The integrated economy is increasingly developing, leading to many foreign individuals establishing companies in Vietnam. After being granted the Investment Registration Certificate, the investor needs to contribute enough investment capital as registered to implement the project. However, in some cases, capital contribution does not take place on time. So what are the consequences of that? To answer questions from clients, Viet An Law firm published an article below about the consequences when foreign investors cannot contribute capital on time under Vietnamese law.
Foreign investors are individuals who do not have Vietnamese nationality, and organizations established under foreign law that conduct business investment activities in Vietnam.
Forms of foreign investment capital contribution include:
Vietnamese Investment Law 2020 does not stipulate the time limit for fully contributing registered investment capital, nor does it stipulate the maximum investment capital contribution period. Based on each form of investment, the time limit for full capital contribution is prescribed as follows:
The consequences when foreign investors do not contribute capital on time are that foreign investors must be subject to administrative sanctions specified in Clauses 3 and 5, Article 46 of Decree No. 122/2021/ND-CP.
Specifically, based on Article 46:
Additionally, as point b, Clause 5, Article 46 stipulates:
Thus, the penalty that foreign investors may be subject to when not comply with the procedure of capital contributions under Vietnamese law can be up to 50,000,000 VND.
After receiving the transactions, the enterprise pays the fine and fully contributes capital according to the time limit recorded in the decision of the Inspection Department or adjusts the Investment Registration Certificate to extend the capital contribution period or reduce capital if they are unable to contribute capital according to the time limit recorded in the decision of the Inspection Department.
According to current law, if the investment capital contribution time limit is overdue, the enterprise must carry out procedures to extend capital contribution. The Enterprise Law 2020 stipulates that foreign-invested companies have an Investment Registration Certificate. The term for contributing charter capital to establish a new company is 90 days as mentioned or a longer period recorded by the Investment Registration Certificate.
According to Decree 31/2021/ND-CP guiding the Investment Law 2020, when investors need to extend the investment capital contribution period, they must carry out procedures to adjust the Investment Registration Certificate.
To carry out capital contribution extension procedures for foreign investors, the dossier includes the following documents:
Step 1: Prepare documents to adjust the Investment Registration Certificate (including documents listed above.)
Step 2: Submit an application to extend the capital contribution time limit.
After preparing the documents, the investor submits the documents to the competent investment registration agency.
Investors declare information about investment projects online at the National Information System on Foreign Investment and submit it directly to the competent Investment Registration Agency.
Within 15 working days from the date of online declaration, investors must submit an extension application to the investment registration agency.
Step 3: Process the application and receive the results.
Within 10 days from the date of receipt of valid documents, the Investment Registration Authority adjusts the Investment Registration Certificate for the investor to record the adjusted capital contribution period for the investor.
The Investment Law 2020 does not restrict foreign investors from adjusting their investment registration certificates without fully contributing capital. Therefore, the enterprise can register to adjust the investment registration certificate at the same time as requesting to extend the capital contribution period.
The term for capital contribution in foreign-invested companies is prescribed in the Enterprise Law 2020.
The Investment Law 2020 does not stipulate the time limit for contributing full investment capital. For capital contribution to establish a company, the time for full capital contribution is 90 days from the date of issuance of the Enterprise Registration Certificate. Or the investor may request the investment management agency for a longer term but must be consistent with the progress of the registered project.
Clients need advice on capital contribution extension documents, please contact Viet An Law for the best support.
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