“My friend’s business is a Thailand country, doing film production and distribution. Currently wants to buy back a part of capital (accounting for about 60% of charter capital) of a two-member limited liability company in Vietnam for cooperation and development. This company in Vietnam is also active in the field of film production. Please advise me on relevant legal issues”. Thank you for your interest in using LSX Lawfirm’s services, with your questions, we would like to discuss and answer you in the article: “Foreign investors contribute capital into Vietnam enterprises”, as follows:
Legal grounds
Law on investment 2020
Foreign investors contribute capital into Vietnam enterprises
Currently, the Vietnamese economy is attracting a lot of foreign investors; investment in the form of capital contribution to Vietnamese enterprises is very popular nowadays. So; answer your question on specific issues related to foreign investment activities in Vietnam as follows:
Firstly; forms of investment for foreign investors
- Investment in establishment of a business organization.
- Investment in the form of capital contribution or purchase of shares or stakes.
- Execution of an investment project.
- Investment in the form of a business cooperation contract.
- New forms of investment and types of business organizations prescribed by the Government’s regulations.
So; based on the information you provide, we can see that a foreign investor is planning to invest in Vietnam in the form of capital contribution, then namely capital contribution and a limited liability company with two or more members. operates in the field of film production and distribution.
Secondly; Foreign enterprises wish to buy contributed capital to hold 60%?
Foreign enterprises wish to buy contributed capital to hold 60% of charter capital in the company. With this information, we also will provide the legal regulations and our practical experience in dealing with this issue.
Film production and distribution is a group of industries and professions committed by Vietnam in the WTO Service Commitment Schedule:
Film production services (CPC 96112, excluding video tapes)
Then; Film distribution services (CPC 96113, excluding video tapes): Only in the form of a business cooperation contract or a joint venture with a Vietnamese partner has been authorized to provide these services in Vietnam. In addition, The capital contribution of the foreign side must not exceed 51% of the legal capital of the joint venture.
Thirdly; National Foreign Investment Portal
Film production and distribution is a conditional investment industry for foreign investors, which is regularly updated on the National Foreign Investment Portal, in the list of investment conditions applicable to foreign investors. foreign investment, whereby:
WTO, AFAS
+) The rate of ownership of charter capital of foreign investors in economic organizations: does not exceed 51%.
+) Investment form: joint venture, business cooperation contract
+) Vietnamese partners participating in investment: must be permitted by the competent state agency to provide film production services.
Law of Vietnam
+) Investment form: joint venture, business cooperation contract.
+) Vietnamese partners participating in investment: must have the function of film production.
Thus, according to the above provisions, foreign investors investing capital in Vietnamese enterprises need to comply with the conditions specified in the international treaties to which Vietnam is a member, the conditions of Vietnamese law. for foreign investors.
In conclusion; in the field of film production and distribution, foreign investors are only allowed to hold a maximum of 51% of charter capital in limited liability companies with two or more members. Accordingly, foreign investors need to consider buying capital contributions in economic organizations to hold 51% of the charter capital. The law does not also allow possession in excess of this percentage.
Related article: Steps to establish a company with 100% foreign capital
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