Do foreign investors have the right to contribute capital to economic organizations in Vietnam? What procedures and documents need to be prepared?

What are the forms of capital contribution, share purchase, and capital contribution purchase?

According to Article 25 of the Law on Investment 2020, forms of capital contribution, share purchase, and capital contribution purchase include:– Investors may contribute capital to economic organizations in the following forms:

+ Buy shares issued for the first time or additional shares issued by a joint stock company;

+ Contribute capital to limited liability companies and partnerships;

+ Contributing capital to other economic organizations other than the cases specified in Points a and b of this Clause.

– Investors purchase shares or capital contributions of economic organizations in the following forms:

+ Buy shares of a joint stock company from the company or shareholders;

+ Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company;

+ Buy the capital contribution of a capital contributing member in a partnership company to become a capital contributing member of a partnership company;

+ Buying capital contributions of members of other economic organizations other than the cases specified in Points a, b and c of this Clause.

Do foreign investors have the right to contribute capital to economic organizations?According to Article 24 of the Law on Investment 2020, investment in the form of capital contribution, share purchase, and capital contribution purchase is regulated as follows:

– Investors have the right to contribute capital, buy shares, and purchase capital contributions of economic organizations.

– Foreign investors’ capital contribution, share purchase, or capital contribution purchase of economic organizations must meet the following regulations and conditions:

+ Market access conditions for foreign investors specified in Article 9 of this Law;

+ Ensure national defense and security according to the provisions of this Law;

+ Land law regulations on conditions for receiving land use rights, land use conditions in islands, communes, wards, border towns, coastal communes, wards and towns.

Thus, foreign investors have the right to contribute capital, buy shares, and purchase capital contributions from economic organizations but must meet the regulations and conditions of this Law.

How are investment procedures in the form of capital contribution, share purchase, capital contribution purchase for foreign investors?

According to Article 26 of the Law on Investment 2020, investment procedures in the form of capital contribution, share purchase, capital contribution purchase are regulated as follows:

– Investors contribute capital, Buying shares and purchasing capital contributions from economic organizations must meet the conditions and carry out procedures for changing members and shareholders according to the provisions of law corresponding to each type of economic organization.

– Foreign investors carry out procedures for registering capital contribution, purchasing shares, purchasing capital contributions of economic organizations before changing members and shareholders if they fall into one of the following cases:

+ Contributing capital, purchasing shares, purchasing capital contributions increases the ownership ratio of foreign investors in economic organizations doing business in industries and occupations with conditional market access for foreign investors;

+ Capital contribution, share purchase, or capital contribution purchase leads to foreign investors and economic organizations specified in Points a, b and c, Clause 1, Article 23 of this Law holding more than 50% of the charter capital of the economic organization in the following cases: increasing the foreign investor’s charter capital ownership ratio from less than or equal to 50% to more than 50%; increase the charter capital ownership ratio of foreign investors when foreign investors already own more than 50% of the charter capital in economic organizations;

+ Foreign investors contribute capital, buy shares, purchase capital contributions of economic organizations with land use rights certificates on islands and border communes, wards and towns; coastal communes, wards and towns; other areas that affect national defense and security.

– Investors not falling into the cases specified in Clause 2 of this Article must carry out procedures for changing shareholders and members according to relevant laws when contributing capital, purchasing shares, or purchasing capital contributions of economic organizations. In case there is a need to register capital contribution, share purchase, or purchase of capital contribution from an economic organization, the investor shall comply with the provisions of Clause 2 of this Article.

– The Government regulates detailed documents, order, and procedures for capital contribution, share purchase, and capital contribution purchase of economic organizations specified in this Article.

Thus, foreign investors must carry out procedures to register capital contributions to economic organizations before changing members or shareholders if they fall into one of the following cases:

– Capital contribution increases the ownership ratio of foreign investors in economic organizations doing business in industries and occupations with conditional market access for foreign investors;

– Capital contribution leads to foreign investors and economic organizations specified in Points a, b and c, Clause 1, Article 23 of this Law holding more than 50% of the charter capital of the economic organization in the following cases: increasing the foreign investor’s charter capital ownership ratio from less than or equal to 50% to more than 50%; increase the charter capital ownership ratio of foreign investors when foreign investors already own more than 50% of the charter capital in economic organizations;

– Foreign investors contribute capital to economic organizations with land use rights certificates in islands and border communes, wards and towns; coastal communes, wards and towns; other areas that affect national defense and security.

What does the registration dossier for capital contribution, share purchase, and capital contribution include?

According to the provisions of Point 3, Section I of Official Dispatch 8909/BKHDT-PC of 2020, the dossier for registration of capital contribution, share purchase, and capital contribution includes the following documents: following:

– Document to register capital contribution, purchase of shares, or capital contribution includes the following contents: information about the business registration of the economic organization to which the foreign investor intends to contribute capital, buy shares, or contribute capital; business lines and occupations; List of founding shareholders, list of shareholders who are foreign investors (if any); charter capital ownership ratio of foreign investors before and after capital contribution, share purchase, capital contribution to economic organizations; transaction value of capital contribution contract, share purchase, capital contribution; information about investment projects of economic organizations (if any);

– Copies of legal documents of individuals, organizations contributing capital, purchasing shares, purchasing capital contributions and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions;

– Written agreement on capital contribution, share purchase, capital contribution purchase between the foreign investor and the economic organization receiving capital contribution, stock purchase, capital contribution;

– Document declaring (attached with a copy) Certificate of land use rights of the economic organization receiving capital contributions, shares, capital contributions from foreign investors (for the cases specified in Points b and c, Clause 2, Article 24 of the Law on Investment 2020). Economic organizations with foreign investors contributing capital, purchasing shares, or capital contributions are responsible before the law for the accuracy and truthfulness of their declaration.