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In the context of globalization, Vietnamese investors are increasingly looking beyond domestic borders for investment opportunities. Understanding the legal framework for outward foreign investment is crucial for compliance and strategic planning.
This article delves into the sources of capital included in outward foreign investment, the conditions under which investors can transfer capital abroad, and the documentation required for investment activities involving capital contribution.
Sources of Capital for Outward Foreign Investment
According to Article 69 of Decree 31/2021/ND-CP, outward foreign investment capital can be sourced from:
- Owner’s Equity: This includes the investor’s own funds allocated for overseas investments.
- Loans in Vietnam Transferred Abroad: Funds borrowed within Vietnam that are transferred for the purpose of foreign investment.
- Retained Profits: Profits earned from existing foreign investment projects that are retained and reinvested in further foreign investment activities.
Additionally, outward investment capital encompasses a variety of money and legal assets, such as:
- Foreign Currency: Funds held in accounts at authorized credit institutions or purchased from these institutions.
- Vietnamese Dong: Utilized in accordance with Vietnam’s foreign exchange management laws.
- Machinery, Equipment, and Goods: This includes materials, raw materials, fuel, finished and semi-finished goods.
- Intellectual Property and Technology: The value of intellectual property rights, technology, trademarks, and rights to assets.
- Shares and Capital Contributions: Investors can use shares, capital contributions, or investment projects in Vietnam to pay for or exchange for shares, capital contributions, or investment projects of economic organizations abroad.
It’s important to note that capital amounts transferred abroad, once recovered and repatriated, are not counted as capital transferred abroad.
Conditions for Transferring Investment Capital Abroad
Under Article 66 of the Investment Law 2020, investors are permitted to transfer investment capital abroad when the following conditions are met:
- Certificate of Registration for Outward Investment: Investors must have been granted this certificate, with certain exceptions as specified in Clause 3, Article 66 of the Investment Law 2020.
- Approval from the Investment-Receiving Country: The investment activity must be approved or licensed by the competent authority of the investment-receiving country. If the law of the investment-receiving country does not require investment licenses or approval, the investor must provide documents proving their right to invest in that country.
- Capital Account: Investors must have a capital account as stipulated in Article 65 of the Investment Law 2020.
Moreover, the transfer of investment capital must comply with laws on foreign exchange management, export, technology transfer, and other relevant regulations. Investors can also transfer foreign currency or goods, machinery, and equipment abroad for market surveys, research, exploration, and other preparatory activities as prescribed by the Government.
Documentation for Outward Investment Activities Involving Capital Contribution
For outward investment activities in the form of capital contribution, purchase of shares, or purchase of capital contributions in economic organizations abroad, the determining document is outlined in Clause 2, Article 74 of Decree 31/2021/ND-CP. Investors must submit agreements, contracts, or other documents determining the capital contribution or purchase, along with documents on the legal status of the economic organization abroad.
By understanding these legal requirements and preparing the necessary documentation, Vietnamese investors can effectively navigate the complexities of outward foreign investment, ensuring compliance and maximizing their investment potential in the global market.
***ASL Law is a leading full-service and independent Vietnamese law firm comprising experienced and talented lawyers. ASL Law is ranked as Vietnam’s top tier Law Firm by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm aims to provide the most practical, efficient, and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
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