Hence the development of the economy, Vietnam is constantly attracting foreign investors; while keep making changes and improvements in the investment regulations for more convenience and security towards the investors. The regulation on direct investment capital account is one of the improvements that the Vietnamese government offer. Therefore, in this article, LSX will give you an introduction on “Regulation on open and use a direct investment capital account”.
- Circular 06/2019/TT-NHNN
What is a direct investment capital account?
Accordingly, a direct investment capital account means a payment account in foreign currency or VND; opened by a foreign direct investment enterprise or foreign investor at an authorized bank to perform transactions. transactions related to foreign direct investment activities in Vietnam.
Who need to open and use a direct investment capital account?
Hence the Article 3 and Article 5, Circular 06/2019/TT-NHNN, the following subjects are those who need to open and use a direct investment account:
Foreign-invested enterprises, including:
- Enterprises which establish in the form of investment to establish economic organizations,
- Enterprises with foreign investors contributing capital, buying shares or capital contributions to the enterprise; resulting in foreign investors owning 51% or more of the charter capital of the enterprise
- Enterprises which establish after separation, merger or consolidation; resulting in foreign investors owning 51% or more of the enterprise’s charter capital
- New enterprises which establish in accordance with specialized laws; with foreign investors owning 51% or more of the charter capital of the enterprise
- Project enterprises which establish to implement PPP projects in accordance with the law on investment.
Foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects if a project enterprise is not established
Regulations on conversion between types of direct investment capital accounts
Thus the regulation, enterprises, and non-residents foreign investors who own shares or contributed capital in such enterprises must change accounts; according to regulations in the following cases:
Firstly, in case enterprises with foreign investors have opened and used indirect investment capital accounts to contribute capital, purchase shares or contributed capital in private enterprises; foreign investors owning 51% or more of charter capital must open a direct investment capital account following the regulation.
Secondly, in case the following enterprises have opened a direct investment capital account, they must close this account; and at the same time, the foreign investor who is a non-resident owning shares or contributed capital in such enterprise shall open an indirect investment capital account; under the regulations on foreign exchange management
Foreign investment means that organizations and individuals of one country bring capital in different forms into another country to conduct business activities for profit. Foreign investment is made in the form of direct investment or indirect investment.
This Circular takes effect from September 6, 2019. Accordingly, businesses and investors must complete the requirements of the law within 12 months from September 6, 2019.
All transactions are via wire transfer.