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Capital contribution in Vietnam

According to the Law on Investment 2014, the Law on Enterprises 2014 and documents providing guidelines for implementation, foreign investors may invest in Vietnam by contributing capital, buying shares or buying capital contributions of Vietnamese enterprises. Vietnamese enterprises are which were established in Vietnam and are in operation, including 100% local-owned enterprises and foreign-invested enterprises. The investment process shall be regulated as follows:

Methods for capital contribution in Vietnamese enterprises for foreign investors:

  • Buy shares of joint-stock companies from the companies or their shareholders through IPOs or additional issuance;
  • Buy capital contributions in limited liability companies which were contributed by their members and become members of limited liability companies;
  • Buy capital contributions in partnerships which were contributed by their partners and become partners of partnerships;
  • Contribute capital to Vietnamese enterprises in other manners.

Foreign investors are interpreted as foreign individuals holding foreign nationalities and enterprises or organizations which are established under the foreign laws. They have the rights to contribute capital and buy shares in Vietnamese enterprises.

Conditions of capital contributions in Vietnamese enterprises for foreign investors:

  • Foreign investors contribute capital to Vietnamese enterprises must comply with investment methods, operating scope, Vietnamese partners and other aspects regulated by international agreements to which the Socialist Republic of Vietnam is a member;
  • Capital ratio of foreign investors in Vietnamese enterprises is unlimited, except for the following cases:
  • Capital ratio of foreign investors in listed companies, public companies, securities-trading organizations and securities investment funds shall be complied with regulations of the law on securities;
  • Capital ratio of foreign investors in state-owned companies which have been equitized or converted shall be complied with regulations of the law on equitation and conversion of state-owned companies.
  • Capital ratio of foreign investors in companies which are not listed companies, public companies, securities-trading organizations, securities investment funds and state-owned companies shall be complied with other regulations of relevant law and international agreements to which the Socialist Republic of Vietnam is a member.

Foreign investors must perform the registration procedures for contributing capital, buying share or buying capital contributions in Vietnamese enterprises in the following cases:

  • Foreign investors contributing capital, buying shares or buying capital contributions in Vietnamese enterprises which engaged in business lines subject to conditions applied to foreign investors;
  • Capital contribution, share purchase or capital contribution purchase of foreign investors lead to more than 51% of charter capital of the enterprise is held by foreign investors.

A dossier for registration includes:

  • A written form for capital contribution/shares purchase/capital contribution purchases which specifies: information of the business organization that foreign investors intend to contribute capital/buy shares/buy capital contribution; charter capital ratio of foreign investors after contributing capital/buying shares/buying capital contribution;
  • For foreign investors who are individuals: copies of ID cards or passports;

For foreign investors who are organizations: copies of the certificates of establishment of organizations or equivalent papers which certify legal status of investors.

Registration procedures for foreign investors contributing capital, buying shares, buying capital contributions in 100% local-owned enterprises in Vietnam:

Step 1: Investors submit the dossier at the Investment Division of the Department of Planning and Investment where the head-office of the enterprise locates.

If capital contribution, share purchase, capital contribution purchase of foreign investors satisfies the regulated conditions, the Department of Planning and Investment shall issue a written acceptance within 15 days from the day on which they receive the valid dossier in order for investors to perform the procedures for changing members, shareholders as prescribed by the law.

If capital contribution, share purchase, capital contribution purchase of foreign investors does not satisfy the regulated conditions, the Department of Planning and Investment shall issue a written refusal and provide explanation.

Step 2: After being granted an acceptance by the Department of Planning and Investment, investors shall perform the following procedures:

Change information of members, shareholders on the Certificate of Business Registration as prescribed by the law at the Business Registration Division of the Department of Planning and Investment.

Registration procedures for foreign investors contributing capital, buying shares, buying capital contributions in foreign-invested enterprises in Vietnam:

Step 1: Investors submit the dossier at the Investment Division of the Department of Planning and Investment where the head-office of the enterprise locates.

Step 2: After being granted an acceptance by the Department of Planning and Investment:

If the enterprise has not separate the Certificate of Investment into the Certificate of Investment Registration and the Certificate of Business Registration, investors must perform the procedures for separation and issuance of the Certificate of Business Registration as well as engrave the new seal sample of the enterprise at the Business Registration Division of the Department of Planning and Investment.

Step 3: After separating into the Certificate of Investment Registration and the Certificate of Business Registration, investors must perform the procedures for adjustment of the Certificate of Investment Registration to adjust some information.

The payment of the assignee to the assignor:

According to Circular No. 19/2014/TT-NHNN which was issued on August 11, 2014 by the State Bank of Vietnam, the payment for capital assignment must be executed through a direct investment account of the enterprise. Therefore, a foreign investor who contributes capital, buys shares or buys capital contributions to a Vietnamese enterprise shall open a direct investment account at a bank in Vietnam. The currency shall be Vietnam Dong or foreign currency, depends on the currency which is chosen for capital contribution to the enterprise.

Investing by contributing capital, buying shares or capital contributions in Vietnamese enterprise are popular investment methods but investors have to comply with many legal regulations. Investors who intend to do so, please feel free to contact Viet An Law Firm in order to receive legal advice and to be support during the procedures for capital contribution, shares purchase or capital contribution purchase!

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