Capital contribution in Vietnam

Pursuant to the provisions of the Law on Investment 2014, the Law on Enterprise 2014 and the documents guiding the implementation of the Law on Investment 2014, the Law on Enterprise 2014, stipulating the foreign investor’s investment in the form of capital contribution, buying shares or capital contributions to Vietnamese companies (Vietnamese companies are understood as companies established in Vietnam, including: The company has 100% capital owned by Vietnamese and the company has foreign-invested capital currently operating in Vietnam) are prescribed and implemented as follows:

Forms of investment for foreign investors to contribute capital to Vietnamese companies

• Buy shares of joint-stock companies through IPOs or additional issuance through buying shares of joint-stock company from the company or shareholders;
• Contributing capital to a limited liability company through buying contributed capital from members of the limited liability company to become a member of the limited liability company;
• Contributing capital to a partnership through buying contributed capital from a partner in a partnership to become a capital contributing member of the partnership;
• Contributing capital to Vietnamese companies in other ways.

* Foreign investors are understood as foreign individuals or enterprises, foreign organizations contributing capital, buying shares in 100% Vietnamese capital companies.

Conditions for foreign investors to contribute capital to Vietnamese companies:

– 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 in accordance with 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:

• The ownership proportion of foreign investors in listed companies, public companies, securities-trading organizations and securities investment funds in accordance with the law on securities;
• 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;
• 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.

Carrying out procedures for registration of capital contribution, purchase of shares or contributed capital in Vietnamese companies in the following cases:

• Foreign investors contribute capital, purchase shares, or contributed capital to Vietnamese companies operating in conditional business investment sectors and trades applied to foreign investors;
• Capital contribution, shares purchase, or capital contribution result in foreign investors holding 51% or more of charter capital of Vietnamese companies.

Dossier for registration of capital contribution, purchase of share and contributed capital of foreign investors to Vietnamese companies

• A written registration of capital contribution, share purchase or capital contribution comprising the following information: about 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;
• 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.

Procedures of investments for foreign investors to contribute capital to Vietnamese companies

In case foreign investors register to contribute capital, purchase shares or contributed capital to the company with 100% Vietnamese capital

Step 1: The investor submits a dossier at the Investment Office – Department of Planning and Investment where the economic organization is headquartered to complete the procedures for registration of capital contribution, purchase of  shares and contributed capital to the Company with 100% Vietnam.

If the capital contribution, purchase of shares or contributed capital of foreign investors meet all the conditions, the Department of Planning and Investment will notify in writing within 15 days from the date of reveiving the complete dossier so that investors can carry out procedures for changing shareholders and members according to the provisions of law. In case of failure to meet the conditions, the Department of Planning and Investment shall notify the investor in writing, clearly stating the reason.

Step 2: After obtaining the Investment Department – Department of Planning and Investment’s approval for foreign investors to contribute capital, buy shares or contributed capital, investors shall carry out the following procedures: Open a direct investment account for a Vietnamese company if buying from 51% capital of a Vietnamese company, 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) in accordance with the regulations at the Business Registration Office – Department of Planning and Investment .

In case foreign investors register to contribute capital, purchase shares, or contributed capital to foreign-invested companies in Vietnam

Step 1: The investor submits the dossier to the Investment Office – Department of Planning and Investment where the economic organization is headquartered to complete procedures for registration of capital contribution, purchase of shares and contributed capital to the Company with foreign-invested capital.

Step 2: After obtaining the Investment Department – Department of Planning and Investment’s approval for foreign investors to contribute capital, buy shares or contributed capital. If the company has not yet split the Investment Certificate into an Investment Registration Certificate and Enterprise Registration Certificate, the investor shall carry out the procedures for splitting and issuing the Enterprise Registration Certificate, making a new legal seal at Business Registration Office – Department of Planning and Investment.

Step 3: After obtaining the Investment Office – Department of Planning and Investment’s approval of foreign investors to contribute capital, buy shares or contributed capital, investors shall carry out the following procedures: Open a direct investment capital account for a Vietnamese company if buying from 51% capital of a Vietnamese company, then the foreign investor will contribute the transferred capital and declare the transferred income tax.

Step 4: After splitting the Investment Registration Certificate and the Enterprise Registration Certificate, the investor shall adjust the Investment Registration Certificate at the Investment licensing agency.

Payment by the assignee to the assignor of capital transfer

Pursuant to Circular No. 06/2019/TT-NHNN of the Bank of Vietnam, the payment for the transfer of investment capital in an enterprise with foreign direct investment must be made via the foreign direct investment of that enterprise. Therefore, a foreign investor contributes capital to a Vietnamese company  must open a foreign direct investment account at a bank in Vietnam; it can be opened in VND or foreign currency depending on the currency used to contribute capital to invest in the enterprise.

If you have any questions, please contact Viet An Law Firm for more supportive information.