How Is False Declaration of a Joint Stock Company’s Charter Capital to Bid for High-Capital Projects Handled?

What is a joint stock company?

Under Article 111 of the Law on Enterprises 2020 on joint stock companies as follows:

“Article 111. Joint stock companies

Related services

Corporate Legal Advisory

If your company needs to review governance authority, resolutions, charter documents or internal dispute risk, ANT Legal can help assess the file and suggest appropriate next steps.

Explore this service Message on Zalo Copy WeChat Send consultation request

Website information is for general reference only and does not replace legal advice for a specific matter.

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

a) Charter capital is divided into equal parts called shares;

b) Shareholders may be organizations or individuals; the minimum number of shareholders is 03 with no maximum limit;

c) Shareholders are liable for the debts and other asset obligations of the enterprise only within the amount of capital contributed to the enterprise;

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

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

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?

Under Article 112 of the Law on Enterprises 2020 on the capital of a joint stock company 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 shares of all types sold. The charter capital of a joint stock company upon enterprise establishment registration is the total par value of shares of all types registered for purchase and recorded in the company charter.

2. Sold shares are shares authorized for offering that have been fully paid by shareholders to the company. Upon enterprise establishment registration, sold shares are the total number of shares of all types registered for purchase.

3. Shares authorized for offering 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. The shares authorized for offering of a joint stock company upon enterprise establishment registration are the total number of shares of all types that the company will offer to raise capital, including shares registered for purchase and shares not registered for purchase.

4. Unsold shares are shares authorized for offering that have not been paid to the company. Upon enterprise establishment registration, unsold shares are the total number of shares of all types not registered for purchase.

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

a) Under a decision of the General Meeting of Shareholders, the company refunds part of the contributed capital to shareholders in proportion to their share ownership in the company if the company has continuously operated for 02 years or more from the date of enterprise establishment registration and ensures full payment of debts and other asset obligations after the refund to shareholders;

b) The company repurchases sold shares as prescribed in Articles 132 and 133 of this Law;

c) Charter capital is not fully and timely paid by shareholders as prescribed in Article 113 of this Law.”

What is false declaration of charter capital of a joint stock company?

Clause 5, Article 16 of the Law on Enterprises 2020 addresses the act of falsely declaring charter capital as follows:

“Article 16. Prohibited acts

1. Issuing or refusing to issue the Enterprise Registration Certificate, requiring enterprise founders to submit additional documents contrary to this Law; causing delays, troubles, obstruction or harassment to enterprise founders and business operations of enterprises.

2. Preventing owners, members or shareholders of enterprises from exercising rights and obligations as prescribed in this Law and the company charter.

3. Conducting business in the form of an enterprise without registration, or continuing business after the Enterprise Registration Certificate has been revoked or the enterprise has been suspended from business operations.

4. Falsely or inaccurately declaring contents of enterprise registration dossiers and dossiers for changes to enterprise registration contents.

5. Falsely declaring charter capital, failing to contribute the full registered charter capital; intentionally valuing contributed assets incorrectly.

6. Trading in sectors prohibited from business investment; trading in sectors not yet open to market access for foreign investors; trading in conditional business sectors without meeting business conditions as prescribed by law or failing to maintain investment business conditions during operations.

7. Fraud, money laundering, terrorist financing.”

Under the above legal provisions, false declaration of charter capital can be understood as the act of a joint stock company arbitrarily declaring charter capital higher than the actual charter capital for business registration. False declaration of charter capital is an act strictly prohibited by law.

How is false declaration of charter capital of a joint stock company handled?

The sanctioning form for false declaration of charter capital of a joint stock company is prescribed in Article 47 of Decree 122/2021/ND-CP as amended and supplemented by Decree 288/2026/ND-CP (effective from 21/7/2026), specifically:

“Article 47. Violations in charter capital declaration

1. A fine of from 20,000,000 dong to 30,000,000 dong for falsely declaring charter capital with a value of under 10 billion dong.

2. A fine of from 30,000,000 dong to 40,000,000 dong for falsely declaring charter capital with a value of from 10 billion dong to under 20 billion dong.

3. A fine of from 40,000,000 dong to 60,000,000 dong for falsely declaring charter capital with a value of from 20 billion dong to under 50 billion dong.

4. A fine of from 60,000,000 dong to 80,000,000 dong for falsely declaring charter capital with a value of from 50 billion dong to under 100 billion dong.

5. A fine of from 80,000,000 dong to 100,000,000 dong for falsely declaring charter capital with a value of 100 billion dong or more.

6. Remedial measures: Compulsory registration to adjust charter capital to equal the actually contributed capital for violations prescribed in Clauses 1, 2, 3, 4 and 5 of this Article.”

Thus, when a competent authority discovers false declaration of charter capital, the joint stock company shall be fined from 20,000,000 dong to 100,000,000 dong depending on the severity of the violation. In addition, the joint stock company must take the remedial measure of compulsory registration to adjust charter capital to the contributed capital for the violation.

Regarding your question, the answer is as follows: If that joint stock company is discovered by a competent authority to have falsely declared charter capital from 5 billion dong to 20 billion dong, the joint stock company shall be fined from 30,000,000 dong to 40,000,000 dong, and must take the remedial measure of compulsory registration to adjust charter capital to the contributed capital.

ANT Legal