INVESTMENT FORMS FOR FOREIGN INVESTORS IN VIETNAM
When conducting investment activities, foreign investors are free to choose the investment form that suits their needs and goals. The selection of appropriate investment forms is very important for the implementation of effective and profitable investment project activities for investors.
I. The forms of investment
Foreign investment projects in Vietnam can take the form of any of the following investment vehicles:
1. The Limited Liability Company (“LLC”)
An LLC may take the form of either an LLC with two or more members (“Multiple Member LLC”) or an LLC with one member (“Single Member LLC”). An LLC has the status of a recognized legal entity and a member of an LLC is responsible for the debts and liabilities of the enterprise to the extent of the amount of capital that the member has contributed or committed to contributing to the enterprise. An LLC does not issue shares.
2. The Joint Stock Company (“JSC”)
A JSC is an enterprise whose charter capital is divided into shares held by three or more organizations or individuals. Shareholders are responsible for the debts and liabilities of the enterprise to the extent of the amount of their contributed capital. A JSC has the right to issue securities in order to raise capital and it may list on the Securities Exchange. The JSC must have common shares and may have preferred shares and/or issue bonds
3. The Partnership Company (“PC”)
A PC is a form of enterprise set up by at least two partners and has a status of a legal person - a PC is akin to a limited liability partnership in other jurisdictions. A PC must have two general partners and may also have limited partners (literally, “capital contributing members”). General partners are liable for all obligations of the PC with their own property, while limited partners are only liable to the extent of their capital contribution. To date, PCs have not been a common vehicle for foreign investment in Vietnam.
4. The Business Cooperation Contract (“BCC”)
A BCC is a contractual relationship akin to a partnership that does not create a new legal entity but is licensed to engage in business activities in respect of a specific project in Vietnam. BCCs are most commonly used in the oil industry, where production sharing contracts have traditionally been structured as BCCs, and in telecommunications and advertising projects. This is changing as LLCs and JSCs are being allowed into these fields.
5. Public-Private Partnership (“PPP”) projects
Investment under the form of PPP is defined as a form of investment conducted on the basis of a contract (“PPP Project Contract”) between an authorized State agency (“ASA”) and the investor and/or project enterprise in order to implement, manage and operate an infrastructure project or to provide public services.
II. Investing in Domestic Vietnamese Enterprises
Most investors prefer Purchasing Shares or Charter Capital in Domestic Vietnamese enterprises due to the convenience and short amount of time for perfection.
In general, foreign investors may invest in Vietnamese enterprises by way of taking any of the following ways:
· Purchasing capital contribution portions from existing members in LLCs;
· Contributing new capital into LLCs;
· Purchasing existing shares from shareholders of JSCs; and
· Subscribing for new shares in JSCs.
Other kinds of investment vehicles include Merger, Consolidation, Division, and Separation; Acquisition of Assets; Competition Rules on Economic Concentration; Foreign Ownership Limitations.
Nowadays, foreign investors may purchase capital contributions or shares in domestic Vietnamese enterprises with no limitation but some restrictions according to the law on Enterprise and other relating legal documents.
The above is an analysis of Doanh Tri Law firm on the issue of Investment forms for foreign investors in Vietnam. If customers have questions or further information, please contact Doanh Tri Law firm through the following forms:
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