When conducting business investment of a project, capital is needed to implement that investment project, which is called investment capital. There are many people who wonder when an enterprise conducts business investment, is the investment capital source of the charter capital of the enterprise? So what is investment capital, how are the characteristics of investment capital shown? The following article provides some basic legal issues about investment capital:
Investment capital is the accumulated capital of the society, used in the process of social reproduction and to maintain and create new potentials based on investment projects and works.
Viewing: What is investment capital?
Investment capital is understood as the total cost that an investor spends to carry out investment activities, formed from two main sources, domestic capital and foreign capital.
When implementing a certain project, it is necessary to have capital to implement that project. Project investment capital is the total capital contributed, including charter capital of the enterprise, loan capital, capital mobilized from other individuals and organizations before project implementation.
– An enterprise can carry out one or more different investment projects depending on its financial resources.
– The concept of investment capital is not understood by many people in its true meaning and nature, but many people are only interested in the charter capital of the enterprise.
– Investment capital is a common phrase for FDI enterprises (foreign-invested enterprises).
– Normal investment capital will be attached to specific investment projects and shown on the investment registration certificate when the investor conducts business investment.
Capital Investment is the money a business receives to continue its business goals, or the money the company spends to buy long-term assets.
2. Is the investment capital the charter capital of the enterprise
Charter capital is often used more commonly and inclusively than investment capital, so many people default when investing in a business, the business will make an investment based on the charter capital of that enterprise.
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However, because the nature of these two sources of capital is different, it is impossible to identify the investment capital as the charter capital of the enterprise.
Because investment capital includes the charter capital of the enterprise (may be a part or the whole), mobilized capital, borrowed capital from other individuals and organizations.
Therefore, the investment capital is more extensive than the charter capital of the enterprise, when implementing an investment project, an enterprise can spend all of the charter capital of the enterprise or a part of the charter capital to conduct business in addition to the charter capital of the enterprise. other mobilized capital sources.
In some cases, when implementing an investment project, an enterprise puts all its charter capital into the implementation of that project without raising any other capital, then the investment capital is equal to the charter of the enterprise. However, in this case, the concept of investment capital and charter capital must not be identical.
Advantages of investment capital
Investment capital can be flexible depending on the implementation of specific investment projects. When an enterprise carries out each project, the investment capital will be different, so the investment capital cannot be the same as the charter capital of the enterprise.
Therefore, to ensure investment activities for project implementation, the implementing enterprise may contribute part or all of its charter capital to the investment capital, in addition to other sources of capital mobilized for investment.
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The above are the legal issues about the investment capital to implement the project and its characteristics to distinguish it from the charter capital of the enterprise implementing the investment project. To learn more about this issue, immediately contact 1900.6199 for free advice and support.