Foreign investment in Vietnam in the form of capital contribution, shares, purchase of contributed capital

Currently, foreign investors often decide to choose foreign investment in Vietnam in the form of capital contribution, share purchase, and capital contribution. In this article, BI LAW focuses on the conditions, forms and procedures for foreign investment in Vietnam in the form of capital contribution investment, share purchase and capital contribution in accordance with the laws of Vietnam. Current information for investors to actively grasp the basic information and decide to choose the appropriate form of investment.

Article 21 of the Law on Investment 2020 stipulates the following investment forms: (i) Investment in establishing economic organizations; (ii) Investment to contribute capital, purchase of shares, purchase of contributed capital; (iii) Implementation of investment projects; (iv) Investment in the form of BCC contract and (v) New forms of investment and economic organization according to the Government’s regulations.

Conditions for capital contribution, share purchase and capital contribution purchase by foreign investors

According to regulations, investors have the right to contribute capital, buy shares or purchase capital contributions from economic organizations, however, foreign investment in Vietnam in the form of capital contribution, share purchase, capital contribution must meet the following conditions:

Market access conditions for foreign investors in accordance with the Law on Investment.
Ensuring national defense and security in accordance with the Law on Investment;
Regulations of law on land on conditions for receiving land use rights, conditions for using land in islands, communes, wards, border towns, communes, wards and coastal townships.

Forms of capital contribution, share purchase, purchase of contributed capital

Foreign investors may contribute capital to economic organizations in the following forms:

Buy shares issued for the first time or additionally issued shares of a joint-stock company;
Contribute capital to limited liability companies, partnerships;
Contribute capital to other economic organizations that do not fall into the above cases.

Foreign investors purchase shares or capital contributions from economic organizations in the following forms:

Buy shares of a joint stock company from the company or shareholder;
Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company;
Purchase capital contributions of capital contributors in a partnership to become a capital contributing member of a partnership;
Purchase capital contributions of members of economic organizations other than the above cases.

You may be interested: 5 steps to buying business shares

Procedures for foreign investment in Vietnam in the form of capital contribution, share purchase, purchase of contributed capital

Foreign investors investing in the form of capital contribution, share purchase or capital contribution purchase in one of the following cases must carry out the procedures for registration of capital contribution, share purchase or purchase of contributed capital at the Department of Planning and Investment in the province or centrally run city where the economic organization’s head office is located before carrying out the procedures for registration of change of members or shareholders at the business registration office in accordance with the law on business registration and other laws corresponding to each type of economic organization:

Capital contribution, share purchase, purchase of contributed capital increases the foreign investors’ ownership ratio in economic organizations doing business in industries and professions with conditional market access for foreign investors;
The contribution of capital, purchase of shares, purchase of contributed capital results in the holding of more than 50% by foreign investors and economic organizations specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment 2020 charter capital of economic organizations in the following cases: increasing the rate of ownership of charter capital of foreign investors from less than or equal to 50% to over 50%; increase the rate of ownership of charter capital of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations;
Foreign investors contribute capital, purchase shares or purchase capital contributions from economic organizations with land use right certificates in islands and border communes, wards and townships; coastal communes, wards and towns; other areas affecting national defense and security.

Dossier for registration of capital contribution, share purchase or purchase of contributed capital includes:

Written registration of capital contribution, share purchase, purchase of contributed capital;
Copies of legal papers of individuals and organizations that contribute capital, purchase shares, purchase capital contributions and economic organizations in which foreign investors contribute capital, purchase shares or purchase capital contributions;
Written agreement in principle on capital contribution, share purchase, purchase of capital contributions between foreign investors and economic organizations in which foreign investors contribute capital, purchase shares, purchase capital contributions or between foreign investors with shareholders or members of such economic organizations;
A copy of the certificate of land use rights of the economic organization in which foreign investors contribute capital, purchase shares or purchase capital contributions in some cases as prescribed by the investment law.

If not required to carry out the procedures for registration of capital contribution, share purchase, purchase of contributed capital, foreign investors only need to carry out the procedures for changing shareholders or members at the business registration agency according to the provisions of the law on enterprises and other laws corresponding to each type of economic organization.

Rights and obligations of foreign investors as members and shareholders of economic organizations shall be established upon completion of procedures for changing members and shareholders.

Thus, before choosing this type of investment as well as in the process of making an investment, a foreign investor must clearly understand the provisions of law, the operation situation, and the financial capacity of the organization economic organizations intend to invest to limit legal risks and protect their legitimate rights and interests. Therefore, in order to ensure foreign investment in Vietnam in the form of capital contribution, share purchase, purchase of contributed capital in compliance with the law, foreign investors should learn and choose to use the services legal advice from reputable law firms in Vietnam with experience in corporate and investment legal advice can provide useful legal advice to help investors save time and costs in carrying out procedures. related to foreign investment in Vietnam in the form of capital contribution investment, share purchase, purchase of contributed capital.