The State treats all investors equally; it has policies to encourage and create favorable conditions for investors to carry out business investment activities, developing economic sectors sustainably. This is stipulated in the Investment Law 2020, thereby foreign investors are granted access and encouraged to make effective investments. One of the most common forms of investment in Vietnam for foreign investors is: Contributing capital, purchasing shares, or purchasing capital contributions in enterprises.
1. Legal Basis
- WTO Commitments and international investment treaties to which Vietnam is a signatory or accedes;
- Law on Investment of Vietnam 2020;
- Decree 31/2021/ND-CP guiding the Investment Law;
- Enterprise Law 2020;
- Decree No. 01/2021/ND-CP guiding the Enterprise Law.
2. Forms of foreign investor capital contribution to Vietnamese companies
2.1. Forms of capital contribution by investors to a company
– Purchasing initial public offering shares or additional issued shares of a joint-stock company;
– Contributing capital to a limited liability company, a partnership company;
– Contributing capital to other economic organizations not covered by the above cases.
2.2. Foreign investors purchasing shares, purchasing capital contributions of a company
– Purchasing shares of a joint-stock company from the company or its shareholders;
– Purchasing capital contributions from a member of a limited liability company to become a member of that limited liability company;
– Purchasing capital contributions from a capital contributing member in a partnership company to become a capital contributing member of that partnership company;
– Purchasing capital contributions from a member of another economic organization not falling under the above-mentioned cases.
Case 1: Foreign investors perform procedures for registering capital contributions, purchasing shares, purchasing capital contributions of a company before changing members
Foreign investors shall carry out procedures for registering capital contributions, purchasing shares, purchasing capital contributions of economic organizations before changing members or shareholders if they fall into one of the following cases:
- The capital contribution, purchase of shares, or purchase of capital contributions increases the ownership ratio of foreign investors in an economic organization operating in sectors or businesses with market access conditions for foreign investors;
- The capital contribution, purchase of shares, or purchase of capital contributions results in foreign investors or economic organizations specified at Points a, b, and c, Clause 1, Article 23 of the Investment Law holding more than 50% of the charter capital of the economic organization in the following cases:
- Increasing the foreign investor’s charter capital ownership ratio from below or equal to 50% to over 50%;
- Increasing the foreign investor’s charter capital ownership ratio when the foreign investor already owns more than 50% of the charter capital in the economic organization.
Dossier for registering capital contributions, purchasing shares, capital contributions by foreign investors
- Application form for capital contribution, share purchase, capital contribution purchase;
- Copies of legal documents of individuals, organizations contributing capital, purchasing shares, purchasing capital contributions, and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions;
- Agreement on capital contribution, share purchase, capital contribution purchase between the foreign investor and the economic organization receiving the capital contribution, share purchase, capital contribution purchase;
- Declaration document (accompanied by copies) of the Certificate of Land Use Rights of the economic organization receiving capital contributions, shares, capital contributions from foreign investors.
Case 2: Foreign investors perform procedures for changing shareholders, members at the Business Registration Authority.
- Investors not falling under Case 1 shall carry out procedures for changing shareholders and members in accordance with relevant legal provisions when contributing capital, purchasing shares, or purchasing capital contributions of an economic organization at the Business Registration Authority where the economic organization is headquartered.
- If there is a need to register the capital contribution, purchase of shares, or purchase of capital contributions of an economic organization, investors shall follow the provisions in Case 1.
Dossier for changing business registration
- Notice of change in business registration content;
- Resolution on changing company members;
- Meeting minutes regarding changing company members (if any)
- Transfer contract and documents certifying the completion of the transfer, with confirmation from the company’s legal representative;
- List of contributing members or shareholder register;
- Notarized copy of the passport of new members participating in capital contribution to the company (if any).
3. Procedures for foreign investors contributing capital to Vietnamese companies
3.1. Procedures for foreign investors to register capital contributions, purchase shares, capital contributions into 100% Vietnamese-owned companies
Step 1: Investors submit dossiers at the Investment Department – Department of Finance where the economic organization is headquartered to carry out procedures for registering capital contributions, purchasing shares, or purchasing capital contributions into a 100% Vietnamese-owned company.
If the capital contribution, share purchase, or capital contribution purchase by the foreign investor meets the conditions, the Department of Finance will notify in writing within 15 days from the date of receiving complete dossiers for the company to carry out procedures for changing shareholders or members in accordance with legal provisions. If the conditions are not met, the Department of Finance will notify the investor in writing, stating the reasons.
Step 2: After receiving approval from the Investment Department – Department of Finance regarding the acceptance for foreign investors to contribute capital, purchase shares, or purchase capital contributions, the investor shall perform the following procedures: If purchasing 51% or more of the Vietnamese company’s capital, open a direct investment capital account for the Vietnamese company, then the foreign investor shall proceed with capital contribution for transfer and declare transfer income tax.
Step 3: Subsequently, the company in which the investor proceeds to purchase capital contributions or shares shall carry out procedures for changing shareholders and members on the Business Registration Certificate (Enterprise Registration Certificate) in accordance with legal provisions at the Business Registration Department – Department of Finance.
3.2. Procedures for foreign investors to register capital contributions, purchase shares, capital contributions into foreign-invested companies in Vietnam
Step 1: Investors submit dossiers at the Investment Department – Department of Finance where the economic organization is headquartered to carry out procedures for registering capital contributions, purchasing shares, or purchasing capital contributions into a foreign-invested company.
Step 2: After receiving approval from the Investment Department – Department of Finance regarding the acceptance for foreign investors to contribute capital, purchase shares, or purchase capital contributions.
Step 3: After receiving approval from the Investment Department – Department of Finance regarding the acceptance for foreign investors to contribute capital, purchase shares, or purchase capital contributions, the investor shall perform the following procedures: If purchasing 51% or more of the Vietnamese company’s capital, open a direct investment capital account for the Vietnamese company, then the foreign investor shall proceed with capital contribution for transfer and declare transfer income tax.
Step 4: After or simultaneously with the enterprise registration amendment procedures, the company shall amend its Investment Registration Certificate to record the new foreign investor.
3.3. Payment for foreign investors’ capital contribution to Vietnamese companies
Pursuant to Circular No. 06/2019/TT-NHNN of the State Bank of Vietnam, payments for investment capital transfer transactions in foreign direct investment enterprises must be made through the direct investment capital account of that enterprise. Therefore, when a foreign investor contributes capital to a Vietnamese company, a direct investment capital account must be opened at a bank in Vietnam; it can be opened in Vietnamese Dong or foreign currency, depending on the currency used for capital contribution to the enterprise.
See more: Order and procedures for establishing a company or enterprise
