Procedure for extending capital contribution of FDI company in Vietnam

Learn about the step-by-step procedure for extending the capital contribution of foreign direct investment (FDI) companies in Vietnam, ensuring compliance with local regulations and maximizing investment potential. For FDI companies, after being granted an IRC (investment registration certificate), foreign investors must open a foreign direct investment account (capital transfer account) at a bank and contribute capital through that account within the time limit prescribed by the Enterprise Law and in the Investment Registration Certificate.

Timely capital contribution is considered extremely important because if the capital contribution deadline is overdue according to the investment certificate, the bank will not allow the receipt of investment capital, and the company will not be able to receive investment capital to carry out its operations. However, the ability to contribute capital on time depends on many factors and does not always occur within the deadline. At this time, foreign investors are forced to carry out procedures to extend the investment capital contribution deadline (content recorded on the investment certificate) or procedures to adjust the investment registration certificate. In this article below, Viet An Law would like to provide some legal opinions related to the procedure for extending capital contribution of FDI company in Vietnam.

Legal basis

• Law on Investment 2020;
• Decree 31/2021/ND-CP dated March 26, 2021;
• Decree 122/2021/ND-CP dated December 28, 2021.

Term of investment capital and charter capital contribution of foreign invested company (FDI)

Investors should note the following regulations on capital contribution:

• The Investment Registration Certificate of the enterprise has the criterion of Total Investment Capital, which includes contributed capital to implement the project and other sources of capital as registered. For the contributed capital to implement the project as prescribed in the Investment Registration Certificate, the investor must fully contribute within 90 days from the date of issuance of the Enterprise Registration Certificate/Investment Registration Certificate.
• The total investment capital on the Investment Registration Certificate is contributed by the investor through the investment capital account according to the recorded capital contribution period (usually 90 days). If the period recorded on the Investment Registration Certificate is exceeded, the bank managing the account will refuse to accept the capital transferred into the account. Therefore, at this time, to transfer capital into the investment account, the investor needs to carry out the procedure of adjusting the IRC with the content of extending the capital contribution period.

Procedure for extending capital contribution of FDI company in Vietnam

Extending the capital contribution period is the adjustment of the IRC in the capital contribution progress section. The implementation process is as follows:

Step 1: Prepare Investment Registration Certificate adjustment dossier

The dossier for adjusting the Investment Registration Certificate includes:

• Document requesting adjustment of investment project
• Report on investment project implementation status
• Decision of the Owner/ Board of Members/ General Meeting of Shareholders on adjusting the IRC;
• Explanation of the adjusted content (with attached documents – if any)
• Documents proving capital contribution (if part of the capital has been contributed)
• Certified copy of the issued Investment Registration Certificate
• Power of Attorney for Viet An Law

Within 10 working days, the Department of Planning and Investment will review the dossier and respond to the investor regarding its assessment opinion. Specifically:

• In case the dossier is complete and valid, the Department of Planning and Investment shall issue an adjusted Investment Registration Certificate recording the new capital contribution period for the investor;
• In case the dossier shows signs of administrative violations in the field of planning and investment, the Department of Planning and Investment shall notify the investor and transfer the dossier to the Inspection Agency for settlement. The investor/Economic organization implementing the project shall contact the Inspection Agency to settle the administrative violation (if any).

Step 2: Handling administrative sanctions at the Inspection Department (in case the file shows signs of administrative violations, late capital contribution within the prescribed deadline)

After the file is transferred to the Inspection Department, the investor waits to receive the Invitation to Work. When coming to work, the investor needs to prepare the following documents:

• Invitation letter from the Inspectorate;
• Copy of Investment Registration Certificate, Business Registration Certificate;
• Documents proving the investor’s capital contribution;
• Explanation of failure to contribute sufficient capital on time
• Other documents as required by the Inspection Department.
• Power of Attorney for Viet An Law to act on your behalf

Processing time:

The person with authority to sanction administrative violations must issue a decision to sanction administrative violations within 07 days from the date of making the Record of administrative violations.

Step 3: Determine the level of fines and pay fines for late contribution of investment capital and charter capital (only perform this step if the FDI enterprise has delayed capital contribution according to the recorded deadline)

Administrative penalty for late capital contribution and handling procedure:

According to Article 17, Decree 122/2021/ND-CP regulating administrative sanctions in the field of planning and investment, depending on the records and level of violation, investors may be subject to the following penalties:

“A fine of from VND 70,000,000 to VND 100,000,000 shall be imposed for one of the following acts:

b) Failure to carry out procedures to adjust the Investment Registration Certificate in case the adjustment of the investment project changes the content of the Investment Registration Certificate;”

Based on the explanation file and review of the violation content, the inspection agency will decide on the appropriate penalty level.

Step 4: Pay the fine at the State Treasury

After receiving the Decision on administrative penalty, the investor goes to the State Treasury to pay the fine.

Step 5: Complete the application for an extension term of capital contribution of FDI company

After paying the fine, the investor must provide documents proving the payment of the fine so that the Inspection Department can complete the file and transfer it to the Foreign Economic Affairs Department to continue processing the file to extend the capital contribution deadline for the enterprise.

Questions related to the procedure for extending capital contribution of FDI company in Vietnam

Where is the capital contribution period in an FDI company regulated?

The term of capital contribution in a foreign invested company is stipulated in the Enterprise Law and on the Investment Registration Certificate.

How long is the capital contribution period in a foreign company?

According to the provisions of the Enterprise Law, the time limit for capital contribution in a newly established foreign investment company is 90 days from the date of issuance of the business registration certificate of the economic organization implementing the project.

Can the investment capital contribution be extended after the investment capital contribution period has expired?

Before the capital contribution deadline expires, the investor must apply for an extension of the capital contribution deadline. In case the capital contribution deadline expires, the investor may not be approved by the investment registration agency and must go through inspection and penalty procedures due to failure to comply with the project implementation schedule and failure to adjust the investment registration certificate.

Service of extending capital contribution of FDI company in Vietnam of Viet An Law Firm

• Consulting on conditions and documents for procedures to extend investment capital contribution for FDI companies according to regulations;
• Representing clients in carrying out procedures to extend investment capital contribution for FDI companies at competent state agencies.
• Consulting on conditions for establishing a foreign-invested company: capital contribution ratio of foreign investors in Vietnam; business conditions of each industry; project implementation location; note the procedures before and after establishing an FDI company;
• Consulting on choosing the appropriate type of company for investors: LLC or Joint Stock Company;
• Consulting on opening capital transfer accounts and capital contribution deadlines;
• Consulting and guiding investors to prepare necessary documents to establish a foreign-invested company;
• Consulting and drafting company establishment documents for investors;
• Representing investors in working with competent state agencies of Vietnam in the process of carrying out procedures for establishing a company for investors (Applying for Investment Registration Certificate, Enterprise Registration Certificate, Business License, License according to specialized requirements, making a legal seal, announcing seal samples, procedures after establishing a company, etc.);
• Comprehensive, regular consulting, accounting services, tax law package for activities arising in the process of doing business in Vietnam for investors.