Capital Contribution, Share Purchase, Contributed Capital To The Economic Organization Of The Foreign Investor

Currently, Vietnam is on the way to expanding its developed market, which has attracted investors from countries around the world. Many foreign investors have chosen to invest in capital contribution to buy shares and capital in economic organizations. The foreign investors register to contribute capital, purchase shares or contributed capital to the company with 100% Vietnamese capital or register to contribute capital, purchase shares, or contributed capital to foreign-invested companies in Vietnam. How should this procedure be performed?

LTS LAW advises on the procedures and conditions applying for foreign investors’ capital contribution, purchase of shares, capital contributions to economic organizations as follows:

Forms that foreign investors may contribute capital to economic organizations in the following

–   Purchasing initially or additionally issued shares of joint stock companies;

–   Contributing capital to limited liability companies and partnerships;

–   Contributing capital to other economic organizations.

Foreign investors shall buy shares or capital contributions of business organization in the following manners:

–   Buy shares of joint-stock companies from the companies or their shareholders;

–   Buy capital contributions to limited liability companies by their members and become members of limited liability companies;

–   Buy capital contributions to partnerships by partners and become partners

–   Buy capital contributions to business organizations other 

An investor shall follow the register the capital contribution, purchase of shares, or capital contributions in the following cases

–   The investor contributes capital, buy shares or capital contributions of business organizations engaged in business lines subject to conditions applied to foreign investors;

–   The capital contribution or purchase of shares/stakes that leads to a foreign investor or business organization specified in Point a, Point b, and Point c Clause 1 Article 23 of the Law on Investment holds 51% of charter capital of the business organization or more in the following cases: The charter capital held by the foreign investor is increased to 51% or over and the charter capital held by the foreign investor is increased while such foreign investor is holding 51% charter capital of the business organization or more

The registration dossier for foreign investors

–  A written for registration of capital contribution or purchase of shares/capital contributions, which specify information about the business organization to which investment is made; the holding of the foreign investor after making investment

–   A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization).

Note: Valid copy means a copy extracted from the master register or a copy authenticated by a competent authority, or a copy that has been compared with the original, or a copy printed from the national database about residents, enterprise registration, and investment

Procedures of investments for foreign investors to contribute capital to Vietnamese companies

Step 1: The investor shall submit 01 application for registration of capital contribution or purchase of shares/stakes to the Department of Planning and Investment of the province where the business organization’s headquarters is located

Step 2: Receive, check the application

The Department of Planning and Investment receives and checks the application. If the application is complete, it will receive the application and issue a receipt for the investor; If the composition of the dossier is not complete, the receptionist / guide will explain to the investor to supplement and complete the dossier.

Step 3: Appraisal and approval of the application

Within 15 days from the receipt of the valid application, the Department of Planning and Investment shall assess the foreign investor’s fulfillment of investment conditions and send a notification to the investor

Step 4: The Investor based on the appointment date on the Receipt Paper, receive the settlement result at the Department of Planning and Investment.

After the Department of Planning and Investment notices the satisfaction of the conditions for capital contribution/share purchase/capital redemption of foreign investors. The economic organization with the capital contribution, share purchase, contributed capital of the foreign implements the procedures of change in members, shareholders in the business registration agency under the provisions of the law on enterprises 2014

When transferring contributed capital, the assignor must declare tax on the assignor according to Clause 4 Article 16, Circular No. 156/2013/TT-BTC of the Ministry of Finance guidance on some articles of the law on tax administration.

• Law on Investment No.67/2014/QH13 on 26^thNovember, 2014
• Law on Enterprises67/2014/QH13 on 26^thNovember, 2014
• Decree No.118/2015/ND-CP on 12^thNovember, 2015  of Government on guidelines for some article of law on Investment
• Circular No. 16/2015/TT-BKHDT on 18^thNovember, 2015 of the Ministry of planning and investment on regulations on application for investment procedures and reporting forms on investment in Vietnam
• Circular No. 156/2013/TT-BTC of the Ministry of Finance guidance on some articles of the law on tax administration