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Transfer capital for an Investment registration certificate in Vietnam

 Before being granted the Investment Registration Certificate to open a direct investment capital account, investors had to spend a lot of money to prepare the investment: finding a location cost, renting office cost, consulting cost, business establishment cost, etc. Vietnamese law allows foreign investors to transfer money to invest in Vietnam before being granted the Investment Registration Certificate. Viet An Law Firm would like to provide investors with detailed regulations on money transfer for pre-investment activities as follows:

Reduce capital in Vietnam

Legal basis:

  • Law on Investment 2020;
  • Circular No 06/2019/TT-NHNN of the State Bank dated June 26 2019 guiding foreign exchange management for foreign direct investment activities in Vietnam.

The account was used to transfer investment money before being granted the Investment Registration Certificate

According to the provisions of Article 8 the Circular No 06/2019/TT-NHNN:

“Before obtaining the investment registration certificate, the notice of the foreign investor’s eligibility to contribute capital or purchase shares/stakes, the license of establishment and operation under the relevant law, signing of PPP contracts, foreign investors are allowed to transfer their investments from overseas or their accounts in foreign currencies or Vietnamese dong opened at authorized banks to pay for legal expenditures in the pre-investment stage in Vietnam.”

Foreign investors are allowed to transfer money to prepare for investment as follows:

  • Transfer from abroad to Vietnam;
  • Transfer from the foreign investor’s account in foreign currency or Vietnamese dong, that account must be opened at an authorized bank in Vietnam.

Handling the money transferred into Vietnam after being granted the Investment Registration Certificate or not receiving the Investment Certificate

          After obtaining the investment registration certificate, the notice of the foreign investor’s eligibility to contribute capital or purchase shares/stakes, the license of establishment and operation, signing of PPP contracts, capital transferred to Vietnam in the pre-investment stage shall be:

  • Fully or partially converted into stakes;
  • Fully or partially converted into foreign loan capital of FDI enterprises.  In cases of conversion into loan capital, FDI enterprises shall comply with regulations of law on enterprises taking and repaying foreign loans. The loan term begins on the date when the project is granted the investment registration certificate, license of establishment and operation by specialized law, conclusion of the PPP contract, or the date on which parties sign the foreign loan agreement (whichever is later) to the repayment date;
  • Returned to foreign investors in foreign currencies or Vietnamese dong excluding legal expenditures on such stage in Vietnam.

In case the foreign investor is not granted the investment registration certificate, notice of the foreign investor’s eligibility to contribute capital or purchase shares/stakes, license of establishment and operation does not sign the PPP contract or decides to terminate their direct investment projects in Vietnam, the foreign investor may transfer overseas the rest of capital in foreign currencies or purchase foreign currencies to transfer overseas the capital and any interest after deducting relevant expenses incurred in the pre-investment stage.

Customers wishing to establish a foreign-invested company, please contact Viet An Law Firm for specific support!

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