REMARKS FOR VIETNAMESE OUTWARD INVESTMENT ENTERPRISE

Cơ sở pháp lý:

Law on Investment 2020;

Decree 31/2021/ND-CP.

1. What principles do enterprises investing abroad need to comply with?

Vietnamese investors who have investment activities abroad need to comply with certain principles of Vietnamese law on investment (Law on Investment 2020 and relevant legal documents), the law of the host country, and relevant international treaties. Outward investment enterprises must be solely responsible for the efficiency of their overseas investment activities.

Business entities in Vietnam that are entitled to conduct outward investment activities according to the provisions of Article 68 of Decree 31/2021/ND-CP include:

- Enterprises established and operating under the provisions of the Law on Enterprises 2020 and the Law on Investment 2020;

- Cooperatives and unions of cooperatives established and operated by the Law on Cooperatives;

- Credit institutions established and operating under the Law on Credit Institutions;

- Business households registered under the law of Vietnam;

- Individuals with Vietnamese nationality, except for the case specified in clause 2 Article 17 of the Law on Enterprises 2020;

- Other organizations conducting business investments under Vietnamese laws.

2. In what forms can enterprises invest abroad?

The current investment laws restrict investment forms for domestic enterprises when conducting overseas investment activities in the following forms:

- Establishment of an economic organization by the laws of the host country;

- Investment in the form of a contract abroad;

- Contributing capital, buying shares, buying capital contributions of an economic organization abroad to participate in the management of such economic organization;

- Buy and sell securities and other valuable papers or invest through securities investment funds or other intermediary financial institutions in foreign countries;

- Other forms of investment are under the laws of the host country.

3. Remark business lines banned from outward investment and with conditional investment

Investors should remark the business lines prohibited from investing abroad under Article 53 of the Law on Investment 2020 including:

- Banned business lines prescribed in Article 6 of the Law on Investment 2020:

(i) Trading in narcotics specified in Appendix I of the Law on Investment 2020;

(ii) Trading in chemicals and minerals specified in Appendix II of the Law on Investment 2020;

(iii) Trading in specimens of wild plant and animal species derived from natural exploitation specified in Appendix I to the Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of endangered, precious, and rare species of forest plants, animals, and aquatic animals of Group I, derived from natural exploitation specified in Appendix III of the Law on Investment 2020;

(iv) Prostitution business;

(v) Buying and selling human beings, tissues, corpses, human body parts, human fetuses;

(vi) Business activities related to human cloning;

(vii) Trading in firecrackers;

(viii) Debt collection service business.

- Business lines banned from investment under relevant international treaties;

- Business lines with technologies and products banned from export according to the provisions of the laws on foreign trade management;

- Business lines are prohibited from doing business under the laws of the host country.

In addition, investors must also comply with the regulations on conditional investment lines in Article 54 of the Law on Investment 2020, guided by Article 72 of Decree 31/2021/ND-CP:

- Bank; insurance; securities: Investors must meet the conditions prescribed by law in the field of banking, insurance, and securities and be approved in writing by competent authorities;

- Newspapers; broadcasting; television: Investor is an organization that has been licensed to operate press, radio, and television in Vietnam and has been approved in writing by the Ministry of Information and Communications;

- Real estate business: Investor is an enterprise established under the Law on Enterprises 2020.

4. Remarks on capital sources for outward investment that investors are allowed to mobilize

According to Article 54 of the Law on Investment 2020 and Article 69 of Decree 31/2021/ND-CP, the investor is responsible for capital contribution and mobilization of capital sources to carry out outward investment activities. Borrowing capital in foreign currency and transferring investment capital in foreign currency must comply with the conditions and procedures prescribed by the laws on banks, credit institutions, and foreign exchange management.

The source of outward investment capital includes the money and other lawful assets of the investor, including equity, loan capital in Vietnam remitted abroad, profits earned from outward investment projects are retained to carry out outward investment activities.

Money and other lawful property as prescribed in clause 1 Article 69 of Decree 31/2021/ND-CP include:

• Foreign currency on account at an authorized credit institution or purchased at an authorized credit institution under the laws;

• Vietnam Dong under the law on foreign exchange management of Vietnam;

• Machinery, equipment, supplies, raw materials, fuel, finished goods, semi-finished goods;

• Value of intellectual property rights, technology, trademarks, property rights;

• Shares, capital contributions, and projects of investors can be exchanged at economic organizations in Vietnam and overseas economic organizations according to the provisions of clause 4 Article 69 of Decree 31/2021/ND-CP;

• Other legal assets as prescribed by civil law.

Outward investment capital is used to contribute capital, lend capital to overseas economic organizations, make payment of receiving shares, purchase contributed capital, fulfill arising guarantee obligations (if any) to carry out the outward investment activities in the forms specified at points a, b, c, and đ clause 1 Article 52 of the Law on Investment 2020. Capital amounts that have been transferred abroad, when recovered and repatriated, shall not be included in the capital remitted abroad.

Vietnamese investors may use its shares, capital contribution, or investment project in Vietnam to make payments or swap for the purchase of shares, capital contributions, or investment projects of an outward economy organization. In this case, the Vietnamese investor shall carry out the procedures for the issuance of an outward investment registration certificate first, then the foreign investor shall carry out the investment procedures in Vietnam under the laws.

ADK & Co Vietnam Lawyers Law Firm