Do foreigners who contribute capital to a limited liability company have to follow procedures for registration of capital contribution in Vietnam?

1. Do foreigners who contribute capital to a limited liability company have to follow procedures for registration of capital contribution in Vietnam?

In Article 26 of the Investment Law 2020, there are regulations on procedures for making investment by contributing capital, purchasing shares or purchasing stakes as follows:

1. Upon contributing capital, purchasing shares or purchasing stakes of a business organization, the investor shall satisfy conditions and follow procedures for change of members or shareholders in accordance with regulations of law applicable to each type of business organization.

2. A foreign investor shall follow procedures for registration of capital contribution or purchase of shares or stakes of a business organization prior to change of members or shareholders in one of the following cases:

a) The capital contribution or purchase of shares or stakes increases the ownership ratio by foreign investors in a business organization conducting business in the restricted business lines;

b) The capital contribution or purchase of shares or stakes results in a foreign investor or business organization specified in Points a, b and c Clause 1 Article 23 of this Law holding over 50% of the charter capital of the business organization in the following cases: The holding of charter capital by the foreign investor is increased from less than or equal to 50% to over 50%; the holding of charter capital by the foreign investor is increased while such foreign investor is holding over 50% of the charter capital of the business organization.

c) The foreign investor that contributes capital, purchases shares or stakes of a business organization has a certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defense and security.

3. Investors other than those mentioned in Clause 2 of this Article shall follow procedures for changing shareholders/members as prescribed by law when contributing capital, purchasing shares or stakes of business organizations. If such investors wish to register their capital contribution or purchase of shares or stakes of business organizations, regulations in Clause 2 of this Article shall be complied with.

4. The Government shall provide specific regulations on applications and procedures for capital contribution and purchase of shares and stakes of business organizations specified in this Article.

Thus, according to the above provisions, foreign investors are only required to follow procedures for registration of capital contribution in some specific cases. If foreign investors want to contribute capital to your company in one of the above cases, they must register for capital contribution in Vietnam.

2. What does application for registration of capital contribution in Vietnam comprise?

In Subsection 3, Section I of Official Letter 8909/BKHDT-PC in 2020, there are regulations on procedures for making investment by contributing capital, purchasing shares or purchasing stakes as follows:

3. Procedures for making investment by contributing capital, purchasing shares or purchasing stakes:

3.1. Any investor that contributes capital or purchases shares/stakes of a business entity must satisfy the conditions and follow the procedures set out in Article 26 of the Law on Investment 2020.

3.2. Procedures for registration of capital contribution or purchase of shares/stakes are as follows:

3.2.1. A business entity to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors in the case specified in Clause 2 Article 26 of the Law on Investment shall submit 01 application for registration of capital contribution or purchase of shares/stakes to the investment registration authority where the business entity’s head office is located.

If the conditions specified in Clause 2 Article 24 of the Law on Investment are satisfied, according to the written approval of the investment registration authority, the business entity to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors shall follow procedures for change of members or shareholders at the investment registration authority in accordance with regulations of law on enterprises and other laws applicable to each type of business entity.

3.2.2. An application for registration of capital contribution or purchase of shares/stakes consists of:

a) A registration form for capital contribution or purchase of shares/stakes, which specifies enterprise registration information about the business entity to which foreign investors expect to contribute capital or whose shares/stakes are expected to be purchased by foreign investors; business lines; list of founding shareholders, list of shareholders that are foreign investors (if any); holding of charter capital by the foreign investor before and after capital contribution or purchase of shares/stakes; transaction value of the contract for capital contribution or purchase of shares/stakes; information about the business entity's investment project (if any);

b) Copies of legal documents of the individual or organization that contributes capital or purchases shares/stakes and of the business entity to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors;

c) A written agreement on the capital contribution or purchase of shares/stakes between the foreign investor and the business entity receiving capital contribution from or selling shares/stakes to the foreign investor;

d) A declaration document enclosed with the copy of the certificate of land use rights of the business entity (in the case specified in Points b and c Clause 2 Article 24 of the Law on Investment 2020). The business entity shall take legal responsibility for the accuracy and truthfulness of the declaration document.

Thus, the application for registration of capital contribution will have the documents according to the above provisions in Vietnam.

Best Regards!