VI Since the economic reform milestone in 1986, Vietnam has been developing steadily. From a poor country, Vietnam has risen to become a developing country and is integrating more deeply with the world economy. This is the driving force as well as a condition that helps Vietnam today become a dynamic and potential market for foreign businesses to invest in. And investing in the form of capital contribution, share purchase and capital contribution is a form of investment that many foreign businesses are interested in and is also an important part of business activities and economic development. . Therefore, in this article, Pham Consult will introduce the necessary procedures when investing in these forms, to help you better understand the process and requirements in accordance with the law.
Relevant legal documents:
• Investment Law 2020
• Decree 31/2021/ND-CP
1. What is investment in the form of capital contribution, share purchase, or capital contribution?
According to the provisions of Article 24 of the Investment Law 2020, investment in the form of capital contribution, share purchase, or capital contribution purchase is where a foreign investor does not establish a new enterprise but participates in the Vietnamese market. through contributing additional capital, purchasing shares or purchasing capital contributions from members/shareholders of previously established and operating businesses. This form of investment will help investors avoid cumbersome procedures such as establishing a new business according to the law, but investors will also satisfy certain regulations on forms and conditions. .
2. How are the forms of capital contribution, share purchase, and capital contribution purchase regulated?
Regarding the form of capital contribution, based on the provisions of Clause 1, Article 25 of the Investment Law 2020, foreign investors are allowed to contribute capital to economic organizations in the following forms:
(i) Buy shares issued for the first time or additional shares issued by a joint stock company;
(ii) Contribute capital to limited liability companies and partnerships;
(iii) Contribute capital to other economic organizations that do not fall into the two cases mentioned above
For the form of buying shares and purchasing capital contributions, investors can make this investment in the following forms:
(i) Buy shares of a joint stock company from the company or its shareholders
(ii) Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company
(iii) Buy the capital contribution of a capital contributing member in a partnership company to become a capital contributing member of the partnership company
(iv) Buying capital contributions of members of other economic organizations that do not fall into the cases specified in the above cases
3. Conditions for carrying out investment activities in the form of capital contribution, share purchase, purchase of capital contribution from foreign investors:
Carrying out business investment activities is determined to be a right of investors. However, because this is a business investment activity of a special entity with foreign elements, lawmakers also stipulate a number of specific conditions for natural persons who want to invest in this form. This includes:
• Market access conditions as prescribed in Clause 3, Article 9 of the Investment Law 2020 and Articles 15, 16, 17 of Decree 31/2021/ND-CP
• Conditions for ensuring national defense, security and land use conditions in case that foreign investor has a Certificate of land use rights in islands, communes, wards, border towns and communes, wards, seaside town; Other areas that have an impact on national defense and security, except economic organizations implementing investment projects in industrial parks, export processing zones, high-tech zones, and economic zones established according to Government regulations
• Carry out procedures for registering capital contribution, purchasing shares, purchasing capital contributions of economic organizations before changing members and shareholders if they fall into one of the following cases:
Contributing capital, purchasing shares, purchasing capital contributions increases the ownership ratio of foreign investors in economic organizations doing business in industries and professions with conditional market access for foreign investors. ;
Capital contribution, share purchase, purchase of contributed capital leads to foreign investors and economic organizations specified in Points a, b and c, Clause 1, Article 23 of this Law holding more than 50% of charter capital. ratio of economic organizations in the following cases: increasing the charter capital ownership ratio of foreign investors from below or equal to 50% to above 50%; increase the charter capital ownership ratio of foreign investors when foreign investors already own more than 50% of the charter capital in economic organizations;
Foreign investors contribute capital, buy shares, buy capital contributions of economic organizations that have land use rights certificates on islands and border communes, wards and towns; coastal communes, wards and towns; other areas that affect national defense and security
4. Implementation order and procedures:
– Step 1: The investor submits an application for capital contribution, share purchase, or capital contribution purchase to the business registration agency.
– Step 2: The business registration agency reviews the dossier and discloses information about the investor according to regulations.
– Step 3: After completing the registration procedure, investors make capital contributions, buy shares, and purchase capital contributions as committed.
– Step 4: Carry out procedures for notifying changes in members/shareholders with the Department of Planning and Investment
Thus, capital contribution, share purchase, partial purchase is a popular form of investment and is considered and given priority by foreign investors, but at the same time, Vietnam also has similar regulations. stricter treatment of these investment entities in order to select quality investors for the Vietnamese market and contribute to protecting domestic businesses.
