LAWYER CONSULTING ON ENTERPRISE CAPITAL MOBILIZATION

Business consulting

1. What is capital mobilization?
2. Forms of capital mobilization of one-member limited liability company
3. Forms of capital mobilization of limited liability companies with two or more members
4. Forms of capital mobilization of joint-stock companies
5. Common legal risks when enterprises raise capital
6. What does a Lawyer consulting on capital mobilization of enterprises do?
7. Phong & Partners Law Firm specializes in consulting business capital mobilization
8. Phong & Partners Law Firm

Capital mobilization is an activity to increase the capital of the enterprise. The current Vietnamese law specifies the method for enterprises to raise capital corresponding to each different type of enterprise.

1. What is capital mobilization?

The capital of an enterprise can be understood as the assets of the enterprise, which can be in cash or assets, property rights with monetary value that can be used in the business operations of the enterprise such as intellectual property rights, land use rights; is real estate or movable property; short-term assets or long-term assets; is a fixed asset or a current asset.
The capital of an enterprise includes many types such as: owner's equity, investment capital, charter capital, mobilized capital, business capital, entrusted capital, legal capital, real capital, own capital, and loans.

Business capital mobilization is the activity of increasing the enterprise's capital in various forms from other entities in the market to supplement the enterprise's business capital (in addition to equity capital). The law allows enterprises to mobilize capital in many different ways, specifically in Clause 3, Article 7 of the Enterprise Law 2020, enterprises have the right to choose the form, method of capital mobilization, allocation and use. Depending on the form of capital mobilization, enterprises must comply with the corresponding legal provisions. However, enterprises must carefully study the legal provisions as well as consider the practical situation of their enterprises to decide on the appropriate form of capital mobilization because if an inappropriate form of capital mobilization is chosen, it will limit business opportunities and increase the risk of bad debt of the enterprise.

2. Forms of capital mobilization of one-member limited liability company

One-member limited liability company is an enterprise owned by an organization or an individual (company owner); the owner of the company is responsible for the debts and other property obligations of the company within the scope of the company's charter capital.
According to the provisions of law, one-member limited liability company can increase capital for the operation of company by:

Raising capital in the form of bond issuance;
Mobilizing capital contributions from other individuals and organizations to transform one-member limited liability company into limited liability company with two or more members or a joint-stock company;
Raising capital from other individuals and organizations through cooperation contracts;
Raising capital in the form of loans;
Raising capital by increasing the owner's charter capital.

3. Forms of capital mobilization of limited liability companies with two or more members

A limited liability company with two or more members is an enterprise in which members can be organizations or individuals. The number of members does not exceed fifty. Members are responsible for debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise.
According to the provisions of law, two-member limited liability company can increase capital for the operation of company by:

Raising capital in the form of bond issuance;
Raising capital in the form of increasing the contributed capital of members to increase the company's charter capital;
Mobilizing capital contributions from other individuals and organizations to increase the number of members of the company or transform limited liability company with two or more members into a joint-stock company;
Raising capital from other individuals and organizations through cooperation contracts;
Raising capital in the form of loans.

4. Forms of capital mobilization of joint-stock companies

A joint-stock company is an enterprise in which:

Charter capital is divided into equal parts called shares;
Shareholders can be organizations and individuals; the minimum number of shareholders is 03 and there is no limit on the maximum number;
Shareholders are only responsible for debts and other property obligations of the enterprise within the amount of capital contributed to the company.

According to the provisions of law, a joint-stock company can raise capital by:

Offering shares to existing shareholders;
Public offering;
Private placement of shares;
Bond issuance;
Signing cooperation contracts;
Borrowing capital from other individuals and organizations.

5. Common legal risks when enterprises raise capital

If the enterprise implements the capital mobilization in contravention of the law, the enterprise may bear risks such as:

Being administratively sanctioned (fines and other additional penalties);
Having to pay compensation for damage and entangled in disputes;
Being criminally prosecuted ;
…

6. What does a Lawyer consulting on capital mobilization of enterprises do?

Providing legal advice on capital mobilization options in accordance with the company's needs and the provisions of law; at the same time, anticipating possible legal risks for each option;
Analyzing, comparing and evaluating the advantages/disadvantages of each legal option and form;
Drafting agreements and contracts on capital mobilization according;
Preparing documents for capital mobilization required by the law;
Supporting and consulting throughout the mobilization implementation to ensure it is within the scope of law.

7. Phong & Partners Law Firm specializes in consulting business capital mobilization

Phong & Partners Law Firm with a team of experienced Lawyers in business consulting activities (Regular consulting and case-based consulting). In particular, for business consulting activities, Phong & Partners provides legal services as follows:

Consulting and representing to carry out procedures for registration of business establishment;
Advising and representing to carry out the procedures of division, separation, consolidation, merger of enterprises, transformation of business types;
Consulting on capital mobilization;
Consulting and representing to resolve disputes related to the operation of enterprise;
Consulting, drafting and revising the set of internal management regulations of enterprises, human resource management;
Consulting, drafting and revising all types of contracts in business;
Participating in and representing in the negotiation and signing of contracts;
Consulting, registering for trademark protection, copyright...;
Presenting and protecting interests in disputes at courts and arbitration centers;
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