What Is “Capital” in Vietnam? A Complete Guide to the Five Types — Charter Capital, Investment Capital, Loan Capital, and More — and the Legal Points to Watch

NEXORA LAWFIRM regularly advises on company formation, capital increases, ownership structuring, and capital restructuring, and provides practical support on the various "capital" concepts commonly encountered in Vietnam — charter capital, investment capital, loan capital, and more — along with the regulations that apply to each. In this article, our Vietnamese attorneys carefully organize and explain the differences between five capital categories that Japanese investors and foreign-invested companies frequently misunderstand, along with the associated legal points to watch, with the aim of helping readers avoid common misunderstandings and manage the practical risks involved.

01 - Types of "Capital" in Vietnam and How They Differ

When establishing or operating a company in Vietnam, or implementing an investment project, several different "capital" terms come into play. Although similar in appearance, they carry distinct meanings, and a precise understanding is essential. This section explains, from a legal practitioner's perspective, the differences between the five capital terms most commonly used.

1.1. Charter Capital (Vốn điều lệ)

Charter capital refers to the capital amount recorded in the company's charter and Enterprise Registration Certificate. It represents the funds that the members/shareholders are actually obligated to contribute, and is used as the company's operating funds. It is typically the first form of capital that Japanese companies set for their local subsidiary.

1.2. Legal Capital (Vốn pháp định)

Legal capital refers to the minimum amount of capital required to conduct business in certain regulated industries. For example, in fields such as labor outsourcing, banking, and securities, the law sets a minimum capital requirement, and a license cannot be obtained unless it is met.

1.3. Investment Capital (Vốn đầu tư)

Investment capital refers to the total capital amount required to implement an investment project, as recorded on the Investment Registration Certificate (IRC). It consists of two components:

Contributed capital (vốn góp) — this ordinarily corresponds to the company's charter capital.
Mobilized/borrowed funds (vốn vay) — such as borrowings from third parties.

When a foreign investor establishes a local entity to implement a project, the contributed-capital component becomes, as is, the "charter capital."

1.4. Loan Capital (Vốn vay)

Loan capital refers to funds raised from third parties — such as financial institutions or affiliated companies — either for an investment project or to supplement working capital.

1.5. Mobilized Capital (Vốn huy động)

Mobilized capital is the term used when a company raises additional capital through means such as issuing new shares or corporate bonds. It most often refers to fundraising activity connected with a capital increase or financing transaction.

02 - Key Legal Points Relevant to Each Capital Category

Different legal rules and procedures apply to each type of "capital" in the course of operating a company or carrying out investment activity in Vietnam. Below is a summary of the key legal points relevant to the five main capital categories.

■ Legal Points on Charter Capital (Vốn điều lệ)
Charter capital must be expressly stated in the company's charter and Enterprise Registration Certificate (ERC).
Any change to charter capital requires an amendment to the enterprise registration.
Charter capital changes fall into two categories.

✅ A change to the initial charter capital requires prior "approval" from the authorities, whereas an increase in capital is simply "reflected based on notification from the company" (i.e., a post-hoc reporting regime).

For foreign-invested companies, charter capital must be contributed through the Direct Investment Capital Account (DICA). In the case of indirect investment, contributions may instead be made through an indirect investment capital account.
A delay in completing the capital contribution may result in administrative sanctions (fines).

■ Legal Points on Legal Capital (Vốn pháp định)
The legal capital required for a regulated industry must be maintained at all times throughout the period of business operation.
Falling below the required legal capital risks license revocation or suspension of operations.

■ Legal Points on Investment Capital (Vốn đầu tư)
Investment capital must be recorded on the Investment Registration Certificate (IRC).
Contributed capital (vốn góp) may be paid in installments in line with project progress (this is particularly common for large-scale projects).
Loan capital (vốn vay) used in the project must also be pre-registered on the IRC.

■ Legal Points on Loan Capital (Vốn vay)
Medium- and long-term borrowing is, in principle, required to be recorded on the IRC.
By contrast, there is no clear legal position on whether short-term borrowing must be registered.
In practice, treatment varies by financial institution — some banks permit it, while others do not.
It is therefore important to confirm the position with the relevant bank in advance.
Foreign-currency-denominated borrowing may also require advance reporting to, and registration with, the State Bank of Vietnam.

■ Legal Points on Mobilized Capital (Vốn huy động)
When raising capital through means such as additional share issuance or corporate bond issuance, the following requirements must be satisfied.
Compliance with the Enterprise Law (Luật Doanh nghiệp) and other relevant specialized laws
A resolution of the General Meeting of Shareholders
Appropriate reporting and registration procedures
For foreign-invested companies in particular, raising capital also requires confirming consistency with the company's investment registration and compliance with securities and financial regulations.

03 - Frequently Asked Questions (Q&A)

Q1. Does Vietnam impose a minimum charter capital requirement?

A:
In principle, there is no statutory minimum charter capital requirement for industries that are not subject to a legal capital requirement.
That said, individual localities may apply their own internal review standards.

For example, Hanoi has been observed to apply the following in practice.

For a single-industry, small-scale business: a minimum capital of VND 200 million may be requested.
For businesses involving multiple industries or medium- to long-term investment: the authorities determine an appropriate capital amount after requesting a business plan and financial projections.

✅ It is therefore important to confirm the position with the local authorities or with legal counsel in advance whenever establishing a company or registering an investment.

Q2. If the capital contribution deadline is missed, is the right to contribute capital lost?

A:
No. The obligation to contribute capital does not lapse simply because the deadline has passed.
Capital contribution is not merely a right but an obligation under the Enterprise Law, and the contributor remains obligated to make the contribution even after the 90-day deadline has elapsed.

A delayed contribution is subject to an administrative fine, but the state authorities also allow a grace period for completing the contribution.
However, for as long as the contribution remains unmade, the prospective contributor does not hold the rights of a shareholder/member.

Practical Legal Advice

The legal rules governing each type of capital affect not only the incorporation stage but also ongoing operations, fundraising, and changes to investment plans. Misclassification or procedural deficiencies can lead to licensing risk, administrative penalties, or restrictions on remittances and borrowing. It is therefore important to proceed in a planned manner with the benefit of expert advice.