Process of contributing charter capital for a foreign-invested company in Vietnam

The charter capital of a foreign-invested company in Vietnam

Charter capital (based on the Enterprise Registration Certificate) is understood as the total value of assets contributed or pledged to contribute by the company’s members and owners when establishing a limited liability company, a partnership; is the total value of shares sold or registered for purchase upon the establishment of the joint stock company.

The minimum charter capital to establish a company in Vietnam with foreign investment

• Currently, there is no regulation on the minimum charter capital required for foreign investors to contribute when establishing a foreign-invested company, nor does it stipulate the maximum charter capital, except for the business industries must satisfy the condition of the legal capital such as multi-level sales, medical examination and treatment services, etc., the minimum charter capital must be equal to the required legal capital.
• However, in practice, applying the law, depending on the sectors and investment projects of foreign investors in Vietnam, the licensing agency will consider the conditions of financial capacity to approve the permit foreign investors business or not. In addition, depending on the business strategy, target customers and partners that foreign investors determine the amount of charter capital to contribute in accordance with the company’s activities after its establishment.

Assets used to contribute capital of a company in Vietnam

According to the Law on Enterprise, assets contributed capital include the following assets:

• Vietnamese Dong;
• Convertible foreign currency;
• Gold;
• Value of land use rights, value of intellectual property rights (including copyright, copyright-related rights, industrial property rights, rights to plant varieties and other intellectual property rights under provisions of the law on intellectual property);
• Technology, technical know-how and other assets can be assessed in Vietnamese Dong.

Foreign investors contribute capital in cash to establish a company in Vietnam

When contributing capital in Vietnam Dong or freely convertible foreign currency to a foreign-invested company, foreign investors are required to transfer through an investment capital account opened at a commercial bank. The investment capital account can be either a direct investment capital account or an indirect investment capital account, it depends on the percentage of foreign investors’ charter capital ownership in a foreign-invested company. Specifically:

• In case a foreign-invested company opens a direct investment capital account: The capital contribution through the direct capital account can be made in foreign currency, Vietnam Dong and the amount of capital contributed by the investor based on according to the documents proving the investor’s right to contribute capital such as: Investment Registration Certificate, Enterprise Registration Certificate, Notice of satisfaction of conditions for contribute capital, purchase shares, redempt stakes,… For each type of capital contribution (Vietnamese dong, foreign currency), the foreign-invested company will have to open a direct investment capital account for the respective currency and can only open one direct investment capital account in a currency at an authorized bank.
• In case foreign investors open an indirect investment capital account: All investment activities of foreign investors in Vietnam must be done in Vietnamese dong and through the indirect investment capital account. Transactions related to foreign indirect investment activities in Vietnam of foreign investors must be done through 01 (one) only indirect investment capital account opened at an authorized bank.

Term for contributing the charter capital to establish a company in Vietnam

Depending on the type of enterprise that the foreign investor intends to establish in Vietnam, the time limit for contributing the charter capital varies as follows:

• For the type of limited liability company: Within 90 days from the date of issuance of the Enterprise Registration Certificate, a capital contributing member in a limited liability company with two or more members or the owner in a single-member limited liability company has the obligation to contribute capital in full and with the right type of assets as committed. After members in a multiple-member limited liability company have fully contributed the committed capital, the company must issue a certificate of capital contribution corresponding to the value of the contributed capital.
• For the type of joint stock company: Shareholders in a joint-stock company are obliged to pay in full for the number of shares registered to purchase within 90 days from the date of issuance of the Enterprise Registration Certificate, except for the following cases: The company’s charter or the share purchasing subscription contract stipulates another shorter term. The Board of Directors is responsible for supervising and urging shareholders to pay in full and on time the registered shares.

Procedures for contributing the charter capital to establish a company in Vietnam

Procedures for contributing to the charter capital of a foreign-invested company with assets must register ownership:

Step 1 : Sign a contract to contribute capital with assets, notarized/certified.

Step 2: Hand over the property in practice.

Step 3: Submit the application for the name transfer, declare tax, pay related fees. The transfer of the ownership right of assets contributed as capital is not subject to registration fees.

Step 4: Get the Certificate of Ownership in the name of the company.

Step 5 : Record your membership

• For a single-member limited liability company, the capital contribution is completed after the owner transfers the ownership of the assets registered for capital contribution.
• For multiple-member limited liability companies and joint-stock companies, the capital contribution is officially completed after the company issues the Certificate of capital contribution and makes a member register for limited liability companies with 2 or more members; or stocks (Certificate of share ownership) and make a register of shareholders for a joint-stock company.
• For a partnership, there is no mandatory requirement to make a register of members, only regulations on the issuance of a Certificate of capital contribution to a general partner or a capital contributor who has completed capital contribution. However, to ensure the storage, the company should also set up a member register with the same contents as the member register of multiple-member limited liability companies.

Procedures for contributing the charter capital to establish a foreign-invested company in cash

Step 1: Register the Investment Certificate, the Enterprise Registration Certificate

Step 2: Open an investment capital account

Step 3: Contributing capital according to the normal term recorded on the Investment Certificate, which is 90 days from the date of issuance of the Enterprise Registration Certificate.

Customers wishing to establish a foreign-invested company or contribute capital to purchase a part of a foreign-invested company, a Vietnamese company, please contact Viet An Law Firm for quick support and the most professional with the most reasonable cost!