursuant to Clause 3, Article 46 of Decree 122/2021/ND-CP, the penalties for acts of contributing insufficient charter capital within the prescribed time limit is as follows: follows:
"Article 46. Violations on business establishment
...
3. Impose a fine of between VND 30,000,000 and VND 50,000,000 for one of the following acts:
2.3. Penalties for Violations in Case of Contributing Charter Capital Beyond the Specified Time Limit
In case the enterprise fails to contribute sufficient capital within the prescribed time limit, it may be penalized as follows:
(i): Fine
Pursuant to Clause 3, Article 46 of Decree 122/2021/ND-CP, the penalties for acts of contributing insufficient charter capital within the prescribed time limit is as follows: follows:
"Article 46. Violations on business establishment
...
3. Impose a fine of between VND 30,000,000 and VND 50,000,000 for one of the following acts:
a) Failing to carry out procedures for capital adjustment or change of founding members or shareholders as prescribed at the business registration agency when the capital contribution time limit has expired and the time limit for capital adjustment due to the the founding shareholders do not contribute enough capital but none of the founding members or shareholders fulfill their capital contribution commitments;
b) Deliberately valuing assets contributed to capital at an improper value."
(ii): Remedial measures
In addition to paying fines with the above-mentioned amounts, enterprises must also take remedial measures as prescribed in Clause 5, Article 46 of Decree 122/2021/ND-CP:
"Article 46. Violations against regulations on establishment of enterprises
5. Remedial measures:
a) Forcible change of capital contributors, purchase of shares or capital contributions, for the violations specified at Point b, Clause 2 of this Article;
b) Forcible implementation of procedures for capital adjustment or change of founding members or shareholders, for violations specified in Clause 3 of this Article;
c) Forcible registration of enterprise establishment, for the violations specified at Point a, Clause 4 of this Article."
2.4. Agencies Authorized for Administrative Penalties
According to the provisions of Articles 73 and 74 of the above Decree:
In addition to paying fines with the above-mentioned amounts, enterprises must also take remedial measures as prescribed in Clause 5, Article 46 of Decree 122/2021/ND-CP:
"Article 46. Violations against regulations on establishment of enterprises
5. Remedial measures:
a) Forcible change of capital contributors, purchase of shares or capital contributions, for the violations specified at Point b, Clause 2 of this Article;
b) Forcible implementation of procedures for capital adjustment or change of founding members or shareholders, for violations specified in Clause 3 of this Article;
c) Forcible registration of enterprise establishment, for the violations specified at Point a, Clause 4 of this Article."
2.4. Agencies Authorized for Administrative Penalties
According to the provisions of Articles 73 and 74 of the above Decree:
"Article 73. Authority of the Inspectorate of Planning and Investment to Impose Penalties
1. Inspectors and persons assigned to perform specialized inspection tasks on duty have the right to:
a) Issue warnings;
b) Impose a fine of up to VND 1,000,000.
2. The chief inspector of the Department of Planning and Investment and the head of the department-level specialized inspection team have the right to:
a) Issue warnings;
b) Impose a fine of up to VND 50,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 100,000,000 for violations in the field of bidding, investment and planning;
c) Apply the remedial measures specified in this Decree.
3. The head of the specialized inspection team of the Ministry of Planning and Investment has the right to:
a) Issue warnings;
b) Impose a fine of up to VND 70,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 200,000,000 for violations in the field of bidding and investment; impose a fine of 350,000,000 for violations in the field of planning;
c) Apply the remedial measures specified in this Decree.
4. The chief inspector of the Ministry of Planning and Investment has the right to:
a) Issue warnings;
b) Impose a fine of up to VND 70,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 200,000,000 for violations in the field of bidding and investment; impose a fine of 350,000,000 for violations in the field of planning;
c) Apply the remedial measures specified in this Decree.
4. The chief inspector of the Ministry of Planning and Investment has the right to:
a) Issue warnings;
b) Impose a fine of up to VND 100,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 300,000,000 for violations in the field of bidding and investment; impose a fine of up to VND 500,000,000 for violations in the field of planning;
c) Apply the remedial measures specified in this Decree."
Article 74. The Authority to Impose Penalties of People's Committees at Various Levels
1. Chairpersons of commune-level People's Committees have the right to:
a) Issue warnings;
b) Impose a fine of up to VND 10,000,000.
2. Presidents of district-level People's Committees have the right to:
a) Issue warnings;
b) Impose a fine of up to VND 50,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 150,000,000 for violations in the field of bidding and investment; impose a fine of 200,000,000 for violations in the field of planning;
c) Apply the remedial measures specified in this Decree.
3. Presidents of provincial-level People's Committees have the right to:
a) Issue warnings;
b) Impose a fine of up to VND 100,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 300,000,000 for violations in the field of bidding and investment; impose a fine of up to VND 500,000,000 for violations in the field of planning;
c) Apply strict measures to the consequences prescribed in this Decree."
Acts of violating regulations on capital contribution are acts of being administratively penalized according to regulations on administrative violations in the field of enterprise registration. Accordingly, the penalties are from 30 to 50 million VND for violations in the field of enterprise registration under the authority of the Chief Inspector of the Department of Planning and Investment, the Head of the specialized inspection team at the department level or the district-level People's Committee.
a) Issue warnings;
b) Impose a fine of up to VND 100,000,000 for violations in the field of enterprise registration; impose a fine of up to VND 300,000,000 for violations in the field of bidding and investment; impose a fine of up to VND 500,000,000 for violations in the field of planning;
c) Apply strict measures to the consequences prescribed in this Decree."
Acts of violating regulations on capital contribution are acts of being administratively penalized according to regulations on administrative violations in the field of enterprise registration. Accordingly, the penalties are from 30 to 50 million VND for violations in the field of enterprise registration under the authority of the Chief Inspector of the Department of Planning and Investment, the Head of the specialized inspection team at the department level or the district-level People's Committee.
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