How will it be handled if he falsifies the charter capital of a Joint Stock Company to participate in the auction of projects with high capital?

What is a joint stock company?

According to the provisions of Article 111 of the Law on Enterprises 2020 on Joint Stock Companies as follows:

“Article 111. Company shares

1.  A joint stock company is an enterprise in which:

a) charter capital is divided into many equal parts called shares;

b) Shareholders can be organizations or individuals; the minimum number of shareholders is 03 and there is no maximum number limit;

c) Shareholders is only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

d) Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.

2. A joint stock company has legal status from the date of issuance of the Registration Certificate enterprise.

3. A joint stock company has the right to issue shares, bonds and other securities of the company.”

What is the charter capital of a Joint Stock Company?

Pursuant to the provisions of Article 112 of the Law on Enterprises 2020 on the charter capital of a Joint Stock Company as follows: as follows:

“Article 112. Capital of a joint stock company

1. The charter capital of a joint stock company is the total par value of all types of shares sold. The charter capital of a joint stock company when registering to establish a business is the total par value of all types of shares registered to buy and recorded in the company charter.

2. Shares sold are shares The shares entitled to be offered for sale have been fully paid by the shareholders to the company. When registering to establish a business, the shares sold are the total number of shares of all types that have been registered to buy.

3. The shares entitled to be offered for sale of a joint stock company are the total number of shares of all types that the General Meeting of Shareholders decides to offer to raise capital. will offer to raise capital, including shares that have been registered to buy and shares that have not been registered to buy.

4. Unsold shares are shares that have the right to be offered for sale and have not yet been paid to the company. When registering to establish a business, unsold shares are the total number of shares of all types that have not been registered to buy.

5. The company may reduce its charter capital in the following cases:

a) According to the decision of the General Meeting of Shareholders, the company refunds a portion of capital contribution to shareholders in proportion to their share ownership in the company if the company has operated continuously for 02 years or more from the date of business registration and ensures full payment of debts and other property obligations after repaying shareholders. shareholders;

b) The Company repurchases shares sold in accordance with the provisions of Article 132 and Article 133 of this Law;

c) The charter capital is not paid in full and on time by shareholders according to the provisions of Article 113 of this Law.”

False declaration of the charter capital of a Joint Stock Company is What?

In Clause 5, Article 16 of the Law on Enterprises 2020, the act of overstating charter capital is mentioned as follows:

“Article 16. Prohibited acts

1. Issuing or refusing to issue Business Registration Certificates, requiring business founders to submit other documents contrary to the provisions of this Law; causing delay, inconvenience, obstruction, and harassment to business founders and business operations of the enterprise.

2. Prevent owners, members, and shareholders of the enterprise from exercising their rights and obligations under the provisions of this Law and the company’s Charter.

3. Doing business in the form of an enterprise without registration or continuing to do business after the Business Registration Certificate has been revoked or the enterprise is temporarily suspending business operations.

4. Untruthful or inaccurate declaration of the content of the business registration application and the content of the registration application to change the content of the business registration.

5. Incorrect declaration of charter capital, failure to contribute the full amount of charter capital as registered; intentionally valuing assets contributed as capital at an incorrect value.

6. Doing business in industries and professions that are prohibited from business investment; Business lines and professions that do not have market access for foreign investors; Doing business in conditional business investment lines when the business investment conditions are not met according to the provisions of law or the business investment conditions are not guaranteed to be maintained during operation.

7. Fraud, money laundering, terrorist financing.”

Based on the above legal regulations, it can be understood that over-declaration of charter capital is the act of a joint stock company arbitrarily declaring a charter capital higher than the actual charter capital for business registration. Declaring charter capital is an act strictly prohibited by law.

How is false declaration of charter capital of a Joint Stock Company handled?

Sanctions for false declaration of charter capital of a Joint Stock Company are specified in Article 47 of Decree 122/2021/ND-CP, specifically:

“Article 47. Violations of declaration of charter capital rules

1. Fine from 20,000,000 VND to 30,000,000 VND for false declaration of charter capital worth less than 10 billion VND.

2. Fine from 30,000,000 VND to 40,000,000 VND for false declaration of charter capital valued from 10 billion VND to under 20 billion VND.

3. Fine from 40,000,000 VND to 60,000,000 VND for false declaration of charter capital valued from 20 billion VND to under 50 billion VND.

4. Fine from 60,000,000 VND to 80,000,000 VND for false declaration of charter capital valued from 50 billion VND to under 100 billion VND.

5. Fine from 80,000,000 VND to 100,000,000 VND for false declaration of charter capital valued at 100 billion VND or more.

6. Remedial measures: Force registration to adjust charter capital equal to the actual contributed capital for violations specified in Clause 1, Clause 2, Clause 3, Clause 4 and Clause 5 of this Article.”

Thus, when the competent authority discovers an act of over-declaring charter capital, the Joint Stock Company will be fined from 20,000,000 VND to 100,000,000 VND depending on the severity of the violation. In addition, the Joint Stock Company must take remedial measures such as forcing registration to adjust charter capital equal to the amount of contributed capital for violations.

Regarding your question, the answer is as follows: If that Joint Stock Company is discovered by a competent authority to have declared its charter capital from 5 billion VND to 20 billion VND, that Joint Stock Company will be fined from 30,000,000 VND to 40,000,000 VND, and at the same time take the remedial measure of being forced to register to adjust its charter capital equal to the amount of contributed capital.