PROCEDURES FOR CAPITAL CONTRIBUTION, PURCHASE OF SHARES OR STAKES OF FOREIGN INVESTORS IN VIETNAM

Legal basis:

Law on Investment 2020;

Decree No. 31/2021/ND-CP.

1. What conditions must a foreign investor adapt to be invested in the capital contribution, purchase of shares, or stakes in Vietnam form?

According to Article 24.2 of the Law on Investment 2020, foreign investors who want to capital contributions, purchase of shares, or stakes from economic organizations must adapt the following conditions:

(i) Market access conditions for foreign investors according to Article 9 of the Law on Investment 2020;

(ii) Ensuring national defense and security;

(iii) Regulations of land law on conditions for receiving land use rights, using land in islands, borders, and coastal towns.

2. In what cases do foreign investors have to carry out the procedures for capital contribution, purchase of shares, or stakes registration?

(i) The capital contribution, purchase of shares, or stakes increases the foreign investor's ownership rate in economic organizations that business in conditional market access lines applied foreign investors;

(ii) The capital contribution, purchase of shares, or stakes leads to foreign investors and economic organizations at Points a, b, c, Clause 1, Article 23 of the Law on Investment 2020 holding over 50% of the charter capital of economic organizations: increase the rate of charter capital owned by foreign investors from less than or equal to 50% to over 50%; increase the rate of charter capital owned by foreign investors when foreign investors have held over 50% of economic organizations’ charter capital;

(iii) The foreign investors that make capital contributions, purchase shares or stakes of economic organizations have land use right certificates in islands, or border and coastal towns, another area that affects national defense and security.

The foreign investors without the above cases, when capital contributions, purchase shares, or stakes are not required to carry out registration procedures but carry out for changing shareholders or members as prescribed laws. In case a foreign investor wants to register, they shall comply with the above provisions.

3. Procedures of capital contribution, purchase of shares, or stakes registration by foreign investors

According to the provisions of Decree No. 31/2021/ND-CP guiding some articles of the Law on Investment 2020 that procedures for capital contribution, purchase of shares, or stakes registration by foreign investors shall carry out as follows:

(i) Step 1: Apply documents for capital contribution, purchase of shares, or stakes registration in a Vietnamese enterprise at the Investment Registration Authority;

(ii) Step 2: Register the change of members or shareholders at the business registration authority.

4. What do the foreign investor's registration documents for capital contribution, purchase of shares, or stakes include?

Documents for capital contribution, purchase of shares, or stakes registration includes:

(i) A written registration of capital contribution, purchase of shares or stakes, including the contents: information on enterprise registration of the economic organization to which the foreign investor intends to contribute capital, purchase of shares, or stakes; business lines; list of founding shareholders and shareholders being foreign investors (if any); the charter capital rate owned by foreign investors before and after capital contribution, purchase of shares or stakes to economic organizations; transaction value of the contract of capital contribution, purchase of shares or stakes; information on investment projects of economic organizations (if any);

(ii) Copies of legal documents of individuals, organizations capital contribution, purchase of shares or stakes, and economic organizations which have foreign investors capital contribution, purchase of shares or stakes;

(iii) Written agreement on capital contribution, purchase of shares or stakes between foreign investors and economic organizations receiving the capital contribution, shares or stakes;

(iv) Declaration document (enclosed with a copy) land use right certificate of the economic organization receiving the capital contribution, shares, or stakes of foreign investors (for the case specified at Point a, b and c, Clause 2, Article 24 of the Law on Investment in 2020). Economic organizations which have foreign investors' capital contributions, purchase of shares, or stakes are responsible before law for the accuracy and truthfulness of their declarations.

Within 15 days from the date of receipt of valid documents, the investment registration authority shall consider adapting the conditions for capital contribution, purchase of shares or stakes and notify investors in writing.

ADK & Co Vietnam Lawyers Law Firm