Transferring the company with 100% foreign capital in Vietnam

The company with 100% foreign capital corresponds to the type of one-member limited company according to the law on business 2020. When setting up a company, The owner shall contribute adequate and correct assets as promised when applying for business registration within 90 days from the date of issuance of the Enterprise Registration Certificate. During business operations, due to some reasons that the company’s owner wants to withdraw their capital from the business, the owner must transfer their capital to the organization, individually based on the capital transfer contract. With this content, Viet An Law Firm has some legal opinions on the procedure for transfer capital of a company with 100% foreign investment capital is as follows.

Regulations on the charter capital of the company with 100% foreign capital

The initially registered charter capital of a single-member limited liability company is the total assets promised by the owner and shall be written in the company’s charter.

The owner shall contribute adequate and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to these 90 days.  During this period, the owner shall have rights and obligations that are proportional to the promised capital.

The company’s owner may only withdraw capital by transferring part or all of the charter capital to another organization or individual. If the capital is withdrawn otherwise, the owner and relevant organizations and individuals shall be jointly responsible for the company’s debts and other liabilities.

Procedure for transferring the capital

The procedure for transferring the company with 100% foreign investment capital is performed through the following steps:

• Register to purchase capital contribution if the transferee organization/individual is a foreign investor;
• Change the content of business registration in the Business registration certificate: Change the owner. The Transferee investors can combine to perform additional contents such as changing the representative, head office address, business line….;
• Adjusting information about investors and related information in the Investment registration certificate in case of the company is issued an Investment Registration Certificate.

Step 1: Register to purchase capital contribution of the company with foreign capital

Document for the register to purchase capital contribution of the company with 100% foreign capital

• A registration form for capital contribution/purchase of shares/stakes, which contains: enterprise registration information of the business organization to which the foreign investors expects to contribute capital or whose shares/stakes are expected to be purchased by the foreign investors; business lines; list of owners, members and founding shareholders, list of owners, members and founding shareholders that are foreign investors (if any); holding of charter capital by foreign investors before and after the capital contribution/purchase of shares/stakes in the business organization; expected transaction value of the contract for capital contribution/purchase of shares/stakes; information about the business organization’s investment project (if any);
• Copies of legal documents of the individual or organization that contributes capital or purchases shares/stakes and of the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors;
• A principal agreement on capital contribution or purchase of shares/stakes between the foreign investors and the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors or between the foreign investors and the shareholders or members of such business organization.
• A copy of the certificate of land use rights of the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors in case such business organization has the certificate of rights to use land on the island, in border commune, ward or town and coastal commune, ward or town; other areas that affect defense and security, except for the business organization executing the investment project in an industrial park, export-processing zone, hi-tech zone or economic zone established under the Government’s regulations.
• The authorization letter for Viet An Law

Submit at: Departments of Planning and Investment where the headquarters are located

Sequence, procedure: If the capital contribution, share purchase of the foreign investor meets the requirements for ownership ratio and investment method by the Schedule of Commitments and Vietnamese laws. within 15 days from the receipt of the valid document, the Departments of Planning and Investment will notify in writing. In case the document does not meet the conditions, the Department of Planning and Investment will notify in writing and clearly state the reason.

Step 2: Register for changing of the company owner with 100% foreign capital

After getting the notice of approval to purchase contributed capital, the investor prepares the document to change the contents on the Business Registration Certificate.

The document includes:

• A notification of replacement of owner of the single-member limited liability company bearing signatures of the old owner or his/her legal representative and the new owner or his/her legal representative;
• Copies of legal documents of the transferee that is an individual, or copies of legal documents of the transferee that is an organization and copies of legal documents of its authorized representative and letter of appointment of authorized representative.
• If the company’s owner is a foreign organization, copies of legal documents of that organization must be legalized;
• The copy of the amended charter of the company;
• The contract for stake transfer or documents proving completion of the transfer;
• A written approval given by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities in case procedures for registration of capital contribution or purchase of shares/stakes must be followed by the Law on Investment
• The authorization letter for Viet An Law

In addition to the above document, in case of the company combines and changes other business registration contents, the company submits a set of documents corresponding to the changed content. In this case, you can directly contact Viet An Law Firm for more detailed instructions.

Step 3: Adjusting the Investment Registration Certificate

This step will be performed when the company is issued the Investment Registration Certificate.

Documents for adjustment of Investment Registration Certificate

• An application form for adjustment of the investment project;
• A report on investment project’s progress by the time of adjustment;
• The investor’s decision on investment project adjustment;
• Capital transfer contract;
• Copies of legal documents of the transferee that is an individual, or copies of legal documents of the transferee that is an organization and copies of legal documents of its authorized representative and letter of appointment of authorized representative.

If the company’s owner is a foreign organization, copies of legal documents of that organization must be legalized;

• A copy of the investment registration certificate has been issued;
• A copy of the business registration certificate with the change of owner information
• Authorization letter for Viet An Law.

The deadline for processing applications is 15 working days from the date of receipt of the application.

Some issues need to note when transferring the capital

Tax declaration for transferring the capital

For the owner is an individual transferring capital

After performing the capital transfer, within 10 days from the date that the capital contribution contract is effective, individuals who has been transferred capital shall declare and pay the personal income tax

Tax calculation:

Personal income tax have to pay = Taxable income x Tax rate 20%

Tax declaration documents include:

• The declaration on capital transfer personal income tax is according to the form 04/CNV-TNCN;
• Capital transfer contract;
• Documents proving the capital transfer;
• Identity card/citizen identity card of the transferor;
• Business registration certificate has recorded a new charter capital;
• Authorization letter for Viet An Law Firm

The competent authority for settlement: Tax administration authorities directly manage enterprises whose owners transfer capital.

For the owner is an organization transferring the capital

• Foreign organizations earning income in Vietnam (generally referred to as foreign contractors) have capital transfer activities have to declare corporate income tax for each time it is incurred)
• The deadline for declaration is 10 days from the date of the contract is effective or the date of the competent authorities approval for transfer
• Tax declaration document:
• Corporate income tax declaration on capital transfer;
• Capital transfer contract;
• Document for proving the transfer of capital;
• Copy of Business registration certificate;

Money transfer for payment when transferring the company with 100% foreign capital

The payment of the transfer value of the capital contribution is made as follows:

• Among the non investors – residents and the investors who are residents not through direct investment capital account;
• Among the non investors – residents and the investors who are residents perform through direct investment capital account;

Valuation currency, payment of the transfer value of the investment capital in foreign direct investment activities in Viet Nam as follows:

• Valuation, payment of the transfer value investment capital between two non-residents are allowed to conduct in foreign currency;
• Valuation, payment of the transfer value investment capital between the residence and non – resident, between residents together must be performed in Vietnam dong.

Services establishing the company with foreign capital of Viet An Law Firm

• Consulting on the conditions for establishing a foreign-invested company: capital contribution ratio of foreign investors in Vietnam; conditions for business lines; project implementation location; Note the procedures before and after the establishment of a foreign-invested company;
• Consulting to choose the suitable company type for investors: limited liability company or joint-stock company;
• Consulting on opening a capital transfer account, capital contribution term;
• Consulting and guiding investors to prepare necessary documents to establish the company with foreign capital;
• Consulting, drafting company establishment documents for investors;
• Representing investors to work with the competent state agencies of Vietnam during the process of carrying out the procedures for establishing a company for investors (Apply for Investment Registration Certificate, Certificate of Investment Registration). business registration, business license, license according to specialized requirements, making the seal of a legal entity, the announcement of seal sample, procedures after company establishment;
• Comprehensive, regular advice, accounting services, tax law package of activities arising in the process of doing business in Vietnam for investors.