Because the legal environment is conducive to Foreigners’ investment, business and residence in Vietnam, the number of Foreigners living and working in Vietnam is increasing, and they are also generating many properties such as cash accounts in banks, real estate that are apartments, movable properties that are vehicles or other properties. Besides, a large number of foreigners investing in establishing enterprises and doing business in Vietnam can own all or a part of Shares/Contributed Capital in the company. One of the concerns of an Individual Foreign Investor is if in the event of his/her death, how will be Shares/Contributed Capital treated in the business? Whether he/she can make a will to leave Shares/Contributed Capital to people whom he/she wishes to leave or not. The following are some analyzes for Individual Foreign Investors to consider inheriting their Share/Contributed Capital:
1. Applicable law
As mentioned in Article 680 of Civil Code 2015, the inheritance must comply with the law of the country of which person wills properties held nationality before his or her death, except that the right to inherit immovable property in Vietnam must comply with Vietnamese law. Although Shares/Contributed Capital in enterprises in Vietnam must be registered with the business registration office, and these properties are determined to be movable properties, the law of the country of which a Foreigner held nationality just before his/her death will be applied. In addition, as described in Article 681 of Civil Code 2015, the capacity to make a will, change or cancel a will must comply with the laws of the country of which the testator is a citizen when he/she make the will, change or cancel the will.
Therefore, in order to consider inheriting Shares/Contributed Capital of Foreigners in Vietnamese enterprises, a Foreigner or an inheritor needs to research the law of the country of which he/she held nationality just before his/her death or when he/she made a will. In other words, the Foreigner making a will should be consulted by lawyers who have a profound knowledge of the law of the country of which such Foreigner is a citizen or advised legal issues about inheriting Shares/Contributed Capital in Vietnamese enterprises.
Because Shares/Contributed Capital are properties in Vietnam, a will must be recognized by Vietnam in order to carry out the procedure for registration of the heir as a new Shareholder/Contributing Partner. Hence, foreigners have noticed that the types of wills are determined in accordance with the law of the country where the will was made, and Vietnam will recognize the will if it complies with the laws of one of the following countries:
- The country of which the testator resides when he/she make a will or when he/she dies;
- The country of which the testator holds nationality when he/she make a will or when he/she dies.
2. Receiving properties by inheritors
According to Enterprise Law 2014, if a Shareholder/Contributing Partner dies, the heir under the will or the law of such Shareholder/Contributing Partner shall automatically become a new Shareholder/Contributing Partner of an enterprise without other Shareholders’/Partners’ consent.
3. Registering for the heir as a new Shareholder/Contributing Partner in an enterprise
When a foreigner dies, the enterprise must register with the business registration office for the admission of the heir as a new Shareholder/Contributing Partner. When carrying out this procedure, the enterprise must submit documents and documents on certification of Shares’/Contributed Capital’s lawful inheritance rights. If the documents are issued by oversea competent authorized offices, they must be carried out the procedure for consular legalization and translated into Vietnamese before they are submitted to the business registration office. An heir becomes a new Shareholder/Contributing Partner in an enterprise when:
- For Joint Stock Companies: the enterprise has completed the procedure for registering foreign shareholders with the business registration office, and the heir has been recorded as a shareholder in the Book of Shareholder Registration.
- For Company Limited: the enterprise has completed the procedure for the change in the Enterprise Registration Certificate to recognize the heir as the new contributing partner.
Please be noted that if an enterprise operates under an Investment Registration Certificate and Business Registration Certificate, it must not only register with the business registration office about changing Shareholders/Contributing Partners but also carry out a procedure for changing the information about investors in the Investment Registration Certificate.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.
