Company transfer agreement with foreign investors in Vietnam

Purchaseing an operating company in Vietnam is a form of investment that many foreign investors choose due to its benefits. However, they should notice that there are some legal procedures they have to carry out before official own the company, which are regulated by the Law on Enterprise 2014, Law on Investment 2014 and Decree 78/2015 / NĐ-CP. This article will provide the details of those legal procedures.

1. Registration of capital contribution or purchase of shares/capital contributions:

According to the Law on Investment 2014, foreign investors who wish to own more than 51% of the charter capital must carry out registration procedures for buying shares. The transfer of the company to a foreigner means that the person will hold 100% of the charter capital of the company, so this procedure must be carried out before the transfer.

Application file for capital contribution should include:

Application documents need prepared:

• A written for registration of capital contribution or purchase of shares/capital contributions, which specify information about the business organization to which investment is made; the holding of the foreign investor after making investment;
• A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization);
• In case the investors authorize someone else to do this procedure on behalf of him/her, there must be a procuration or a service contract indicating person who will carry out this fomality.

Procedure:

• The investor shall submit the application prescribed above at the Service of Planning and Investment of the province where the headquarter of the business organization is situated;
• If the contribution of capital, purchase of shares/capital contributions satisfies all the conditions, the Service of Planning and Investment shall send a written notification to the investor within 15 days from the day on which the satisfactory application is received. If conditions are not satisfied, the Service of Planning and Investment shall notify the investor in writing and provide explanation.

2. Application for Certificate of Business registration:

If the transferred company is a single-member limited liability company:

Under the Decree No. 78/2015/NĐ-CP, when the company owner transfers his/her whole charter capital to another individual or organization, the transferee must register the change of ownership:

Application for registration of replacement of owner of single-member limited liability company includes:

• A notification of changes of enterprise registration information bearing the signatures of the old owner or his/her legal representative and the new owner or his/her legal representative;
• A legitimate copy of the ID paper of the transferee (if the transferee is an individual) or legitimate copy of certificate of enterprise registration or an equivalent document (if the transferee is an organization); a list of authorized representatives, a legitimate copy the ID paper of the authorized representative and a letter of attorney issued by the owner;
• A legitimate copy of the revised charter of the company;
• A capital transfer contract or documents proving completion of the capital transfer;
• A written approval for capital contribution, purchase of shares/stakes by foreign investors given by Department of Planning and Investment.

The application are submitted to the Business Registration Office of the province / city where the company is located. Within 3 days, the Business Registration Office will consider the validity of the above mentioned documents and issue the certificate of business registration.

If the transferred company is a multi-member limited liability company or joint stock company:

Foreign investors who receive assignments will have to register for convert or retain the type of company in accordance with the law. The regulations on documents and procedure depend on the type of company that investor wish to establish.

Due to the complexity of the procedures, which require much paperwork and time, investors should contact with liable law firms for more information.