The Company Charter is a mandatory and fundamental document that must be included in the application dossier for enterprise establishment, as well as throughout the entire course of the enterprise’s existence and operation. However, in practice, many small and medium-sized enterprises have not attached due importance to the drafting of the Charter in a manner that is coherent, anticipatory, and applicable to both members and employees of the company. There are instances where the Charter is prepared perfunctorily, copied from online templates, or merely to “comply” with requirements of competent state authorities, without practical enforceability within the company. In some cases, enterprises are even unaware of the whereabouts of their Charter, whether it is being kept on file or has been misplaced.
The Charter is regarded as the “Constitution” of the company. In the event of a dispute, the parties concerned as well as competent state authorities will rely upon the provisions of the Charter to review and render decisions.
What are the key contents that a Charter must contain? Depending on the scope, organizational structure, operation, and type of company, the Charter may be adjusted accordingly to reflect practical circumstances. However, pursuant to the provisions of the Law on Enterprises 2020, the Charter must include the following:
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The Charter of the company shall consist of the Charter submitted at the time of enterprise registration and any amendments or supplements adopted during the course of its operation.
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The Charter shall include the following principal contents:
a) Name and address of the company’s head office; names and addresses of branches and representative offices (if any);
b) Business lines;
c) Charter capital; total number of shares, classes of shares, and par value of each class of shares in the case of a joint stock company;
d) Full name, contact address, and nationality of general partners in the case of a partnership; of the owner in the case of a single-member limited liability company; of members in the case of a multiple-member limited liability company; of founding shareholders in the case of a joint stock company. The contributed capital and value of each member’s contribution in a limited liability company or partnership. The number of shares, classes of shares, and par value of each class of shares of founding shareholders in a joint stock company;
đ) Rights and obligations of members in a limited liability company or partnership, and of shareholders in a joint stock company;
e) Organizational and management structure;
g) Number, titles, authority, and obligations of the legal representative(s) of the enterprise; allocation of authority and obligations among legal representatives in the event that a company has more than one legal representative;
h) Procedures for adoption of company decisions; principles for resolution of internal disputes;
i) Basis and method for determining salaries, remuneration, and bonuses of managers and controllers;
k) Cases in which members or shareholders are entitled to request the company to repurchase their capital contributions in a limited liability company or shares in a joint stock company;
l) Principles for distribution of after-tax profits and handling of business losses;
m) Cases of dissolution, dissolution procedures, and liquidation of company assets;
n) Procedures for amending and supplementing the Charter.
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The Charter submitted at the time of enterprise registration must bear the full name and signature of the following:
a) General partners in the case of a partnership;
b) The owner (if an individual), or the legal representative of the owner (if an organization), in the case of a single-member limited liability company;
c) Members (if individuals), and the legal representative or authorized representative of members (if organizations), in the case of a multiple-member limited liability company;
d) Founding shareholders (if individuals), and the legal representative or authorized representative of founding shareholders (if organizations), in the case of a joint stock company.
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Any amendments or supplements to the Charter must bear the full name and signature of the following:
a) Chairperson of the Members’ Council in the case of a partnership;
b) The owner, the owner’s legal representative, or the company’s legal representative in the case of a single-member limited liability company;
c) The company’s legal representative in the case of a multiple-member limited liability company or a joint stock company.
(Legal basis: Article 24, Law on Enterprises 2020)
These are the fundamental requirements when drafting a Charter. Depending on the scale, changes, and development of the enterprise over time, the Charter must be duly amended and supplemented to ensure both formality and substantive coherence, while aligning with the company’s circumstances and harmonizing the interests of members as well as employees.
