PROCEDURE FOR BUYING SHARES AND CONTRIBUTED CAPITAL OF A COMPANY IN VIETNAM
When setting up a company with foreign capital, investoes often face up many difficulties such as: Preparation of missing document; implementation time is prolonged; etc leading to not achieving the desired result. Doanh Tri Firm would like to send to readers the following essay to guide the procedure for buying shares and contributed capital of a company in Vietnam.
1. Legal basis:
- Law on Enterprise 2020;
- Law on Investment 2020
Conditions for capital contribution:
Foreign investors may contribute capital to economic organizations in the following forms:
(i) Buy shares issued for the first time or additionally issued shares of a joint-stock company;
(ii) Contributing capital to a limited liability company or a partnership;
Conditions for buying shares:
Foreign investors may purchase shares or capital contributions from economic organizations in the following forms:
(i) Purchase shares of a joint-stock company from the company or shareholder;
(ii) Purchase capital contributions of members of a limited liability company to become a member of a limited liability company;
(iii) Purchase capital contributions of capital contributors in a partnership to become a capital contributing member of the partnership.
3. Rate of charter capital ownership of foreign investors:
Article 23 of the Law on Investment 2020 stipulates that the rate of ownership of charter capital of foreign investors is not restricted in economic organizations, except for cases where the economic organization is: a listed company; public company; securities business organizations; securities investment funds; State-owned enterprises are equitized or converted to foreign ownership in accordance with relevant laws and treaties to which Vietnam is a contracting party.
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:
(i) The 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;
(ii) Having economic organizations specified at Point a of this Clause holding more than 50% of charter capital;
If a foreign-invested economic organization already established in Vietnam has a new investment project, it shall carry out the procedures for implementation of that investment project without having to establish a new economic organization.
The Government shall detail the order and procedures for investment in the establishment of economic organizations and on the implementation of investment activities by foreign investors and foreign-invested economic organizations.
Foreign investors may own unlimited charter capital in economic organizations, except for the following cases:
(i) The percentage of foreign investors' ownership in listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities;
(ii) The percentage of foreign investors' ownership in state-owned enterprises which are equitized or converted into other forms shall comply with the law on equitization and transformation of state-owned enterprises;
(iii) The foreign investor's ownership ratio not specified at Points a and b of this Clause shall comply with other provisions of relevant laws and international treaties to which the Socialist Republic of Vietnam is concerned and being a member.
4. Prepare dossier:
Foreigners who directly invest to establish a foreign-invested company in Vietnam need to prepare:
(i) Certified copy of the passport of the foreign individual.
(ii) Written registration of capital contribution, purchase of shares or contributed capital;
For foreign investors who are organizations
(i) Certified copy of business registration license, consular legalization
(ii) Financial statements audited or certified by tax authorities in the latest year, consular legalization
(iii) Certified copy of identity card or passport of the representative
(iv) Power of attorney from the organization for the representative of the capital contribution in the company to be established in Vietnam
(v) Written registration of capital contribution, purchase of shares or contributed capital;
(vi) Documents proving the investor's financial capacity from abroad such as financial statements, bank verification of savings assets, etc.
Case 1: Foreign investors hold less than 51% of charter capital
Step 1: Investor makes capital contribution/transfer, declares income tax from transfer (if any)
Step 2: Enterprises carry out procedures to change the Certificate of Business Registration
Step 3: The enterprise submits the application at the Business Registration Office
Within 03 working days from the date of receipt of a valid application, the business registration authority shall issue a new business registration certificate to the enterprise.
Case 2: Foreign investors hold more than 51% of charter capital.
Step 1: Register for capital contribution, purchase of contributed capital, and purchase of shares in a Vietnamese enterprise at the Investment Registration Authority
Within 15 working days from the date of receipt of a valid dossier, the Business Registration Authority shall issue a Notice of satisfaction of conditions for capital contribution, share purchase, contributed capital and Vietnamese enterprises.
Step 2: Foreign investors make capital contribution, purchase shares, contributed capital and Vietnamese enterprises. Investors make capital contribution and transfer capital through direct investment capital account.
Capital transfer members and shareholders shall declare tax upon transfer according to the law on personal income tax and corporate income tax (if any).
Step 3: Change the business registration certificate to add foreigners in the business registration dossier submitted at the Business Registration Office - Department of Planning and Investment.
The above article is our firm's perspective towards procedure for buying shares and contributed capital of a company in Vietnam . For more information and advice on this issue, please contact Doanh Tri Law Firm directly via:
Hotline: (+84) 911.233.955 - (024) 6293 8326
Doanh Tri Law Firm is pleased to accompany our customers!
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