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Extend capital contribution of foreign capital company in Vietnam

For foreign capital company, after being granted an investment certificate, foreign investors must open a foreign direct investment account (capital transfer account) at the Bank and contribute capital through that account within the time limit stated in the investment certificate.

Investment capital contribution

The timely contribution of capital is considered extremely important because if it overdue according to the time limit for capital contribution specified on the Investment Certificate, the Bank will not allow to receive investment capital, the company will not be able to receive investment capital to conduct operations. However, being able to contribute capital on time depends on many factors and does not always happen on time. At this time, foreign investors are required to carry out procedures for extending the time limit for contributing investment capital (contents are recorded on the Investment Certificate) or procedures for adjusting the Investment Registration Certificate. This article Viet An Law Firm would like to provide contents related to the procedures to extend capital contribution of foreign capital company.

Legal bases for procedures to extend capital contribution of foreign capital company

  • Investment Law 2020;
  • Decree No. 31/2021/ND-CP guiding the Law on Investment.
  • Decree 50/2016/ND-CP provides for sanctioning administrative violations in the field of planning and investment.

Procedures for sanctioning administrative violations on the time limit for capital contribution in the field of investment plans

Implementation process

The time limit for capital contribution is specified in the Investment Certificate, in case the capital contribution is not on time, the enterprise needs to contact the inspection agency to carry out procedures for sanctioning violations. The Inspection Agency will issue a decision on penalties for failure to contribute sufficient capital.

After receiving the decision, the enterprise shall pay a fine and proceed to adjust the Investment Certificate to extend the time limit for capital contribution or reduce capital if it is unable to contribute capital according to the time limit recorded in the decision of the Inspection Department.

Dossier of sanctioning administrative violations due to delay in capital contribution

  • A written explanation for the violation of the time limit for capital contribution;
  • Copy of investment registration certificate, enterprise registration certificate;
  • Documents proving the investor’s capital contribution;
  • Other documents required by the inspection authority.

Deadline for settlement

The person competent to sanction administrative violations must issue a decision to sanction administrative violations within 07 days from the date of making a record of administrative violations.

Penalties for administrative violations due to late capital contribution

According to Article 13, Decree 50/2016/ND-CP stipulating violations of regulations on investment activities in Vietnam: A fine of VND 20,000,000 to VND 30,000,000 for one of the following acts:

  • Failing to carry out procedures for registration of capital contribution, purchase of shares or capital contribution to economic organizations;
  • Failure to carry out procedures for adjustment of investment projects;
  • Extend the project implementation schedule, extend the investment schedule but do not propose in writing to the investment registration agency or have notified but have not been approved in writing by the investment registration agency;

Based on the explanation dossier and consideration of the violating contents, the inspection agency will decide on the appropriate fine.

Procedures to extend of capital contribution of foreign capital company

Documents to prepare

A dossier of application to extend of investment capital contribution time limit includes the following documents:

  • A written request for adjustment of the Investment Certificate;
  • Report on the implementation of investment projects up to the time of adjustment;
  • Decision and valid copy of meeting minutes of the Members’ Council/General Meeting of Shareholders/ owner of an economic organization implementing  an investment project on the adjustment of investment projects;
  • Explain the reasons for adjusting the investment project;
  • A copy of  the decision approving (adjusting) the investment policy or the decision approving (adjusting) the investor or the decision approving (adjusting) the investment policy concurrently with the investor approval or the investment registration certificate/investment certificate/investment license/business license.
  • Documents related to the adjustment: confirmation of the contributed investment capital; proof of financial capacity for insufficient investment capital.
  • Written authorization in case the investor does not directly submit the application.

Note:  For projects subject to decision on investment policies, when adjusting investment projects related to investment objectives, locations, main technologies, increasing or decreasing investment capital by more than 10% of total investment capital, implementation duration, change of investor or change of conditions for investors (if any),  The investment registration agency shall carry out the procedures for deciding on investment policies before adjusting the Investment Registration Certificate.

Authority to apply

Investment registration agency as prescribed in Article 39 of the Law on Investment 2020.

Deadline for settlement

Within 10 days from the date of receipt of a valid dossier, the Investment Registration Agency shall amend the Investment Registration Certificate for the investor to record the time limit for contributing new investment capital to the investor.

State fee: No.

Some questions related to procedures to extend of capital contribution of foreign capital company

What is the time limit for capital contribution in a foreign capital company regulated?

The duration of capital contribution in a foreign investment company is specified on the investment registration certificate.

How long is the term of capital contribution in a foreign company?

Normally, the time limit for capital contribution in a newly established foreign investment company is 90 days from the date of issuance of the enterprise registration certificate of the economic organization implementing the project.

Can the investment capital contribution term expire?

Before the expiry of investment capital contribution, investors need to submit an application to extend of the time limit for capital contribution. In case of expiry of capital contribution, the extended investor may not be approved by the investment registration agency and must carry out inspection and sanction procedures for failure to comply with the project implementation schedule and failure to adjust the investment registration certificate.

What are the procedures for sanctioning administrative violations for not contributing enough capital within the time limit before or after submitting the extension application?

Normally, when submitting an extension dossier, the investment registration agency considers the time to submit the application, in case the capital contribution is overdue, the investment registration agency sends the dossier to the inspection agency to handle violations. In case the enterprise knows that the capital contribution is beyond the time limit, it can make its own dossier to apply for the first handling of violations and carry out procedures to extend of the time limit faster.

Customers who are interested in the procedures for extending capital contribution of a foreign capital company, please contact Viet An Law Firm directly for detailed advice.

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