Is it possible to use a red book to contribute capital to establish a joint stock company? in Vietnam

What is a joint stock company?

According to Article 111 of the Law on Enterprises 2020, the regulations on joint stock companies are as follows:

“Article 111. Joint stock company

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

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

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

c) Shareholders are 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 Business Registration Certificate.

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

Accordingly, a joint stock company is an enterprise in which:

– charter capital is divided into equal parts called shares;

– Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number;

– Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

– Shareholders have the right to freely transfer their shares to others

How is the capital of a joint stock company regulated?

According to Article 112 of the Law on Enterprises 2020, regulations on capital of joint stock companies are as follows:

– 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’s charter.

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

– Shares authorized to be offered for sale by a joint stock company are the total number of shares of all types that the General Meeting of Shareholders decides to offer for sale to raise capital. The number of shares a joint stock company is entitled to offer when registering to establish a business is the total number of shares of all types that the company will offer to raise capital, including shares that have been registered to buy and shares that have not been registered to buy.

– 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.

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

+ According to the decision of the General Meeting of Shareholders, the company returns 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;

+ The company buys back sold shares according to the provisions of Articles 132 and 133 of this Law;

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

Accordingly, 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’s charter.

Is it possible to use a red book to contribute capital to establish a joint stock company?

According to Article 34 of the Law on Enterprises 2020, regulations on assets contributed as capital are as follows:

“Article 34. Assets contributed as capital

1. Assets contributed as capital are Vietnamese Dong, foreign currencies are freely transferable exchange, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be valued in Vietnam Dong.

2. Only individuals and organizations that are legal owners or have legal use rights to assets specified in Clause 1 of this Article have the right to use those assets to contribute capital according to the provisions of law.”

Accordingly, the assets contributed as capital are Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be valued in Vietnamese Dong. Only individuals and organizations that are the legal owners or have legal use rights to the property have the right to use that property to contribute capital.

However, for each type of business, the law regulates the order and procedures for capital contribution differently, and to contribute capital to the company with the value of land use rights, you need to meet the conditions prescribed by land law.