Procedures for the capital contribution to establish a foreign-invested company in Vietnam

Capital contribution is a high recommend choice for small and medium-sized foreign enterprises when investing in Vietnamese market. It involves the infusion of capital or assets into the company by its shareholders or founders to support its operations and growth. This process requires adherence to specific legal procedures and compliance with the laws and regulations of Vietnam. Therfore, clients can rely on the professional legal services provided by Viet An Law. With extensive experience and expertise in corporate law, Viet An Law offers comprehensive assistance to clients throughout the entire capital contribution procedure.

The noticable for the condition of the capital contribution to a foreign-invested company

The capital contribution to a foreign-invested company must satisfy the following regulations and conditions:

• The condition of market access to foreign investors is specified in Article 9 of the Law on Investment 2020.
• Ensuring national defense and security as prescribed in Law on Investment 2020.
• Provisions of the Land law on conditions for receiving land use rights, conditions for land use in islands, communes, wards, border towns, and coastal towns.

The noticable of the investment capital contribution account when establishing a foreign-invested company

• A foreign-invested enterprise must open a foreign currency direct investment capital account at 01 (one) authorized bank to conduct lawful receipts and payments in foreign currencies related to investment activities foreign direct investment into Vietnam;
• Foreign investors, Vietnamese investors are conducted to contribute investment capital in foreign currency or Vietnam dong according to the level of capital contributed by the investor in the Investment Registration Certificate, Notice of Satisfaction of Conditions for contributing capital, buying shares/stakes of foreign investors.
• The contribution of investment capital in money of foreign investors, Vietnamese investors must be done through the form of transfer to the direct investment capital account.

The noticable of procedures when contributing capital to establish a foreign-invested company

For foreign-invested companies are newly established with the participation of investors from the beginning

• Foreign-invested enterprises within 90 days from the date of issuance of the Enterprise Registration Certificate need to open an investment capital account and contribute capital on time as specified in the Investment Certificate.
• In case the enterprise has not opened an investment capital account and contributed investment capital beyond the time limit for investment capital contribution, the bank will refuse to open the account after the expiration date. Accordingly, the company needs to conduct the procedures for extending the investment capital contribution in order to open an investment capital account and contribute investment capital according to the provisions of the amended Investment Certificate.

For foreign-invested companies in which foreign investors purchase a capital contribution

Foreign-invested companies contributing capital to economic organizations must satisfy the conditions and carry out procedures for changing members and shareholders according to the provisions of law corresponding to each type of economic organization.

Foreign-invested companies shall conduct procedures for registration of capital contribution to economic organization before changing members, shareholders if they fall into one of the following cases:

• The capital contribution increases foreign investor’s ownership ratio in economic organizations doing business in lines of business with conditional market access for foreign investors.
• The contribution of capital leads to the fact that foreign investors and economic organizations specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment hold more than 50% of the charter capital of the economic organizations in case: increase the rate of ownership of charter capital of foreign investors from less than or equal to 50% to over 50%; increase the rate of ownership of charter capital of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations;
• Foreign-invested companies contribute capital to economic organizations that have the certificate of land use rights in islands and border communes, wards, and townships; coastal communes, wards and towns; other areas affecting national defense and security.

The dossier of capital contribution to establish a foreign-invested company

The dossier of the registration of capital contribution includes:

• The capital contribution registration document includes: information on the business registration of the economic organization to which the foreign-invested company intends to contribute capital; the line of business; list of founding shareholders, list of foreign shareholders (if any); rate of ownership of charter capital of foreign investors before and after capital contribution to economic organizations; transaction value of the capital contribution contract; information on investment projects of economic organizations (if any);
• Legal document copies of the foreign-invested company and the economic organization in which the foreign-invested company contributes capital.
• Written agreement on capital contribution between the foreign-invested company and the economic organization receiving capital contribution.
• Declaration document (enclosed with a copy) Certificate of land use right of the economic organization receiving capital contribution from the foreign-invested company (in the case specified at Point b and Clause 2, Article 24 of the Law on Investment 2020).

Economic organizations in which foreign-invested companies contribute capital shall be responsible before law for the accuracy and truthfulness of their declarations.

The noticable of dossier of the process of capital contribution to foreign-invested companies

Step 1: Submit application for purchase contributed capital

• Economic organizations with capital contribution by foreign-invested companies in the cases specified in Clause 2, Article 26 of the Law on Investment 2020 shall submit a set of capital contribution registration dossiers to the investment registration agency where the company is located. headquarters.
• In case the conditions specified in Clause 2, Article 24 are satisfied and it does not fall into the cases specified in Clause 2, Article 26 of the Law on Investment 2020, based on the written consent of the Investment Registration Authority, the economic organization that has Foreign-invested companies contributing capital shall conduct procedures for changing members and shareholders at the enterprise registration agency following the law on enterprises and other laws corresponding to each type of company.

Step 2: Contribute capital according to the registration documents

After being approved to contribute capital as prescribed in Clauses 3 and 4, Article 65 of Decree No. 31/2021/ND-CP, the receiving economic organization opens an investment capital account and accepts foreign investment capital contributions according to the notice of approval to purchase the contributed capital. Note that the investment capital contribution account is independent from the company’s trading account.

Step 3: Carry out the procedure to change members

After the foreign investor completes the capital contribution in accordance with the written approval to purchase the contributed capital, the company shall carry out the procedures for changing members and shareholders at the enterprise registration agency in accordance with the law on enterprises and other laws corresponding to each type of company.

The noticable of  the case of capital contribution with a land use right certificate in special areas

In case a foreign-invested company contributes capital and has a certificate of land use rights in islands, communes, wards, border towns and coastal communes, wards and townships; or in other areas affecting national defense and security, the investment registration agency shall carry out the following procedures:

• Within 03 working days from the date of receipt of a valid application, the investment registration agency shall consult the Ministry of National Defense and the Ministry of Public Security on the satisfaction of the conditions specified at Point b, Clause 4, Article 65 of Decree 31/2021/ND-CP.
• Within 07 working days from the date of receipt of a written request from the investment registration agency, the Ministry of National Defense and the Ministry of Public Security shall give opinions on the satisfaction of the conditions for ensuring national defense and security for the economic organizations in which foreign-invested companies contribute capital. If the request is not made within the time limit, it shall be deemed to have agreed to meet the conditions for ensuring national defense and security for economic organizations in which foreign-invested companies contribute capital.
• Within 15 days from the date of receipt of a valid dossier, the investment registration agency shall examine the fulfillment of capital contribution as prescribed in Article 24.2 of the Law on Investment, and Article 65.4 of the Decree No. 31/2021/ND-CP and based on the opinions of the Ministry of National Defense and the Ministry of Public Security to notify investors. The notification document shall be sent to foreign investors and economic organizations with foreign investors contributing capital.

Client wishing to establish a foreign-invested company or invest in other form in Vietnamese market, consulting on procedures after establishing a foreign-invested company, please contact Viet An Law Firm for the best advice!