Essential information on indirect investment capital account

Legal Basis: 

• Investment Law 2020 (Law No. 61/2020/QH14). 

• Securities Law 2019 (Law No. 54/2019/QH14). 

• Decree No. 135/2015/ND-CP providing guidelines for the implementation of certain provisions of the Investment Law. 

• Circular No. 05/2014/TT-NHNN of the State Bank of Vietnam regulating foreign exchange management for foreign indirect investment activities. 

1. Indirect Investment Capital Account

An Indirect Investment Capital Account is a Vietnamese-dong-denominated payment account opened by a foreign investor at an authorized bank to carry out permitted transactions related to foreign indirect investment activities in Vietnam. 

Foreign indirect investment activities in Vietnam by foreign investors include the following:  

• Contribution of capital, purchase, and sale of shares or capital contributions in enterprises that are not subject to the provisions of Clause 2, Article 3 of Circular No. 06/2019/TT-NHNN dated June 26, 2019, issued by the Governor of the State Bank of Vietnam on foreign exchange management for foreign direct investment in Vietnam, and any amendments or supplements thereto, provided that such enterprises are not listed or registered for trading on the Stock Exchange. 

• Contribution of capital, purchase, and sale of shares or capital contributions in enterprises whose shares are listed or registered for trading on the Stock Exchange. 

• Purchase and sale of bonds and other types of securities on the Vietnamese stock market. 

• Purchase and sale of other valuable papers denominated in Vietnamese dong issued within the territory of Vietnam by resident entities authorized to issue such instruments. 

• Entrusted investment in Vietnamese dong through fund management companies, securities companies, and other institutions authorized to carry out entrusted investment operations under securities laws; entrusted investment in Vietnamese dong through credit institutions and foreign bank branches permitted to engage in entrusted investment activities in accordance with regulations of the State Bank of Vietnam. 

• Contribution of capital and transfer of capital contributions by foreign investors in securities investment funds and fund management companies in accordance with securities laws. 

• Other forms of indirect investment as prescribed by law. 

2. Eligible Entities for Opening an Indirect Investment Capital Account

Pursuant to Vietnamese law, the following entities are eligible to open an Indirect Investment Capital Account: 

• Foreign investors: Individuals or organizations that are non-residents in Vietnam, including companies, investment funds, and financial institutions seeking to engage in indirect investment activities.

• Foreign investment funds: Funds sourced from foreign capital seeking to invest in securities or financial instruments in Vietnam.

• Securities companies and custodian banks: Entities acting as intermediaries to facilitate transactions and manage indirect investment assets for foreign investors.

These investors are required to open an Indirect Investment Capital Account at a licensed commercial bank authorized to conduct foreign exchange operations in order to carry out lawful indirect investment transactions.

Xem thêm: Procedures for opening and using foreign currency accounts in overseas countries to fulfill commitments, agreements, and contracts with foreign parties

3. Permitted Transactions on the Indirect Investment Capital Account

The Indirect Investment Capital Account is used to conduct lawful transactions related to indirect investment activities in Vietnam. Specifically, the permitted transactions include: 

3.1. Inflows 

• Proceeds from selling foreign currency to an authorized credit institution; 

• Proceeds from the transfer of capital contributions, shares, securities, and other valuable papers, as well as dividends and interest income from bonds and valuable papers denominated in Vietnamese dong arising from foreign indirect investment activities in Vietnam; 

• Fund transfers from the Vietnamese-dong-denominated payment account of the foreign investor opened at an authorized bank; 

• Fund transfers from the accounts of fund management companies, securities companies, credit institutions, and foreign bank branches authorized to carry out entrusted investment activities on behalf of foreign investors (applicable when foreign investors invest in Vietnam through entrusted investment arrangements); 

• Other lawful inflows in Vietnamese dong related to foreign indirect investment activities in Vietnam. 

3.2. Outflows 

• Expenditures for conducting foreign indirect investment activities in Vietnam in the forms specified in Article 5 of this Circular; 

• Expenditures for purchasing foreign currency from an authorized credit institution to remit investment capital, profits, and other lawful income abroad; 

• Payments for lawful expenses incurred in Vietnam; 

• Transfers to the Vietnamese-dong-denominated payment account of the foreign investor opened at an authorized bank; 

• Transfers to the accounts of fund management companies, securities companies, and other institutions authorized to conduct entrusted investment activities for foreign investors (applicable when foreign investors engage in indirect investment in Vietnam through entrusted investment arrangements); 

• Other lawful outflows related to foreign indirect investment activities in Vietnam. 

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