Charter capital contribution time limit should be extended: VCCI
Shareholders should have 180 days to contribute charter capital to their company instead of 90 days starting immediately, the Vietnam Chamber of Commerce and Industry recently proposed.
Shareholders should have 180 days to contribute charter capital to their company instead of 90 days starting immediately, the Vietnam Chamber of Commerce and Industry (VCCI) recently proposed.
The proposal is part of VCCI’s suggestions to amend the Law on Enterprises from 2020.
According to current laws, owners, members and shareholders of an enterprise have 90 days from the day they were granted the Certificate of Enterprise Registration to contribute charter capital to their company.
This time limit does not include the time needed to transport or import contributed assets, or to perform administrative procedures related to the transfer of asset ownership.
However, as VCCI observed, in reality several enterprises – especially foreign-invested ones – are unable to gather all their charter capital within 90 days, because of complicated and time-consuming procedures.
To begin the contribution process, these enterprises often have to open a direct investment capital account (DICA) at a Vietnamese bank, which requires several documents from the company, the owner, members or foreign shareholders for customer identification procedures (often known as KYC – Know Your Customer).
The majority of these documents would have to be legalised by foreign consular offices in Việt Nam, which is a time-consuming process.
On the other hand, although the law does stipulate the capital reduction process if shareholders fail to contribute enough charter capital within 90 days, it does not specify how shareholders could continue contributing charter capital after this period ends.
This leads to a situation where even though enterprises have had their banking procedures completed, the banks can’t accept charter capital contributions deposited into their accounts.
On these grounds, VCCI proposed that the time limit for charter capital contribution should be increased to 180 days, so that enterprises have more time to handle administrative procedures.
Provisions on how shareholders can continue contribute charter capital after this period ends should also be added to the law, in case they fail to contribute the funds within the designated period, according to VCCI.
One possible solution is that they can submit an application to business registration authorities, explaining the reason and requesting an extension for capital contribution.
The total extension can be up to 180 days from the date of the extension request, according to VCCI. — VNS
