Forms of capital contribution or purchase of shares or stakes in Vietnam

Forms of capital contribution or purchase of shares or stakes in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Forms of capital contribution or purchase of shares or stakes in Vietnam

Forms of capital contribution or purchase of shares or stakes according to Article 25 of the Law on Investment 2020 are as follows:

- A foreign investor may contribute capital to a business organization in the following forms:

+ Purchase of shares of joint-stock companies through the initial public or additional issuance;

+ Contribution of capital to limited liability companies and partnerships;

+ Contribution of capital to other business organizations not mentioned in Point a and Point b of Clause 1 of Article 25 of the Law on Investment 2020.

- A foreign investor may purchase shares or stakes of a business organization in the following forms:

+ Purchase of shares in a joint-stock company from such company or its shareholders;

+ Purchase of stakes of members of a limited liability company to become a member of such limited liability company;

+ Purchase of stakes of a capital contributing member of a partnership to become a capital contributing member of such partnership;

+ Purchase of stakes of members of other economic entities not mentioned in Points a, b and c of Clause 2 of Article 25 of the Law on Investment 2020.

2. Procedures for making investment by contributing capital, purchasing shares or purchasing stakes in Vietnam

Procedures for making investment by contributing capital, purchasing shares or purchasing stakes in Vietnam according to Article 26 of the Law on Investment 2020 are as follows:

- Upon contributing capital, purchasing shares or purchasing stakes of a business organization, the investor shall satisfy conditions and follow procedures for change of members or shareholders in accordance with regulations of law applicable to each type of business organization.

- 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:

+ 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;

+ 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 the Law on Investment 2020 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.

+ The foreign investor contributes capital, purchases shares or stakes of a business organization that holds a certificate of rights to use land on an island or in a border or coastal commune, or in another area that affects national defense and security.

- Investors other than those mentioned in Clause 2 of Article 26 of the Law on Investment 2020 shall follow procedures for changing shareholders/members as prescribed by law when contributing capital, purchasing shares or stakes of business organizations.

If such investors wish to register their capital contribution or purchase of shares or stakes of business organizations, regulations in Clause 2 of Article 26 of the Law on Investment 2020 shall be complied with.

- The Government shall provide specific regulations on applications and procedures for capital contribution and purchase of shares and stakes of business organizations specified in Article 26 of the Law on Investment 2020.

3. Regulations on investment in form of capital contribution or purchase of shares or stakes

Regulations on investment in form of capital contribution or purchase of shares or stakes according to Article 24 of the Law on Investment 2020 are as follows:

- Investors are entitled to contribute capital, purchase shares or purchase stakes of business organizations.

- Foreign investors making investment by contributing capital, purchasing shares and purchasing stakes of business organizations must:

+ Satisfy market access conditions applied to foreign investors as prescribed in Article 9 of the Law on Investment 2020;

+ Ensure national defense and security in accordance with the Law on Investment 2020;

+ Comply with regulations of the law on land and conditions for receipt of land use rights and conditions for use of land on islands or border or coastal communes.

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