Foreign investor contribute capital to Vietnamese company

Each country treats investors equally; has policies to encourage and create favorable conditions for investors to carry out business investment activities and sustainable development of economic sectors. This is prescribed in the Investment Law 2020, so foreign-national investors have access to and encourage effective investment implementation. One of the most popular forms of investment in Vietnam for foreign investors is Investment in capital contribution, purchase of shares, purchase of capital contribution to enterprises.

Legal grounds

• WTO commitments and investment treaties to which Vietnam is a sign or accession to;
• Law on Investment 2020;
• Decree No. 31/2021/ND-CP guiding the Investment Law;
• Law on Enterprises 2020;
• Decree No. 01/2021/ND-CP guiding the Law on Enterprises.

Forms of foreign investment contributing capital to Vietnamese companies

Investors are allowed to contribute capital to the company

• Purchase of first-time issued shares or additional shares of joint-stock companies;
• Capital contribution to limited liability companies and partnerships;
• Capital contribution to other economic organizations does not belong to the above 01 cases.

Foreign investors buying  shares or buying capital contributions of companies

• Purchase of shares of joint-stock companies from companies or shareholders;
• Purchase of contributed capital of members of a limited liability company to become a member of a limited liability company;
• Purchase of contributed capital portions of capital contributing members in partnerships to become capital contributing members of partnerships;
• Purchase of capital contributed by members of other economic organizations other than those mentioned above.

Case 1: Foreign investors carry out procedures for registration of capital contribution, purchase of shares, purchase of contributed capital of the company before changing members

Foreign investors carry out procedures for registration of capital contribution, purchase of shares, or purchase of contributed capital by economic organizations before changing members or shareholders if they are in one of the following cases:

• The capital contribution, purchase of shares, or purchase of contributed capital increases the ownership ratio of foreign investors in economic organizations doing business in sectors and trades accessing conditional markets for foreign investors;
• The capital contribution, purchase of shares, or purchase of contributed capital leads to the holding of more than 50% of charter capital by foreign investors and economic organizations specified at Points a, b and c, Clause 1, Article 23 of the Investment Law holding more than 50% of charter capital of economic organizations in the following cases: 

• • To increase the charter capital ownership ratio of foreign investors from less than or equal to 50% to over 50%; 
  • To increase the charter capital ownership rate of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations.

Application for registration of capital contribution, purchase of shares, or capital portions of foreign investors

• Written registration of capital contribution, purchase of shares, or contributed capital;
• Copies of legal papers of individuals and organizations contributing capital, buying shares, buying contributed capital and economic organizations with foreign investors contributing capital, buying shares or buying contributed capital;
• Written agreement on capital contribution, purchase of shares, purchase of contributed capital between foreign investors and economic organizations receiving the capital contribution, purchase of shares or contributed capital;
• Written declaration (enclosed with a copy) of the land use right certificate of the economic organization receiving the capital contribution, shares, and contributed capital of the foreign investor. 

Case 2: Foreign investors carry out procedures for changing shareholders and members at the business registration agency.

• Investors are not subject to the provisions in case 1 implements procedures for changing shareholders and members under relevant laws when contributing capital, buying shares, or buying capital contributions of economic organizations at the business registration office of the locality where the economic organization is headquartered.
• In case of need to register capital contribution, share purchase, purchase of contributed capital of economic organizations, investors shall comply with the provisions in Case 1.

Business registration change dossier

• Notification of changes in business registration contents;
• Decisions on the change of members of the company;
• Minutes of meeting on change of company members (if any)
• The transferred contract and the documents certified by the legal representative of the company have been completed;
• List of capital contributing members or shareholder registers;
• A certified copy of the passport of a new member who contributes capital to the company (if any).

Procedures for foreign investors to contribute capital to Vietnamese companies

Procedures for foreign investors to register capital contribution, purchase of shares, or capital contribution to the Company 100% of the Vietnamese capital

• Step 1: Investors submit dossiers at the Investment Department – Department of Planning and Investment where the economic organization is headquartered to complete procedures for registration of capital contribution, purchase of shares, and capital contribution to the Company 100% of Vietnam capital.
• In case the capital contribution, purchase of shares, or contributed capital of foreign investors meet the conditions, the Department of Planning and Investment shall notify in writing within 15 days from the date of receiving sufficient dossiers for the company to carry out procedures for shareholder change, members as prescribed by law. In case of not meeting the conditions, the Department of Planning and Investment notified the investor in writing and clearly stated the reason.
• Step 2: After the approval of the Department of Investment – Department of Planning and Investment on approval for foreign investors to contribute capital, buy shares, contributed capital, investors carry out the following procedures: If buying from 51% of capital, Vietnamese companies open direct investment capital accounts for Vietnamese companies, then the foreign investor contributes the transferred capital and declares the transferable income tax.
• Step 3: After that, the company in which the investor buys contributed capital, shares will carry out procedures to change shareholders and members on the Business Registration Certificate (Enterprise Registration Certificate) following the provisions of law at the Business Registration Office – Department of Planning and Investment.

Procedures for foreign investors to register capital contribution, purchase of shares, or contributed capital to foreign-invested companies in Vietnam

• Step 1: Investors shall submit dossiers at the Investment Department – Department of Planning and Investment of the locality where the economic organization is headquartered to apply for registration of capital contribution, purchase of shares, or capital contribution to a foreign-invested company.
• Step 2: After the approval of the Department of Investment – Department of Planning and Investment on the approval for foreign investors to contribute capital, buy shares, contributed capital. 
• Step 3: After the approval of the Department of Investment – Department of Planning and Investment on the approval for foreign investors to contribute capital, buy shares, contributed capital, investors carry out the following procedures: If buying from 51% of the capital of a Vietnamese company to open a direct investment capital account for a Vietnamese company, then the foreign investor contributes the transferred capital and declares the transferable income tax.
• Step 4: After or at the same time with the procedures for changing the enterprise registration, the company changes the investment registration certificate to recognize new foreign investors.

Payment of  capital contribution by foreign investors to Vietnamese companies

According to Circular No. 06/2019/TT-NHNN of the State Bank of Vietnam, payment for investment capital transfer transactions in foreign direct investment enterprises must be made through foreign direct investment capital accounts of such enterprises. Therefore, when a foreign investor contributes capital to a Vietnamese company, he/she must open a foreign direct investment capital account at a bank in Vietnam; can be opened in Vietnamese dong or foreign currency, depending on the currency used to contribute capital to the enterprise.

Some questions about foreign investment capital contribution to Vietnamese companies

Do foreign investors have restrictions when making investments in Vietnam?  

Investors are required to meet the investment conditions of the WTO Commitments, international investment treaties to which Vietnam is a sign or accession, and domestic laws.

The maximum ownership rate of foreign investors in Vietnamese companies?

Restrictions on the ratio of contributed capital are imposed on some specific conditional trades that the investor intends to register. There are also popular industries that do not limit the capital contribution rate to encourage investment. 

Is the nationality of foreign investors restricted when contributing capital to Vietnamese companies?

Currently, the nationality of investors is no longer restricted from receiving investment, except for a small number of nationalities that are not allowed to receive investment because of the impact on national defense, security, politics, and social order …

Consulting services for foreign investors contributing capital to Vietnamese companies of Viet An Law Firm

• Advise on the capital contribution ratio of foreign investors when investing in capital contribution, buying shares, buying capital contributions to economic organizations in Vietnam;
• Consult on selecting suitable types of companies for investors: Limited Liability Company or Joint Stock Company, head office address, capital, business line, opening capital transfer account, capital contribution term;
• Advice on conditions, guiding investors to prepare necessary documents for capital contribution, share purchase, purchase of capital contributions to economic organizations in Vietnam;
• Advise, draft investment dossiers for capital contribution, purchase of shares, purchase of capital contributions to economic organizations in Vietnam;
• Represent for investors and economic organizations to submit and process dossiers, arise with concerned agencies in the course of carrying out procedures for capital contribution, share purchase or purchase of capital contributions to economic organizations;
• Support to advise and guide customers on activities in the process of investment and business in Vietnam.

Customers wishing to understand the laws and legal regulations related to the procedures of foreign investors contributing capital to Vietnamese companies please contact Viet An Law Firm for the fastest support.