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Foreign investors contribute less than 51% to Vietnamese companies

One of the forms of investment in Vietnam by foreign investors in the form of capital contribution, share purchase, stake purchase to Vietnamese enterprises.

Legal basis

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

This form of investment is detailed in Article 26 of the Investment Law 2020:

“2. Foreign investors shall carry out procedures for registration of capital contribution, share purchase or purchase of capital contributions of economic organizations before changing members and shareholders if they fall under one of the following cases:

“a) The capital contribution or purchase of shares or stakes increases the ownership ratio by foreign investors in a business organization conducting business in the restricted business lines;

  1. b) The capital contribution or purchase of shares or stakes results in a foreign investor or business organization specified in Points a, b and c Clause 1 Article 23 of this Law holding over 50% of the charter capital of the business organization in the following cases: The holding of charter capital by the foreign investor is increased from less than or equal to 50% to over 50%; the holding of charter capital by the foreign investor is increased while such foreign investor is holding over 50% of the charter capital of the business organization.
  2. c) The foreign investor that contributes capital, purchases shares, or stakes of a business organization has a certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defense and security.”

Accordingly, foreign investors buying less than 51% of the total capital of Vietnamese companies trading in non-conditional business lines only need to carry out procedures to change the Business Registration Certificate without carrying out procedures for capital contribution registration, share purchase, and contribution with the Department of Planning and Investment.

Business lines that do not have conditions under the list specified in the Investment Law include:

  • Management consulting and investment consultancy services;
  • Computer services and computer-related services;
  • Production services;
  • Wholesale and retail services of goods are not on the list of prohibited and restricted businesses.

Forms of capital contribution, share purchase, purchase of contributed capital:

  • Purchase of first-time issued shares or additionally issued shares of joint-stock companies;
  • Contributing capital to limited liability companies and shareholders;
  • Purchase of shares of joint-stock companies from the company or shareholders;
  • Purchase the capital contribution of a member of a limited liability company to become a member of a limited liability company;
  • Purchase the capital contribution of the member contributing capital in the company to become a contributing member of the company;
  • Capital contribution and purchase of contributed capital are not subject to the above cases

Procedures for implementation:

  • The company submits 01 sets of dossiers submitted at the Department of Planning and Investment where the company is headquartered.
  • Within 03 working days after receiving a valid dossier, the business registration agency issued a new enterprise registration certificate to the enterprise.

Dossiers of Vietnamese enterprises and foreign investors should be prepared:

  1. Notice of change in the content of business registration;
  2. Decision on changing members of the company;
  3. Minutes of meeting on changing company members;
  4. The transferred contract and the certified documents have completed transfer certified by the legal representative of the company;
  5. List of capital contributing members or shareholder registers;
  6. Notarized copy of the new member’s passport to contribute capital to the company (if any).

Payment of foreign investors’ capital contribution 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 the foreign direct investment account of that enterprise. Therefore, when a foreign investor contributes capital to a Vietnamese company, it is required to open a foreign direct investment account at a bank in Vietnam; can be opened in Vietnamese or foreign currency, depending on the currency used to contribute capital to invest in the enterprise.

 

Some questions about foreign investors contributing less than 51% to Vietnamese companies doing business without conditions

What do “non-conditional business lines” mean?

The list of business lines without conditions is specified in Appendix IV of the Investment Law 2020.

Can foreign investors contribute less than 51% to Vietnamese companies doing business in non-conditional business lines still need to register to buy capital contributions at the Business Registration Agency?

Foreign investors contributing less than 51% to Vietnamese companies doing business in non-conditional industries but still wishing to register to buy capital contributions at business registration agencies shall comply with investment procedures in the form of capital contribution, share purchase, stake purchase specified in Article 26 of the Investment Law 2020.

 

Foreign investor advisory service contributes capital to Vietnamese company of Viet An Law Firm

  • Advising on the capital contribution rate of foreign investors when investing in capital contribution, buying shares, purchasing capital contributions to economic organizations in Vietnam
  • Advising on the selection of suitable types of companies for investors: Limited company or joint-stock company, head office address, capital, business lines, opening capital transfer accounts, capital contribution duration;
  • Advising on conditions, guiding investors to prepare necessary documents to invest in capital contribution, share purchase, purchase of capital contribution to economic organizations in Vietnam
  • Advising and drafting investment dossiers for capital contribution, share purchase, purchase of capital contributions to economic organizations in Vietnam
  • Representatives of investors and economic organizations to submit and process dossiers, arising with relevant agencies in the process of carrying out procedures for capital contribution investment, share purchase, purchase of capital contribution to economic organizations.
  • Supporting to advise and guide passengers on activities arising during the implementation of investment and business in Vietnam.

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

 

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