Regulations on rights and obligations of foreign investors in Vietnam

Regulations on rights and obligations of foreign investors in Vietnam (Internet image)

1. Who are foreign investors?

According to Clause 3, Article 3 of Decree 01/2014/ND-CP, foreign investors include foreign organizations and individuals:

- Foreign organizations include:

+ Organizations which are set up and operate under foreign law and branches of these organizations in foreign countries or/and in Vietnam.

+ Organizations, closed funds, member funds, companies of securities investment which are set up and operate in Vietnam with rate of contributed capital amount of foreign parties more than 49%.

- Foreign individuals are persons who do not bear Vietnamese nationality.

(Clause 4 and 5, Article 3 of Decree No. 01/2014/ND-CP)

2. Rights and obligations of foreign investors in Vietnam

2.1. Rights of foreign investors in Vietnam

Foreign investors have the following rights:

- To have full rights of shareholder as prescribed by Vietnamese law, charter of joint-stock credit institutions where the foreign investors have purchased shares and agreements in conformity with Vietnamese law in contract of share purchase and sale between foreign investors and Vietnamese credit institutions.

- To transfer incomes from investment, share purchase, revenues from transfer of shares into other countries after having fulfilled financial obligations as prescribed by Vietnamese law.

- To participate in or appoint representative to participate in the Managing Board, Control Board, executive persons of joint-stock credit institutions as prescribed in Charter of joint-stock credit institutions where foreign investors have purchased shares and Vietnamese law.

- To have other lawful rights and interests protected by the State of the Socialist Republic of Vietnam in accordance with Vietnamese law and International treaties to which Vietnam is a contracting party.

(Article 13 of Decree 01/2014/ND-CP)

2.2. Obligations of foreign investors in Vietnam

Specifically, in Article 14 of Decree 01/2014/ND-CP, foreign investors have the following obligations:

- To fulfill obligations of shareholders in accordance with Vietnamese law and the charters of the Vietnamese credit institutions where they purchase shares and agreements in conformity with Vietnamese law in contracts of share purchase and sale between foreign investors and Vietnamese credit institutions.

-. To ensure and take responsibility for the lawfulness of capital sources used for share purchase and the validity of dossiers of application for share purchase and the accuracy of the supplied information and documents in accordance with Vietnamese law.

- To report full information and take responsibilities for the accuracy of information about their concerned persons who hold shares, information about shareholding through their concerned persons and though investment entrustment at Vietnamese credit institutions where the foreign investors participate in share purchase.

- To fully transfer the amount of capital already registered for the purchase of shares of Vietnamese credit institutions under agreements in contract of share purchase and sale between foreign investors and Vietnamese credit institutions and in conformity with law.

- A foreign strategic investor is not permitted to transfer shares owned by it at Vietnamese credit institutions for other organizations or individuals within at least 5 years after becoming strategic investor of Vietnamese credit institution as stated in written acceptance of the State bank of Vietnam.

- A foreign strategic investor being organization owning 10% or more of charter capital of a Vietnamese credit institution is not permitted to transfer shares owned by it for other organizations or individuals within at least 3 years from owning 10% or more of charter capital of such credit institution.

- Foreign investors purchasing shares of the weak and restructured joint-stock credit institutions as prescribed at Clause 6 Article 7 of Decree 01/2014/ND-CP must formulate plan on share purchase and restructure of the weak credit institutions and send them to the State bank of Vietnam for consideration, appraisal and submission to the Prime Minister for decision.

- To abide by current regulations on foreign exchange management of Vietnam.

Thanh Rin

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