CONDITIONS FOR CAPITAL CONTRIBUTION, PURCHASE OF SHARE, CONTRIBUTED CAPITAL

CONDITIONS FOR CAPITAL CONTRIBUTION, PURCHASE OF SHARE, CONTRIBUTED CAPITAL

Besides forms of establishing new enterprises; implementing investment projects or business cooperation contracts; capital contribution, purchase of share, contributed capital in an enterprise is a popular form of foreign investment into Vietnam. However, to invest in business in this form, foreign investors need to comply with certain conditions.

Objects to implement capital contribution, purchase of share, contributed capital in enterprises in Vietnam

Foreign investors have rights to contribute capital, buy shares, and contributed in enterprises in Vietnam, including:

– Individuals with foreign nationality;

– Individuals holding Vietnamese passports and foreign passports use foreign passports to invest in Vietnam;

– Enterprises and organizations established under the laws of foreign countries;

– Enterprises and other economic organizations with foreign capital established in Vietnam, including:

+ Over 50% of its charter capital is held by a foreign investor(s) or, in case of a partnership, the majority of its general partners are foreigners;

+ There is an economic organization with foreign investors holding more than 50% of charter capital or a majority of partners being foreign individuals holding more than 50% of charter capital;

+ There are foreign investors and economic organizations with foreign investors holding more than 50% of charter capital or the majority of partners are foreign individuals holding more than 50% of charter capital.

Conditions for foreign investors for capital contribution, purchase of share, contributed capital in Vietnam

Market access conditions for foreign investors.

Including the requirements for each business line regarding the charter capital ownership ratio of foreign investors in economic organizations; investment form; scope of investment activities; investor capacity; partners participating in investment activities; other conditions.

In particular, foreign investors must ensure that the target company’s current business lines are consistent with market opening commitments in international treaties to which Vietnam is a member as well as current regulations of the laws of Vietnam, specifically on investment forms, investment conditions, foreign capital ratio, Vietnam’s opening roadmap…

In case the target company has the business lines that are not consistent with Vietnam’s market opening commitments or Vietnam’s legal regulations, foreign investors have the following options:

– In the application for registration of capital contribution, purchase of share, contributed capital in a enterprise in Vietnam, the foreign investor must commit to eliminating inappropriate occupations and only retaining suitable occupations before implementation the actual capital contribution, purchase of share, contributed capital.

– If a foreign investor has demand to retain one or several business lines that are not in accordance with Vietnam’s market opening commitments or the provisions of laws of Vietnam, the competent authority will send an official dispatch asking for opinions of the Ministry managing specialized industries before deciding whether or not to accept investors to retain the above business lines.

Conditions concerning assurance of national defense upon capital contribution, purchase of share, contributed capital.

Conditions concerning assurance of national defense and security and conditions for land use applied to a business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors in case such business organization has the certificate of rights to use land on the island, in border commune, ward or town and coastal commune, ward or town; other areas that affect defense and security, except for the business organization executing the investment project in an industrial park, export-processing zone, hi-tech zone or economic zone established under the Government’s regulations.

Regulations of the law on land and conditions for receipt of land use rights and conditions for use of land on islands or border or coastal communes.

Business investment in the form of capital contribution, purchase of share, contributed capital in enterprises in Vietnam, foreign investors need to comply with certain conditions.

Procedures to be complied upon capital contribution, purchase of share, contributed capital in enterprises in Vietnam

Investors as individuals or organizations must fully carry out relevant legal procedures, including preparing documents, submitting necessary documents and implementing measures related to the capital contribution, purchase of share, contributed capital.

In particular, special attention should be paid to the following procedures:

– Registration on capital contribution, purchase of share, contributed capital in enterprises in Vietnam at the investment registration agency.

– Registration on change of the enterprise registration content for changing shareholders and company members.

– Transfer of investment money upon capital contribution, purchase of share, contributed capital.

Note, compliance with procedures for capital contribution, purchase of share, contributed capital is the premise for transparent, legal, and smooth investment activities.

Legal basis:

  • Investment Law 2020;
  • Enterprise Law 2020;
  • Decree 31/2021/ND-CP guiding the Investment Law.

𝐋𝐈𝐍𝐂𝐎𝐍 𝐋𝐀𝐖 𝐅𝐈𝐑𝐌 – 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐜𝐨𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧

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