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Vietnam continues to be an attractive destination for foreign investors, thanks to its robust economic growth and favorable investment policies. In 2024, foreign investors can contribute capital to Vietnamese enterprises through various forms as specified in the Investment Law 2020. This article outlines the permissible forms of capital contribution, share purchases, and the procedural requirements for foreign investors in Vietnam.
Forms of Capital Contribution by Foreign Investors
According to Clause 1, Article 25 of the Investment Law 2020, foreign investors can contribute capital to Vietnam through the following forms:
- Purchasing Initial Shares or Additional Shares:
- Foreign investors can buy initial shares issued for the first time or additional shares issued by a joint-stock company.
- Contributing Capital to Limited Liability Companies and Partnerships:
- Foreign investors can contribute capital to limited liability companies (LLCs) or partnership companies.
- Contributing Capital to Other Economic Organizations:
- Investments can also be made in other types of economic organizations not covered under the aforementioned categories.
Methods of Purchasing Shares and Capital Contributions
Clause 2, Article 25 of the Investment Law 2020 specifies the methods through which foreign investors can purchase shares or capital contributions in Vietnamese enterprises:
- Purchasing Shares from Joint-Stock Companies:
- Buying shares directly from the company or from existing shareholders.
- Purchasing Capital Contributions in Limited Liability Companies:
- Acquiring capital contributions from current members of an LLC to become a member of the LLC.
- Purchasing Capital Contributions in Partnerships:
- Acquiring capital contributions from current partners to become a capital-contributing partner in a partnership company.
- Purchasing Capital Contributions in Other Economic Organizations:
- Acquiring capital contributions in economic organizations not specified in the above categories.
Investment Procedures for Capital Contribution, Share Purchase, and Capital Contribution Purchase
According to Article 26 of the Investment Law 2020, the procedures for foreign investors to contribute capital, purchase shares, or capital contributions in Vietnam are as follows:
- General Conditions and Procedures:
- Foreign investors must meet the conditions and complete the procedures for changing members or shareholders according to the relevant laws for each type of economic organization.
- Pre-Transaction Registration:
- Foreign investors must register their capital contribution, share purchase, or capital contribution purchase with the appropriate authorities before changing members or shareholders if:
- The transaction increases the foreign investor’s ownership ratio in economic sectors with market access conditions.
- The transaction results in the foreign investor or specified economic organizations holding over 50% of the charter capital, including:
- Increasing the foreign investor’s ownership from 50% or less to over 50%.
- Increasing the ownership ratio when the foreign investor already holds over 50%.
- The economic organization has a land use certificate in sensitive areas like islands, border regions, or coastal areas.
- Foreign investors must register their capital contribution, share purchase, or capital contribution purchase with the appropriate authorities before changing members or shareholders if:
- Post-Transaction Registration:
- Investors not falling under the above conditions can proceed with changing shareholders or members according to relevant laws. If they wish to register their capital contribution or share purchase, they follow the same procedures as those requiring pre-transaction registration.
- Government Regulations:
- The Government provides detailed regulations on the documents, sequence, and procedures for capital contributions, share purchases, and capital contribution purchases by foreign investors.
Vietnam’s legal framework in 2024 offers a structured yet flexible approach for foreign investors to contribute capital and purchase shares or capital contributions in various types of economic organizations. By adhering to these regulations, foreign investors can efficiently navigate the Vietnamese market, ensuring compliance and fostering economic growth.
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