WHAT DO DOCUMENTS FOR CONVERTING LOAN INTO INVESTMENT CAPITAL INCLUDE?
QUESTION
Dear TLK Law Firm, I currently have a question and hope to hear from you as follows: My company specializes in manufacturing electronics and has borrowed a large amount of money from another business. Currently, the payment deadline has come but I cannot afford to pay and I have agreed to convert the loan amount into investment capital for your business. However, I do not clearly understand the regulations on the documents required in the application when making the conversion. 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
During the recent Covid-19 pandemic, many businesses in the Vietnamese market encountered difficulties, many investment projects were stalled due to lack of capital. To promote and ensure business activities, many investors have borrowed money from other organizations and individuals. However, many investors cannot repay this debt when the deadline comes and the two sides have agreed to convert the loan into investment capital. Accordingly, when there is a change in investment capital, investors need to readjust the investment registration certificate for their project. So, what does the document to convert debt into investment capital include? This is a question that many customers sent to TLK Law Firm.
Therefore, through this article, we will answer your questions about "What do documents for converting debt into investment capital include?"
Photo 1. What do documents for converting loan into investment capital include?_Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO DOCUMENTS FOR CONVERTING LOAN INTO INVESTMENT CAPITAL
1. Documents for converting loan into investment capital
Pursuant to the Investment Law 2020, when converting debt into investment capital, investors need to register to increase investment project capital. At that time, the investor must make adjustments to the capital content recorded in the Investment Registration Certificate issued in advance. And investors need to prepare 01 set of conversion documents including the following documents:
(1) Written request to implement the investment project, including a commitment to bear all costs and risks if the project is not approved;
(2) Documents on the investor's legal status;
(3) Documents proving the investor's financial capacity include at least one of the following documents:
- Investor's 02 most recent financial statements;
- Commitment to financial support from the parent company;
- Commitment to financial support from a financial institution;
- Guarantee of the investor's financial capacity;
- Other documents proving the investor's financial capacity;
(4) Report on the implementation of the investment project from the time of implementation to the time of application for an investment registration certificate;
(5) In case the investment project does not request the State to allocate land, lease land, or allow a change of land use purpose, submit a copy of land use rights documents or other documents determining right to use location to carry out investment projects;
(6) Explanatory content about the technology used in the investment project for projects subject to appraisal and consultation on technology according to the provisions of law on technology transfer;
(7) BCC contract for investment projects in the form of BCC contract;
(8) Other documents related to the investment project, conditions and capacity requirements of the investor according to the provisions of law (if any).
Thus, when changing or adjusting the investment registration certificate, investors need to prepare the above documents to request the competent state agency to change the certificate according to the provisions of law.
2. Authority to adjust investment registration certificate
Pursuant to Decree No. 31/2021/ND-CP, investors will proceed to submit documents to adjust the Investment Registration Certificate to the competent Investment Registration Agency. As follows:
(1) Management Board of industrial parks, export processing zones, high-tech zones, and economic zones (for investment projects in industrial parks, export processing zones, high-tech zones, and economic zones);
(2) Department of Planning and Investment (for investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones);
(3) Investment registration agency where the investor implements the investment project, locates or plans to locate the executive office to implement the investment project for the following investment projects:
- Investment projects implemented in 02 or more provincial administrative units;
- Investment projects implemented inside and outside industrial parks, export processing zones, high-tech parks and economic zones;
- Investment projects in industrial parks, export processing zones, high-tech zones, economic zones where the Management Board of industrial parks, export processing zones, high-tech zones, economic zones have not been established or are not within the scope management of the Management Board of Industrial Parks, export processing zones, high-tech zones, and economic zones.
Thus, when wanting to adjust the investment registration certificate, investors need to submit the correct documents to the competent authority for the field in which their enterprise invests.
3. Conditions for investors to be granted investment registration certificates
Pursuant to Decree No. 31/2021/ND-CP, to be granted a registration certificate, investors need to meet the following conditions:
(1) Not belonging to industries or professions banned from business investment according to the provisions of the Investment Law 2020 and international treaties on investment;
(2) There is a location for implementing the investment project determined on the basis of a valid copy of land use rights documents or a valid copy of the location rental agreement or other documents determining land use rights of the location to carry out investment projects;
(3) Investment projects in accordance with the planning as prescribed in Decree No. 31/2021/ND-CP;
(4) Meet the conditions for investment rate per land area prescribed by the Provincial People's Committee based on actual local conditions and approved by the Standing Committee of the Provincial People's Council (if any), number of workers used (if any);
(5) Meet market access conditions for foreign investors.
Thus, investors need to meet all the conditions prescribed by law in order to be granted an investment registration certificate by a competent state agency.
=> See more: Can foreign investors withdraw from Vietnam by transferring 100% of the project to Vietnamese investors?
Photo 2. What do documents for converting loan into investment capital include?_Hotline: 0972118764
II. SUMMARY OF THE ANSWER SECTION: WHAT DOES THE DOCUMENT FOR CONVERTING LOAN INTO INVESTMENT CAPITAL INCLUDE?
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
When investors convert debt into investment capital, investors have a change in investment project capital in the form of increasing investment capital. At that time, the investor must make adjustments to the capital content recorded in the pre-issued Investment Registration Certificate according to the provisions of the Investment Law 2020 and the documents include:
1. Application for adjustment of investment registration certificate;
2. Documents related to the investor's legal status, documents proving financial statements, reports on investment project implementation and other related documents (if any).
=> See more: Fast and reputable investment capital reduction service for foreign companies.
III. 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 when 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 best legal service provider on the market, we satisfy all of the above criteria and more will definitely be a good choice for you.
IV. SOME QUESTIONS RELATED TO DOCUMENTS FOR CONVERTING LOAN INTO INVESTMENT CAPITAL
Question 1: When implementing investment projects, do investors have to comply with any principles?
Reply:
The answer is yes.
Pursuant to the Investment Law 2020, when implementing investment projects, investors need to comply with the following principles:
(1) For investment projects subject to investment policy approval, the investment policy approval must be done before the investor carries out the investment project;
(2) For investment projects subject to issuance of Investment Registration Certificates, investors are responsible for carrying out procedures for issuance of Investment Registration Certificates before implementing the investment project;
(3) Investors are responsible for complying with the provisions of the Investment Law 2020, laws on planning, land, environment, construction, labor, fire prevention and fighting, and other relevant laws. Related documents, investment policy approval documents (if any) and Investment registration certificates (if any) during the implementation of the investment project.
Thus, investors need to seriously implement the above principles when participating in investment activities in Vietnam.
Question 2: When does an investment project stop or partially stop its operations?
Reply:
Pursuant to the Investment Law 2020, the state agency in charge of investment decides to stop or partially stop the operation of an investment project in the following cases:
(1) To protect vestige, relics, antiquities, and national treasures according to the provisions of the Cultural Heritage Law;
(2) To remedy violations of the law on environmental protection at the request of the state environmental management agency;
(3) To implement measures to ensure labor safety at the request of state labor management agencies;
(4) According to court judgments, decisions, and arbitration awards;\
(5) The investor does not comply with the investment policy approval and Investment Registration Certificate and has been sanctioned for administrative violations but continues to violate them.
Thus, when an investor's investment project falls into the above cases, the investor needs to coordinate with state agencies in the process of stopping or partially stopping the activities of the investment project.
Question 3: Can income from investment activities of foreign investors be transferred abroad?
Reply:
The answer is yes.
Pursuant to the Investment Law 2020, after fully fulfilling financial obligations to the State of Vietnam according to the provisions of law, foreign investors are allowed to transfer abroad the following assets:
(1) Investment capital, investment liquidation;
(2) Income from business investment activities;
(3) Money and other assets are legally owned by the investor.
Thus, the income from investment activities of foreign investors will be transferred abroad when the investor has fully fulfilled its financial obligations.
=> See more: Conditions for converting loans into project capital?
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).
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