How to buy capital from a Vietnamese company?

Vietnam is listed as one of the most attractive destinations for tourism, food, and especially investment. Despite the outbreak of the pandemic of Covid-19 with the most complicated development so far, the number of new companies set up in the first half of this year and the amount of registered capital injected into the economy reached the all-time high highs. That’s the reason so many investors wish to invest in Vietnam. But how can a foreigner contribute capital from a Vietnam company?

Buy capital such as contributing capital, purchasing shares, or purchasing stakes of business entities is entitled to foreign investors but they have to carry out the procedures for registration of capital contribution to the company first.

1.Cases of foreign investors have to apply for registration of capital contribution, purchase of shares, or contributed capital to Vietnamese company:

– Foreign investors contribute capital, purchase shares, or capital contributions to Vietnamese companies operating in business investment lines subject to conditions applicable to foreign investors;

– The contribution of capital, purchase of shares or contributed capital results in foreign investors holding 51% or more of the charter capital of the Vietnamese company;

2.Procedures for foreign investors to contribute capital, purchase shares, or capital contributions to Vietnamese companies

Step 1: The investor applies for approval of capital contribution, share purchase, and capital contribution to a Vietnamese company

An application file for approval includes:

– A written registration of capital contribution, purchase of shares or contributed capital includes the following contents: information on the economic organization in which the foreign investor intends to contribute capital, purchase shares or contributed capital; the ratio of charter capital ownership of foreign investors after contributing capital, buying shares or capital contributions to economic organizations;

– A copy of the identity card, identity card, or passport for the investor is an individual; a copy of the Certificate of Establishment or other equivalent document certifying the legal status of the investor is an organization (notarized translation, consular legalization);

Place of application: Investors submit dossiers in the External Economic Department – Department of Planning and Investment where economic organizations are headquartered as procedures for registration of capital contribution and purchase of shares and contributed capital.

Application processing time: 10 – 15 business days from the date of receipt of valid documents.

Step 2: Foreign investors make a capital contribution, purchase shares, contributed capital, and Vietnamese enterprises.

In case foreign investors contribute capital to Vietnamese companies, they will open direct investment capital accounts. Investors contribute capital, transfer capital through direct investment capital accounts.

According to Circular No. 06/2019/TT-NHNN of the State Bank of Vietnam, payment for investment capital transfer transactions in foreign direct investment enterprises must be made through financial accounts. foreign direct investment capital of that enterprise. Therefore, when a foreign investor contributes capital, a Vietnamese company must open a foreign direct investment capital account at a bank in Vietnam; can be opened in Vietnamese Dong or a foreign currency, depending on the currency used to contribute capital to the business.

The members and shareholders transferring capital shall declare tax upon the transfer according to the law on personal income tax and corporate income tax (if any).

Step 3: Change the business registration content on the Business Registration Certificate

A dossier of change of business registration contents includes:

– Notice of change of business registration contents;

– To decide on the change of the company’s business registration contents;

– Minutes of meeting on change of business registration contents of the company;

– The transfer contract and documents certifying that the transfer has been completed, certified by the legal representative of the company;

– Confirmation of money transfer of foreign investors;

– List of capital contributors or list of foreign shareholders;

Place of application: Submit at the Business Registration Office – Department of Planning and Investment where the enterprise is located.

Application processing time: 3-5 working days after receiving a valid application.

Please don’t hesitate to contact us if you require any further information!

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