Capital contribution, share acquisition, and purchase of contributed capital in a Vietnamese enterprise are the three types of indirect investments that foreign investors can make if they fulfill all of the legal requirements.
1. Forms and conditions
1.1. Forms of capital contribution that foreigners can make to Vietnamese enterprises
Foreign investors may contribute capital to economic organizations in the following forms:
Share purchases issued for the first time or additionally issued shares of a joint-stock company. Foreign investors become shareholders of joint-stock companies.
Capital contribution to limited liability companies and partnerships. Foreign investors become members of limited liability companies and partnerships.
Capital contribution to other economic organizations.
1.2. Forms of share purchases and contributed capital purchases
Forms of share purchases and capital purchases of Vietnamese companies:
Share purchases of a joint stock company from a legal entity or shareholder;
Contributed capital purchases from members of a limited liability company to become a member of a limited liability company;
Contributed capital purchases of capital contributors in a partnership to become a capital contributing member of a partnership;
Contributed capital purchases of members of economic organizations other than the above cases.
1.3. Requirements of capital contribution, share purchase and contributed capital purchase of foreign investors
The capital contribution, share purchase and capital purchase portion of foreign investors must satisfy the following conditions:
In listed corporations, public companies, securities trading organizations, and securities investment funds, foreign investors’ charter capital ownership is restricted; in state-owned enterprises, equitization, or ownership transformation in other forms is prohibited.
Under the rules of international treaties to which the Socialist Republic of Vietnam is a signatory, the investment form, scope of operations, Vietnamese partners engaging in the implementation of investment activities, and other conditions must be met.
2. Process
Depending on the business fields of the company in which the foreign investor intends to contribute capital, purchase shares, or purchase capital, the procedures are as follows:
2.1. Foreign investors must conduct procedures for registration of capital contribution, purchase of shares or capital purchase to economic organizations in the following instances:
Foreign investors contributing capital, purchase shares, or contribute capital to economic organizations should comply with conditions of business fields;
The contribution of capital, purchase of shares or contributed capital results in a foreign investor or an economic organization in one of the following circumstances holding 51-percent (51%) or more of the charter capital of the economic organization: (i) Having a foreign investor holding 51-percent or more of the charter capital or having the majority of general partners being foreign individuals, for economic organizations being a partnership; or (ii) Having an economic organization at (i) holding 51-percent or more of its charter capital; or (iii) There are foreign investors and economic organizations in points (i), (ii) hold 51-percent or more of the charter capital.
** Documents for registration of capital contributions, share purchases or capital contributions:
Written registration of capital contributions, share purchases, capital purchases;
Written agreement in principle on capital contributions, share purchases, purchases of contributed capital;
Copies of identification cards or passports of the parties involved.
** Process:
Step 1: Investors submit required documents at the Department of Planning and Investment where the economic organization’s head office is located to register for capital contribution;
Step 2: After being approved, the investor must make the capital contribution, receive the transfer of shares or capital and implement other procedures (if necessary).
2.2. Investors who are not subject to procedures for registration of capital contribution, purchase of shares or contributed capital purchases:
Investors, who are not in the category of performing the procedures for registration of capital contribution, purchase of shares, or contributed capital, as mentioned above, will need to conduct the procedure of changing shareholders or members as prescribed by law when contributing capital or buying shares, contributed capital of economic organizations. If there is a need to register the capital contribution, purchase of shares, or contributed capital of an economic organization, the investor must comply with those regulations.
In addition to making indirect investments in Vietnam, through capital contribution, share purchases, and contributed capital purchases, investors can directly invest in Vietnam through the form of “establishing a company with 100-percent foreign capital“.
