THE DECREASE IN CAPITAL INVESTMENT IN VIETNAM

Besides initial capital, adjustments in the increase or decrease in capital are a regular activity for investors when participating in business investment. With this article, NPLaw shall provide the client with the necessary information relating to the decrease in capital investment. We hope that this article shall help the investors with the decrease in capital investment to implement this procedure exactly, quickly, and suitably according to the Law.

When is the investor allowed to decrease a capital investment?

First, we need to clearly understand what a Capital Investment is. Pursuant to Clause 23, Article 03 of the Law on Investment 2022, “Capital Investment” is money and other assets as defined by the Law on Civil and International Treaties of which the Socialist Republic of Vietnam is a member to implement the activity of business investment.

Therefore, when is the investor allowed to decrease a capital investment?

Pursuant to Article 41 of the Law on Investment 2020: Within the process of implementing a project, the investor is allowed to adjust the goals, transfer a part or all of an investment project, merge the projects, divide or separate one project into many projects; apply the land use rights on the land belonging to the investment project to contribute capital to business establishment and business cooperation; or implement other contents according to the Law.

In case, adjustment in the investment project causes a change in the Investment Registration Certificate’s content, the investor implements adjusting procedures for the Investment Registration Certificate. 

Therefore, the investor is allowed to decrease the capital investment and has to implement the adjusting procedures for the Investment Registration Certificate if the decrease in the capital investment causes a change in the Investment Registration Certificate’s content.

Besides, the investment project has been approved by the investment policy, the investor has to implement approval processes for adjusting the investment policy, if the investment project belongs to one of the cases where an adjustment in the decrease of the capital investment by 20% or more changes the investment project’s scale.

What are the conditions for decreasing the capital investment?

The conditions for decreasing the capital investment on the Investment Registration Certificate include:

• The company must account for the appropriation in the new capital investment total in the Project Proposal.
• The company must guarantee the feasibility of the project, guarantee to implement accurately and fully the contents recorded on the Investment Registration Certificate. If the company doesn’t implement it accurately (For instance: The change in project deployment’s process, etc,.), the company must adjust these contents along with the increase or decrease in the capital investment.
• The company must account for the investor’s financial capacity when increasing the capital investment, and guarantee to accurately and fully implement the civil obligations (if any) when decreasing the capital investment.
• The company is approved for increasing and decreasing the capital investment through the granting of an adjusted Investment Registration Certificate by the Investment Management Agency.

How are the decreasing procedures for the capital investment stipulated?

The decreasing procedures of the capital investment shall have the two following cases:

Case 1: The adjusting procedure for the Investment Registration Certificate when decreasing the capital investment for an investment project that doesn’t belong to the area of approval for the adjustment of the investment policy.

The investor shall submit one (1) application to the Investment Registration Agency, including:

• The proposal for adjustment in the investment project;
• The report on deployment status for the investment project at the time of adjustment;
• The investor’s decision to adjust the investment project for investors who are organizations;
• The investor accounts for or provides documents relating to adjustments in contents as defined by Points b, c, d, đ, e, g, and h, Clause 1, Article 33 of the Law on Investment (if any).

Within ten (10) days from the date of receiving a valid application, the Investment Registration Agency adjusts the Investment Registration Certificate to the investor.

Case 2: The adjusting procedures for approval decisions on the investment policy when decreasing the capital investment by 20% or more change the investment project’s scale for approved projects in the investment policy.

Step 1: Prepare for application

• The proposal for adjustment in the investment project;
• The report on deployment status for the investment project at the time of adjustment;
• The investor’s decision to adjust the investment project for investors who are organizations;
• The investor accounts for or provides documents relating to the decrease in the capital investment;
• The Economic Organization’s financial report implementing the project

Step 2: Filing an application with the competent agency to adjust the license.

(1) The competence for approving the investment policy of the Prime Minister: The investors must file eight (8) applications with the Ministry of Planning and Investment.

• Within three (3) working days from the date of receiving a valid application, the Ministry of Planning and Investment shall send an application to the competent State Agency to take an opinion relating to the contents of adjusting the investment project according to such a provision;
• Within fifteen (15) days from the date of receiving a valid application, the agencies taken the opinion shall suggest the contents of adjusting the project belonging to the state management area of such agencies;
• Within thirty-five (35) days from the date of receiving a valid application, the Ministry of Planning and Investment establishes an assessment report for the contents of adjusting the investment project to submit to the Prime Minister;
• Within five (5) days from the date of receiving the assessment report from the Ministry of Planning and Investment, the Prime Minister decides to approve of adjusting the investment policy. The approval decisions on the adjustment of the investment policy shall be sent to the Ministry of Planning and Investment, the Investment Registration Agency, the Investor, the Ministry, the Agency relating to implementation on the investment projects, and the Agency approving the investor.

(2) The competence for approving the investment policy of the Provincial People’s Court: The investors must file four (4) applications to the Investment Registration Agency.

• Within three (3) working days from the date of receiving a valid application, the Investment Registration Agency shall send an application to the competent State Agency to take an opinion relating to the contents of adjusting the investment project according to such a provision;
• Within fifteen (15) days from the date of receiving a valid application, the agencies taken the opinion shall suggest the contents of adjusting the project belonging to the state management area of such agencies;
• Within twenty-five (25) days from the date of receiving a valid application, the Investment Registration Agency establishes an assessment report for the contents of adjusting the investment project to submit to the Provincial People’s Court;
• Within seven (7) days from the date of receiving the assessment report from the Investment Registration Agency, the Provincial People’s Court decides to approve of adjusting the investment policy. The approval decisions on the adjustment of the investment policy shall be sent to the Investment Registration Agency, the Investor, and the Agency approving the investor if the approval for the investor is according to Clause 3, Article 29 of the Law on Investment, the Ministries, the Agencies relating to the implementation on the investment projects.

(3) The competence for approving the investment policy of the The Board of Management of Industrial Area, Export Processing Zone, High-Tech Park, and Economic Zone: The investors must file four (4) applications to The Board of Management of Industrial Area, Export Processing Zone, High-Tech Park, and Economic Zone.

• Within three (3) working days from the date of receiving a valid application, The Board of Management of Industrial Area, Export Processing Zone, High-Tech Park, and Economic Zone shall send an application to the competent State Agency to take an opinion relating to the contents of adjusting the investment project according to such a provision;
• Within fifteen (15) days from the date of receiving a valid application, the agencies taken the opinion shall suggest the contents of adjusting the project belonging to the state management area of such agencies;
• Within twenty-five (25) days from the date of receiving a valid application, The Board of Management of Industrial Area, Export Processing Zone, High-Tech Park, and Economic Zone decides to approve of adjusting the investment policy. The approval decisions on the adjustment of the investment policy shall be sent to the Investor, and the Agency relating to the implementation on the investment projects.

Step 3: Within five (5) days from the date of approval for the investment policy, the Investment Registration Agency grants the Investment Registration Certificate to the investors and organizations implementing the project (if the investment project belongs to the area of approval for the investment policy and is granted the Investment Registration Certificate). 

Some queries arise when the investor wants to decrease the capital investment.

Whether changing the capital is difficult or not?

The change in decrease for the capital investment isn’t too difficult, but the investor must clearly understand the provisions of the Law and determine the decrease in the capital belonging to any case to implement it accurately and quickly.

Whether the charter capital is decreased or not when decreasing the capital investment?

There is a difference between the decrease in the capital investment and the decrease in charter capital, so the decrease in the capital investment is still entitled to the decrease in charter capital.

Where are the decreasing procedures for the capital investment submitted, and what documents are included?

The decreasing procedures for the capital investment are particularly presented in Section 3.

How do Foreign-Invested Enterprises implement the decreasing procedures for the capital investment ? 

The decreasing procedures for the capital investment for Foreign-Invested Enterprises are prescribed similarly by the decreasing procedures for the capital investment for domestic investors.   

These are all information relating to the decrease in the capital investment as prescribed by Vietnamese Law. Please don’t hesitate to contact us, if the clients have any further questions.

NPLaw specializes in providing legal services all-around relating to domestic and abroad investments such as Enterprise, Real Estate, Intellectual Property, Labor; Drafting Consultation, negotiations and concluding support for the Commercial Contract, domestic and abroad Service Contract; consultations and support for implementing licensed procedures of licenses, etc,. With our professional Lawyers and Specialists, we have the full ability to consult with and support customers as they implement the above procedures. 

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