Capital registered for implementation of investment projects

Investment capital is an important catalyst for economic growth. When foreign investors pour capital to invest in new projects, they not only create jobs and raise income, but also trigger a chain of positive reactions. From increasing people’s consumption, boosting production, to improving infrastructure and enhancing the competitiveness of the economy, investment capital serves as a constant engine for economic development. However, many businesses are unclear about registering capital to implement investment projects. Viet An Law would like to guide customers through the article below.

Legal Basis

• Law on Investment 2020;
• Decree guiding the Law on Investment

Concept of capital registered for implementation of investment projects

According to Clause 23, Article 3 of the Law on Investment, it is stipulated as follows:

“Investment capital is money and other assets in accordance with the provisions of civil law and international treaties to which the Socialist Republic of Vietnam is a contracting party for the implementation of business investment activities.”

Thus, it can be understood that the registered capital for the implementation of an investment project is the total amount of money or assets that the investor commits to contribute to a specific investment project that has been planned in advance. This is the number clearly stated in the investment certificate related to the investment project.

Why is the registered capital for the implementation of an investment project important?

• It is a proof of financial capacity: The registered capital shows that the investor has enough financial capacity to implement the project.
• As a basis for licensing investment projects: State agencies will base on the registered capital to consider and license the project.
• Investment attraction: Registered capital for the implementation of an investment project is one of the important factors to attract other investors to participate in the project.

Sources of capital registered for implementation of investment projects

Project investment capital may include: capital of the investor committed to contribute and mobilized capital may be borrowed from banks,

The investor’s capital is an extremely important concept when implementing an investment project. This is the amount of money or assets that the investor commits to contribute to the project or company.

Meaning of Committed Capital Contribution

• Proof of financial capacity: The amount of money investors commit to contribute shows that they have the financial capacity to implement the investment project.
• Legal basis: Committed capital contribution is one of the legal bases for project implementation.
• Commitment: Investors are obliged to make capital contributions in accordance with the commitments made.

Forms of capital contribution

• Cash contribution: This is the most common form, investors contribute capital in cash directly to a foreign currency account for investment purposes.
• Capital contributed by assets: Investors can contribute capital with other types of assets such as land, factories, machinery, equipment, etc.
• Capital contributed by land use rights: Investors contribute land use rights to the project.

Mobilized capital of the project

Mobilized capital is the total amount of money that an organization or enterprise collects from external sources to serve production and business activities. This is an additional source of capital for equity, helping businesses expand their scale, invest in new projects or overcome financial difficulties.

Common forms of capital mobilization

• Loan capital:
  • Bank loans: This is the most common form, businesses borrow money from commercial banks to meet short-term or long-term capital needs.
  • Borrow from financial institutions: In addition to banks, businesses can borrow capital from other financial institutions such as financial companies and investment funds.
  • Bond loans: Businesses issue bonds to raise capital from the public.
  • Unsecured loans: Businesses borrow based on their reputation and ability to repay debts.
• Securities issuance capital:
  • Issuance of shares: The enterprise issues shares to raise capital from investors, in return, the investor will become a shareholder of the company.
  • Bond issuance: Similar to borrowing bonds, but bonds are widely issued to the public.

Proof of registered capital for implementation of investment projects

When investors submit investment registration dossiers or increase investment project capital, they will have to prove their financial capacity. A dossier proving the registered capital of an investment project is a collection of necessary papers and documents to prove the financial capacity of the investor and ensure that the project will be implemented in accordance with the commitment. This can be proven through documents such as:

• Financial statements: Of the investor or of the company expected to implement the project in recent years.
• Documents proving the origin of capital:
  • If it is own capital: Passbook, bank certification, certificate of ownership of stocks, securities…
  • If it is a loan: Loan contract, loan approval decision of the bank.
  • If it is contributed capital of other investors: Capital contribution contracts, documents proving the financial capacity of these investors.

Customers who need advice on registered capital for investment projects, please contact the Company directly for detailed advice and the best support!