In addition to receiving foreign investment capital into Vietnam, the State also has a legal framework to facilitate outward investment activities. General provisions on outward investment activities are an important basis for the consistency in the system of laws governing outward investment. Let’s join Lawyer X to find out about this issue through the following situation: “Dear lawyer! My company is planning to invest in Cambodia. Can you please introduce to me the general regulations governing outward investment activities? What are general principles of outward investment as well relevant general legal provisions? Thanks for your advice!”
Legal grounds
Law on Investment
What are outward investment activities?
Business investment means the use of investment capital by investors to carry out business activities. Investor means an organization or individual carrying out business investment activities. Investors include domestic investors, foreign investors and foreign-invested economic organizations.
“Outward investment activity” means an investor transferring investment capital from Vietnam to a foreign country and using profit obtained from such investment capital to carry out outward investment activities in the foreign country.
Rules for carrying out outward investment activities
– The State encourages outward investment in order to exploit, develop and expand the market; improve the export of goods and services, earn foreign currencies; access modern technologies, raise the managerial capability and develop resources for socio-economic development.
– Investors carrying out outward investment activities shall comply with Law on Investment, other relevant regulations of law, laws of the countries or territories that receive investment (“host countries”), and the international agreements to which the Socialist Republic of Vietnam is a signatory, and take responsibility for outward investment activities they carry out.
Forms of outward investment
Investors shall carry out outward investment activities in the following forms:
– Establishment of a business entity in accordance with the law of the host country;
– Making investment on the basis of an overseas contract;
– Contribution of capital to, purchase of shares or stakes of an overseas business entity to participate in management of such business entity;
– Trading in securities, other financial instruments, or making investment via securities investment funds and other intermediary financial institutions in a foreign country;
– Other forms of investment prescribed by law of the host country.
Business lines banned from outward investment
– Business lines specified in Article 6 of Law on Investment and relevant international agreements.
– Business lines with technologies and products banned from export in accordance with the law on foreign trade management.
– Business lines banned from business investment in accordance with laws of the host countries.
Business lines subject to conditional outward investment
– Business lines subject to conditional outward investment include:
+ Banking;
+ Insurance;
+ Securities;
+ Press, radio and television;
+ Real estate business.
– The conditions for making business investment in the business lines mentioned in Clause 1 of Article 54 Law on Investment are specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government and international agreements on investment to which the Socialist Republic of Vietnam is a signatory.
+ For the banking, insurance, and securities industries specified at Points a, b and c, Clause 1, Article 54 of Law on Investment, investors must satisfy the conditions prescribed by law in the banking, insurance, securities industries and and is approved in writing by the competent authority.
+ For the press, radio and television industries and trades specified at Point d, Clause 1, Article 54 of the Investment Law, the investor is an organization licensed to operate press, radio and television activities in Vietnam and is approved in writing by the Ministry of Information and Communications.
+ For the real estate business lines specified at Point dd, Clause 1, Article 54 of Law on Investment, the investor is an enterprise established under Law on Enterprises.
Sources of capital for outward investment
– Investors shall contribute capital and raise capital to carry out outward investment activities.
– Borrowing foreign currency loans and transferring foreign currency investment capital must comply with the conditions and procedures prescribed in the laws on banking, credit institutions and foreign exchange management.
– According to objectives of monetary policies and foreign currency management policies in each period, the State Bank of Vietnam shall promulgate regulations on grant of foreign currency loans by credit institutions and branches of foreign banks in Vietnam to investors to carry out outward investment activities.
– Capital sources for outward investment include investors’ money and other lawful assets, including equity, loans in Vietnam transferred abroad, profits earned from offshore investment projects. be retained for investment activities abroad. Money and other lawful assets include: Foreign currency on the account at an authorized credit institution or purchased at an authorized credit institution as prescribed by law; Vietnamese Dong is in accordance with Vietnam’s foreign exchange management law; Machinery, equipment, supplies, raw materials, fuel, finished goods, semi-finished goods; Value of intellectual property rights, technology, brands, rights to property; Shares, capital contributions and projects of investors may be swapped at economic organizations in Vietnam and overseas economic organizations; Other legal assets as provided for by civil law.
– Outward investment capital is used to contribute capital, to lend capital to overseas economic organizations, pay for the purchase of shares, purchase contributed capital, fulfill arising guarantee obligations (if any) for real purposes. making offshore investment in the forms specified at Points a, b, c and e, Clause 1, Article 52 of Law on Investment. Capital remitted abroad, when recovered and repatriated, are not included in the remitted capital.
– Vietnamese investors are allowed to use their shares, capital contribution or investment projects in Vietnam to pay or swap for the purchase of shares, capital contributions or investment projects of economic organizations abroad. In this case, Vietnamese investors 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 according to the provisions of law.
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Frequently asked questions
Yes! The State encourages outward investment in order to exploit, develop and expand the market; improve the export of goods and services, earn foreign currencies; access modern technologies, raise the managerial capability and develop resources for socio-economic development.
Business lines subject to conditional outward investment include: Banking; Insurance; Securities; Press, radio and television; Real estate business.
Borrowing foreign currency loans and transferring foreign currency investment capital must comply with the conditions and procedures prescribed in the laws on banking, credit institutions and foreign exchange management.
Conclusion: So the above is General provisions on outward investment activities in Viet Nam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
