How much capital is needed to establish a limited company?

The amount of capital required to establish a limited company is an important factor to understand before starting a business. Capital is one of the conditions that must be met to establish a company and issue a business registration certificate. In the article below, we will provide specific information about the capital level to establish a limited company.

The conditions to establish a limited company

When establishing a limited liability company, Vietnamese law stipulates a number of mandatory conditions that the business must meet. These conditions are specified in the Law on Enterprise 2020 and its guiding documents. Understanding and complying with these conditions will help the business establishment process go smoothly, avoiding legal risks that may arise.

Owner conditions

Pursuant to the provisions of Article 17 of the Law on Enterprise 2020, organizations and individuals have the right to establish and manage limited liability companies, except in the following cases:

• State agencies and units of the people’s armed forces use state assets to establish business enterprises to make their own profits;
• Officials, civil servants and public employees;
• Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, and police workers in agencies and units under the People’s Public Security of Vietnam, except those appointed as authorized representatives to manage the State’s capital contribution in the enterprise or management at state-owned enterprises;
• Leaders and professional managers in state-owned enterprises, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;
• Minors; people with limited civil act capacity; people who have lost their civil act capacity; people with difficulty in cognition and behavior control; organizations without legal status;
• People who are being prosecuted for criminal liability, are detained, are serving prison sentences, are serving administrative measures at compulsory detoxification facilities, compulsory education establishments or are being banned by the Court holding positions, prohibiting practicing certain professions or doing certain jobs; Other cases according to the provisions of the Law on Bankruptcy and the Law on Prevention and Combat of Corruption;
• Organizations are commercial legal entities banned from doing business and operating in certain fields according to the provisions of the Criminal Code.

Capital conditions

Charter capital is an important factor that determines an enterprise’s ability to operate and develop. Determining the appropriate level of charter capital not only meets regulatory requirements but also ensures that the business has enough financial resources to operate effectively.

Currently, the law does not stipulate a minimum capital level for establishing a business, except for some industries with legal capital requirements.

However, it should be noted that in order to establish a company, it is necessary to ensure that the full amount of registered charter capital is contributed on time.

Industry conditions

Enterprises have the right to register to do business in industries and professions that are not prohibited by the law, but those industries must be within the Vietnamese economic industry code system or must be specifically regulated in specialized legal documents.

As for conditional industries and professions, businesses must ensure that they meet the conditions of each industry according to the provisions of the law.

Types of capital to establish a limited company

During the process of establishing a limited liability company, investors need to clearly understand the different types of capital and their roles. Each type of capital has its own characteristics and requirements, directly affecting the business’s ability to operate and comply with the law.

Charter capital

Charter capital is the total value of assets contributed or committed to by company members and owners when establishing the company.

This type of capital is required when establishing a business. Charter capital is freely registered by enterprises; without being bound by other provisions of law.

Legal capital

Legal capital is a special requirement for some conditional business lines. This is the minimum capital that businesses are required to have to be licensed to operate in specific fields.

Some examples of legal capital levels:

• International postal service: 5 billion VND;
• Life insurance business: 1,000 billion VND;
• Securities trading: 100 billion VND;
• Payment service without a bank account: 50 billion VND.

Margin capital

Margin capital is a special form of financial security, required for some specific business lines. This money is deposited at the bank and can only be used in accordance with the law.

Some professions require deposits:

• Inbound international travel: 250 million VND;
• Outbound international travel: 500 million VND;
• Service of sending workers to work abroad: 1 billion VND;
• Security service: 300 million VND;

Note when contributing capital to establish a limited company

The process of contributing capital to establish a limited company is an important step that requires strict compliance with legal regulations.

Capital contribution period

The capital contribution deadline is an important factor that needs to be strictly followed by members to ensure the business operates. Contributing capital on time demonstrates the financial capacity and commitment of the members to the business.

Regulations on capital contribution deadline:

• Members must contribute capital to the company in full and with the right type of assets as committed when registering to establish a business within 90 days from the date of issuance of the Business Registration Certificate;
• In case there are members who have not contributed capital or have not contributed the full amount of capital as committed, the company must register to change charter capital, with the proportion of members’ capital contribution equal to the amount of capital contributed within 30 days from the date of registration. Last day to pay full capital contribution.

Form of capital contribution

The law regulates many different forms of capital contribution, creating favorable conditions for members to fulfill their capital contribution obligations. Each form of capital contribution has its own advantages and requirements regarding procedures and documents.

Pursuant to Article 34 of the Law on Enterprise 2020, there are the following forms of capital contribution:

• Cash, gold;
• Land use rights and assets attached to land, intellectual property rights;
• Technology and technical know-how;
• Other assets can be valued in Vietnamese Dong.

Valuation of capital contribution assets

Valuation of contributed assets is one of the most important steps in the capital contribution process, ensuring fairness and transparency among members. The valuation process must comply with the principles and methods prescribed by law. Principles for valuing capital contribution assets:

• Assets contributed as capital must be valued according to the principle of consensus among members or by a valuation organization.
• In case a valuation organization determines the value, the value of contributed assets must be approved by more than 50% of the members.
• In case the contributed capital is valued higher than its actual value at the time of capital contribution, the members jointly contribute an additional amount equal to the difference between the valued value and the actual value of the contributed capital at the time of valuation completion.

Consulting services for establishing a limited company

With many years of experience in the field of business consulting, Long Phan provides comprehensive, professional and reputable limited company establishment consulting services. We support customers throughout the process of establishing a business, from initial consultation to completing procedures. Our services include:

• Consulting on conditions for establishing a limited liability company;
• Consulting and guidance on preparing company registration documents;
• Consulting on documents and procedures for applying for licenses for certain occupations;
• Consulting on the amount of capital to be contributed and the time limit for capital contribution;
• Customer representative carries out business establishment registration procedures and other related procedures;
• Consulting and answering questions during the business establishment process.

Establishing a limited company requires an understanding of the law and administrative procedures. For detailed advice on the process of establishing a limited liability company, determining appropriate charter capital and other related issues, please contact us via the hotline 0906735386. Long Phan’s team of experts will assist you in completing all procedures as quickly and effectively as possible.