In recent years, the rate of foreign investment in Vietnam has continued to grow. This proves that Vietnam is a safe and potential destination for foreign investors. Recognizing that problem, the government of Vietnam has issued many policies and implemented many solutions to create an attractive investment environment and attract foreign investment capital. In order not to make mistakes in business investment activities, Vietnamese enterprises, individuals and foreign organizations investing in Vietnam must be aware of the provisions of the law on this issue.
Our market economy is aiming for international integration. Business activities in recent times have thrived in alignment with foreign investors. Vietnam has become a potential destination for foreign investors due to its political stability and abundant human resources with cheap labor. The growth of foreign investment capital not only creates many favorable conditions for Vietnam to accelerate the expansion time in the international market, but also more and more significant improvements in business activities, reducing the burden on capital for many large projects. In addition, the attraction and use of foreign capital also contributes to the impact of promoting shifting, restructuring the economy, renewing the growth model, improving national competitiveness, industry, products and services; promoting institutional reforms, legal policies and business environment; and developing a full, modern and integrated market economy.
The concept of foreign investors as defined in Clause 19, Article 3 of the Investment Law 2020 is as follows:
Foreign investors are individuals with foreign nationalities or organizations established under foreign laws to conduct businesses and investment activities in Vietnam.
Accordingly, foreign investors may also be individuals or organizations, but individuals must have citizenship or organizations have to be established under foreign law and conduct business activities in Vietnam.
Pursuant to Clause 2, Article 24 of the Investment Law 2020, stipulating the conditions for foreign investors to contribute capital and purchase stocks from economic organizations:
When foreign investors expect to contribute capital, purchase stocks and purchase capital contributions from economic organizations, they have to demand the following regulations and conditions:
a) Market access conditions for foreign investors specified in Article 9 of this Law;
b) Defense and security in accordance with this Law;
c) Provisions of the Law on land on conditions of receiving land use rights and conditions of land use in islands, communes, wards, border towns, communes, wards and coastal towns.
Accordingly, foreign investors contributing capital and purchasing stocks have to demand the conditions specified above.
Pursuant to Clause 1, Article 25 of the Investment Law 2020, foreign investors are entitled to contribute capital to the economic organizations in the following forms:
- Purchasing stocks issued for the first time or stocks additionally issued by Joint Stock Company;
- Contributing capital to the Limited Liability Company or Partnership Company;
- Contributing capital to other economic organizations (not under the above cases).
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Registration of capital contributions of foreign investors specified in the Dispatch No. 8909/BKHDT-PC including:
+ Registration documents for contributing capital, purchasing stocks or purchasing capital contributions.
+ Copies of legal documents of individuals or organizations contributing capital, purchasing stocks or purchasing capital contributions and economic organizations with foreign investors contributing capital, purchasing stocks or purchasing capital contributions.
+ Written agreement on contributions of capital, stock purchases or purchases of capital contributions between foreign investors and economic organizations receiving contributions of capital, stock purchases or capital contributions.
+ Written declaration (accompanied by a copy) of Certificate of land use rights of the economic organizations receiving capital contributions or stocks from foreign investors (for cases specified in points b and c, Clause 2, Article 24 of the Investment Law 2020). Economic organizations with foreign investors contributing capital, purchasing stocks or purchasing capital contributions are responsible before the law for the accuracy and honesty of their declaration.
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Step 1: Preparing the dossiers.
Preparing a set of dossiers as shown above
Step 2: Applying the dossiers.
Applying at the Department of Planning and Investment where the economic organizations receiving capital contribution is located at the head office.
Step 3: Processing dossiers and sending results.
If the dossiers demand the conditions, the Department of Planning and Investment shall notify in writing within 15 days from the date of receipt of sufficient dossiers so that investors can implement procedures for changing stockholders or members in accordance with the law.
In case the dossiers don’t demand the conditions, the Department of Planning and Investment shall notify the investor in writing and state the reasons.
Pursuant to Article 9 of the Investment Law 2020, foreign investors shall apply market access conditions as prescribed for domestic investors, except in cases specified in the list of sectors and trades in which foreign investors are subject to market access restrictions, including:
+ Sectors and trades not having access to the market;
+ Sectors and trades having conditional access to the market.
Market access conditions for foreign investors specified in the list of sectors and trades in which foreign investors are subject to market access restrictions, including:
+ The percentages of charter capital ownership of foreign investors in the economic organizations;
+ Forms of investment;
+ Scope of investment activities;
+ Capacity of investors or partners participating in investment activities;
+ Other conditions prescribed in the Law, resolutions of the National Assembly, ordinances and resolutions of the Standing Committee of the National Assembly, decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a member.
Point C, Clause 2, Article 37 of the Investment Law 2020 stipulates that cases not required to implement the procedures for issuing investment registration certificates, as follows:
a) Investment projects of domestic investors;
b) Investment projects of economic organizations specified in Clause 2, Article 23 of this Law;
c) Investment in the form of contributing capital, purchasing stocks or purchasing capital contributions of the economic organizations.
According to this regulation, the investment in the form of purchasing 50% of the capital contributions of the Two-Members Company Limited as mentioned above is not required to apply for the investment registration certificate.
Foreign investors are required to apply for capital contributions before changing members and shareholders if they fall under one of the following circumstances:
- The contributions of capital increase the ownership rate of foreign investors at the economic organizations that conduct businesses in list of sectors and trades in which foreign investors are subject to market access restrictions;
- The contributions of capital increase the ownership rate of charter capital of foreign investors from less than or equal to 50% to more than 50%; increase the ownership rate of charter capital of foreign investors that already own more than 50% of charter capital in the economic organizations;
- Foreign investors contribute capital to economic organizations with Certificates of land use rights in islands and communes, wards and border towns; communes, wards and coastal towns; and other areas that affect defense and security.
The above is the whole content that NPLAW consults on procedures for purchasing capital contributions from foreign investors. To use consulting services more effectively, contact NPLaw to enjoy the best services. NPLAW specializes in providing services:
- Consulting issues related to the purchases of capital contributions;
- Supporting documents for foreign investors to purchase capital contributions;
- Implementing and monitoring procedures for settling dossiers for foreign investors to purchase capital contributions.
With an experienced and professional team, we will bring you the best service!
CÔNG TY LUẬT TNHH NGỌC PHÚ
Customer service: 19009343
Hotline: 0913 41 99 96
Email: legal@nplaw.vn
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