Procedures for transferring a company with 100% foreign capital in Vietnam

The company is 100% foreign capital capital corresponding to the type of one-member limited liability company in accordance with the Law on Enterprises in 2020. When establishing a business, the owner will commit to contribute capital to the company within 90 days from the date of issuance of the Enterprise Registration Certificate. In the course of business activities, for some reason, the company owner wants to withdraw his/her capital from business activities, the owner must transfer his/her capital to another organization or individual on the basis of the capital transfer contract.

In the following, Viet An Law would like to give some legal opinions on the procedures for capital transfer of 100% foreign capital company as follows:

Regulations on charter capital of 100% foreign capital company in Vietnam

The charter capital of a one-member limited liability company when registering for business establishment is the total value of assets committed by the company owner and stated in the company’s charter.

The company owner must contribute capital to the company in full and in accordance with the type of assets committed when registering for business establishment within 90 days from the date of issuance of the Enterprise Registration Certificate, excluding the time for transportation and import of assets contributed as capital,  carry out administrative procedures to transfer ownership of property. During this period, the company owner has rights and obligations corresponding to the committed capital contribution.

The company owner is only entitled to withdraw capital by transferring part or all of the charter capital to another organization or individual; In case of withdrawing part or all of the contributed charter capital from the company in another form, the company owner and related individuals and organizations must be jointly responsible for debts and other property obligations of the company.

Capital transfer procedure

Procedures for transferring company capital with 100% foreign invested capital are carried out through the following steps:

• Register to purchase contributed capital if the transferee organization/individual is a foreign investor;
• Change of business registration contents on the Business Registration Certificate: Change of owner. The transferee investor can combine to carry out additional contents such as change of representative, head office address, industry …;
• Adjust information about investors and related information on the Investment Registration Certificate in case the company is granted an Investment Registration Certificate.

Step 1: Register to buy contributed capital of a foreign capital company

Dossier of registration for purchase of 100% foreign capital capital contribution

• A document of registration of capital contribution, share purchase or purchase of contributed capital includes the following contents: information on enterprise registration of economic organizations to which foreign investors plan to contribute capital, purchase shares or purchase contributed capital; business lines; list of owners, members, founding shareholders, list of owners, members, shareholders being foreign investors (if any); the percentage of ownership of charter capital of foreign investors before and after capital contribution, share purchase or purchase of contributed capital to economic organizations; expected transaction value of contracts for capital contribution, share purchase, purchase of contributed capital; information on investment projects of economic organizations (if any);
• Copies of legal papers of organizations contributing capital, buying shares, purchasing contributed capital and economic organizations with foreign investors contributing capital, buying shares or purchasing contributed capital: Business license or equivalent document and Passport of the person authorized to manage the capital portion in Vietnam;
• A written agreement in principle on capital contribution, share purchase or purchase of contributed capital between foreign investors and economic organizations in which foreign investors contribute capital, purchase shares, purchase contributed capital or between foreign investors and shareholders or members of such economic organizations;
• A copy of the land use right certificate of an economic organization in which foreign investors contribute capital, purchase shares or purchase contributed capital if such economic organization has a land use right certificate in islands, communes, wards, border towns and coastal communes, wards and townships; other areas affecting national defense and security, except economic organizations implementing investment projects in industrial parks, export processing zones, hi-tech parks or economic zones established under the Government’s regulations.
• Power of attorney for Viet An Law to carry out the procedure on its behalf.

Place of application: Department of Planning and Investment where the economic organization is headquartered.

Order and procedures: If the capital  contribution, share purchase or capital contribution of foreign investors satisfies the conditions on ownership ratio and investment form in accordance with the Schedule of commitments and Vietnamese law, within 15 days from the date of receipt of complete dossiers,  The Department of Planning and Investment will notify in writing. In case the application does not meet the conditions, the Department of Planning and Investment will notify in writing clearly stating the reason.

Step 2: Register to change the company owner with 100% foreign capital

After receiving the Notice of approval to purchase contributed capital, the investor prepares a dossier of change of contents on the Enterprise Registration Certificate

The dossier includes:

• Notice of change of owner of a one-member limited liability company signed by the owner or legal representative of the old owner and the new owner or legal representative of the new owner;
• Copies of legal papers of individuals in case the transferee is an individual or copies of legal papers of organizations, copies of legal papers of individuals for authorized persons and copies of documents appointing an authorized representative in case the transferee is an organization.

For owners being foreign organizations, copies of legal papers of the organization must be consular legalized;

• A copy of the amended and supplemented charter of the company;
• Contract for transfer of contributed capital or documents proving completion of the transfer of contributed capital;
• Documents of the Investment Registration Agency approving the capital contribution, share purchase, purchase of contributed capital by foreign investors or foreign capital economic organizations in case of having to carry out procedures for registration of capital contribution, share purchase or purchase of contributed capital in accordance with the provisions of the Investment Law.
• Power of attorney for Viet An Law to carry out the procedure on its behalf.

In addition to the above dossiers, in case the combined company changes other business registration contents, it shall enclose the dossier corresponding to the changed contents. In this case, customers can contact Viet An Law directly for more detailed instructions.

Step 3: Adjust the Investment Registration Certificate

This step is performed when the company is granted an Investment Registration Certificate.

Dossiers of adjustment of Investment Registration Certificates are as follows:

• A written request for adjustment of an investment project
• Report on the implementation of investment projects
• Decision of the Owner on the adjustment of the Investment Registration Certificate;
• Capital transfer contracts;
• Copies of legal papers of individuals in case the transferee is an individual or copies of legal papers of organizations, copies of legal papers of individuals for authorized persons and copies of documents appointing an authorized representative in case the transferee is an organization.

For owners being foreign organizations, copies of legal papers of the organization must be consular legalized;

• A certified copy of the granted Investment Registration Certificate;
• A certified copy of the Business Registration Certificate that has changed the owner’s information;
• Power of attorney for Viet An to carry out the procedure on his behalf.

The time limit for processing applications is 15 working days from the date the Department of Planning and Investment receives a valid dossier.

Some issues to attend when transferring capital

Tax declaration for capital transfer activities

For owners who are individuals transferring capital:

After carrying out the transfer of capital, within 10 days from the effective date of the contract on transfer of contributed capital, the individual transferring capital shall declare and pay PIT.

Tax calculations:

PIT payable = Taxable income x 20% tax rate.

Tax declaration documents include:

• PIT return for capital transfer form 04/CNV-PIT;
• Capital transfer contracts;
• Documents proving the transfer of capital;
• Identity card/citizen identity card of the transferor;
• The enterprise registration certificate has shown the transfer contents;
• Power of attorney for Viet An Law to carry out the procedure on its behalf.

Settlement agency: The tax administration agency directly manages the enterprise whose owner transfers capital.

For owners who are capital transfer organizations

• Foreign organizations earning income in Vietnam (collectively referred to as foreign contractors) engaged in capital transfer activities shall declare corporate income tax according to each occurrence.
• The declaration period is 10 days from the effective date of the Contract or the date on which the competent authority approves the transfer.
• Tax returns:
• Corporate income tax return on capital transfer;
• Capital transfer contracts;
• Documents proving the transfer of capital;
• A copy of the Enterprise Registration Certificate;

Transfer of payment when transferring company capital with 100% foreign capital

The payment of the transfer value of contributed capital is made as follows:

• Between investors who are non-residents or between investors who are residents who do not exercise through a direct investment capital account;
• Between a non-resident investor and a resident investor must do so through a direct investment capital account.

The currency of valuation and payment of the transfer value of investment capital in foreign direct investment activities in Vietnam is as follows:

• The valuation and payment of the transfer value of investment capital between two non-residents is allowed to be made in foreign currency;
• The valuation and payment of the transfer value of investment capital between residents and non-residents, between residents must be made in Vietnamese dong.

Services of Viet An Law Firm are related to the establishment and change of foreign capital company.

• Advising on conditions for establishing a foreign capital company: capital contribution ratio of foreign investors in Vietnam; business conditions for trades; project implementation location; note the procedures before and after the establishment of a foreign capital company;
• Advising on choosing the right type of company for investors: Limited company or joint stock company;
• Consulting, carrying out procedures related to adjustment of investment certificates; change the contents of business registration of foreign capital company;
• Advising on opening a capital transfer account, capital contribution duration;
• Consulting and guiding investors to prepare necessary documents to establish a foreign capital company;
• Advising and drafting company establishment documents for investors;
• Representing investors to work with competent state agencies of Vietnam in the process of carrying out company establishment procedures for investors (Application for Investment Registration Certificate, Business Registration Certificate, Business License,  License according to specialized requirements,  make legal entity seals, announce seal samples, procedures after company establishment,…;
• Comprehensive, regular consultancy, accounting services, tax law package of activities arising in the process of conducting business in Vietnam for investors.