Can foreign investors in Vietnam contribute capital in cash?

Capital is all the assets and material values ​​invested by an enterprise to conduct business activities. Is the monetary expression of all assets of an enterprise used for business activities to make a profit. When establishing a company, investors must determine the scope, scale, and business lines to determine the source of capital to contribute to the business. For foreign investors, in addition to determining the level of business capital, how to bring capital into Vietnam in accordance with Vietnam’s regulations on foreign exchange management. So, can foreign investors in Vietnam contribute capital in cash? Viet An Law hereby will give some legal opinions on whether foreign investors can contribute capital in cash.

Legal basis

• Law on Enterprise 2020;
• Law on State Bank of Vietnam 2010;
• Law on Credit Institutions 2010, as amended and supplemented in 2017;
• Foreign Exchange Ordinance 2005, as amended and supplemented in 2013;
• Decree No. 70/2014/ND-CP dated July 17, 2014;
• Circular 06/2019/TT-NHNN dated June 26, 2019.

The company’s capital is foreign invested capital

Capital contribution is the contribution of assets to form the company’s charter capital, including capital contribution to set up a company or contribute additional charter capital of an established company.

According to the provisions of the Enterprise Law, assets contributed as capital are Vietnamese Dong, convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be priced in Vietnam Dong.

For economic organizations with foreign investment capital, foreign investors and Vietnamese investors in joint ventures are allowed to contribute investment capital in foreign currency and Vietnamese Dong according to the investor’s capital contribution level. in the Investment Registration Certificate, License for establishment and operation in accordance with specialized laws (for enterprises with foreign direct investment established and operating in accordance with specialized laws), Notice of meeting the conditions for capital contribution, share purchase, repurchase of capital contributions from foreign investors, PPP contract signed with a competent state agency, other documents proving the capital contribution of foreign investors in accordance with the provisions of law.

Can foreign investors in Vietnam contribute capital in cash?

According to the provisions of Clause 1, Article 3 of Circular 06/2019/TT-NHNN, foreign investors include individuals with foreign nationality, organizations established under foreign law carrying out investment activities. foreign direct entry into Vietnam.

Direct investment activities are determined as follows:

• Establish investment in the form of investment in establishing an economic organization, in which foreign investors are members or shareholders and must carry out procedures for granting an Investment Registration Certificate in accordance with the provisions of law on investment;
• Establish investment without the form of an economic organization, in which foreign investors are members or shareholders and must carry out procedures for granting an Investment Registration Certificate according to the provisions of investment law in which foreign investors own 51% or more of the enterprise’s charter capital, including:
  • Investing in capital contributions, buying shares, or capital contributions in enterprises (operating in industries and business investment sectors with or without conditions applicable to foreign investors) leads to foreign investors in addition to owning 51% or more of the enterprise’s charter capital;
  • Investing in an enterprise established after a split, merger, or consolidation resulting in foreign investors owning 51% or more of the enterprise’s charter capital;
  • Investing in establishment of new enterprises according to the provisions of specialized laws.
• Project enterprises are established by foreign investors to implement PPP projects in accordance with investment laws.

According to the provisions of Clause 3, Article 4 of Circular 06/2019/TT-NHNN, “cash investment capital contributions of foreign investors and Vietnamese investors must be made through bank transfer to direct investment capital account”.

Thus, in cases of direct investment in Vietnam, foreign investors are required to contribute capital through transfer to a direct investment capital account. Therefore, foreign investors cannot contribute capital in cash when a company has foreign investment capital in Vietnam or contribute capital to Vietnamese companies.

Establishing a company with foreign investment service of Viet An Law

• Consulting on conditions for establishing foreign invested companies: capital contribution ratio of foreign investors in Vietnam; business conditions of various industries; project implementation location; Note the procedures before and after establishing a foreign invested company;
• Consulting on choosing the right type of company for investors: company limited liability or Joint stock company;
• Consulting on opening a capital transfer account, capital contribution deadline;
• Consulting and guiding investors to prepare necessary documents to establish foreign-invested companies;
• Consulting and drafting company establishment documents for investors;
• Investor representative works with competent Vietnamese state agencies during the process of implementing company establishment procedures for investors (Application for Investment Registration Certificate, Enterprise Registration Certificate, business license, license according to specialized requirements, making legal entity seals, announcing seal samples, procedures after establishing a company,…);
• Comprehensive, regular consulting, accounting services, tax law package of activities arising during the process of doing business in Vietnam for investors.