Procedures for buying company shares in Vietnam by foreigners

DangKhoi August 25, 2021

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The following article will provide you with information about the procedures for buying company shares in Vietnam by foreigners.

Currently, foreign investment in Vietnam is increasing. Accordingly, the acquisition of shares by foreigners in Vietnam must meet certain conditions and procedures. So how does the law regulates procedures for buying shares of a company in Vietnam by foreigners? Let’s find out in this article with LSX Law firm.

Legal Ground

Investment Law 2020

Investment in the form of buying shares of a company

Article 24 of the Law on Investment 2020 states that:

Investors have the right to buy shares, contributed capital of economic organizations.
The purchase of shares and contributed capital by foreign investors from economic organizations must satisfy the following regulations and conditions:

a) Conditions on market access for foreign investors.

b) Ensuring national defense and security as prescribed by law This Law;

c) Regulations of the law on land on the conditions for receiving land use rights; land use conditions on islands; commune; Ward; border town; commune; Ward; seaside town.

Forms of buying company shares

According to Clause 2, Article 25 of the Investment Law 2020, foreigners can purchase shares and contributed capital of economic organizations in the following forms:

a) Purchase shares of joint-stock companies from the company or shareholders;

b) Purchase contributed capital from members of the limited liability company, become a member of a limited liability company;

c) Purchase contributed capital in a partnership, become a capital contributing member of a partnership;

d) Purchase of contributed capital of members of other economic organizations. This does not fall into the cases specified at Points a, b, and c of this Clause.

Procedures for buying shares of a company in Vietnam by foreigners

Case 1:

Foreigners will carry out the procedures for registering to buy shares, purchase the contributed capital of an economic organization before the change of members and shareholders in one of the following cases:

a) The purchase of shares, contributed capital to increase the foreigner’s ownership ratio in the economic organization with conditional market access for foreign investors;

b) The purchase of shares, contributed capital leads to the fact that the foreigner specified at Points a, b and c, Clause 1, Article 23 of this Law holds more than 50% of the charter capital of the economic organization; in the following cases: increasing the percentage of foreign investors owning charter capital from below; or equal to 50% to over 50%. And increase the rate of ownership of charter capital of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations;

c) Foreigners buy shares; purchase of capital contributions from economic organizations that have certificates of land use rights in islands and communes; Ward; border town; coastal communes, wards and towns; other areas affecting national defense and security.

Case 2:

For foreigners that do not fall into case 1, The procedures for changing shareholders and members will be carried out in accordance with law when buying shares, contributed capital of economic organizations. If there is a need to register the purchase shares of economic organizations, investors shall comply with the provisions in case 1. A

Dossier for the registration procedures to buy shares of companies for foreigners

So the dossier for foreigners to buy shares, contributed capital includes:

A written registration to purchase shares, the capital contribution portion includes the following contents: information about the economic organization in which the foreign investor intends to buy shares, capital contribution. And the rate of ownership of charter capital of foreign investors after buying shares, capital contribution to economic organizations;
A copy of the identity card, identity card or passport for the investor being an individual; copy of Certificate of Establishment; or other equivalent document certifying the legal status of an institutional investor.

Procedures for registering to buy company shares in Vietnam by foreigners

Procedures for registering to buy company shares include:

Firstly, the Investor prepares 01 set of documents as above.

Secondly, the Investor submits the application.

Place of application: Department of Planning and Investment where the company’s head office is located.

Finally, wait for the result.

So within 15 days from the date in which the valid dossier is accepted, The Department of Planning and Investment considers the investment conditions for foreign investors and informs investors. But If the dossier is invalid, the Department of Planning and Investment shall notify the Investor in writing and clearly state the reason.

Then, after receiving the notification, Economic organizations where foreign investors purchased shares or contributed capital shall carry out procedures for changing members, shareholders at the business registration agency according to the provisions of law.

Hope this article is useful for you, If you need any further information, please contact LSX Law Firm: 0833102102

Frequently Asked Questions

So can foreign investors buy capital contributions in Vietnam?

Investors have the right to purchase capital contributions from economic organizations as prescribed in Clause 1, Article 24 of the Law on Investment.

What is the time limit for the Department of Planning and Investment to notify the Investor in writing when receiving the dossier?

During a period of 15 days from the date in which the valid dossier is accepted, The Department of Planning and Investment considers the investment conditions for foreign investors and informs investors. But if the dossier is invalid, the Department of Planning and Investment shall notify the Investor in writing and clearly state the reason.

Before carrying out the procedures for buying shares of a company in Vietnam by foreigners, what conditions must foreign investors meet?

Foreign investors must meet the following regulations and conditions:

a) Conditions on market access for foreign investors.

b) Ensuring national defense and security as prescribed by law This Law;

c) Regulations of the law on land on the conditions for receiving land use rights; land use conditions on islands; commune; Ward; border town; commune; Ward; seaside town.

So where is the procedure for changing members and shareholders?

After receiving the notice of an economic organization with a foreign investor buying shares, the procedures for change of members or shareholders shall be carried out at the Business Registration Office.