A foreign investor, when intending to invest and do business in Vietnam; must comply with the provisions of Vietnamese law on conditions for investment capital for foreign investors. To clarify this, LSX Lawfirm will give you an article about: “Conditions on foreign investment capital in Vietnam”, as follows:
Legal grounds
Law on investment 2020
Law on enterprise 2020
Conditions on foreign investment capital in Vietnam
Investment capital is money and other assets as prescribed by civil law and international treaties to which the Socialist Republic of Vietnam is a signatory to conduct business investment activities.
The registered capital for implementation of an investment project is determined on the basis of:
- Firstly, capital contributed by the investor in cash, machinery, equipment; value of intellectual property rights, technology; technical know-how, value of land use rights and other assets according to civil and regulatory laws international treaty on investment;
- Secondly, capital mobilized to implement investment projects;
Conditions for charter capital
Accordingly, one of the market access conditions for foreign investors; specified in the List of industries and trades restricted from market access for foreign investors is the foreign investor’s rate of ownership of charter capital outside in economic organizations;
Accordingly, the restriction on the percentage of foreign investors’ ownership according to the provisions of international treaties on investment is applied as follows:
- In case many foreign investors contribute capital; purchase shares or purchase capital contributions to an economic organization and are subject to one or more international treaties on investment; the total ownership ratio of all foreign investors shall be determined. All foreign investors in that economic organization must not exceed the highest ratio; prescribed by an international treaty that provides for the foreign investor’s ownership ratio in an industry or profession specific;
- In case many foreign investors from the same country or territory contribute capital; purchase shares; or purchase capital contributions to an economic organization; the total ownership ratio of all such investors must not be determined exceeding the ownership ratio; specified in an international treaty on investment applicable to such investors;
- So, for public companies, securities companies; securities investment fund management companies or securities investment funds, securities investment companies in accordance with the law on securities; the law on securities If the securities have different regulations on the ownership ratio of foreign investors; the provisions of the law on securities shall apply;
- In case an economic organization has many lines of business; and the international treaty on investment contains different provisions on the foreign investor’s ownership ratio; the foreign investor’s ownership ratio in such economic organization must not exceed the limit on foreign ownership ratio; for the industry or profession with the lowest foreign ownership restriction.
Conditions on contributed capital
Economic organizations must satisfy the conditions and carry out investment procedures as; prescribed for foreign investors when investing to establish other economic organizations; make capital contribution, purchase shares, purchase capital contribution portion of other economic organizations; investment in the form of BCC contract if such economic organization falls into one of the following cases:
(1) There is a foreign investor holding more than 50% of the charter capital; or the majority of general partners are foreign individuals; for economic organizations being a partnership;
(2) Having an economic organization specified in (1) holding more than 50% of charter capital;
(3) Foreign investors and economic organizations specified in (1) hold more than 50% of charter capital.
Economic organizations other than those specified above shall comply with investment conditions and procedures as ; prescribed for domestic investors when investing in establishing other economic organizations; investment in the form of capital contribution, share purchase, purchase of capital contributions of other economic organizations; investment in the form of BCC contract.
A foreign investor’s capital contribution, share purchase or capital contribution purchase; from an economic organization must satisfy the following regulations and conditions:
- Market access conditions for foreign investors;
- Then, ensuring national defense and security;
- Regulations of land law on conditions for receiving land use rights, conditions for using land in islands; communes, wards, border towns, communes, wards and coastal towns.
You can refer to the article related to capital or foreign capital and dossier about transfer of direct investment capital from abroad into Vietnam.
Related questions
– Subjects entitled to investment incentives
– Supporting the development of infrastructure systems of industrial parks, export processing zones, high-tech zones, and economic zones
– Special investment incentives and support.
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