Vietnam: Local development investment funds can only invest up to 20% of equity

According to Article 22 of the Decree No. 147/2020/NĐ-CP of the Vietnam’s Government, the investment limit of the local development investment funds is stipulated as follows:

- The total disbursed value of investments as prescribed in Article 19 of this Decree shall not exceed 20% of the Fund's equity as recorded in the latest financial statement at the time of disbursement of investment capital.

- The total disbursed value of investments as prescribed in Article 20 of this Decree shall not exceed 50% of the equity of the local development investment fund recorded in the latest financial statement at the time of disbursement of investment capital.

- For projects using support capital from international donors with regulations on investment limits different from those of this Decree, the agreement signed with the donor shall be followed.

According to Article 19 of the Decree No. 147/2020/NĐ-CP, investment in the establishment of an economic organization, investment in capital contribution, purchase of shares or capital contribution of an economic organization by a local development investment fund must satisfy the following conditions:

- The plan for investment, capital contribution, share purchase and capital contribution is evaluated as effective and capable of recovering investment capital.

- Economic organizations may invest or contribute capital with main business lines on the list of investment and lending sectors of the Fund promulgated by the People's Committee of the province in accordance with the provisions of Article 16 of this Decree.

According to Article 20 of the Decree No. 147/2020/NĐ-CP, investment in the form of contract and implementation of investment projects must satisfy the following conditions:

- The project is evaluated as effective and has the ability to recover investment capital.

- Projects on the list of investment and lending sectors of the Fund promulgated by the People's Committee of the province according to the provisions of Article 16 of this Decree.

- The project complies with the provisions of the law on investment.

More details at the Decree No. 147/2020/NĐ-CP of the Vietnam’s Government, effective from February 05, 2021.

Le Thanh

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