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VIETNAM INVESTMENT CONSULTANCY

1. In general

Investment activities in Vietnam (hereinafter referred to as Vietnam investment) means the process of using financial resources, labor, natural resources and other physical assets to directly or indirectly reproduce simply and re-expanded production and Material and technical facilities of the general economy & a specific economic field. According to the 2014 Law of Investment, forms of investment include: Investment in establishment of economic organizations, capital contribution, share purchase, capital contribution to economic organizations, PPP contracts, BCC contracts.

Vietnam investment consultancy

2. Investment in establishment of a business organization:

a) Investors may establish business organizations in accordance with law. Before establishing a business organization, the foreign investor must have an investment project and apply for a Certificate of investment registration following the procedures in Article 37 of Vietnam Law of Investment 2014, and satisfy the following conditions:

  • The investor’s charter capital satisfies the requirements in Clause 3 of this Article of Vietnam Law on investment, 2014
  • 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.

b) Every foreign investor shall execute the investment project via a business organization established in accordance with Clause 1 of Article 22 of Vietnam Law on Investment 2014, except for the case in which investment is made by contributing capital, buying shares, buying capital contributions, or making investments under contracts.

c) Foreign investors may own an indefinite amount of charter capital invested in business organizations, except for the following cases:

  • The holdings of the foreign investors at listed companies, public companies, securities-trading organizations, and securities investment funds are conformable with regulations of law on securities;
  • The holdings of the foreign investors at state-owned companies that have been equitized or converted are conformable with regulations of law on equitization and conversion of state-owned companies;
  • With regard to holdings of the foreign investors in other cases than those mentioned in Point a and Point b of Clause 1 of Article 23 of Viet Nam Law on Investment, relevant regulations of law and the international agreements to which the Socialist Republic of Vietnam is a signatory shall apply.

3. Investments made by foreign-invested business organizations

a) When establishing business organizations, contributing capital, buying shares or capital contributions of business organizations; making investments under business cooperation contracts in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:

  • 51% of charter capital or more is held by foreign investors, or the majority of the general partners are foreigners if the business organization is a partnership;
  • 51% of charter capital or more is held by the business organizations mentioned in Point a of this Clause;
  • 51% of charter capital or more is held foreign investors and the business organizations mentioned in Point a of this Clause.

b) Foreign-invested business organizations in other cases than those mentioned in Points a, b, and c of clause 1, article 23 of Vietnam law on investment shall satisfy conditions and follow investment procedures applied to Vietnamese investors when establishing business organization, when making investment by contributing capital, buying shares, buying capital contribution of business organizations, when making investments under business cooperation contracts (BCC)

c) If a foreign-invested business organization that is established in Vietnam has a new investment project, procedures for such investment project shall be followed without having to establish a new business organization.

d) The government shall specify the procedures for establishing business organizations to execute investment projects of foreign investors and foreign-invested business organizations.

4. Making investment by contributing capital, buying shares, or buying capital contributions of business organizations  

a) Investors are entitled to contribute capital, buy shares, or buy capital contributions of business organizations.

b) Foreign investors making investment by contributing capital, buying shares, buying capital contribution of business organizations shall comply with regulations in Article 25 and Article 26 of Vietnam Law on Investment.

5. Methods and conditions for making capital contributions to business organizations, buying shares or capital contributions of business organizations

Foreign investors may contribute capital to business organizations in the following manners:

  • Buy shares of joint-stock companies through IPOs or additional issuance;
  • Contribute capitals to limited liability companies and partnerships;
  • Contribute capital to other business organizations not mentioned in Point a and Point b of this Clause.
  • Foreign investors shall buy shares or capital contributions of business organization in the following manners:
  • Buy shares of joint-stock companies from the companies or their shareholders;
  • Buy capital contributions to limited liability companies by their members and become members of limited liability companies;
  • Buy capital contributions to partnerships by partners and become partners;
  • Buy capital contributions to business organizations other than those mentioned in Points a, b, and c of this Clause from their members.
  • The contribution of capital, purchase of shares or capital contributions of foreign investors in the manners in Clause 1 and Clause 2 of this Article must satisfy the conditions in Point a and Point b Clause 1 Article 22 of this Law.

6. Procedures for making investment by contributing capital, buying shares, or buying capital contributions

a) An investor shall follow the register the capital contribution, purchase of shares, or capital contributions in the following cases:

  • The investor contributes capital, buy shares or capital contributions of business organizations engaged in business lines subject to conditions applied to foreign investors.
  • 51% of charter capital of the business organization or more is held by foreign investors and/or business organizations mentioned in Clause 1 Article 23 of this Law after the capital is contributed, or shares/capital contributions are purchased.

b) 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).

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

  • The investor shall submit the application prescribed in Clause 2 of this Article 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 in Point a and Point b Clause 1 Article 22 of this Law, 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 in order for the investor to follow procedures for changing shareholders/members as prescribed by law. If conditions are not satisfied, the Service of Planning and Investment shall notify the investor in writing and provide explanation.

d) Investors other than those mentioned in Clause 1 of this Article shall follow procedures for changing shareholders/members as prescribed by law when contributing capital, buying shares/capital contributions of business organizations. If such investors wish to register the capital contribution or purchase of shares/capital contributions, regulations in Clause 3 of this Article shall be followed.

7. Investment under PPP contracts

a) Investors and project management companies shall sign PPP contracts with competent authorities to execute an investment project to build new infrastructural works, to improve, upgrade, expand, manage, and operate infrastructural works, or to provide public services.

b) The Government shall specify the fields, conditions, and procedures for executing investment projects under PPP contracts.

 8. Investment under business cooperation contracts (BCC)

a) Business cooperation contracts signed between Vietnamese inventors are executed in accordance with civil laws.

b) Procedures for issuance of Certificates of investment registration in Article 37 of this Law shall apply to business cooperation contracts signed between a Vietnamese investor with a foreign investor, or between foreign investors.

c) Parties to a business cooperation contract shall establish a steering board to execute BBC. Functions, tasks, powers of the steering board shall be agreed by the parties.

9. Contents of a business cooperation contract

a) A business cooperation contract shall contain:

  • Names, addresses, authorized representatives of parties to the contract; business address or project address;
  • Objectives and scope of business;
  • Contributions by parties to the contract and distribution of profits;
  • Schedule and duration of the contract;
  •  Rights and obligations of parties to the contract;
  •  Adjustment, transfer, termination of contracts;
  •  Responsibilities for breaches of contract; method of dispute settlement.

b) During the execution of a business cooperation contract, parties may reach an agreement on using assets derived from the business cooperation to establish a company in accordance with regulations of law on companies.

c) Parties to a business cooperation contract may reach other agreements that do not contravene law.

10. Contact:

English speaking to Mr. Alex Thuc ( Dong Van Thuc): (+84) 9 61 67 55 66 (Zalo, Viber, Whatsapp). Vietnamese speaking to Ms. Ha ( Do Thi Thu Ha): (+84) 9 33 11 33 66 (Zalo, Viber, Whatsapp), Email: info@vietanlaw.com

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