A single-member limited liability company is a popular type of company in business today. However, when establishing a LLC, many investors ask the question “How much is the charter capital of a one-member LLC?”. The law does not determine the amount of share capital of a limited liability company. However, it is necessary to enter a certain number when registering a company. Viet My Law Firm would like to advise clients on initial capital issues when establishing a single-member limited liability company in the following article.

1. What is charter capital?

Charter capital is the total amount of assets donated or pledged by partners and owners to establish a limited liability company or partnership. Total par value of shares registered to buy and sell at the time of establishment of the public company.

The Enterprise Law 2020 also specifically regulates the types of assets used to provide capital for companies and businesses.

2. Regulations on charter capital of a one-member LLC

The charter capital of a one-member limited liability company is the total amount of assets that the owner is obligated to contribute and is specifically stated in the company’s charter. The company’s share capital is completely adjusted up and down during the course of business operations. This change is at the discretion of the owner.

2.1 Assets contributed to the charter capital of a one-member limited liability company

There are many forms in which an individual or organization can contribute capital.

• Cash (VND)
• Foreign currency cash
• Gold
• Value of land use rights
• The value of intellectual property rights (copyrights, patents, etc.)
• Other assets may be valued in Vietnam Dong

Owners/members/shareholders must invest the entire amount, including transportation and import time, into the company according to the type of business registration assets within 90 days from the date of issuance of the Certificate. Business Registration. We handle administrative procedures such as company formation and transfer of assets and property rights for investment.

If you do not contribute enough share capital within the prescribed time limit:

The owner of a one-member limited liability company must register within 30 days from the last date of changing the charter capital according to the amount of capital contributed to contribute sufficient charter capital. In this case, the owner is responsible for the financial obligations of the company arising in the period before the last day of registration of the change of charter capital as stipulated, in proportion to the capital contributed by the owner.

2.2 Time to contribute charter capital of a one-member limited liability company

When contributing initial capital to a one-member limited liability company, the full amount of assets must be contributed according to the method stated in the company registration. The deadline for initial capital contribution is 90 days from the date of receiving the company registration certificate. During the above time limit, the owners of a single-member limited liability company are responsible for contributing the full amount of initial capital.

If within the time limit specified in Clause 2 of this Article, the company owner does not contribute the full amount of registered capital, then within 30 days, the company owner must request to adjust the registered capital corresponding to the actual capital amount. contribute. can do it. From the last day of full capital contribution until the payment date. In this case, the owner is responsible for the company’s financial obligations arising during the period before the company registers a change in share capital, according to the amount of capital committed to contribute.

2.3 Changing the charter capital of a one-member limited liability company

• A one-member limited liability company has the right to change the charter capital of a one-member limited liability company in the following cases: :If the company continues to operate for more than two years from the date of registration of its establishment, it can return part of its principal to the owner. This repayment must continue so that the company can fully pay off its debts and financial obligations.
• Owners do not contribute capital as committed
• The company’s owner invests more capital
• Owners raise money from others. If a transforming company gives a part of its registered capital to another organization or individuals or raises another person’s capital contribution to increase its registered capital, it must transform its management organization into a limited liability company.

3. What is the charter capital of a one-member LLC according to regulations?

In the process of implementing procedures to establish a limited liability company, charter capital is a prerequisite, requiring business owners to register with state agencies. How much the charter capital of a one-member LLC is will depend on the company’s owner’s decision.

In case a one-member limited liability company establishes a regular business line and the minimum legal capital is not prescribed by law, the law also does not stipulate the minimum capital level for establishing a limited liability company. In fact, there are many single-member limited liability companies registered with very low initial capital, for example 5-10 million VND. However, the law does not prohibit this and if a private limited company transacts or cooperates in business with partners with a small initial capital, or cooperates with banks or tax authorities, trust is required. Entering a business, carrying out transactions is very limited and this is also a big obstacle when the registered share capital of a one-member limited liability company is too low. Therefore, company owners should register their relative level and financial situation to make business more favorable.

4. Should I register a high or low charter capital?

However, you also need to note the following: Charter capital is the provision of company assets to customers and partners. For this:

If the share capital is low or too low, the responsibility for the company’s assets will decrease and it will be difficult to build trusting relationships with customers and business partners. In particular, if a company needs to borrow capital from a bank that is too short on capital, the bank may find it unreliable to lend beyond its capacity and beyond the company’s equity capital.
High/excessive registered capital also increases the possibility of liability and risks related to the company’s assets, but it is easier to build trust with customers and partners, especially in business activities. suggestion.

Increasing charter capital is easy, decreasing charter capital is difficult. Therefore, managers should keep initial capital at a reasonable level and maintain skills depending on the financial situation, business direction and company size. The company’s share capital will be increased until the company’s business operations become more stable and show signs of growth.

5. Frequently asked questions about charter capital of a one-member LLC

5.1 Is it necessary to prove the charter capital of a one-member limited liability company?

Currently, when starting a business, depositing seed capital into a bank account is not necessary, unless you are operating in an area that requires deposits. However, in reality today there are many companies that do not need to prove this exact capital amount after registering capital.

5.2 Should the charter capital of a single-member LLC be high or low?

A company’s share capital is part of its reputation among customers and partners, so companies should not portray their share capital as too low. This easily leads to a lack of trust in the company among partners and customers. However, there is no need to overestimate the initial capital because the annual royalty rate for the company will increase.

5.3 How does declaring charter capital of a single-member limited liability company affect license tax?

The initial capital of the company determines the annual royalty rate that the company must pay when completing the company establishment process. According to current regulations, the license tax that businesses pay is divided into 2 levels:

• Level 1: If registered capital exceeds 10 billion VND, the company must pay 3 million VND annually.
• Level 2: If registered capital is less than 10 billion VND, the company must pay 2 million VND annually.

5.4 What are the owner’s responsibilities for contributing capital to establish a one-member limited liability company?

The owner must bear the financial obligations of the company and damages arising from not contributing or not fully contributing the initial capital of the limited liability company with a number of partners. all assets.

5.5 What is the penalty for violating the charter capital of a single-member limited liability company?

Fine from 20 million VND to 30 million VND for intentional valuation of contributed assets at incorrect value, forced revaluation of contributed assets and registration of charter capital according to the actual value of contributed assets. capital. If you do not register changes with the company registration agency, if you lack the registered establishment capital, you will be fined from 10,000,000 VND to 20 million VND and forced to register for adjustment of establishment.

Above is the article “What is the charter capital of a one-member LLC according to regulations?” Mention detailed information about the legal regulations on charter capital of a one-member LLC. Business registration, changing business registration including changing charter capital is a relatively common need for businesses and establishments in a vibrant business situation. When this need arises, businesses should clearly understand the work that needs to be done or contact VIET MY LAW AND ACCOUNTING to be able to perform the service of changing charter capital on their behalf quickly and effectively.