Failure to fully contribute charter capital: What consequences do enterprises face?

1. Concept and deadline for charter capital contribution

1.1. Concept

Charter capital is the total value of assets contributed or committed to be contributed by company members or company owners upon the establishment of a limited liability company or a partnership; it is the total par value of shares sold or registered for purchase upon the establishment of a joint-stock company (Clause 34, Article 4 of the Law on Enterprises).

This serves as the basis for determining ownership ratios, voting management rights, as well as the asset and legal liabilities of the relevant parties.

1.2. Deadline for charter capital contribution

2. Legal consequences for failure to fully contribute charter capital according to law

2.1. Impact on the rights of owners, capital contributing members, and shareholders

2.1.1. For Single-member Limited Liability Company

Pursuant to Article 75 of the Law on Enterprises, upon failure to fully contribute the charter capital within the prescribed deadline, the company owner shall have the following obligations and be subject to the following consequences:

• The owner must register for a change in charter capital equal to the value of the contributed capital within 30 days from the final deadline for full capital contribution.
• The owner shall be liable in proportion to the committed capital contribution for the company's financial obligations arising during the period prior to the final date the company registers for the change in charter capital.
• The company owner is liable with all of their assets for the company's financial obligations and damages occurring due to failure to contribute, failure to fully contribute, or failure to contribute charter capital on time as prescribed.

Accordingly, given the nature of a single-member limited liability company, the law only stipulates that the owner shall be held liable for damages resulting from the failure to fully contribute capital, without forfeiting the owner's rights.

2.1.2. For Multi-member Limited Liability Company

Pursuant to Clauses 3 and 4, Article 47 of the Law on Enterprises, in cases where members of a multi-member limited liability company have not contributed capital or have not fully contributed the committed capital, the matter shall be handled as follows:

• Members who have not contributed capital as committed shall automatically cease to be members of the company
• Members who have not fully contributed the committed capital shall have rights proportional to the capital portion actually contributed
• The un-contributed capital portion of the members shall be offered for sale in accordance with the resolutions or decisions of the Members' Council.
• The company must register for a change in charter capital and members' capital contribution ratios equal to the contributed capital within 30 days from the final deadline for full capital contribution as prescribed.
• Members who have not contributed or have not fully contributed capital as committed shall be liable in proportion to the committed capital contribution portion for the company's financial obligations arising during the period prior to the date the company registers the change in charter capital and members' capital contribution ratios.

While the risks in single-member limited liability companies primarily concentrate on the owner's asset liability, in multi-member limited liability companies, the failure to contribute or the insufficient contribution of capital leads to the direct consequence of loss or restriction of membership status. This mechanism contributes to ensuring the transparency of charter capital, protecting the interests of the remaining members and third parties, and simultaneously limiting the occurrence of virtual charter capital in business practice.

2.1.3. For Joint-stock Company

Pursuant to Clauses 3 and 4, Article 113 of the Law on Enterprises, upon the expiration of the prescribed capital contribution period, shareholders who have not paid or have only partially paid for the registered shares shall be handled as follows:

• Shareholders who have not paid for the registered shares shall automatically cease to be shareholders of the company and may not transfer the right to purchase those shares to others
• Shareholders who have only partially paid for the registered shares shall have the right to vote, receive dividends, and other rights proportional to the number of paid-up shares; they may not transfer the right to purchase the unpaid shares to others
• Unpaid shares shall be considered unsold shares and the Board of Directors is authorized to sell them
• Within 30 days from the end of the deadline for full payment of registered shares as prescribed, the company must register to adjust the charter capital to the total par value of the fully paid shares (except where the unpaid shares have been fully sold within this period) and register the change of founding shareholders;
• Shareholders who have not paid or have not fully paid for the registered shares shall be liable in proportion to the total par value of the registered shares for the company's financial obligations arising during the period prior to the date the company registers the charter capital adjustment.
• Members of the Board of Directors and the legal representative(s) shall be jointly and severally liable for any damages arising from the failure to perform or the improper performance of the obligation to supervise and urge shareholders to contribute capital or to perform capital adjustment procedure.

Compared to limited liability companies, the handling mechanism for joint-stock companies is more flexible as it allows the Board of Directors to actively offer unpaid shares for sale, helping the company quickly stabilize its capital source. Maintaining the financial liability of defaulting shareholders and establishing the joint and several liability of the Board of Directors and legal representative(s) contributes to enhancing discipline in corporate governance and protecting the interests of creditors and investors.

2.2. Administrative penalties

Failure to contribute capital, failure to fully contribute capital on time, or failure to register a change in charter capital within the prescribed deadline may subject the enterprise to administrative fines under Decree No. 122/2021/ND-CP as follows:

2.2.1. A fine ranging from VND 30,000,000 to VND 50,000,000 for the failure to perform procedures for capital adjustment or changes to members or founding shareholders at the business registration authority upon the expiration of the capital contribution deadline and the capital adjustment period, where members or founding shareholders failed to contribute capital in full but no other members or founding shareholders fulfilled the contribution commitment (Article 46.3.a)

2.2.2. A fine ranging from VND 3,000,000 to VND 30,000,000 for violations regarding the deadline for registering changes to the contents of the Enterprise Registration Certificate (Article 44)

2.2.3. A fine ranging from VND 20,000,000 to VND 30,000,000 for dishonest or inaccurate declaration in the application for registering changes to business registration contents to obtain a Certificate of Change in Business Registration Contents (Article 43)

In summary, the full and timely contribution of charter capital is a mandatory legal obligation that enterprises, capital-contributing members, and shareholders must strictly fulfill to ensure transparency and legal safety in business operations. In the event of insufficient capital contribution, enterprises must promptly perform procedures to change the charter capital in accordance with Decree No. 168/2025/ND-CP to mitigate risks and avoid arising legal consequences. Lexsol is ready to advise and support enterprises in ensuring compliance and maximizing the protection of their legal rights and interests.