INTERCONNECTED MECHANISM FOR INVESTORS TO INVEST IN THE FORM OF CAPITAL CONTRIBUTION, PURCHASE OF SHARES/ STAKES

INTERCONNECTED MECHANISM FOR INVESTORS TO INVEST IN THE FORM OF CAPITAL CONTRIBUTION, PURCHASE OF SHARES/ STAKES

Vietnam is stepping up its efforts to modernise and revamp administrative procedures. The Ministry of Planning and Investment, in particular, has issued a mechanism for coordination in settling investment registration and enterprise registration procedures for foreign investors making investment in the form of capital contribution, purchase of shares/stakes. For futher detail, HTC Vietnam Law firm will assist investors in answering this matter in the article below.

I. Legal basis

- Investment Law 2014

- Circular 123/2015 /TT-BTC

II. Scope of consultation

An interconnected mechanism means a mechanism for cooperation between the investment registration authority and the Business Registration Authority in completing procedures for investment registration and enterprise registration applied to foreign investors as prescribed. Foreign investors are entitled to carry out procedures for issuance of Investment Registration Certificate and Enterprise Registration at the same agency.

For foreign investors making investment in the form of capital contribution, purchase of shares/stakes, the order of implementation of the cooperation mechanism is as follows:

Step 1: The investor shall submit the application to the Application-receiving division affiliated to the Service of Planning and Investment.

Foreign investors and enterprises in which foreign investors invest in the form of capital contribution, purchase of shares/stakes shall submit applications for registration of capital contribution or purchase of shares / stakes and applications for registration of changes in enterprise registration information of contributed businesses to the Application-receiving division affiliated to the Service of Planning and Investment.

The Application-receiving division affiliated to the Service of Planning and Investment shall check the receipt of the application for capital contribution or acquisition of shares/stakes as stipulated. In this case, the application for enterprise registration changes does not contain the Service of Planning and Investment’s official authorisation for capital contribution or acquisition of shares/interests by the foreign investor.

If the application is satisfactory, the Application-receiving division affiliated to the Service of Planning and Investment shall issue a receipt to the applicant.

Step 2: The Application-receiving division affiliated to the Service of Planning and Investment shall transfer the application for enterprise registration to the Business Registration Authority.

The application for enterprise registration shall be transferred to the Business Registration Authority on the same working day as it is received by the Application-receiving division affiliated to the Service of Planning and Investment

Step 3: Examine the validity of the application.

a) For the Application-receiving division affiliated to the Service of Planning and Investment:

The Application-receiving division affiliated to the Service of Planning and Investment shall process the application for investment registration on National Information System on investment under procedures as stipulated in Law on Investment and its guiding documents. In the cases where the application is rejected, the Application-receiving division shall request the Business registration authority to remove the applicant’s enterprise registration information from the National Enterprise Registration Information System.

b) For the Business Registration Authorities:

Within a period of 02 working days from the date of receipt of the enterprise registration application, the Business Registration Authority shall post the enterprise registration dossier on the National Company Registration Portal and provide their response as to the dossier’s validity to the Application-receiving division affiliated to the Service of Planning and Investment.

- In case of a valid dossier: The Business Registration Authority shall provide their response to the Application-receiving division affiliated to the Service of Planning and Investment regarding the validity of the dossier, and shall expect for a written approval from the Service of Planning and Investment concerning about capital contribution, purchase of shares/stakes of the foreign investors for the purpose of enterprise registration issuance.

- In case of an invalid dossier: The Business Registration Authority shall issue a notice requesting the amendment and/or supplementation of the dossier and send it to the Application-receiving division affiliated to the Service of Planning and Investment for consolidation and guidance to complete the process for the business entity. Upon the investor or business entity making the necessary amendments to the business registration dossier, the Application-receiving division affiliated to the Service of Planning and Investment shall receive and forward the dossier to the Business Registration Authority for further processing of the enterprise registration.

Step 4: Issuance of the written approval for capital contribution, purchase of shares/stakes of the foreign investors.

If the foreign investor's capital contribution, purchase, or share/stake meets the prescribed requirements, the Service of Planning and Investment shall issue a written approval for the capital contribution, purchase of shares/stakes of the foreign investors.

If the foreign investor's capital contribution, purchase, or share/stake does not meet the prescribed requirements, the Application-receiving division affiliated to the Service of Planning and Investment shall notify the Business Registration Authority to proceed with the cancellation of the enterprise registration dossier on the National Company Registration Portal.

On the same working day as the issuance of the written approval for the capital contribution, share purchase of shares/stakes of the foreign investor, the Application-receiving division affiliated to the Service of Planning and Investment shall forward this document to the Business Registration Authority.

Step 5: Granting the Business Registration Certificate, Confirmation of amendments to enterprise registration information.

On the same working day as the receipt of the document from the Service of Planning and Investment approving the foreign investor's capital contribution, share purchase of shares/stakes, the Business Registration Authority shall issue the Business Registration Certificate, confirmation of amendments to enterprise registration information, along with transmission to the Application-receiving division affiliated to the Service of Planning and Investment.

Step 6: Providing Results to the Investors.

Within one (1) working day from the date of receipt of the Business Registration Certificate and confirmation of amendments to enterprise registration information, the Application-receiving division affiliated to the Service of Planning and Investment shall deliver the written approval regarding the foreign investor's capital contribution, share purchase of shares/stakes; as well as the Business Registration Certificate and Confirmation of amendments to enterprise registration information to the enterprise. In the event of a demand, the enterprise may be provided with the written approval pertaining to the foreign investor's capital contribution, purchase of shares/stakes in advance.

The foregoing represents our advice on the coordination mechanism for investors to invest in the form of capital contribution, purchase of shares/stakes To gain a comprehensive understanding of the procedures or conducting investment through capital contribution, share/stake purchase please feel free to contact us for specific consultations. HTC Vietnam Law Firm is honored to accompany clients in resolving all legal issues. Please contact us for the best consulting services.

______________________________

For more details, please contact:

HTC Vietnam Law Firm

Address: 15th Floor, Multipurpose Building, 169 Nguyen Ngoc Vu, Trung Hoa Ward, Cau Giay District, Hanoi.

Tel: 0989.386.729; Email: [email protected]

Website: https://htc-law.com; https://luatsuchoban.vn

(Writer: Tuan Anh; Date: )

Translator: Pham Nguyen Nhat Linh