During business operations, capital adjustment is an important strategic tool enabling enterprises to adapt and optimize performance. Depending on market conditions and business plans, investors may increase capital to expand operations or reduce capital to optimize cash flow for new strategic objectives.

When operating in Vietnam, investors must carefully comply with applicable regulations to ensure that any reduction in charter capital or project investment capital is conducted efficiently and lawfully.

1. Conditions for Reducing Charter Capital

The conditions for reducing charter capital are stipulated under the Law on Enterprises 2020. A company may reduce its charter capital if:

(1) The company has conducted continuous business operations for at least two (02) years from its establishment date; and

(2) It is able to fully discharge all debts and financial obligations after returning capital contributions to investors.

2. Conditions for Reducing Investment Capital

Investment capital refers to monetary and asset contributions used to implement investment activities, in accordance with civil law and international treaties to which Vietnam is a party.

Registered investment capital includes: (1) Capital contributed by investors in cash, machinery, intellectual property, technology, land-use rights, and other lawful assets; (2) Mobilized capital for project implementation; và (3) Retained profits reinvested into the project (if any).

Investors may adjust investment projects, including increasing or reducing capital, provided such adjustments comply with applicable laws. However, the Law on Investment 2020 and its guiding regulations do not explicitly provide specific conditions for capital reduction.

Based on legal principles and practical experience in licensing capital reductions in Ho Chi Minh City, Dong Nai, and Da Nang, a reduction in project investment capital may be accepted if:

  • All due debts and financial obligations are fully satisfied (where capital reduction is accompanied by a reduction in charter capital); 
  • The project maintains sufficient financial capacity for continued effective operation.
3. Procedures for Capital Reduction
  • Step 1: Reduction of Charter Capital: Carry out registration of charter capital reduction with the Business Registration Authority under the Department of Finance. Processing time is approximately 03 working days.
  • Step 2: Reduction of Investment Capital: Register the adjustment of investment capital with the Foreign Investment Department under the Department of Finance or the Management Board of Industrial Zones. Processing time is approximately 10 working days.
  • Step 3: Repatriation of Capital: The investor proceeds to transfer the reduced capital abroad in accordance with foreign exchange regulations.