Noteable when carrying out the registration procedures for foreign investors to contribute capital/buy shares/buy contributed capital

According to statistics of the Ministry of Planning and Investment, by the end of November 2024, the total newly registered capital, adjustment and capital contribution, share purchase, and purchase of contributed capital of foreign investors reached nearly USD 31.4 billion, up 1% over the same period in 2023. In which, Ho Chi Minh City leads in the number of projects contributing capital, buying shares, and buying contributed capital in November 2024 with 2,148 projects.  

1. The registration process for foreign investors to contribute capital/purchase shares/purchase capital contributions

Step 1: Submiting the registration dossier for foreign investors to contribute capital/buy shares/purchase capital contributions at the investment registration agency where the Target Company is headquartered.  

Step 2: Signing a contract for transferring of contributed capital/shares and paying the transfer value. 

Step 3: Amending the Enterprise Registration Certificate (charter capital, owner, capital contributor, etc.) within 10 days from the date of completion of the payment of the transfer value. 

2. Reviewing the Target Company’s business lines

According to the WTO Schedule of Commitments, Vietnam has opened the market for foreign investors to access some service industries. However, Vietnam has not yet committed to opening the market to the manufacturing industry. Accordingly, for industries that have not been committed by Vietnam to open the market or industries that have been committed by Vietnam to open the market but have regulations on conditions for foreign investors, such as production, real estate, restaurants, etc. then the investment registration agency may request an explanation of the mode of operation, scope of customers, location, etc. or issue a written consultation with relevant agencies, after receiving full feedback from relevant agencies, the investment registration agency has a basis to consider and respond to approve or disapprove the dossier of registration for capital contribution/purchase of shares/purchase of contributed capital. Therefore, during the negotiation process, the Transferor and the Transferee need to review and agree on the business lines of the Target Company to limit the risk that after completing the transaction, The Target Company cannot continue to operate in the business lines as in the past.  

3. Payment of the transfer value

After being approved by the investment registration agency, the Parties will sign a contract for the transfer of shares/contributed capital and pay the transfer value. Pursuant to Article 10.1 of Circular 06/2019/TT-NHNN stipulating that the payment of the transfer value is made as follows: 

• Between the non-resident investors or between the resident investors does not have to pay through the Target Company’s direct investment capital account. Accordingly, the Parties can actively transfer money to each other through their own accounts opened at foreign banks or Vietnamese banks; 

• Between a non-resident investor and a resident investor, it must be done through the direct investment capital account of the Target Company. Accordingly, the Target Company needs to contact a commercial bank to open a direct investment capital account, then the Transferee will transfer money to the Target Company’s direct investment capital account and the Target Company will transfer the money to the Transferor.

In addition, Article 10.3 of Circular 06/2019/TT-NHNN stipulates the payment currency in foreign direct investment activities in Vietnam as follows: 

• The valuation and payment of the transfer value of investment capital or investment projects between two non-residents are allowed to be carried out in foreign currencies. Accordingly, the Parties are free to agree on the payment currency, such as USD, SGD …; 

• However, the valuation and payment of the transfer value of investment capital and investment projects between residents and non-residents, between residents must be carried out in Vietnam Dong. In this case, the Parties shall be obliged to pay in Vietnam Dong. 

Therefore, the Parties need to work with the commercial bank in advance on the payment process to transfer money to the right type of account according to the regulations of the State Bank of Vietnam. 

4. Amending the Enterprise Registration Certificate

Article 30.2 of the Law on Enterprises 2020 stipulates that the Target Company must carry out the procedures for registering changes to the contents of the Enterprise Registration Certificate within 10 days from the date of completion of the money transfer transaction. It should be noted that in case of having multiple transactions, these transactions should be completed within 10 days, if the Parties only complete one or several transactions within 10 days while other transactions have not been completed, the Target Company must carry out the procedure for registering changes to the contents of the Enterprise Registration Certificate for completed transactions. However, from the point of view of the business registration authority, the contents of the change registration with the business registration authority must match the content approved by the investment registration authority at the stage of registration of capital contribution/purchase of shares/purchase of contributed capital. Therefore, the registration of changes to the business registration content that does not match the approval notice will cause risks to the Target Company and the Transferee. 

Above are the contents to note when carrying out registration procedures for foreign investors to contribute capital/buy shares/buy capital contributions. 

See more: 

1. Applying for investment registration certificate for foreign investors not subject to investment policy approval

2. The conditions for foreign investors to be issued investment registration certificate

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