Foreign investment in vietnam’s software company

In the age of technology, the use of computer software in serving business as well as daily life becomes more and more necessary. Some popular office software such as: management of revenue and expenditure, quantity of goods; Sales management (customers, invoices, transaction time …); Employee management … are so user-friendly and simplier than working manual on Microsoft software…Due to these advantages, the demand of using computer software increases, leading to the estabishment of software companies. Many foreign investors see the potential of software services sector and decide to contribute capital to the software company. The following article will clarify procedures for foreign investors to contribute capital to software companies in Vietnam.

Legal documents (for reference):

• Law on Investment 2014;
• Law on Enterprise 2014;
• Law on Information technology 2006, Decree No. 71/2007/NĐ-CP and Circular No. 16/2014/TT-BTTTT;
• International treaties and commitments to which Vietnam is a signatory (eg Vietnam’s WTO Protocol on Accession; ASEAN Framework Agreement on Services (AFAS), VKFTA (Vietnam-Korea), VJEPA (Vietnam – Japan)…

Under the Law on Information Technology and its guidelines, software companies are business organizations engaged in consultancy, manufactory and supply of software, warranty and repair of software according to customer’s request.

First is the conditions that foreign investors have to fulfill:

• The form of investment, operating scope, Vietnamese partners, and other aspects are conformable with the international agreements to which the Socialist Republic of Vietnam is a signatory.
  • On the form of investment: Investors are entitled to contribute capital, buy shares, or buy capital contributions of business organizations.
• The investor’s charter capital: According to WTO Protocol to Accession, foreign investors can carry out service related to company with no limit of their charter capital, which means they can own 100% company’s charter capital.
• If foreign investors contribute more than 51% of company’s charter capital, they have to carry out the procedure to register for capital contribution or purchase of shares/capital contribution.

An application for registration of capital contribution or purchase of shares/capital contribution:

• 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);
• A procuration or service contract (in case company’s legal presentative does not directly do the formality to file and receive the result).

Procedures for registration of capital contribution or purchase of shares/capital contributions:

• 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 the conditions of the Law on Investment 2014, 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.

After receiving the permit, foreigners shall contribute capital to software company. The company receiving the capital contribution will carry out procedures for changing its members/shareholders in accordance with the law. In the situation when foreign investor wishes to establish foreign-invested software company, the procedure will be: Application for Investment Registration Certificate  Establishment a company (which register for software business line)  Application for other sub-licenses (If any).

All procedures related to foreign investors to contribute capital to Vietnam’s software companies, please contact the Viet An Law Firm for detailed information.