Charter capital contribution process of foreign capital companies in Vietnam

Charter capital of foreign capital companies in Vietnam

Charter capital (shown on the Business Registration Certificate) is understood as the total value of assets contributed or committed by company members and company owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered to buy when establishing the company.

Minimum charter capital for establishment of a foreign capital company in Vietnam

• Currently, there are no regulations on the minimum charter capital required for foreign investors to contribute when establishing foreign capital companies nor regulations on the maximum charter capital, except for business lines that must meet legal capital conditions such as multi-level sales, medical examination and treatment services… then the minimum charter capital must be equal to the required legal capital.
• However, in practice, depending on the fields and projects that foreign investors invest in Vietnam, the licensing authority will consider the conditions on financial capacity to approve whether to allow foreign investors to do business or not. In addition, depending on the business strategy, target customers and partners, foreign investors determine the level of charter capital contributed in accordance with the company’s operations after establishment.

Assets that can be used to contribute capital

According to the Law on Enterprises, assets contributed as capital include the following assets:

• Vietnamese Dong;
• Convertible foreign currency;
• Gold;
• The value of land use rights, the value of intellectual property rights (including copyrights, copyright-related rights, industrial property rights, rights to plant varieties and other intellectual property rights in accordance with the law on intellectual property);
• Technology, technical know-how and other assets can be assessed in Vietnamese dong.

Foreign investors contribute capital in cash in Vietnam

When contributing capital in Vietnamese dong or freely convertible foreign currency to a foreign capital company, foreign investors are required to transfer funds through investment capital accounts opened at commercial banks. An investment capital account can be a direct investment capital account or an indirect investment capital account depending on the percentage of charter capital ownership of the foreign investor in the foreign capital company. As follows:

• In case a foreign capital company opens a direct investment capital account: The capital contribution through the direct capital account can be made in foreign currency, Vietnam Dong and the investor’s capital contribution level based on documents proving the investor’s right to contribute capital such as: Investment registration certificate, enterprise registration certificate, Notice of satisfaction of conditions for capital contribution, share purchase, redemption of contributed capital… For each type of capital contribution (Vietnamese dong, foreign currency), the foreign capital company will have to open a direct investment capital account for the corresponding currency and may only open one direct investment capital account for one currency at an authorized bank.
• In case a foreign investor opens an indirect investment capital account: All investment activities of foreign investors in Vietnam must be carried out in Vietnamese dong and through an indirect investment capital account. Transactions related to foreign indirect investment activities in Vietnam of foreign investors must be carried out through 01 (one) single indirect investment capital account opened at an authorized bank.

Time limit for charter capital contribution of a foreign capital company in Vietnam

Depending on the type of enterprise that foreign investors plan to establish in Vietnam, the time limit for charter capital contribution varies as follows:

• For the type of limited company: Within 90 days from the date to issue the Business Registration Certificate, the capital contributing member in a limited liability company with two or more members or the owner in a one-member limited liability company is obliged to contribute capital in full and the right type of assets as committed. After the members of a limited liability company with two or more members fully contribute the committed capital, the company must issue a Certificate of capital contribution corresponding to the value of the contributed capital.
• For the type of joint-stock company: Shareholders in a joint-stock company are obliged to pay in full the number of shares registered to buy within 90 days from the date to issue the Business Registration Certificate, unless the company’s charter or share purchase registration contract provides for another shorter term. The Board of Directors is responsible for supervising and urging shareholders to pay in full and on time the shares registered to buy.

Procedures for charter capital contribution of foreign capital companies in Vietnam

Procedures for contributing charter capital to a foreign capital company with assets subject to ownership registration

Step 1: Sign a capital contribution contract with assets, notarized/authenticated.

Step 2: Actual handover of assets.

Step 3: Submit documents to your name, file tax returns, pay related fees. The transfer of ownership rights to assets contributed as capital is not subject to registration fees.

Step 4: Get the Certificate of Ownership in the name of the company.

Step 5: Acknowledge membership

• For a one-member limited liability company, the capital  contribution is completed after the owner transfers the ownership of the assets registered for capital contribution.
• For a 2-member limited liability company and a joint-stock company, the capital contribution is officially completed after the company issues the Certificate of capital contribution and makes a Register of Members for a 2-member limited liability company; or shares (Certificate of share ownership) and make a register of shareholders for joint-stock companies.
• For partnerships, there are no mandatory regulations on the establishment of a Register of Members, but only regulations on the issuance of a Certificate of capital contribution to a general partner or a capital contributor who has completed the capital contribution. However, to ensure archiving, the company should also establish a Register of Members with the same contents as the Register of Members of a 2-member limited liability company.

Procedures for charter capital contribution of foreign capital companies in cash

Step 1: Register the Investment Registration Certificate, Business Registration Certificate

Step 2: Open an investment capital account

Step 3: Make capital contribution according to the time limit recorded on the ordinary Investment  Registration Certificate 90 days from the date to issue of the Business Registration Certificate

Customers wishing to establish a foreign capital company or contribute capital to buy shares of foreign capital companies, Vietnamese companies, please contact Viet An Law Firm for the fastest and most professional support at the most reasonable cost!