Capital Contribution to set up company in Vietnam

 Since the Law on Investment 2020 replaced the one in 2014, a lot of provisions relating to investment have been changed, one of them is capital contribution provisions. For customers wishing to find out a capital contribution in Vietnam, based on the Law on Investment 2020, the Law on Enterprises, and some relating documents, Viet An Law would like to give customers important information.

“A Vietnamese enterprise” means an enterprise that is registered following Vietnam’s law and has its headquarters located within Vietnam. Investors have the right to contribute capital to Vietnamese enterprises through the following forms:

• Purchase of shares in a joint-stock enterprise from such enterprise or its shareholders;
• Purchase of stakes of members of a limited liability enterprise to become a member of such limited liability enterprise;
• Purchase of stakes of capital contributing member of a partnership to become a capital contributing member of such partnership;
• Purchase of stakes of members of other economic entities.

Conditions for foreign investors to contribute capital to Vietnamese enterprises:

• Foreign investors contributing capital to Vietnamese companies must comply with the investment form, scope of activities, Vietnamese partners participating in the implementation of investment activities, and other conditions under international treaties to which the Socialist Republic of Vietnam is a member.
• The ownership proportion of charter capital of foreign investors in Vietnamese companies is not limited, except for the following cases:

o The ownership proportion of foreign investors in listed companies, public companies, securities-trading organizations, and securities investment funds following the law on securities;

o The ownership proportion of foreign investors in state-owned companies that have been equitized or converted are conformable with regulations on equitization and conversion of state-owned companies;

o The ownership proportion of foreign investors who are not public companies, securities trading organizations, investment funds, state-owned enterprises shall comply with other relevant laws and international treaties to which the Socialist Republic of Vietnam is a member.

Capital contribution dossier includes for each case:

Case 1: In the case of foreign investors contributing capital, buying contributed capital, buying shares of less than 51% charter capital in an enterprise:

         Investors contribute capital/transfer capital, declares tax on income from the transfer (if any)

         Enterprises only shall carry out the procedures for changing the enterprise registration certificate. The dossier includes:

• Notice of changes in business registration content;
• A decision on the change of enterprise;
• A meeting report on the enterprise changes;
• A transfer contract and documents certifying the completion of the transfer. This contract must be certified by the legal representative of the enterprise;
• A list of capital contributors or A list of foreign shareholders;
• The notarized copies of investors’ passport/business registration certificate of investors;

Enterprises submit dossier at the Business Registration Office. Within 03 working days after receiving a valid dossier, the business registration office shall issue a new enterprise registration certificate to the enterprise.

Case 2: In the case of foreign investors contributing capital, buying contributed capital, buying shares of enterprises investment in conditional industries or contributing capital, buying contributed capital, buying shares which leading to hold more than 51% charter capital.

         The dossier includes:

• A document of registration of capital contribution, buying shares including these following contents: information about the economic organizations that foreign investors plan to contribute capital, purchase shares or contributed capital; ownership proportion of charter capital of foreign investors after contributing capital, buying shares, or buying contributed capital of economic organizations;

· The notarized copies of identity card, identity card, or passport for individuals; copy of the Establishment Certificate or other equivalent documents certifying the legal status for institutional investors.

Step 1: Register for capital contribution, purchase capital contribution, buying shares in a Vietnam enterprise at the Investment Registration Office.

         The required documents are above. Investors submit at the Business Registration Office. Within 15 workings days after receiving a valid dossier, the business registration office shall issue a notice of the satisfaction of the conditions for capital contribution, purchase capital contribution to Vietnamese enterprise.

Step 2: Open a direct investment account for a Vietnamese enterprise if buying from 51% capital of a Vietnamese enterprise, then the foreign investors will contribute the transferred capital and declare the transferred income tax.

Step 3: Follow procedures for changing shareholders and members on the Business Registration Certificate (Enterprise Registration Certificate) under the regulations at the Business Registration Office – Department of Planning and Investment above.

As a law firm specializing in foreign investment consulting services in Vietnam, Viet An Law commits to provide with best services for foreign investors to buy shares and contribute capital to set up a company in Vietnam. Any difficulties and problems relating to the procedure, please contact Viet An Law for the fastest support.