CAN FOREIGN INVESTORS CONTRIBUTE CAPITAL TO 100%
VIETNAMESE-OWNED COMPANIES?
QUESTION
Dear TLK Law Firm, we hope that your company will answer the following question: I am a Japanese investor. Currently, I am in need of investing in Vietnam in the form of capital contribution to a Vietnamese company. However, I still do not understand the legal regulations on the issue of foreign investors contributing capital to Vietnamese companies. So, lawyer let me ask: Can foreign investors contribute capital to a company with 100% Vietnamese capital? Looking forward to your company's answer. Thank you!
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Thank you for your trust and sending questions to TLK Law Firm. Based on legal regulations and practical solutions, we would like to send you the following consulting content:
LEGAL BASIS
1. Investment Law No. 61/2020/QH14 passed by the National Assembly on June 17, 2020;
2. Decree No. 31/2021/ND-CP issued by the Government on March 26, 2021 detailing and guiding the implementation of a number of articles of the Investment Law;
3. Decree No. 122/2021/ND-CP issued by the Government on December 28, 2021 regulating penalties for administrative violations in the field of planning and investment;
4. Other legal documents providing relevant guidance.
CONSULTATION CONTENT
Currently, our State has been introducing policies to promote trade activities between Vietnam and countries around the world to attract foreign investment capital to promote the development of the international economy.Because of this, more and more foreign investors come to Vietnam to invest. Besides choosing to invest through establishing a foreign business in Vietnam, investors can choose to invest through capital contribution in a Vietnamese company. Because, when choosing this form of investment, foreign investors can limit the relatively complicated administrative procedures when establishing a foreign company in Vietnam. However, most foreign investors when contributing capital to Vietnamese companies do not fully understand the legal regulations governing this issue. Therefore, when making capital contributions, it is difficult to avoid certain problems and difficulties. Through the article below, we - TLK Law Firm will help you answer questions related to Can foreign investors contribute capital to 100% Vietnamese-owned companies?
Photo 1. Can foreign investors contribute capital to 100% Vietnamese-owned companies? _ Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO WHETHER FOREIGN INVESTORS CAN INVEST IN 100% VIETNAMESE CAPITAL COMPANIES
1. Forms of investment in Vietnam
Pursuant to the Investment Law 2020, foreign investors are allowed to invest in Vietnam through the following investment forms:
(1) Investment in establishing economic organizations;
(2) Investing in capital contribution, purchasing shares, purchasing capital contributions;
(3) Implement investment projects;
(4) Investment in the form of BCC contract;
(5) New forms of investment and types of economic organizations according to Government regulations.
Thus, currently, investment law only regulates forms of investment, including capital contribution investment, without setting conditions on capital contribution ratio, type of enterprise, etc. for public companies, companies in which foreign investors contribute capital.
=> See more: Ways of increasing investment capital? In what ways do investors contribute capital to Vietnam?
2. Investment conditions in the form of capital contribution by foreign investors in Vietnam
Pursuant to the Investment Law 2020, investors have the right to contribute capital to economic organizations in Vietnam. Foreign investors contributing capital, purchasing shares, or purchasing capital contributions from economic organizations must meet the following regulations and conditions:
Firstly, Market access conditions for foreign investors are stipulated in the Investment Law 2020. Foreign investors are subject to market access conditions as prescribed for domestic investors, except in cases where investors invest in industries on the List of industries and occupations with limited market access for foreign investors, including:
- Industries and occupations that have not yet accessed the market;
- Industries and occupations have conditional market access.
Market access conditions for foreign investors specified in the List of industries and occupations with restricted market access for foreign investors include:
- Charter capital ownership ratio of foreign investors in economic organizations;
- Investment form;
- Scope of investment activities;
- Capacity of investors; partners participating in investment activities;
- Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, 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 party member.
Second, ensure national defense and security according to the provisions of the Investment Law 2020 and other relevant laws.
Third, regulations of land law on conditions for receiving land use rights, conditions for land use in islands, communes, wards, border towns, coastal communes, wards and towns.
Thus, when foreign investors invest in the form of capital contribution to a company with 100% Vietnamese capital, they must meet the conditions prescribed by Vietnamese law. The regulation of these conditions stems from the unique nature of investment capital, which is foreign capital, so it must be strictly controlled. Besides, these conditions are intended to ensure fairness, safety and protect the interests of both investors and the country.
3. Forms of capital contribution
Pursuant to the Investment Law 2020, investors are allowed to contribute capital to economic organizations in the following forms:
(1) Buy shares issued for the first time or additional shares issued by a joint stock company;
(2) Contribute capital to limited liability companies and partnerships;
(3) Contribute capital to other economic organizations.
Thus, our country's law regulates very diverse forms of capital contribution. Therefore, when an investor decides to invest in Vietnam in the form of capital contribution to a company with 100% Vietnamese capital, it can contribute capital to most types of companies, including: joint stock companies, public companies, limited liability companies and partnerships.
=> See more: What is investment capital? Can the company's loan capital from investors be converted into contributed capital?
II. PROCESS OF IMPLEMENTING INVESTMENT REGISTRATION PROCEDURES IN THE FORM OF CAPITAL CONTRIBUTION INTO A COMPANY WITH 100% VIETNAMESE CAPITAL
1. Steps to carry out investment registration procedures in the form of capital contribution to a company with 100% Vietnamese capital
Step 1: A company with 100% Vietnamese capital that has investors contributing capital prepares investment registration documents in the form of capital contribution;
Step 2: A company with 100% Vietnamese capital that has investors contributing capital submits documents to the Department of Planning and Investment;
Step 3: Department of Planning and Investment receives, appraises and requests amendments and supplements, in case the documents are invalid;
Step 4: The Department of Planning and Investment approves foreign investors to contribute capital to the company with 100% Vietnamese capital;
Step 5: A company with 100% Vietnamese capital that has investors contributing capital carries out procedures for changing capital contributing members and company shareholders at the Business Registration Office.
2. Document components and process for handling investment registration procedures in the form of capital contribution to a company with 100% Vietnamese capital
A. Document components:
1. The capital contribution registration document includes the following contents: information about the business registration of the economic organization to which the foreign investor intends to contribute capital, purchase shares, or purchase capital contributions; business; list of owners, members, founding shareholders, list of owners, members, shareholders who are foreign investors (if any); Charter capital ownership ratio of foreign investors before and after capital contribution to economic organizations; expected transaction value of capital contribution, share purchase, and capital contribution contracts; information about investment projects of economic organizations (if any);
2. Copies of legal documents of individuals, organizations contributing capital and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions;
3. Written agreement in principle on capital contribution between a foreign investor and an economic organization to which a foreign investor contributes capital or between a foreign investor and a shareholder or member of that economic organization ;
4. Copy of the Certificate of land use rights of the economic organization with foreign investors contributing capital (in the case of economic organizations with foreign investors contributing capital as prescribed in Decree No.: 31/2021/ND-CP);
5. Power of attorney for the person submitting the application (in case of authorizing someone else to do so);
6. Certified copy of personal legal documents (ID card, citizen identification card, valid passport) of the person performing the procedure;
7. Other documents required by competent state agencies (if any).
Number of documents: 01 (set)
B. Resolution agency
The Department of Planning and Investment where the headquarters of the company with 100% Vietnamese capital is located has investors contributing capital.
C. How to do it
Submit directly at the headquarters of the Department of Planning and Investment.
D. Implementation results
Document announcing approval for foreign investors to invest in the form of capital contribution to a company with 100% Vietnamese capital.
4. Procedure time
Pursuant to the Investment Law 2020, the time to carry out procedures will vary depending on each case. As follows:
- In case a company with 100% Vietnamese capital has foreign investors contributing capital and has a Certificate of land use rights in islands, communes, wards, border towns and coastal communes, wards and towns; Other areas affecting national defense and security: 25 working days from the date the competent authority receives valid documents.
- Other cases: 15 working days from the date the competent authority receives valid documents.
III. SUMMARY OF ANSWER SECTION: CAN FOREIGN INVESTORS CONTRIBUTE CAPITAL TO COMPANIES WITH 100% VIETNAMESE CAPITAL?
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
Foreign investors are allowed to contribute capital to companies with 100% Vietnamese capital.
The Investment Law 2020 stipulates that capital contribution is one of the forms of investment that investors can choose to invest in Vietnam. At the same time, currently, the law has no limit on the Vietnamese capital ratio of companies in which investors contribute capital in Vietnam. Therefore, foreign investors can completely invest in the form of capital contribution to companies with 100% Vietnamese capital.
However, to invest in the form of capital contribution to a company with 100% Vietnamese capital, foreign investors must meet the following conditions:
(1) Market access conditions for foreign investors prescribed by the Investment Law 2020;
(2) Ensure national defense and security according to the provisions of the Investment Law 2020 and other relevant laws;
(3) Land law regulations on conditions for receiving land use rights, land use conditions in islands, communes, wards, border towns, coastal communes, wards and towns.
=> See more: Comprehensive investment project termination and consulting services
Photo 2. Can foreign investors contribute capital to 100% Vietnamese-owned companies? _ Hotline: 0972118764
IV. HOW SHOULD YOU BEST CHOOSE AN ORGANIZATION THAT PROVIDES LEGAL SERVICES?
An organization providing quality and reputable legal services should have the following criteria:
First: Must be an official legal organization with a legal operating license;
Second: It is better if the Board of Directors must be lawyers, experienced and have high degrees;
Third: Have a team of lawyers and a systematic, professional, and thoroughly trained human resources system;
Fourth: Friendly, dedicated and make every effort for the benefit of customers. Consider customer satisfaction and work quality as your own honor;
Fifth: Professional, thoughtful, flexible and logical service provision process to optimize work performance and save customers' time;
Sixth: Reasonable and competitive service prices;
Seventh: Rich services in both fields of supply and service packages in the same field for customers to choose the appropriate service package, as well as comprehensive support for customers throughout the operation process. movement;
Eighth: Have the ability to Connect - Promote commercial relationships for customers if customers have needs,...
Finding a comprehensive, professional and reputable legal consulting organization is what every customer wants. Because no one wants to risk losing both money and time while the results are not as expected. However, finding such an organization is not easy because the number of service providers in the Vietnamese market today is very large with varying quality.
A suggestion for you: Although our TLK Law Firm does not dare to claim to be the company providing the best legal services on the market, we satisfy all of the above criteria and more will definitely be a good choice for you.
=> See more: The company provides services for establishing, adjusting and terminating professional investment projects
V. SOME QUESTIONS RELATED TO WHETHER FOREIGN INVESTORS CAN CONTRIBUTE CAPITAL TO COMPANIES WITH 100% VIETNAMESE CAPITAL
Question 1: Is it true that in any case, a Vietnamese company with foreign investors contributing capital must also carry out investment registration procedures in the form of capital contribution at the Department of Planning and Investment? ?
Reply:
The answer is No.
Pursuant to the Investment Law 2020, Vietnamese companies with foreign investors contributing capital must only register to invest in the form of capital contribution when falling into the following cases:
(1) Capital contribution increases the ownership ratio of foreign investors in economic organizations conducting business lines with conditional market access for foreign investors;
(2) Capital contribution leads to foreign investors and economic organizations specified in Investment Law 2020 holding more than 50% of the charter capital of the economic organization in the following cases: increasing the ownership ratio Charter capital of foreign investors from less than or equal to 50% to more than 50%; increase the charter capital ownership ratio of foreign investors when foreign investors already own more than 50% of the charter capital in economic organizations;
(3) Foreign investors contribute capital to economic organizations with land use rights certificates in islands and border communes, wards and towns; coastal communes, wards and towns; other areas that affect national defense and security.
Question 2: I am Canadian. Currently, I want to inherit my father's capital contribution at a company in Vietnam. So do I have to carry out procedures related to foreign investors contributing capital to companies in Vietnam?
Reply:
The answer is yes.
Pursuant to Decree No. 31/2021/ND-CP, foreign organizations and individuals receive shares and capital contributions in economic organizations established in Vietnam through exchange contracts, gifts, and contracts. Contracts to transfer other ownership rights as prescribed by law or through inheritance must meet the conditions specified in Decree No. 31/2021/ND-CP and carry out procedures according to regulations for investors. Foreign investors invest in the form of capital contribution, share purchase, or capital contribution purchase.
Above is some general advice that we would like to offer to our customers. As a service provider, we always understand and are ready to accompany and solve the needs and difficulties that customers are facing. If you still have questions or need more in-depth advice, please contact the hotline: 0972118764 to receive direct advice from a lawyer (completely free consultation).
Thank you very much!
Administrative Procedures Department - TLK Law Firm
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