Change in charter capital of foreign capital company in Vietnam

The charter capital of a foreign capital company is the capital that the company commits to contribute according to regulations and the time limit is recorded on the Investment Registration Certificate through the company’s capital account. The charter capital of a foreign capital company may be equal to or less than the investment capital registered by the company on the Investment Certificate. When changing the charter capital, the company needs to complete the change of investment capital in parallel if the registered investment capital is less than the newly increased charter capital.

Capital transfer account of a foreign capital company in Vietnam

• According to the provisions of Vietnamese law, unlike company with Vietnamese capital, foreign capital company must have capital accounts to receive capital from foreign investors and later transfer profits and capital transfers when divestment abroad through this capital account.
• When a foreign investor contributes charter capital, it must be contributed to the company’s capital transfer account within the prescribed time limit. After that, the capital contribution will be transferred from the capital transfer account to the company’s trading account for operation.
• It can be said that many foreign capital company in Vietnam do not understand the regulations on capital transfer accounts. Therefore, it is very difficult for capital contribution in accordance with the provisions of law, difficulties when carrying out procedures for changing and adjusting investment certificates, especially problems when wanting to transfer capital or transfer profits abroad.

Change in charter capital of foreign capital company in Vietnam

According to the Law on Enterprises, foreign capital company may change their charter capital in one of two cases:

• Change to increase the charter capital of foreign capital company.
• Change or reduce in charter capital of foreign capital company.

Change to increase charter capital of foreign capital company in Vietnam

Dossiers to be prepared when changing the increase in charter capital of foreign capital company

• 02 notarized copies of Investment Certificate/Enterprise Registration Certificate;
• 02 copies of the Tax Registration Certificate (In case the company has not separated the Investment Registration Certificate and the Enterprise Registration Certificate);
• Report on the implementation of the project and report on the implementation of the investment project up to the time of request for adjustment of the investment project;
• 01 notarized copy of the audited financial statements closest to the time of adjustment;
• Bank confirmation for capital accounts proving that the company has contributed sufficient capital (if the financial statements do not show that the company has contributed enough capital);
• Confirmation of deposit account balance, financial statements or capital contribution guarantee commitment of the parent company (for institutional investors), passbook, confirmation of account balance (for individual investors) corresponding to the expected increase in charter capital;
• Project proposal development information: Number of foreign workers, number of Vietnamese workers; Phone number, investor email, Company phone number in Vietnam, Head office area.
• Notarized passport and temporary residence confirmation (temporary residence card) of the legal representative.

Process of implementing changes to increase charter capital of foreign capital company

Step 1:  Change the Certificate  of Enterprise Registrationor separate the Enterprise Registration Certificate from the Investment Registration Certificate (if not yet separated) to increase the company’s charter capital: Completion time: 03 – 05 working days;

Step 2: Post Enterprise Registration Information on the National Enterprise Registration Portal;

Step 3: Re-issue the legal entity seal according to the new information (In case the company has not issued a change of seal according to the new regulations or the seal indicating the old district office of the company);

Step 4: Register for adjustment of the Investment Registration Certificate (if there is a change in investment capital according to charter capital);

The deadline for completion is 10 -15 working days.

Change or reduce in charter capital of foreign capital company in Vietnam

Similar to company with Vietnamese capital, the Enterprise Law does not have regulations restricting the reduction of charter capital of foreign capital company.

Conditions for reducing charter capital of foreign capital company

• Refund a part of contributed capital to capital contributors in proportion to their contributed capital in the charter capital of the company if they have been operating business continuously for 02 years or more from the date of registration of business establishment and ensure full payment of debts and other property obligations after refunding to capital contributors.
• Reduction of charter capital of foreign capital company due to investors’ failure to contribute sufficient capital within the time limit recorded on the Investment Certificate and the provisions of the Law on Enterprises.

Services of Viet An Law Firm on procedures for changing charter capital of foreign capital company

• Consultancy, conditions and legal issues arising related to changes in charter capital, investment capital of foreign capital company;
• Special advice on procedures and regulations on capital transfer accounts of foreign capital company;
• Advising on the relationship between charter capital and investment capital of enterprises. Procedures related to the mobilization of foreign investment capital (loans);
• Consulting, preparing dossiers of change of charter capital, certifying proof of financial capacity to meet conditions for capital contribution of foreign investors;
• Representing and acting on behalf of customers to carry out procedures with state agencies to change the company’s charter capital;
• Advising on arising legal issues, time limit and method of capital contribution after changing the charter capital of the company.

If you have any problems in the process of changing the charter capital of a foreign capital company, please contact Viet An Law Firm for detailed advice.