Question: What is the role of the charter capital in a joint stock company?

Answer:

One of the biggest meanings of charter capital is the basis for determining the proportion of share of shareholders in the company. This will serve as the basis for dividing the rights, interests and obligations among the shareholders in the company.

Specifically, shareholders are responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except in some cases stipulated in the Law on Enterprises.

At the same time, the Law on Enterprises also stipulates that shareholders have the number of votes corresponding to the capital contribution as well as share the profit corresponding to the capital contribution after the company has paid fully tax and financial obligations.

In addition, charter capital is also one of the bases for determining business conditions for some conditional business lines. For example: According to the provisions of Decree No. 76/2015/ND-CP dated 10/9/2015, organizations and individuals dealing in real estate must set up enterprises in accordance with the law on enterprises or as prescribed by the law on cooperatives and must have charter capital of not less than VND 20 billion.