WHAT IS INVESTMENT CAPITAL REDUCTION? CONDITIONS FOR REDUCING INVESTMENT CAPITAL?
QUESTION
Dear TLK Law Firm, we hope that your company will answer the following problem: After a period of operation, my company is currently implementing a business project that has an Investment Registration Certificate, we are in need of reducing investment capital. So let me ask, what are the conditions to reduce investment 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. Other legal documents providing relevant guidance.
CONSULTATION CONTENT
In general, small and medium projects or large-scale projects are mobilized capital to implement, that capital source is called investment capital. Issues related to investment capital such as forms of capital mobilization, assets used as investment capital,... after having specific plans, the organization will apply for an Investment Registration Certificate, in which the initial investment capital and issues related to the use of investment capital are fixed. After being certified, if you want to reduce or increase the investment capital, the organization cannot do it unilaterally but needs to carry out capital adjustment procedures at the competent authority.
Next, join us to learn about the legal regulations on investment capital and conditions for reducing investment capital through the following article.
Photo 1. What is investment capital reduction? Conditions for reducing investment capital?_Hotline: 0972118764
I. WHAT ARE SOME IMPORTANT LEGAL ISSUES RELATED TO REDUCTION OF INVESTMENT CAPITAL? CONDITIONS FOR REDUCING INVESTMENT CAPITAL?
1. What is investment capital?
Investment capital is money and other assets according to the provisions of civil law and international treaties to which the Socialist Republic of Vietnam is a member to carry out business investment activities. Investment capital is invested by investors who are organizations and individuals carrying out business investment activities, including domestic investors, foreign investors and economic organizations with foreign investment capital. In there:
(1) Foreign investors are individuals with foreign nationality or organizations established under foreign laws conducting business investment activities in Vietnam;
(2) Domestic investors are individuals with Vietnamese nationality, economic organizations that do not have foreign investors as members or shareholders;
(3) Economic organization is an organization established and operating under the provisions of Vietnamese law, including enterprises, cooperatives, cooperative unions and other organizations carrying out business investment activities;
(4) Economic organization with foreign investment capital is an economic organization with foreign investors as members or shareholders.
In short, investment capital is a source of capital mobilized from individuals and other organizations using money or other assets to carry out profitable business investment activities.
=> See more: What documents need to be prepared for an investment capital reduction application?
2. What is investment capital reduction?
Reducing investment capital is changing one of the contents of the investment registration certificate, so the investor must adjust the capital on the investment certificate.
According to the provisions of the Investment Law 2020, investors with investment projects whose investment policies have been approved must carry out procedures for approval to adjust investment policies if they are in the case of changing the total investment capital from 20 % or more to change the scale of investment projects.
In addition, for investment projects with approved investment policies, investors are not allowed to adjust the investment project implementation schedule by more than 24 months compared to the investment project implementation schedule specified in the document. Approve the investment policy for the first time, except in cases where an increase in total investment capital of 20% or more changes the scale of the investment project.
Thus, reducing investment capital can be understood as a case of wanting to reduce the amount of capital compared to the initial capital of the investment project. In case the investment capital is reduced by more than 20%, the investor needs to carry out procedures to approve the investment policy adjustment.
=> See more: When withdrawing capital, in what ways do foreign investors receive their contributed capital back?
3. Conditions for reducing investment capital
Conditions for investors to reduce total investment capital on the Investment Registration Certificate include:
(1) The company must explain the appropriateness of the total new investment capital in the investment project proposal;
(2) The company must ensure the feasibility of the project and ensure correct and complete implementation of the contents recorded on the investment registration certificate. In case it cannot be done correctly (For example: Changing the project implementation schedule,...), additional adjustments to those contents must be made along with reducing investment capital;
(3) The company must explain the investor's financial capacity and commit to properly and fully comply with all civil obligations; if any,
(4) Approved by the investment management agency to reduce investment capital, demonstrated through the issuance of an adjusted Investment Registration Certificate.
In short, to adjust or reduce investment capital, investors must meet the conditions specified above.
Photo 2. What is investment capital reduction? Conditions for reducing investment capital?_Hotline: 0972118764
II. SUMMARY OF THE ANSWER SECTION: WHAT IS REDUCTION OF INVESTMENT CAPITAL? AND CONDITIONS FOR REDUCING INVESTMENT CAPITAL
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
Reducing investment capital is changing one of the contents of the investment registration certificate, so the investor must adjust the capital on the investment certificate.
Conditions to reduce investment capital:
1. The company must explain the appropriateness of the total new investment capital in the investment project proposal;
2. The company must ensure the feasibility of the project, ensuring correct and complete implementation of the contents recorded on the investment registration certificate. In case it cannot be done correctly (For example: Changing the project implementation schedule,...), additional adjustments to those contents must be made along with reducing investment capital;
3. The company must explain the investor's financial capacity and commit to properly and fully comply with all civil obligations, if any;
4. Approved by the investment management agency to reduce investment capital as shown by the issuance of an adjusted Investment Registration Certificate.
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 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: Can foreign investors withdraw from Vietnam by transferring 100% of the project to Vietnamese investors?
IV. SOME QUESTIONS RELATED TO INVESTMENT REGISTRATION CERTIFICATE
Question 1: Is it possible to invest in the form of capital contribution to economic organizations?
Reply:
The answer is yes.
Investors may 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 that do not fall into the above cases.
In short, investors can invest in the form of capital contribution to economic organizations through purchasing shares or directly contributing capital.
Question 2: What are the principles when implementing investment projects?
Reply:
The Investment Law 2020 stipulates the following principles when implementing investment projects:
(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 this Law, laws on planning, land, environment, construction, labor, fire prevention and fighting, and other relevant laws, investment policy approval document (if any) and Investment registration certificate (if any) during the implementation of the investment project.
In short, when implementing an investment project, investors must ensure to follow the principles specified above.
=> See more:
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!
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