Charter capital is the number that quietly governs a foreign-invested company’s entire first year in Vietnam. It is declared at licensing, must be contributed on a fixed timetable through a specific account, and constrains borrowing, incentive eligibility and credibility with the authorities for as long as the project runs.
Setting charter capital at the right level
Vietnam sets no general minimum, but the licensing authority tests whether the declared figure plausibly funds the business plan. Understate it and the application attracts questions and, later, a constrained borrowing position. Overstate it and the company must actually contribute the money within the statutory window.
Practical benchmarks: service companies commonly declare fifty to one hundred thousand US dollars equivalent; manufacturing and trading projects declare materially more, sized against equipment, working capital and the construction programme in our factory setup guide. Certain conditional sectors carry their own legal minimums.
The ninety-day charter capital rule
Charter capital must be contributed within ninety days of the enterprise registration certificate, through the direct investment capital account. Missing that window is not a technicality – it requires a formal reduction filing, flags the company for scrutiny, and undermines the disbursement conditions that incentives frequently depend on.
Sponsors financing construction over several years should therefore size charter capital to what will genuinely be contributed in the window, and fund the balance through shareholder loans or the registered capital schedule in the investment certificate – the distinction our project financing guide sets out.
Contributing charter capital in assets
Cash is simplest, but equipment, machinery, intellectual property and technology may be contributed with valuation documentation – the inbound counterpart of the analysis in our non-cash capital contribution guide and our in-kind contribution guide.
For manufacturers importing a production line, contributing the equipment as capital rather than purchasing it can simplify both the funding and the customs position – though the valuation must be independent and prepared before the contribution rather than after.
Charter capital and the debt-to-equity relationship
Charter capital sets the base against which the company’s borrowing capacity is assessed, and interest deductibility caps constrain how much of the funding can efficiently be debt. A structure that is thinly capitalised and heavily loaned will find part of its interest non-deductible, which is examined in our tax compliance guide.
The efficient split is modelled at licensing, not discovered at the first tax finalisation.
Charter capital FAQs
Can it be increased later?
Yes, through certificate and enterprise registration amendments – see our IRC adjustment guide. Increases are routine; reductions are considerably harder.
Does it affect incentives?
Capital scale is an incentive criterion in several categories, so the declared and contributed figures both matter – our zone tax incentives guide covers the conditions.
What account must be used?
The direct investment capital account. Contributions routed through ordinary accounts create reconciliation problems that surface when profits are repatriated. Texts are published via the Ministry of Finance.
Common charter capital mistakes
Four recur among first-time investors. Declaring a round figure chosen for appearance rather than derived from the business plan, which invites licensing questions and later constrains borrowing. Assuming the ninety-day window can be extended informally – it cannot, and the remedy is a formal reduction filing that flags the company.
Contributing through an ordinary account rather than the direct investment capital account, which creates a reconciliation problem that surfaces years later at profit repatriation. And treating the registered capital schedule in the investment certificate as aspirational, when it is the benchmark against which disbursement conditions and incentive eligibility are tested.
Each is avoidable at the planning stage and awkward afterwards. The discipline that prevents all four is simple: derive the charter capital figure from the funding model, confirm what will genuinely be contributed inside ninety days, and structure the balance as registered loan funding rather than as an optimistic equity commitment.
This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
