When dealing with a Vietnamese shareholding company, it is important to understand the term “charter capital” (Vốn điều lệ). Under Article 4.6 of the Enterprise Law, the charter capital of a shareholding company is defined to mean “the amount of capital contributed or undertaken to be contributed by shareholders in a certain period and stated in the charter of the company”. However, Article 6.4 of Decree 102/2010 tightens the definition of charter capital by providing that the charter capital of a shareholding company is the aggregate par value of the number of issued shares (số cổ phần phát hành). The number of issued shares is the number of shares fully paid up to the company by shareholders.

In light of the above definitions,

• The charter capital recorded in the business registration certificate of a shareholding company is not necessarily the charter capital of such company. In addition to the business registration certificate, one should look into the charter and the shareholder register of a shareholding company to determine its charter capital;
• If the shareholders of a shareholding company decide to increase its charter capital but fail to pay in full the additional new shares then the charter capital of such company is not the proposed increased charter capital but the actual paid up charter capital; and
• If a shareholding company buys back its own shares then the amount of charter capital of such company should be reduced accordingly. This is because the shares which have been brought back are not contributed or undertaken to be contributed by any shareholder. However, there are certain counterarguments to this position based on various regulations on treasury shares by the Ministry of Finance.