THE PROCESS OF FOREIGN INVESTMENT IN VIETNAM IN THE FORMS OF CAPITAL CONTRIBUTION, PURCHASE OF SHARES, AND PURCHASE OF CAPITAL CONTRIBUTION (REPUTABLE LAW FIRM IN  HO CHI MINH CITY, VIETNAM)

THE PROCESS OF FOREIGN INVESTMENT IN VIETNAM IN THE FORMS OF CAPITAL CONTRIBUTION, PURCHASE OF SHARES, AND PURCHASE OF CAPITAL CONTRIBUTION

(REPUTABLE LAW FIRM IN  HO CHI MINH CITY, VIETNAM)

According to Clause 2, Article 21 of the Investment Law 2020, foreign investors are entitled to invest in Vietnam in the following forms: (1) investment in establishing economic organizations; (2) Investment in capital contribution; (3) Implementing investment projects; (4) Investment in the form of BCC contracts; (5) New forms of investment and types of economic organizations according to Government regulations.

Within the limited scope of this article, HT Legal VN would like to share about the process of foreign investment in Vietnam in the forms of capital contribution, purchase of shares, and purchase of capital contribution in the limit of The Investment Law, especially Vietnam’s Investment Law 2020. Detailed content is as follows:

I. Legal basis:

- Investment Law No. 61/2020/QH14 dated June 17, 2020;

- Decree No. 31/2021/NĐ-CP dated March 26, 2021, details and guides the implementation of several Articles of Investment Law;

- Circular No. 03/2021/TT-BKHĐT dated April 09, 2021, regulates sample documents, and reports related to investment activities in Vietnam and investment from Vietnam to foreign and investment promotion.

II. Forms of investment

We want to note that for some conditional foreign investment industries, foreign investors may not be allowed to invest in the forms of capital contribution, shares purchase, capital contribution purchase, or may be limited to capital investment ratio. The legal content stated below only applies in cases where investment industries are not limited to foreign investors.

According to Article 25 of The Investment Law 2020, investors implement investment as follows:

1. Contributing capital to an enterprise established in Vietnam in the forms of (a) Purchasing first-release shares or additional shares of a Joint Stock Company; (b) Contributing capital in a limited liability company or partnership; (c) Contributing capital to other economic organizations that do not fall under the above cases.

2. Buying shares or purchasing capital contributions in an enterprise established in Vietnam in the form of (a) Buying shares of a Joint Stock Company from the company or shareholders; (b) Buying capital contributions of a member of a limited liability company/partnership to become a new member of that limited liability company/ partnership member of a partnership; (c) Buying capital contributions of a member of other economic organizations that do not fall into above cases.

III. Legal Procedures

1. Investors have to implement The Procedures for registering capital contributions, buying shares, and buying capital contributions of economic organizations if they fall into the following cases:

a. The investment leads to an increase in the ownership ratio of foreign investors in an economic organization enterprises conditional market access industries for foreign investors;

b. The investment leads to foreign investors and economic organizations regulated in Points a, b, and c, Clause 1, Article 23 of The Investment Law 2020 holding more than 50% of the charter capital of economic organizations in cases: Increasing charter capital ownership ratio of foreign investors from under or equal 50% to above 50%; Increasing charter capital ownership of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations.

c. Foreign investors invest in The economic organizations that have Certificates of Using Land rights in islands and border communes, wards, and towns; coastal communes, wards, and towns; and other areas that affect national defense and security.

2. Profile components

- Document for registration of capital contribution, share purchase, and capital contribution (according to Form A.I.7 Circular 03/2021/TT-BKHDT);

- Copies of legal documents of individuals, investing organizations, and economic organizations receiving investment;

- Written agreement on capital contribution, share purchase, and capital contribution purchase between the foreign investor and the economic organization receiving the investment;

- Written declaration (attached with a copy) of the Certificate of land use rights of the economic organization receiving the investment (for the cases in section II.(1).(b) and II.(1).( c))

3. Place of application: 

Department of Planning and Investment of provinces and centrally run cities/ Management Board of industrial zones of provinces and centrally run cities where the economic organization is headquartered.

4. Document processing time:

Results are issued within 15 days of receipt of valid documents.

5. Result: 

Notice of meeting the conditions for capital contribution, share purchase, and repurchase of capital contributions from foreign investors.

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