Do foreigners who purchase 51% of the charter capital of a limited company have to follow procedures for registration in Vietnam?
Do foreigners who purchase 51% of the charter capital of a limited company have to follow procedures for registration in Vietnam? What does application for registration of purchase of of capital contribution in Vietnam comprise?
Hi, my company is a limited liability company. The company intends to sell 51% of its charter capital to an individual foreign investor, does this individual have to carry out the following procedures for registration of capital contribution?
1. Do foreigners who purchase 51% of the charter capital of a limited company have to follow procedures for registration in Vietnam?
Pursuant to Clause 2, Article 26 of the Law on Investment 2020, 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.
Thus, according to the above regulations, when this foreign investor buys 51% of the charter capital of your company, he must carry out the procedures for registration of purchase of of capital contribution in Vietnam.
2. What does application for registration of purchase of of capital contribution in Vietnam comprise?
According to Section 3.2, Subsection 3, Section I of Official Letter 8909/BKHDT-PC in 2020, 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.
Best Regards!
