Is it permissible to use cash payment in capital contribution transactions and in the purchase, sale and transfer of capital contributions in Vietnam?

Is it permissible to use cash payment in capital contribution transactions and in the purchase, sale and transfer of capital contributions in Vietnam?

Pursuant to Article 3 of the Circular 09/2015/TT-BTC stipulating modes of payment in capital contribution transactions and in the purchase, sale and transfer of capital contributions at other enterprises:

Modes of payment in capital contribution transactions and in the purchase, sale and transfer of capital contributions at other enterprises

1. Enterprises may not make cash payment (in banknotes and coins issued by the State Bank of Vietnam) in capital contribution transactions and in the purchase, sale and transfer of capital contributions at other enterprises.

2. When conducting capital contribution transactions and when purchasing, selling or transferring capital contributions at other enterprises, enterprises shall:

a/ Pay by check;

b/ Pay by payment order - money transfer; or

c/ Pay by other non-cash payment modes in accordance with current regulations.

3. Enterprises using assets (other than money) to contribute capital or purchase, sell or transfer capital contributions at other enterprises shall comply with the law on enterprises.

As regulated above, when conducting capital contribution transactions and when purchasing, selling or transferring capital contributions at other enterprises, enterprises shall conduct in following modes:

- Pay by check;

- Pay by payment order - money transfer; or

- Pay by other non-cash payment modes in accordance with current regulations.

Therefore, it is not permissible to use cash payment in capital contribution transactions and in the purchase, sale and transfer of capital contributions in Vietnam.

Is it permissible to use cash payment in capital contribution transactions and in the purchase, sale and transfer of capital contributions in Vietnam? - image from internet

Is it permissible to sell part of the stakes when converting from a limited liability company into a joint stock company in Vietnam?

Pursuant to Clause 2 Article 22 of the Law on Enterprises in 2020 stipulating conversion of a limited liability company into a joint stock company:

Conversion of a limited liability company into a joint stock company

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2. A limited liability company can be converted into a joint stock company:

a) without raising additional capital from other organizations and individuals or selling stakes;

b) by raising additional capital from other organizations and individuals;

c) by selling all or part of the stakes to one or some organizations and individuals; or

d) combining the methods specified in Points a, b and c of this Clause and other methods.

As regulated above, when converting from a limited liability company into a joint stock company in Vietnam, it is permissible to sell all or part of the stakes to one or some organizations and individuals.

What documents are included in the application for registration of change in stakes in Vietnam?

Pursuant to Article 51 of the Decree 01/2021/ND-CP stipulating registration of change in charter capital, stakes and holdings:

Registration of change in charter capital, stakes and holdings

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2. In case of change in stakes/holdings of members of the multi-member limited liability company or general partners of the partnership, the company shall send an application for changes to enterprise registration information to the Business Registration Office of province where it is headquartered. The application includes the following documents:

a) A notification of changes to enterprise registration information which is signed by the enterprise’s legal representative;

b) The list of members of the multi-member limited liability company or list of general partners of the partnership, excluding information about limited partners. Such lists must bear signatures of members/general partners whose stakes are changed; signatures of members/general partners whose stakes are unchanged are optional;

c) The transfer contract or documents proving completion of the transfer if stakes are transferred; donation contract if stakes are donated;

d) A written approval given by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities in case procedures for registration of capital contribution or purchase of shares/stakes must be followed in accordance with the Law on Investment.

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As regulated above, the application for registration of change in stakes in Vietnam includes following documents:

- A notification of changes to enterprise registration information which is signed by the enterprise’s legal representative;

- The resolution or decision of the owner of the single-member limited liability company, the resolution or decision and the copy of the minutes of meeting of the Board of Members of the multi-member limited liability company or partnership, or of the General Meeting of Shareholders of the joint-stock company on change in charter capital;

- The list of members of the multi-member limited liability company or list of general partners of the partnership, excluding information about limited partners. Such lists must bear signatures of members/general partners whose stakes are changed; signatures of members/general partners whose stakes are unchanged are optional;

- A written approval given by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities in case procedures for registration of capital contribution or purchase of shares/stakes must be followed in accordance with the Law on Investment in 2020.

Best regards!