Investors will be permitted to establish companies for managing overseas petroleum projects in Vietnam from December 5, 2024

Investors are allowed to establish companies to manage overseas petroleum projects from December 5, 2024 (Image from the internet)

On October 15, 2024, the Government of Vietnam issued Decree 132/2024/ND-CP regulating outward petroleum investment.

Investors will be permitted to establish companies for managing overseas petroleum projects in Vietnam from December 5, 2024

Article 12 of Decree 132/2024/ND-CP details the establishment of an operating company as follows:

- To conduct activities to initiate overseas petroleum projects or implement overseas petroleum projects, investors are allowed to establish or participate in establishing an operating company in Vietnam, in the host country of investment, or in a third country in accordance with the legal regulations of the host country of investment and the petroleum contract.

- If the investor decides to establish an operating company with the purpose of representing the investor in participating or implementing overseas petroleum projects, the operating company and the investor will be named in the certificate of overseas investment registration. The operating company is allowed to use the overseas investment registration certificate to facilitate activities related to the implementation of the petroleum project.

- Investors may use one operating company to manage and operate one or multiple overseas petroleum projects in compliance with the regulations of the host country of investment. Expenses for each petroleum project must be allocated and accounted for independently.

Thus, according to the aforementioned regulations, investors are permitted to establish or participate in establishing operating companies in Vietnam, in the host country of investment, or in a third country in accordance with the legal regulations of the host country of investment and the petroleum contract.

Regulations on outward investment capital in petroleum activities in Vietnam from December 5, 2024

Sources of outward investment capital in petroleum activities include money and other legal assets of the investor, including equity capital, loans in Vietnam transferred abroad, recoverable expenses, profits, and other shares from overseas petroleum projects retained to continue investment abroad.

Other legal money and assets as stated include:

- Foreign currency in accounts at permitted credit institutions or purchased at authorized credit institutions in accordance with legal regulations;

- Vietnamese Dong consistent with the laws on foreign exchange management of Vietnam;

- Machinery, equipment, materials, raw materials, fuels, finished goods, and semi-finished goods;

- Intellectual property rights, technology, trademarks, and rights to assets;

- Shares, capital contributions, and investor projects converted at economic organizations in Vietnam and overseas economic organizations as regulated;

- Other legal assets as stipulated by civil law.

Note: outward investment capital can be used for capital contribution, payments for purchasing shares, capital contributions, fulfilling arising guarantee obligations (if any), and other financial obligations of the investor as stipulated by the legal regulations of the host country of investment, petroleum contract, licenses, and other related agreements to conduct petroleum activities, and projects from project inception to completion and fulfilling all stipulated obligations. Funds transferred abroad, once recovered and brought back to Vietnam, are not counted as transferred capital abroad.

Vietnamese investors can use their shares, capital contributions, or investment projects in Vietnam to pay or exchange for purchasing shares, capital contributions, or overseas petroleum projects of economic organizations abroad.

In this case, the Vietnamese investor processes the procedures for the issuance of the overseas investment registration certificate first, and thereafter the foreign investor processes investment procedures in Vietnam according to legal regulations.

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