Time limit for contributing capital to establish a single-member limited liability company according to law

How long is the charter capital contribution period for a one-member limited liability company? If we do not contribute enough capital after the prescribed time limit, will there be any penalties?

1. What is the charter capital of a one-member limited liability company?

According to the provisions of Clause 1, Article 75 of the Law on Enterprises 2020 as follows:

“1. The charter capital of a one-member limited liability company when registering to establish a business is the total value of assets committed to contribute by the company owner and recorded in the company’s charter.”

Thus, the charter capital of a single-member limited liability company when registering to establish a business is the total value of assets committed to contribute by the company owner and recorded in the company charter.

2. What is the time limit for contributing capital to establish a one-member limited liability company?

Pursuant to Clause 2, Article 75 of the Law on Enterprises 2020, the capital contribution period of a one-member limited liability company is prescribed as follows:

“2. The company owner must contribute capital to the company in full and with the right type of assets as committed when registering to establish the business within 90 days from the date of issuance of the Business Registration Certificate, excluding the time of transporting and importing the contributed assets and carrying out administrative procedures to transfer asset ownership. During this period, the company owner has rights and obligations corresponding to the committed capital contribution.”

Thus, the time limit for contributing capital to establish a one-member limited liability company is 90 days from the date of issuance of the Business Registration Certificate.

3. If you do not contribute enough capital after the prescribed capital contribution deadline, will you be fined?

In Clause 3, Article 75 of the Law on Enterprises 2020, regulations on capital contribution to establish a company are as follows:

“In case of failure to fully contribute charter capital within the time limit specified in Clause 2 of this Article, the company owner must register to change the charter capital equal to the value of the contributed capital within 30 days from the last day to fully contribute the charter capital. In this case, the owner must be responsible in proportion to the committed capital contribution for the company’s financial obligations arising in the period before the last day the company registers to change the charter capital according to the provisions of this Clause.”

According to the above regulations, if you do not fully contribute charter capital within 90 days from the date of issuance of the Business Registration Certificate, you must register to change charter capital equal to the value of the contributed capital within 30 days from the last day to fully contribute charter capital.

If after the deadline specified above, you still do not register to change the company’s charter capital, you will be subject to administrative sanctions, specifically according to pointma Clause 3 Article 46 of Decree 122/2021/ND-CP stipulated as follows:

“[…] 3. Fine from 30,000,000 VND to 50,000,000 VND for one of the following acts:

a) Failure to carry out procedures to adjust capital or change members and founding shareholders according to regulations at the business registration authority after the end of the capital contribution period and the end of the capital adjustment period due to members and founding shareholders not contributing enough capital but no member or founding shareholder has made a commitment to contribute capital;

b) Intentionally valuing assets contributed as capital at an incorrect value.

[…] 5. Remedial measures:

a) Force change of capital contributing members, purchase of shares, capital contributions for violations specified in Point b, Clause 2 of this Article;

b) Forced implementation of capital adjustment procedures or change of members or founding shareholders for violations specified in Point a, Clause 3 of this Article;

c) Forced registration of enterprise establishment for violations specified in Point a, Clause 4 of this Article.”

However, in Clause 2, Article 4 of Decree 122/2021/ND-CP, the above penalty level is the penalty level prescribed for organizations. For the same administrative violation, the fine for individuals is equal to 1/2 (one-half) of the fine for organizations.

Thus, if past the prescribed capital contribution deadline (90 days from the date of issuance of the Business Registration Certificate) you do not contribute enough capital and then do not register to change the charter capital within 30 days from the last day to fully contribute the charter capital, you may be subject to administrative sanctions with a fine according to the above regulations. In addition, you are also forced to apply remedial measures such as carrying out the registration procedure to adjust charter capital. Therefore, you need to base on the above regulations to make capital contributions or register to change the company’s charter capital within the prescribed time limit.