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Foreign investors repurchase, contribute capital to conditional business companies

One of the most popular forms of investment in Vietnam by foreign investors in the form of capital contribution, shares purchase, stakes purchases to Vietnamese companies. By this form, investors have the advantage of immediately taking advantage of a business that has been operating in Vietnam to do business. For investors who want to own capital of 51% or more in a Vietnamese company or own at a lower rate but the company makes business on conditional business lines to carry out procedures for registration of capital contribution, shares purchase, stakes purchase.

Viet An Law Firm would like to give details about procedures for registration of capital contribution, shares purchase, stakes purchase of foreign investors to Vietnamese companies in this case as follows:

Legal basis

  • WTO commitments and international investment treaties to which Vietnam member 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.

In case of registration of capital contribution, shares purchase and stakes purchase in Vietnamese companies:

According to Article 26 of the Investment Law 2020, the cases must carry out procedures for registration of capital contribution, shares purchase, and stakes purchase including:

  1. 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;
  2. 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.
  3. 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.

Conditional occupations:

Conditional occupations are specified in the list of business investment lines and conditions of the investment Law 2020. Some industries have the following conditions:

  • Trading in fireworks, excluding firecrackersPawn services business;
  • Pawnshop services;
  • Educational services;
  • Travel services;
  • Accounting, auditing services;
  • Real estate business services;

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 partnerships;
  • 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 partnership to become a contributing member of the partnership;
  • Capital contribution and purchase of contributed capital are not subject to the above cases

Procedures for foreign investors to buy capital contribution into Vietnamese companies making business in conditional business lines:

Step 1: Register capital contribution, buy contributed capital, buy shares in Vietnamese companies at the Department of Planning and Investment

Preparation dossier

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

Procedures for implementation:

  • Investors submit their dossiers at the Investment Department – Department of Planning and Investment where the economic organization is headquartered to carry out procedures for registration of capital contribution, shares purchase, stakes purchase to the 100% capital contribution Vietnamese company.
  • In case the capital contribution, shares purchase or stakes purchase of foreign investors meets the conditions, the Department of Planning and Investment shall notify in writing within 15 days from the date of receipt of sufficient dossiers for the company to carry out procedures for shareholder change, members by the law. In case of non-meeting of conditions, the Department of Planning and Investment informs the investor in writing and clearly states the reasons.

Step 2: Foreign investors make capital contributions and transferees declare and pay a transfer tax

After obtaining the approval of the Department of Investment – Department of Planning and Investment on the approval for foreign investors to contribute capital, buy shares, buy stakes, investors carry out the following procedures: If buying from 51% of the capital of the Vietnamese company to open a direct investment capital account for a Vietnamese company, after that, the foreign investor shall contribute transfer capital and declare the transfer income tax.

Step 3: Change the business registration information

After receiving capital from investors buying capital, purchasing shares, companies carry out procedures for changing shareholders and members on the Business Registration Certificate as prescribed by law at the Business Registration Department – Department of Planning and Investment.

Application for change of business registration

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

Some questions about foreign investment in contributing capital to Vietnamese companies

Maximum ownership rate of foreign investors in Vietnamese companies?

Restrictions on capital contribution ratios are placed on certain conditional occupations that investors plan to register. In addition, there are still popular professions that do not limit the rate of capital contribution to encourage investment.

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, stake purchase to economic organizations in Vietnam;
  • Advising and drafting investment dossiers for capital contribution, share purchase, stake purchase 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 understand 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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