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Vietnam has updated its regulations on foreign investment through capital contribution, share purchase, or capital contribution purchase, making it essential for foreign investors to stay informed. Below, we outline the latest conditions and procedures that foreign investors must adhere to, based on the Investment Law 2020 and Decree 31/2021/ND-CP.
Conditions for Foreign Investment through Capital Contribution, Share Purchase, or Capital Contribution Purchase
Foreign investors looking to contribute capital, purchase shares, or purchase capital contributions in economic organizations in Vietnam must comply with several conditions as outlined in Clause 2, Article 24 of the Investment Law 2020:
- Market Access Conditions: Foreign investors must meet the market access conditions specified in Article 9 of the Investment Law 2020. These conditions ensure that foreign investments align with Vietnam’s economic strategies and regulatory framework.
- National Defense and Security: Investments must guarantee national defense and security as per the Investment Law 2020. This provision aims to protect Vietnam’s national interests while facilitating foreign investments.
- Land Law Compliance: Foreign investors must adhere to the regulations concerning land use rights, particularly for land on islands, border areas, and coastal regions. This includes meeting specific conditions for receiving land use rights as stipulated by the Land Law.
Procedures for Foreign Investment through Capital Contribution, Share Purchase, or Capital Contribution Purchase
Article 66 of Decree 31/2021/ND-CP provides detailed procedures for foreign investors to follow:
- Registration of Member or Shareholder Change: Economic organizations with foreign investors contributing capital, purchasing shares, or purchasing capital contributions must register any changes in members or shareholders with the business registration authority. This process must comply with enterprise laws and other relevant laws applicable to each type of economic organization.
- Submission of Investment Registration Documents: For cases specified in Clause 2, Article 26 of the Investment Law 2020, economic organizations must submit a registration dossier to the investment registration authority where they are headquartered. The dossier should include:
- A registration document detailing business registration information, business lines, lists of owners, founding members or shareholders, foreign investors (if any), foreign ownership ratios before and after the transaction, estimated transaction value, and information about any investment projects.
- Copies of legal documents of the individuals or organizations involved.
- An agreement in principle between the foreign investor and the economic organization or its members/shareholders.
- A copy of the land use right certificate of the economic organization, if applicable.
- Review and Notification: For specific cases under points a and b, Clause 2, Article 26 of the Investment Law 2020, the investment registration authority will review the submitted dossier within 15 days. They will assess whether the conditions for capital contribution, share purchase, or capital contribution purchase are met, as outlined in Clause 2, Article 24 of the Investment Law 2020 and Clause 4, Article 65 of Decree 31/2021/ND-CP. The authority will then notify the investor and the economic organization of their decision.
- Land Use and National Defense/Security Review: For economic organizations with land use rights in sensitive areas:
- The investment registration authority will seek opinions from the Ministry of Defense and the Ministry of Public Security within 3 working days of receiving a valid dossier.
- These ministries have 7 working days to provide their input. If no response is received within this period, it is considered an agreement.
- The investment registration authority will then notify the investor of their decision within 15 days, considering the feedback from the defense and security ministries.
- Post-Approval Procedures: Upon receiving approval for capital contribution, share purchase, or capital contribution purchase, the economic organization must register the changes in members or shareholders with the business registration authority. The rights and obligations of foreign investors as members or shareholders are established once these registration procedures are completed.
Navigating the regulatory landscape for foreign investment in Vietnam requires understanding and complying with the latest conditions and procedures. The updates provided in the Investment Law 2020 and Decree 31/2021/ND-CP ensure that foreign investments are conducted transparently and in alignment with Vietnam’s national interests. Foreign investors must follow these guidelines to secure their investments and contribute positively to Vietnam’s economic growth.
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