Approval of Capital Contribution by Foreign Investors in Vietnam

Competent state agencies carry out approval on capital contribution of foreign investors to recognize the legal status of foreign investors to ensure the legitimate rights and interests of foreign investors. In the article below, Viet An Law will clarify for you the procedure for requesting written approval of capital contribution by foreign investors in Vietnam and other related content.

Written approval of capital contribution by foreign investors in Vietnam

Under Form A.II.20 of Circular No. 03/2021/TT-BKHDT on regulations on forms of documents and reports related to investment activities in Vietnam, investment from Vietnam to foreign countries, and investment promotion, the written approval of capital contribution by foreign investors includes the following main contents:

Title Section

• Investment registration agency
• Investor name
• Cite legal basis

Detailed Content

Details of investors:

• Full name;
• Sex;
• Date of birth;
• Nationality;
• Legal status documents;
• Permanent and current address;
• Contact method: Phone, fax, email
• Information about the legal representative of the organization/enterprise: Full name, gender, title, date of birth, documents on legal status, permanent and current address, contact method

Value and ratio of capital contribution, share purchase, capital contribution purchase of investors

• Name of foreign investor
• Nationality
• Capital contribution value according to charter capital: VND, equivalent to USD, Ratio
• Expected transaction value of capital contribution/share purchase/capital contribution purchase contract: VND, equivalent to USD, Ratio;

Information about economic organizations after receiving capital contributions/buying shares/buying capital contributions

• Name of economic organization
• Business registration number
• Charter capital
• Foreign investors’ charter capital ownership ratio
• Business sector
• Some conditions
• Reason (in case of not meeting the conditions)

Conditions for foreign investors to be approved to contribute capital in Vietnam

Under Clause 2, Article 24 of the Vietnam Investment Law 2020 which guided by Clause 4, Article 65 of Decree 31/2021/ND-CP, the conditions for foreign investors to contribute capital include:

• Comply with market access conditions for foreign investors when contributing capital, purchasing shares, and purchasing capital contributions in economic organizations established in Vietnam such as the ratio of charter capital ownership of foreign investors in economic organizations, investment forms; scope of investment activities; capacity of investors; partners participating in investment activities;
• Comply with the conditions on ensuring national defense, security, and land use conditions for economic organizations with foreign investors contributing capital, purchasing shares, and purchasing capital contributions in cases where such economic organizations have Certificates of land use rights in islands, communes, wards, border towns and coastal communes, wards, towns; other areas affecting national defense and security, except for economic organizations implementing investment projects in industrial parks, export processing zones, high-tech zones, economic zones established under Government regulations.

Procedures for capital contribution of foreign investors

Step 1. Carry out procedures for registering capital contributions, purchasing shares, capital contributions (if fall into “foreign economic organizations” after change)

• An economic organization with a foreign investor investing in capital contribution, buying shares, or buying capital contributions shall submit 01 set of documents for registration of capital contribution, buying shares, or buying capital contributions to the Department of Planning and Investment where the economic organization has its head office.
• Within 15 days from the date the Department of Planning and Investment receives valid documents, the Department of Planning and Investment will send a written notice to the investor.

The file includes drafting:

• Documents for registration of capital contribution, purchase of shares, and purchase of capital contributions;
• Minutes of agreement on capital contribution, share purchase, and capital contribution purchase;
• Power of attorney for Viet An Law;

Required documents from Clients:

• Consular legalization of Decision and Establishment License of foreign organizations and enterprises;
• Certified copy of the Passport of the legal representative and representative managing the capital contribution of the foreign investor;
• Certified copy of the Enterprise Registration Certificate of the party transferring capital/shares;
• Certified copy of investor’s Passport;

Step 2. Perform the procedure for changing business registration content

• Enterprises submit 01 set of documents to change business registration at the Business Registration Office.
• Within 03 working days from the date of receiving valid documents, the Business Registration Office shall issue a new Enterprise Registration Certificate.

Prepared Documents

• Notice of change of business registration content;
• Company Charter (if changing business registration type);
• Decision of the Owner (Single-member LLC), Minutes of Meeting and Resolution of the Board of Members (Multiple-member LLC), Minutes of Meeting and Resolution of the General Meeting of Shareholders (Joint Stock Company);
• Decision to repurchase capital contribution and appoint a representative to manage the capital contribution of foreign investors (if the investor is an organization);
• List of members (Multiple-member LLC or List of shareholders who are foreign investors (Joint Stock Company);
• Capital transfer contract/ Documents completing capital transfer;
• Confirmation of transfer of money to repurchase capital contribution (of Investor buying back capital contribution);
• Power of attorney for Viet An Law;

Required documents from Clients:

• Notice of Approval of Capital Contribution Repurchase (Step 1);
• Certified copy of the Enterprise Registration Certificate with consular legalization of the Investor buying back the capital contribution (if the investor is an organization) or Personal Passport (if the investor is an individual);
• Certified copy of Confirmation of payment for repurchase of capital contribution (by the Investor repurchasing capital contribution). (In this case, after the State agency approves the repurchase of capital contribution, the investor repurchasing capital contribution shall transfer payment for the purchased capital contribution to implement the Change of business registration content);
• Certified copy of the Passport of the authorized representative of the Investor repurchasing capital contribution (if the investor is an organization);

Frequently Asked Questions

What are the forms of capital contribution to Vietnamese enterprises by foreign investors?

Pursuant to Article 25 of the Investment Law 2020, foreign investors are allowed to contribute capital to economic organizations in the following forms:

• Purchase of initial public offering or additional public offering of a joint stock company. Foreign investors become shareholders of a joint stock company.
• Contribute capital to a limited liability company or partnership. Foreign investors become members of a limited liability company or partnership.
• Contribute capital to other economic organizations.

How is the ownership ratio of foreign investors in Vietnamese enterprises regulated?

According to Point a, Clause 3, Article 9 of the Investment Law, one of the conditions for foreign investors to access the Vietnamese market as stipulated in the List of industries and occupations with restricted market access is “The ratio of charter capital ownership of foreign investors in economic organizations”.

Pursuant to Clause 10, Article 17 of Decree 31/2021/ND-CP, the following cases of restrictions on foreign investors’ ownership ratio as prescribed in international treaties on business investment are applied:

• In case there are many foreign investors contributing capital, purchasing shares, purchasing capital contributions in the same economic organization and subject to one or more international treaties on business investment: The total ownership ratio of all foreign investors in the same economic organization must not exceed the highest ratio as prescribed by the international treaty with provisions on the capital ownership ratio of foreign investors for a specific industry;
• In case there are many foreign investors from the same country/territory contributing capital, purchasing shares, or purchasing capital contributions in an economic organization: The total capital ownership ratio of all such investors must not exceed the capital ownership ratio prescribed in the international investment treaty applicable to such investors;
• For public companies, securities companies, securities investment fund management companies or securities investment funds, securities investment companies: Apply according to the provisions of the law on securities (Securities Law 2019 and legal documents guiding its implementation);
• In case an economic organization receiving capital investment has many business lines and professions for which international investment treaties have different provisions on the capital ownership ratio of foreign investors: The capital ownership ratio of foreign investors in that economic organization must not exceed the foreign ownership ratio restriction for the business line and profession with the lowest foreign ownership ratio restriction.

Are foreign investors allowed to contribute capital in the form of technological processes, technical know-how, and other assets that can be valued in Vietnamese Dong?

According to Article 34 of the 2020 Law on Enterprises, foreign investors are allowed to contribute capital with the above assets.

Above is the advice of Viet An Law on the written approval of capital contribution by foreign investors in Vietnam. If there are any other legal problems related to the capital contribution of foreign investors, please contact Viet An Law for more specific and detailed advice. Sincerely thank you!

Updated: 9/2024