DELAYED CONTRIBUTION OF CHARTER CAPITAL: PENALTIES AND REMEDIES

Late contribution of charter capital not only affects the capital structure of an enterprise but can also lead to significant legal consequences for members, owners, and shareholders. Depending on the type of enterprise, the failure to fully contribute capital on time may alter member status and shareholder rights, while triggering the obligation to register an adjustment to the charter capital and exposing the entity to the risk of administrative penalties. So, how is late contribution of charter capital handled, what are the penalty amounts, and what procedures must enterprises carry out to remedy the situation? Join BKC LAW in examining the relevant legal regulations to proactively manage risks and ensure business operations strictly comply with the law.

Charter Capital Contribution Obligations of Company Members and Shareholders

Under Clause 34, Article 4 of the Law on Enterprises 2020, as amended and supplemented through 2025:

“Charter capital means the total value of assets contributed or committed to be contributed by members or the company owner upon establishment of a limited liability company or partnership; or the total par value of shares sold or registered for subscription upon establishment of a joint-stock company.”

Charter capital is an essential source of funding for a company’s operations and development. A capital contribution is the obligation of a company member or owner to contribute assets to form the company’s charter capital. This includes contributions made upon establishment of the company and additional contributions to increase the charter capital of an existing company (Clause 18, Article 4 of the Law on Enterprises 2020, as amended and supplemented through 2025).

Capital Contributions upon Establishment of a Company

The capital contribution obligations of limited liability companies are provided for in Articles 47 and 75 of the Law on Enterprises 2020. First, a member or owner must contribute the full amount of capital committed and the type of assets committed. Second, the contribution must be completed within 90 days from the date on which the Enterprise Registration Certificate is issued. Third, the rights and obligations of each member or owner correspond to the committed capital contribution ratio.

For joint-stock companies, capital contribution obligations are governed by Articles 112 and 113 of the Law on Enterprises 2020. First, shareholders must pay in full for the shares they have subscribed for. Second, payment must be made within 90 days from the date on which the Enterprise Registration Certificate is issued. Third, during the statutory payment period, each shareholder’s voting rights are determined by the number of ordinary shares subscribed for, unless the company’s charter provides otherwise.

For partnerships and private enterprises, the Law on Enterprises 2020 does not prescribe a time limit for capital contributions by general partners or capital-contributing partners, nor does it prescribe a deadline for the owner’s investment capital in a private enterprise (Clause 1, Article 178 and Clause 1, Article 189 of the Law on Enterprises 2020).

Additional Contributions to the Charter Capital of an Existing Company

An additional capital contribution is a means of increasing a company’s charter capital. The method of increasing charter capital varies according to the type of enterprise. Under Article 68 of the Law on Enterprises 2020, a multi-member limited liability company may increase its charter capital by increasing the capital contributions of existing members or accepting capital contributions from new members. Similarly, a single-member limited liability company may increase its charter capital when its owner contributes additional capital or raises additional capital contributions from other persons (Clause 1, Article 87 of the Law on Enterprises). If it raises capital contributions from other persons, the company must convert into another type of enterprise. Under Article 123, a joint-stock company may increase its charter capital by offering shares, including offering shares to existing shareholders, through a private placement, or through a public offering.

Unlike capital contributions upon establishment, the deadline for additional contributions is flexible and is not subject to a statutory time limit; it depends on the company’s business circumstances. However, an application to register a change in charter capital must be filed within 10 days from the date on which the change in charter capital is completed or the share offering is completed (Clause 4, Article 68; Clause 2, Article 87; and Clause 4, Article 123 of the Law on Enterprises 2020).

Legal Consequences of Delayed Charter Capital Contributions under the Law on Enterprises

The consequences of failing to contribute capital on time vary depending on the type of enterprise. For a multi-member limited liability company, Clause 3, Article 47 of the Law on Enterprises 2020 provides that:

After the time limit specified in Clause 2 of this Article has expired, if a member has not contributed capital or has not fully contributed the committed capital, the following rules apply:

(a) A member who has not made any capital contribution as committed automatically ceases to be a member of the company.

(b) A member who has not fully contributed the committed capital has rights corresponding to the amount of capital actually contributed.

(c) The un contributed portion of the members’ committed capital may be offered for sale in accordance with a resolution or decision of the Members’ Council.

Members who have not contributed, or have not fully contributed, the committed capital remain liable for the company’s financial obligations arising before the date on which the company registers changes to its charter capital and the members’ capital contribution ratios, in proportion to the capital contribution ratios they committed to make.

For a single-member limited liability company, the owner remains liable, in proportion to the committed capital contribution, for the company’s financial obligations arising before the deadline for registering the change in charter capital. In addition, the owner is liable with all of their assets for the company’s financial obligations and any losses arising from failure to contribute, incomplete contribution, or late contribution of charter capital as required by law (Clauses 3 and 4, Article 75 of the Law on Enterprises).

For a joint-stock company, if a shareholder has not paid, or has only partially paid, for the shares subscribed for within 90 days from the date the Enterprise Registration Certificate is issued, Clause 3, Article 113 of the Law on Enterprises 2020 provides that:

(a) A shareholder who has not paid for the subscribed shares automatically ceases to be a shareholder of the company and may not transfer the right to purchase those shares to another person.

(b) A shareholder who has paid for only part of the subscribed shares is entitled to voting rights, dividends, and other rights corresponding to the number of shares paid for, and may not transfer the right to purchase the unpaid shares to another person.

(c) Unpaid shares are deemed unsold shares, and the Board of Directors is entitled to sell them.

(d) Within 30 days from the end of the deadline for full payment for the subscribed shares specified in Clause 1 of this Article, the company must register an adjustment to its charter capital corresponding to the par value of the shares fully paid for, unless all unpaid shares have been sold within that period. The company must also register changes to its founding shareholders.

A shareholder who has not paid, or has not fully paid, for the subscribed shares remains liable for the company’s financial obligations arising before the date on which the company registers the adjustment to its charter capital, up to the total par value of the shares subscribed for.

Remedies for Delayed Capital Contributions and Cases Subject to Administrative Penalties

Remedies for Delayed Charter Capital Contributions

If a member of a multi-member limited liability company has not contributed, or has not fully contributed, the committed capital, the company must register changes to its charter capital and the members’ capital contribution ratios to reflect the amount of capital actually contributed. This registration must be completed within 30 days from the final date for making the full capital contribution under Clause 2, Article 47 of the Law on Enterprises 2020.

Similarly, under Clause 3, Article 75 of the Law on Enterprises, if the owner of a single-member limited liability company fails to contribute the full charter capital within the prescribed period, the owner must register a change in charter capital to reflect the amount actually contributed within 30 days from the final date for completing the contribution.

A joint-stock company must register an adjustment to its charter capital corresponding to the par value of the shares fully paid for within 30 days from the end of the period for paying in full for the subscribed shares under Clause 1, Article 113 of the Law on Enterprises, unless all unpaid shares have been sold within that period. The company must also register changes to its founding shareholders (Clause 3, Article 113 of the Law on Enterprises).

Cases Subject to Administrative Penalties

Under Point (a), Clause 3, Article 46 of Decree No. 122/2021/ND-CP, as amended and supplemented by Decree No. 288/2026/ND-CP, failure to adjust charter capital may be subject to a fine of VND 30,000,000 to VND 50,000,000 for the following violation:

“Failure to carry out procedures for adjusting charter capital or changing members or founding shareholders with the business registration authority, as required by law, after the capital contribution deadline and the subsequent period for adjusting charter capital have expired because members or founding shareholders failed to contribute the full committed capital, and none of the members or founding shareholders fulfilled their capital contribution commitments.”

If an enterprise appears to have falsely declared its charter capital, it may also be subject to penalties under Article 47 of the same Decree, depending on the amount falsely declared.

In addition to monetary fines, the enterprise may be required to take remedial measures, including completing procedures to adjust charter capital or change its members or founding shareholders. It may also be compelled to register an adjustment of charter capital to match the amount of capital actually contributed (Clause 5, Article 46 and Clause 6, Article 47 of Decree No. 122/2021/ND-CP, as amended and supplemented by Decree No. 288/2026/ND-CP).

Contact BKC LAW

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