Regulations on limiting capital contribution ratio of foreign investors

by QuynhHuong

Hence the regulation in 2020 Investment Law; foreign investors could only invest in Vietnam if they surpass the conditions of the law. One of those is the rate of charter capital ownership. Along with the establishment of Decree 31/2021/ND-CP, regulations on limiting the capital contribution ratio of foreign investors are specified.

  • 2020 Investment Law
  • Decree 31/2021/ND-CP

Accordingly. in Clause 10, Article 17, Decree 31/2021/ND-CP; there are 04 cases that the ratio of capital contribution is limited:

Many foreign investors contribute capital, purchase shares, purchase capital contributions to economic organizations and are subject to the application of international treaties on investment

Firstly, if the investor falls into this case; the total ownership ratio of all foreign investors in that economic organization must not exceed the highest ratio prescribed by an international treaty that provides for the percentage of foreign investors’ ownership in a particular business line.

Many foreign investors belonging to the same country or territory contribute capital, purchase shares, purchase capital contributions to economic organizations

Secondly, if this is the case of the investors; the total ownership ratio of all such investors must not exceed the ownership ratio specified in the international treaty on investment applicable to such investors.

Public companies, securities companies, securities investment fund management companies or securities investment funds, securities investment companies

Thirdly, with the investors in this case, the ratio of capital contribution needs to comply with the regulation on Securities act:

  • For public companies, the capital ownership ratio for foreign investors is 50%.
  • For securities companies, securities investment companies, securities investment funds, the capital ownership ratio for foreign investors is up to 100%.

In case the economic organizations have many lines of business; in which international treaties on investment contain different provisions on the percentage of foreign investors’ ownership

Lastly, within this case, the foreign ownership ratio in that economic organization must not exceed the limit on the foreign ownership ratio for the industry or profession with the lowest foreign ownership restriction.

Thus, the capital ownership ratio of foreign investors is based on international treaties on investment industries and professions. Thank you for paying attention. In case you have any questions, please contact Lawyer X for quick and best legal services: 0833102102.

What is the definition of foreign investment?

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.

What are the business lines that Foreign Capital Companies can operate in?

Thus the provisions of the 2020 Enterprise Law and WTO Law, enterprises have the right to freely conduct business in industries, as long as the regulation does not prohibit.

5/5 - (1 vote)

You may also like

Leave a Comment