TRANSFERRING CAPITAL CONTRIBUTIONS IN FOREIGN COMPANIES
QUESTION
Dear TLK Law Firm, we hope that your company will answer the following problem: In the near future, due to personal reasons of urgent need of money, I need to transfer my capital contribution to a member. Can I have a stake in a foreign company in which I own capital? So let me ask, how is the transfer of capital contribution in a foreign company done? 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. Document consolidating the Enterprise Law No. 07/VBHN-VPQH passed by the National Assembly on January 25, 2022;
2. Circular No. 113/2021/TT-BTC issued by the Minister of Finance on December 15, 2021 amending and supplementing a number of articles of Circular No. 264/2016/TT-BTC regulating tax rates , regime of collection, remittance, management and use of fees and charges in the field of diplomacy applied at Vietnamese representative agencies abroad;
3. Other legal documents providing relevant guidance.
CONSULTATION CONTENT
Many investors, when contributing capital to establish foreign businesses in Vietnam, ask whether they can transfer their capital to another individual or organization when needed? If so, how should that procedure be performed? In this article, we will provide detailed information about "Transfer of capital contributions in foreign companies".
Photo 1. Transferring capital contributions in foreign companies._Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO TRANSFER OF INVESTMENT CAPITAL IN FOREIGN COMPANIES
1. What is capital transfer in a foreign company?
According to the Enterprise Law 2020, capital contribution is the contribution of assets to form the company's charter capital, including capital contribution to establish a company or additional charter capital contribution of an already established company. And contributed capital is understood as the total value of assets which a member has contributed or committed to contribute to a limited liability company or partnership. The capital contribution ratio is the ratio between the capital contribution of a member and the charter capital of a limited liability company or partnership.
Thus, transfer of capital contribution is when a company member transfers part or all of his/her capital contribution to another individual or organization according to the law and charter of that company.
2. Conditions for foreign investors to buy capital contributions of economic organizations
According to the Investment Law 2020, foreign investors purchasing capital contributions from economic organizations must meet the following conditions:
(1) Market access conditions for specific foreign investors:
- 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.
(2) Ensuring national defense and security according to the provisions of the Investment Law 2020;
(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.
Thus, if you are a foreign investor who wants to invest in any economic organization in Vietnam, you must comply with all of the above conditions.
3. Transfer of capital contributions in various types of businesses to foreign companies
According to the Enterprise Law 2020, foreign companies doing business in Vietnam must follow the same regulations on capital transfer as Vietnamese enterprises, unless the relevant law has other provisions, specifically as follows:
(1) Limited liability company with two or more members
Pursuant to the Enterprise Law 2020, regulations on transfer of capital contributions are as follows:
a) Except for other cases specified in the Enterprise Law 2020, members of a limited liability company with two or more members have the right to transfer part or all of their capital contribution to others according to the following regulations:
- Offer to sell that capital contribution to the remaining members in proportion to their capital contribution in the company with the same offering conditions;
- Transfer with the same offering conditions for the remaining members as prescribed in Point a of this Clause to non-members if the remaining members of the company do not buy or do not buy all within 30 days from the date of offering.
b) The transferring member still has rights and obligations towards the company corresponding to the relevant capital contribution until information about the buyer specified in the 2020 Enterprise Law is fully recorded in the registration book.
In short, members of a limited liability company have the right to transfer their capital contribution in proportion to other members of the company. After the transfer, the transferring member still has rights and obligations towards the company corresponding to the relevant capital contribution until information about the person buying back this capital contribution is fully recorded in the registration book pellets.
(2) Joint stock company
According to the Enterprise Law 2020, regulations on transfer of capital contributions in joint stock companies are as follows:
- Freely transfer your shares to others, except for cases specified in the Enterprise Law 2020 and other relevant laws;
- Shareholders who own voting preference shares are not allowed to transfer those shares to others, except in cases of transfer under a legally effective court judgment or decision or inheritance.
Thus, we can see that the regulations on transfer of capital contributions and limits on transfer of capital contributions are also stricter than in limited liability companies.
(3) Partnership company
A general partner is not allowed to transfer part or all of his/her capital contribution in the company to another organization or individual without the consent of the remaining general partners and can only transfer in the following cases, after:
Dispose of your capital contribution by inheritance, gift, mortgage, pledge and other forms according to the provisions of law and the company's Charter; In case of death, the heir will replace the deceased member and become a capital contributing member of the company;
Thus, members of a partnership company are allowed to transfer their capital contributions in cases of inheritance, donation, mortgage, pledge and other forms according to the provisions of law and the company's Charter at the same time.
II. PROCEDURES FOR TRANSFER OF INVESTMENT CAPITAL IN FOREIGN COMPANIES
A. Implementation steps
Step 1: Organizations and individuals prepare registration documents to purchase capital contributions to the investment registration agency where the economic organization is headquartered;
Step 2: Submit documents to the competent state agency;
Step 3: Competent state agency evaluates the validity and processes the application;
Step 4: Edit and supplement documents according to instructions from competent state agencies (if any);
Step 5: Organizations and individuals receive the results.
B. Document components
According to the provisions of Decree 31/2021/ND-CP, registration documents to purchase capital contributions in foreign enterprises include the following documents:
(1) Registration document to purchase capital contribution;
(2) Copies of legal documents of individuals and organizations purchasing capital contributions and economic organizations with foreign investors purchasing capital contributions;
(3) Written agreement in principle on the purchase of capital contributions between foreign investors and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions or between foreign investors with shareholders or members of that economic organization;
(4) Copy of Land Use Rights Certificate of economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions (for specific cases specified in Decree 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
Investment Department - Department of Planning and Investment.
C. How to do it
- Submit directly to the Investment Department - Department of Planning and Investment; or,
- Submit via postal service to the Investment Department - Department of Planning and Investment; or,
- Submitted through the public service system of the Investment Department - Department of Planning and Investment.
D. Implementation time
15 working days from the date of receipt of complete and valid documents.
Photo 2. Transferring capital contributions in foreign companies._Hotline: 0972118764
III. SUMMARY OF THE ANSWER SECTION: TRANSFER OF INVESTMENT CAPITAL IN FOREIGN COMPANIES
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
According to the Enterprise Law 2020, capital contributing members in foreign enterprises are completely allowed to transfer their capital contributions, however for each type of enterprise there will be regulations on conditions, order and procedures for different transfers.
=> See more: What documents are included in the application for additional industries for foreign-invested enterprises?
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: Adding industries, increasing investment capital
V. SOME QUESTIONS RELATED TO TRANSFER OF INVESTMENT CAPITAL IN FOREIGN COMPANIES
Question 1: Does the transfer of capital contribution in a limited liability company need to be notified to the registration agency?
Reply:
Pursuant to the Enterprise Law 2020, enterprises must register with the Business Registration Authority when changing the content of the Business Registration Certificate specified in the Enterprise Law 2020.
Therefore, if the transfer of your capital contribution leads to a change in members or charter capital, the limited liability company must carry out notification procedures with the business registration agency where the company is located headquarters.
Question 2: In what form do foreign investors buy capital contributions from economic organizations?
Reply:
According to the Investment Law 2020, foreign investors purchase capital contributions in the following forms:
- Buy shares of a joint stock company from the company or shareholders;
- Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company;
- Buy the capital contribution of a capital contributing member in a partnership company to become a capital contributing member of a partnership company;
- Buying capital contributions of members of other economic organizations that do not fall into the cases specified in the above section.
Thus, foreign investors can purchase contributions in some of the forms mentioned above.
=> See more: How to add business lines for companies with foreign investments
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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